“We’ve spent money on fixing up homes and helping people move into them,” Wyndham said. “But some houses just need to be knocked down.”
Demolition can cost $5,000 to $25,000, depending on factors such as the presence of asbestos or other hazardous materials. In the past, Brazil has used fees from building permits to demolish abandoned homes.
“But if you don’t have new building, you don’t have the money from those fees,” Wyndham said. “And if you have blighted neighborhoods, no one wants to build. It’s a vicious cycle.”
Local governments must apply for the blight-elimination money, and the process is competitive. Local officials can increase their changes by showing a property will be used for redevelopment or for community green space, or that it will be put up for sale to neighbors. State officials said there’s enough money for about 4,000 demolitions.
The program is funded through the federal Hardest Hit Fund, an offshoot of the Troubled Asset Relief Program. The fund was established in 2010 to help homeowners avoid foreclosure in states hit hardest by the 2008 recession.
Indiana received $221 million, primarily to help low- and moderate-income families avoid foreclosure. The state spent about $30 million of that Hardest Hit money by late last year, helping families with mortgage assistance payments. Another $63 million in mortgage assistance payments has been set aside for families currently enrolled in the program.
States with Hardest Hit funding have lobbied the federal government to use some of the money for demolition of abandoned homes. Houses left vacant through foreclosure, they’ve argued, rapidly deteriorate and pull down surrounding property values. The states made the case that eliminating blight helps reduce foreclosures by stabilizing an area’s property values.
Maureen Hayden covers the Statehouse for the CNHI newspapers in Indiana. She can be reached at email@example.com. Follow her on Twitter @MaureenHayden