WOONSOCKET — The timeworn two-family house at 542 Front St. will be in like-new condition when it hits the market for $165,900, but it’s going to take a good deal more than money to call this place home.
It’s going to take luck: The fully-restored home will be the first offered in a lottery by non-profit housing developer NeighborWorks Blackstone River Valley in a quarter century.
As for the price tag, take heart: It represents a fraction of what the seller is investing in the restoration of the property – $431,000 in all, including $75,000 from NeighborWorks’ partner in the project, the city of Woonsocket.
As NeighborWorks Construction Supervisor Paul Brais observed, “Somebody is going to get a really good deal.”
“The market is nuts,” said Brais, who wouldn’t be surprised if the true post-renovation market value of the house is close to $300,000.
All of the funding for the project originates with the federal bureau of Housing and Urban Development. During a recent tour of the property, Mayor Lisa Baldelli-Hunt, accompanied by Planning Director Scott Gibbs, said the city’s share comes from HUD’s HOME program, a pool of funds restricted for use in creating housing opportunities for under-served segments of the market.
While Baldelli-Hunt has long advocated razing neglected properties to eliminate blight, a better option with a neglected house like 542 Front St. is to save it, she said. It if were torn down, the housing units that are lost can’t be replaced because the lot it sits on is prohibitively small for new construction under the existing zoning regulations.
But rehabbing it will put an affordable property up for home ownership, promoting additional investment in the Front Street corridor, an area that defines urban blight as much as any other in the city.
“The more we can build small, affordable properties and create home ownership – that’s pride in ownership,” said Baldelli-Hunt. “It’s yours and you feel very proud.”
Owner-occupants of their homes have a stake in taking good care of them, behavior that “almost has like a contagion” effect on neighboring property owners, she says.
Gibbs said the project will provide housing inventory for a segment of the market that middle- to low-income shoppers are increasingly shut out of these days. Gibbs said sellers are fetching juicy premiums over market price because housing inventory is depleted and demand is high.
Interest rates may be favorable for home-buyers and prices may be attractive to sellers, but the inventory remains low partly because existing owners are loathe to relocate in the current market. They know that if they sell their homes they’ll end up shopping for another that carries a premium similar to their own.
To accommodate the demand, it’s necessary to build more housing, but that’s not going to happen until the economy creates more jobs, says Gibbs.
“Home ownership is a problem, even for the middle class,” said Gibbs. “Here we are using federal money to rehab a blighted building in this neighborhood, a house that’s vacant and deteriorating.”
Bill Lewis, the co-director of real estate development for NeighborWorks, said the agency’s share of the investment also comes from HUD. It is funneled to NeighborWorks through the Rhode Island Office of Housing and Community Development.
NeighborWorks owns the house, which it acquired from Chase Bank after a foreclosure in 2013, and the dwelling has been vacant since at least that time. Built in 1920, the home became something of a magnet for vandals and trespassers after the foreclosure.
NeighborWorks tried to make it seem less vulnerable and abandoned by commissioning some colorful, cartoon-like paintings of rabbits, birds and other creatures on heavy-duty plywood to place over the windows several years ago. Some of them are still there, giving the forlorn-looking structure a bit of unexpected flair.
“This particular property has been an eyesore and it had its troubles,” Lewis said. “One way of helping the community is investing in the community instead of dragging down the neighbors.”
A prolific developer of affordable housing with a track record that dates back decades, NeighborWorks is plugging away at shoring up property in the Front Street area, one house at a time. Directly adjacent to 542 Front St. is another house the agency rehabbed and sold, and the property stands out as a spiffy exception to seen-better-days tenements that line the main drag.
It’s hard to imagine a self-funded, private developer sinking $430,000 into a house that will be offered for less than half that, but NeighborWorks says much of the investment represents construction choices needed to gain an Energy Star rating for the property. The heating system, the insulation and other features of the house will all be state-of-the-art for energy efficiency.
Abatement of asbestos and lead in the existing dwelling – work that was recently completed – were also relatively pricey items on the construction checklist.
Already gutted down to the studs, the project will be finished by the end of next summer, at which point NeighborWorks will begin promoting the availability of the property via random lottery. In keeping with HUD regulations for low- to moderate- income home buyers, participants in the lottery may qualify only if they earn no more than 80 percent of the Area Median Income, which is $69,900 for a family of four, according to Meghan Rego, communications director for NeighborWorks.
Although the city held a drawing for a multifamily house that it rehabbed through its Office of Planning and Development about a decade ago, Rego said it’s been 25 years since NeighborWorks has sold a house in that manner.
In addition to meeting the HUD income guidelines, lottery participants will be required to pre-qualify for financing, a process NeighborWorks can help with if necessary. Prospective buyers of the two-family will be able to show the income from a potential tenant to boost their chances of making the cut for bank financing.
“Being able to maintain ownership of it as a two-family, that’s also going to be helpful,” says Baldelli-Hunt.
When it comes time to pick the owner of the property, NeighborWorks has promised Baldelli-Hunt the honor of pulling the winner’s name from a hat. That was news to Baldelli-Hunt, who found out for the first time when she arrived for the tour of the premises on Oct. 15.
It may be a mixed blessing, in a lopsided sort of way. More than a few people are bound to be disappointed by the result.
But there’s an upside.
“It’ll make one person very happy,” she quipped.
Follow Russ Olivo on Twitter @russolivo