The U.S. Department of Housing and Urban Development earlier this week approved the City of Cape Coral’s plan to use $7 million in federal funds to help ease the Cape’s housing and foreclosure crisis, and some city officials are green — with envy.
Port St. Lucie, a city in Eastern Central Florida with a population (about 165,000) similar to Cape Coral’s, received $13.5 million for the same program, nearly double the Cape’s allotment.
The funds are part of the Neighborhood Stabilization Program created by the 2008 Housing and Economic Recovery Act signed into law by President Bush on July 30. The program is designed to help municipalities purchase, rehabilitate, and sell foreclosed homes or provide down payment assistance to homebuyers to prevent the blight caused by abandoned homes.
“Do I think we deserve more? Yes, I do. I think we were slighted a little,” Mayor Jim Burch said.
According to HUD statistics, Cape Coral’s 11.9 percent foreclosure rate (the percentage of foreclosure starts in the past 18 months) is 0.6 percent higher than Port St. Lucie’s rate, but greater funds were dispersed to the St. Lucie County city because it has a high risk of abandonment.
Florida’s statewide foreclosure rate is 8 percent.
In November, Burch directed City Manager Terry Stewart to write to HUD asking for an explanation of the perceived discrepancy between the NSP funds given to the two cities.
Assistant Secretary for Community Planning and Development Susan Peppler responded to Stewart’s inquiry last week in a letter stating Port St. Lucie has a much higher vacancy rate in neighborhoods with the greatest risk of foreclosures.
“With regard to the cities of Port St. Lucie and Cape Coral, the City of Port St. Lucie has a 90-day vacancy rate in neighborhoods with high rates of high cost loans nearly 24 times greater than the rate in the city of Cape Coral (rates of 2.61 percent and 0.11 percent, respectively),” Peppler’s letter reads, in part.
HUD uses postal data and other statistics to determine the 90-day vacancy rate for an area.
“We layer on top of that federal data high concentrations of high-cost loans,” HUD spokesperson Brian Sullivan said.
Stewart was not swayed by HUD’s explanation, and noted other criteria used by the department to determine the amount of funding, such as foreclosure start rates, high cost mortgage loan rates, and unemployment rates are greater in Cape Coral than in Port St. Lucie.
“I’m still surprised and disappointed. I don’t see how one-fifth of the criteria should inordinately determine how much money was given,” Stewart said.
While Cape Coral’s foreclosure rate is higher and its economic situation may be more dire than Port St. Lucie’s, homes are selling faster in the Cape, contributing to the city’s relatively low 90-day vacancy rate.
In November, 600 existing single-family homes were sold in the Cape Coral-Fort Myers metro area, compared to 318 in the Port St. Lucie-Fort Pierce metro area.
Despite the increase in sales in the Cape, home values have dropped more precipitously than in Port St. Lucie.
The median sale price for an existing single family home in the local metro area fell to $106,100 in November, a 53 percent decrease from November 2007. The Port St. Lucie-Fort Pierce’s median sale price for November was $130,500, a 37 percent drop-off from November 2007.
HUD officials said the city should look to the state, which received $91 million in NSP funds, if it wants more money to deal with the foreclosure problem.
City officials say they will try to get more state funds for the program, but aren’t happy about relying on the legislature as a last resort.
“I think we should follow up on that. The last mechanism we have now is through the state,” Burch said.
Realtor Gary Tasman said the Cape’s $7 million in NSP funds were not a panacea for the local economy, but would help settle the housing market.
“I’m not sure it’s enough to stabilize the market by itself. Once people start occupying those houses, then they’ll start having demand for other services and that will help stabilize the market,” Tasman said.
“There’s no question it’s beneficial and it’s a step in the right direction,” he added.
Realtor and Cape Coral City Councilmember Gloria Tate was also chagrined the city didn’t get more NSP funds, but said it will make incremental progress.
“I think we deserve a little bit more considering our statistics. I’m sure we’ll spend the money the right way and get it to the people that need it the most,” Tate said.
“Any time you can take one home that’s in disrepair, fix it, and sell it, it’s a win — the whole neighborhood benefits. We just have to do it one home at a time,” she added.