Mundelein officials are teaming with a nonprofit suburban agency to rehabilitate dilapidated homes in town.
Under an arrangement approved last week by the village board, the Affordable Housing Corporation of Lake County can borrow up to $100,000 from Mundelein to purchase local homes that the organization then will fix up and resell.
The loans are interest-free as long as they're repaid within 12 months. After that, the annual interest rate is 6 percent.
Fixing up the homes helps maintain a positive image for Mundelein, officials said. The effort also enhances the quality, safety and appeal of the village's residential neighborhoods.
"We get more investment in Mundelein, distressed homes are returned to productive use, property taxes increase and neighborhoods are upgraded," Assistant Village Administrator Michael Flynn told the Daily Herald in an email. "(And) AHC gets another source of funding to continue its mission."
Lisa Pugliese, the Libertyville-based housing agency's executive director, called the deal unprecedented in this area.
"It just shows a lot of foresight and commitment to neighborhood improvement in Mundelein," Pugliese said.
Formed in 1992, the housing agency has been busy in Mundelein, even before the loan program was developed.
It has purchased, sold and rehabbed 14 Mundelein houses in recent years, Flynn said. An additional house was bought and is being worked on now.
All of those homes are in the center of town. Most are in some of the village's oldest neighborhoods.
The extent of the renovation work has varied from house to house. Sometimes it's been significant, including the installation of new heating and cooling systems, and foundation repairs, Flynn said.
Some houses have required kitchen and bathroom remodeling, painting and flooring work.
Most of the houses were acquired by the agency with money from a federally funded effort called the Neighborhood Stabilization Program. It was created in 2008 as part of the U.S. government's effort to address the national mortgage crisis, Pugliese explained.
That cash was limited to neighborhoods hardest hit by foreclosures and those that had the largest number of subprime loans, factors that led to the crisis and plunged the nation into a recession.
The new program encourages similar purchases of properties anywhere in Mundelein, not just in the zones targeted by the national effort, Flynn said.
According to the arrangement, village officials will suggest foreclosed, abandoned or dilapidated single-family homes to the agency for possible purchase.
The group will evaluate the affordability of those properties and others selected by its staff, the deal states, as well as the viability of "timely rehabilitation and resale."
Mundelein Trustee Terri Voss is a big proponent of the effort.
"It's a fabulous program," Voss said. "It will help us to get rid of homes that are blighted and otherwise unpleasant."
The village's 2013-14 budget includes $100,000 for the program.
The average price of the homes acquired by the agency in Mundelein is about $85,000, Flynn said, and it takes the group between six and nine months to rehab and sell a home.
That means the loan program likely will allow the agency to purchase one or two homes a year, Flynn said.
Unlike people who have turned buying and selling houses into careers, the agency doesn't make a bundle on the homes. It cannot sell a house for more than the purchase price plus the cost of repairs.
The average selling price for the Mundelein properties is $136,900, the housing agency said.
Plus, the project isn't just about flipping real estate.
Homebuyers receive financial management training as part of the program. And with the home prices set relatively low, it opens the market to people who might not otherwise have been able to afford to purchase homes, Voss said.
"In Mundelein, we embrace the fact that homeownership is affordable to most people," Voss said.
Pugliese hopes the program will lead to similar financial arrangements in other Lake County towns.