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Village using national program to 'stabilize' neighborhood

November 25, 2009 - For sale: single-family home, 390 Newton Drive, 4 bedrooms, 1 bath, REDUCED PRICE $1.

It was a deal they couldn't refuse.

So, using funds from Neighborhood Stabilization Program (NSP) the Village of Lake Orion purchased the home at 390 Newton Drive for $1.

Their purpose is to resell the property – originally going for $50,000 to $60,000 – to individuals meeting specific income and credit score guidelines, according to Village Manager Paul Zelenak.

The house on Newton, however, is in serious disrepair and Zelenak says it will be demolished.

"There was mold in the house and extensive damage to flooring, roofing and ceiling," he said. "Because the house is in such disrepair, the building department deemed it to be blighted."

In its place, the village manager says they'll erect a prefabricated home that blends with the character of the neighborhood.

Officials can't say yet how much the new house will sell for, but NSP requires the price to be no higher than the cost of building and furnishing it.

"We bought the house for $1, but let's say we purchase it and put all these [furnishings] into the house, and spend $95k on it – that's the maximum that we can sell it for, but we can sell it for less," said Zelenak.

Profits from selling the house will be dispersed to other communities via Oakland County and NSP, according to the manager.

He says plans for the house could include energy star appliances, foundation work, driveway work, landscaping, interior paint, cabinetry and possible monetary incentives.

"That house was vacant for several years – we want to build a nice house and get somebody in there who may not have been able to afford it otherwise," Zelenak said, noting purchasers have to occupy the house and not rent it.

When working on the new house, Zelenak wants to use local and Michigan-based companies.

"That was my main thought," he said. "There's manufactured and 'pre-fab' houses built all around the United States, but I'm going to procure it through Michigan-based companies so we can keep the jobs here. The demo contractors will most likely be from the area."

According to the manager, this house is the only one available to the village to purchase, though NSP awarded Lake Orion $425,000 to use.

"The whole idea was the county allocating funds to specific communities where needs are," Zelenak said. "It's pretty difficult right now to find the houses that meet all the guidelines established or that are within specific census tracks."

Earlier this year, Zelenak noted "there are a lot of strings attached to the money."

The "strings," set by NSP, dictated the house must be foreclosed and vacant, and must be located east of M-24 and inside village limits.

The village's initial plans for NSP funds called for purchasing four or five houses at around $65,000 each. But, according to Zelenak, the house on Newton will likely be the only house, as NSP funds will be returned at the end of the year.

NSP was established for the purpose of stabilizing communities suffering from foreclosures and abandonment, according to its Website. The program allocates different funding amounts to municipalities based on population, income, number of foreclosed houses and other criteria.

Reporter, Lake Orion Review
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