Low-Priced Merced Foreclosures Enable City Revitalization

by Simon Lindsay on Foreclosures

Low-priced Merced foreclosures are facilitating efforts to rejuvenate the city and revitalize its downtown areas. With lower property prices, it is easier for the city to acquire land and buildings for its plan of developing new high-density urban-style affordable housing in the central areas of the city.

The bargain prices of foreclosed properties will also rev up the acquisition of abandoned foreclosures that are causing blight in certain neighborhoods in the city.

According to Bill Cahill, assistant city manager for Merced, the plan to rejuvenate downtown Merced had been approved by the city council back in 2007, but it is only now that city officials are bent on carrying out the plan because of the opportunities in land and property acquisition.

The plan includes acquiring empty lots and dilapidated homes and reselling them to qualified developers at reduced prices so they can build affordable residential and rental units for low- to moderate-income families.

Daniel Ainslie, a coordinator with the Merced Redevelopment Agency, said that the RDA has already purchased eight lots and houses for $400,000 and is in the process of closing purchases of Merced foreclosures and other vacant properties worth $700,000.

Ainslie added that the downtown project is not a gentrification project because the residential units will be priced at levels affordable to low- and moderate-income households. One goal of the project is to convert renters into owners and reduce the 80-percent share of renters in downtown areas.

According to John Shirey, head of the California Redevelopment Association, downtown revitalization efforts like that of Merced are a great way to take advantage of lower-priced foreclosures for sale in California. Stockton, Modesto and Fresno, cities that have been clobbered by foreclosure properties, have launched similar projects in their downtown areas.

Shirey is encouraging other California cities to relaunch their deferred downtown redevelopment projects or craft new ones to take advantage of the lower prices of land and buildings. He added that the costs of materials have also leveled off.

The only roadblock for cities is the dearth of financing. Since the housing meltdown, lenders have been reticent in considering development loan proposals even if they are for public-private development projects.

California cities like Merced, however, that have received federal stimulus funds can develop projects that comply with federal guidelines and at the same time achieve goals of mitigating Merced foreclosures and redeveloping downtown areas.

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