Gov. Beshear announces $5M award to Covington

Governor Steve Beshear issued this press release today:

COVINGTON, Ky. – Gov. Steve Beshear today announced that the city of Covington has been awarded $5 million from the Neighborhood Stabilization Program (NSP) to help combat the area’s high percentage of foreclosed and abandoned homes in the wake of the country’s economic crisis.

Joined by Virginia Peck, director of Community Planning and Development Division for the U.S. Department of Housing and Urban Development (HUD) Louisville Field Office, Gov. Beshear said the emergency assistance will allow the city to acquire, rehabilitate and sell foreclosed properties that might otherwise become sources of abandonment and blight within their communities.

“Many areas across the Commonwealth have suffered from the effects of foreclosures and declining property values, but Covington has been especially hard hit,” said Gov. Beshear. “The city has put together a great plan to help clean up communities, put families back in these abandoned homes and stabilize neighborhoods and I’m pleased to support them.”

Kenton County has the second-highest need in the state behind Jefferson County, based on the number or percentage of foreclosures, subprime mortgages and mortgage defaults and delinquencies.

According to Covington Mayor Denny Bowman, there is no question these funds will have a positive impact not only on the most severely affected communities, but the ripple effect will be felt in all 18 neighborhoods of the city.

“We’ve seen a reduction in the enrollment of our city schools in excess of 1,000 because families are losing their homes, being forced to move in with relatives or go elsewhere. This affects economic growth and job opportunities,” said Mayor Bowman. “These NSP funds will help put these homes back on the market, bring back the residences and students, create opportunities for jobs, boost small locally owned businesses and eliminate blight.”

The mayor said the investment of dollars will also boost the local economy through the purchase of building supplies and create skilled and unskilled jobs to assist with the renovation and new construction.

Kentucky’s NSP total statewide allotment of $37.4 million is funded through HUD’s Community Development Block Grant Program under the Housing and Economic Recovery Act of 2008. The program, administered by the Department for Local Government (DLG), received more than $115 million in applications statewide.

“We know there were many applicants for such a limited pool of money so we are very grateful to Gov. Beshear and DLG for supporting our efforts,” said Mayor Bowman. “And we’ve always maintained a great relationship with HUD so we’re anxious to get our plan underway.”

Once the city purchases and makes any necessary repairs to foreclosed homes, families with a household income not exceeding 120 percent of the area median income may buy, or in some cases rent them, at a reduced rate. The NSP plan seeks to protect potential buyers by requiring that they obtain a mortgage loan from a lender who agrees to comply with sound lending practices. Homebuyers must also receive at least eight hours of housing counseling from a HUD-approved housing counseling agency.

Covington intends to contract with Catholic Charities and Brighton Center to provide training on the process of purchasing a home, available mortgage products and developing and maintaining home budgets. Under the program’s guidelines, a family of four in Kenton County with a combined income of up to $83,050 will be eligible.

Congress has directed that these grant funds be obligated for specific activities within 18 months.