Housing Acquisition and Rehabilitation Program

The Round Lake Beach Village Board was involved in every step of the HARP program. The Board first had to pass a resolution to purchase each home and later to authorize the expenditure of funds for renovation. The Board also authorized the sale of each home. The Board reviewed expenditures, closing costs, loan interest rates, sale prices, and net profit, all of which the Village Administrator assembled. There were six important components to Round Lake Beach’s HARP program:

• Database: The Village created a database of vacant properties, flagging those that fit the category of substandard foreclosures in which the private market had shown no interest. Village building inspectors continually updated the database to reflect new foreclosures and new Village acquisitions. All homes acquired had to be vacant, and the Village prioritized acquisition opportunities. Those for which acquisition, demolition, or rehabilitation would bring the most benefit to the Village or a given neighborhood — such as fixing severe blight on a block— rose to the top of the list.
• Industry professionals: A banker, real estate agent, and general contractor worked with Village staff to help maintain the database and handle sales.
• Market analysis: The Village worked with a general contractor to develop a market analysis of potential acquisitions. This included the physical condition, minimum market value after renovation, amount of six months’ interest (the typical timeframe from purchase to sale), and closing costs. Following the economic downturn, Round Lake Beach focused much of its efforts on acquisition and demolition of vacant and troubled properties. The Village primarily acquired very low-cost homes in the $10,000–$25,000 range, demolished them, and held the properties for future redevelopment.
• Additional resources: If the cost of a house, including purchase and rehabilitation, exceeded the minimum assessed resale value, the Village could apply for a grant of $15,000 per house ($105,000 total available annually from Lake County). The HARP program applied Community Development Block Grant (CDBG) and HOME funds toward the program, as well as resources from the Lake County Affordable Housing Commission. The Village also drew money from its revolving loan fund (RLF). Some houses, even with the affordable price requirement, sold for more than the purchase price and renovation costs. Money above the loan amount fed the RLF, which was used only for HARP rehabilitation efforts.
• Pacing: The Village made a determination each year on the number of homes for acquisition, demolition, or rehabilitation based on the market. A line of credit from First State Bank dictated the number of HARP projects the Village administered at any one time.
• Affordability: Homes in the program were deed-restricted and remained affordable for five years under CDBG guidelines. Information and counseling on the availability of low-cost loans and grants for eligible homeowners were provided to homebuyers through the program.

The definition of affordability was based on grant specifications from either the U.S. Department of Housing and Urban Development (80 percent of Area Median Income) or the Lake County Affordable Housing Trust Fund (100 percent of the Area Median Income), depending on the grant type used.

In 2005, Round Lake Beach established a partnership with the Affordable Housing Corporation of Lake County at the urging of Lake County officials. As a nonprofit organization, the Affordable Housing Corporation lent additional resources and capacity to the HARP program. As part of the national foreclosure settlement, the Affordable Housing Corporation had an opportunity to continue its work with Round Lake Beach through a grant from the Illinois Attorney General’s Office.