Project Summary
The City of Hazel Park, like so many other communities across the United States, has been ravaged by the current housing foreclosure crisis. Approximately eight percent of Hazel Park’s housing stock is now, or recently has been, in foreclosure. The foreclosure crisis has resulted in a loss to property values, generating less revenue for
Hazel Park’s already financially strapped treasury. The foreclosures have also created a severe blight problem.
In order to address this situation, the City of Hazel Park has initiated a multipronged approach called the Neighborhood Improvement Action Plan (NIAP). The NIAP consists of four components including 1) utilization of funds from the Department of
Housing and Urban Development’s (HUD) Neighborhood Stabilization Program, 2) development of a partnership with the Oakland County Community Development
Department called “Oak Street” that will assist current homeowners with keeping and improving their properties, 3) utilize the HUD Dollar Home Program to acquire foreclosed homes and provide low-cost housing to persons willing to invest sweat equity in repairs, and 4) improve operations of the City of Hazel Park’s Code Enforcement Department through increased ticketing of violators, as well as inventorying and tagging vacant structures in order to cope with the foreclosure crisis
To date, each of these programs have been, or are in the process of being, implemented. Implementation of these programs and the subsequent evaluation of their effectiveness, as well as recommendations for the future, shall constitute the
Capstone Project for Edward Klobucher and Sharon Pinch to be submitted in partial fulfillment of the requirements for completion of the Certified Pubic Manager Program.

Certified Public Manager Program
Saginaw Valley State University
Certified Public Manager Program Capstone Project
Addressing the Foreclosure Crisis in the City of Hazel Park
Submitted by: Sharon Pinch and Edward Klobucher
_____________________________
Sharon Pinch
______________________________
Edward Klobucher

Problem Statement
The City of Hazel Park has one of the highest rates of local foreclosures for single-family housing units in Oakland County. Approximately 8% of the single-family homes in Hazel Park are, or have recently been in, foreclosure. According to statistics provided by Oakland County (2008), the average rate of sub-prime loans in Hazel Park is
42%; this is the highest rate in Oakland County. The City of Hazel Park is projected to experience one of the greatest decreases in residential property assessments (-14%) in
Oakland County for 2009. The foreclosure crisis has the potential to destabilize Hazel
Park’s neighborhoods and slash revenues from property taxes in an already challenging fiscal environment.
Analysis of the Problem
Hazel Park Michigan is a mature, fully developed inner ring suburb of the City of
Detroit. Incorporated in 1942, and approximately 2.8 square miles in size, Hazel Park has historically been populated primarily by working class families employed by firms related to the auto industry. Hazel Park’s housing stock consists primarily of older, affordable single-family homes around 1000 square feet in size. It is a full service community with its own police, fire and public works departments. Hazel Park is also home to the State of Michigan’s largest horse racing track, the Hazel Park Raceway, which occupies approximately 10% of Hazel Park’s geographic area.
Beginning in the mid 1990s, the City of Hazel Park experienced a sharp increase in housing prices, with values climbing on average at a much faster rate than in other
Oakland County communities. While these property value increases were a boon for
Hazel Park property owners, the value improvements amounted to very little in additional revenue for the City of Hazel Park due to the interaction between two voter-

approved constitutional provisions, the Headlee Amendment and Proposal A. In 2006,
Hazel Park voters approved a Headlee override millage adding 3.4 mils to the property tax levy in order to maintain city services.
While housing prices were climbing in Hazel Park, prices were also climbing across the country. Fueled by subprime loans and predatory lending practices, the bubble created by the overheated housing market burst in 2007, causing the bottom to fall out of home prices across the country. Like homeowners across the country, homeowners in Hazel Park suffered dramatic reductions in property values. At the same time, Michigan’s already weak economy was devastated by the dramatic decline in
Michigan’s auto industry. Many Hazel Park homeowners found themselves owing far more money on homes than the homes were worth. As a result, many property owners simply stopped making payments and allowed their properties to go into foreclosure.
The foreclosed properties accelerated the decline in property values, caused blight in neighborhoods, and became attractive nuisances for criminal behavior.
Stabilizing Hazel Park’s neighborhoods will require the cooperation of all stakeholders involved, including city residents, local businesses, municipal government and its employees, and the Hazel Park School System. Governments at the county, state and federal levels also have an obligation to assist and an important role to play in providing resources and expertise.
Project Findings
While the Neighborhood Improvement Action Plan (NIAP) has the potential to mitigate some of the negative impact that the national foreclosure crisis has had on the
City of Hazel Park, it is not a panacea. Obviously, no such “magic wand” solution exists.

The NIAP is a realistic set of policy goals and objectives that has already demonstrated some positive outcomes and achieved some measureable results.
The NIAP consists of four components: 1) utilization of funds from the
Department of Housing and Urban Development’s (HUD) Neighborhood Stabilization
Program, 2) a partnership with the Oakland County Community Development
Department called “Oak Street” that will assist current homeowners with keeping and improving their properties, 3) the HUD Dollar Home Program to acquire foreclosed homes and provide low-cost housing to persons willing to invest sweat equity in repairs, and 4) improving operations of the City of Hazel Park’s code enforcement department in order to cope with the foreclosure crisis and protect the integrity of the neighborhoods.
The Neighborhood Stabilization Plan, although hampered by delays on the part of the federal government, has been useful in helping to acquire blighted and vacant properties. The Oak Street Community Fair was extremely well attended and county leaders have kept their promises to remain engaged with the City of Hazel Park. Hazel
Park continues to participate in the HUD Dollar Home Program. Several dilapidated homes have been purchased and renovated by the new owners.
Alternative Solutions
A new component of the NIAP involves the selection of the Hazel Park School
Districts as a Promise Zone by the State of Michigan. The Promise Zone designation allows the Hazel Park School district to capture revenue increases from the State education fund’s share of property taxes in the school district after certain fundraising requirements are met. The Promise Zone would guarantee college education to any student residing and attending school in the district. The City of Hazel Park’s leadership is working closely with the School District’s administration to ensure a successful

program. Because of the tremendous added value of a free college education, this program has the potential to rapidly spur a rebound in promise zone property values.
Analysis of Solutions
All components of the NIAP are on schedule and having a positive impact except for HUD’s Neighborhood Stabilization Program. While we believe this program continues to have value, there have been multiple delays in implementation due to the federal government’s inability to meet its own published timelines for funding. In order to address these issues, representatives from the City of Hazel Park have met with HUD,
Oakland County, and Congressman Sander Levin’s office. The City of Hazel Park has revised its timeframe for implementation and completion of the Neighborhood
Stabilization Program.
The City of Hazel Park also encountered delays in HUD’s Dollar Home Program.
After advertising the program to local governments, HUD abruptly terminated the law firm handling property management in Michigan. This resulted in a lengthy delay in acquiring properties. The delay became so problematic that several area communities jointly requested a meeting with Michigan’s congressional delegation and representatives from HUD. After the meeting was held, the new property management firm became more responsive to the local units of government.
In terms of improving Hazel Park’s approach to code enforcement, the City’s leadership determined that new ordinances were necessary in order to address the magnitude of the problem. At our recommendation, the Hazel Park City Council passed a tough new vacant property ordinance requiring the owners of problem vacant properties to register with the City of Hazel Park and pay a monthly fee to help offset the City’s costs of coping with these problem properties.

Implementation Plan
City Manager Edward Klobucher and Assistant City Manager / City Clerk Sharon
Pinch have overall responsibility for the effective implementation of the program.
Klobucher and Pinch worked jointly to develop the components of the NIAP and assign implementation responsibilities to employees of the City of Hazel Park. A budget and a project timeline have been developed for each component of the program.
After the City of Hazel Park was notified of its eligibility for participation in the
Neighborhood Stabilization Program a timeline for completion was established in a manner consistent with the other NIAP components. Because NSP regulations required funds to be under contract within nine months after the start of the program, adhering to this timeline was expected to be especially critical. However, delays on the part of the Department of Housing and Urban Development required the initial timeline to be revised.
Estimated Cost of the Project
The United States Department of Housing and Urban development is providing funding for the Neighborhood Stabilization Program. The City of Hazel Park expects to spend all of the NSP funds ($1,658,863.41) that have been allocated for this project.
The funds are allocated as described below:
Purchase foreclosed homes: $653,000.00
Demolition of blighted properties: $ 80,000.00
Redevelopment: $625,000.00
Home rehabilitation: $300,863.41
The Oak Street Program has been funded primarily by Oakland County, with
Hazel Park incurring costs only for support functions such as staff liaison and support

functions. Hazel Park has expended less than $5,000 in staff time and ancillary costs to support this program.
The Dollar Home Program is self-sustaining. Funds earned from the sale of homes cover the staff time involved in implementing the program, and remaining funds are used to support the City’s code enforcement efforts and minor home repair program.
In the previous fiscal year, revenues in excess of $100,000 were used to support code enforcement and minor home repair. This year, the City of Hazel Park expects to use
$10,000 in revenue from the Dollar Home Program to provide supplementary funding for code enforcement and minor home repair.
The City of Hazel Park utilizes funding from the Federal Community Development
Block Grant program to cover most of the cost of the City’s Code Enforcement Program.
Revenues generated from the collection of revised fines and fees will provide additional funding for enhanced code enforcement operations, as will revenues from the aforementioned Dollar Home Program. The total budget for Code Enforcement and
Property Maintenance in Hazel Park is $559,213.
Implementation Solution
City Manager Edward Klobucher and Assistant City Manager /City Clerk Sharon
Pinch have worked cooperatively to develop and implement this action plan in order to stabilize Hazel Park’s neighborhoods and halt the decline in property values. The first component of the NIAP is participation in the Neighborhood Stabilization Program. As a participant in this program, the City of Hazel Park is eligible to receive $1,658,863.41 in funding assistance from HUD’s Neighborhood Stabilization Program (NSP) to address the foreclosure crisis in Hazel Park. Hazel Park receives these funds through Oakland
County via a sub recipient agreement. Hazel Park must receive funds through the

county because the city’s population is not sufficient to qualify as a direct entitlement community. The funds are strictly regulated and must be used only for projects deemed eligible by the Department of Housing and Urban Development.
The City of Hazel Park’s utilization plan calls for the use of NSP funds to purchase foreclosed properties with the intent to accomplish three goals. These goals include demolition of blighted homes, new single-family home construction, and rehabilitation of the existing homes.
1. Projected number of homes to be acquired: 33
2. Projected number of homes to be demolished: 13
3. Projected number of new homes to be constructed: 6
4. Projected number of homes to be rehabilitated: 20
To date, the City of Hazel Park has currently made progress to meet these goals by acquiring seven homes. Eighteen additional homes are in the process of being acquired. The City still plans to meet its stated goal of acquiring 33 homes, demolishing
13, constructing six new homes, and rehabilitating 20 homes.
The second component of the NIAP is the City of Hazel Park’s partnership with
Oakland County’s Department of Economic Development to design and implement the
Oak Street Program. Patterned after Oakland County’s highly successful Main Street
Program, Oak Street is a partnership between Oakland County and the City of Hazel
Park that allows the City of Hazel Park to utilize Oakland County’s extensive resources to help preserve Hazel Park’s neighborhoods. An extremely well attended event was held in Hazel Park on May 16, 2009 to introduce the program to Hazel Park’s residents. A variety of experts were on hand to provide Hazel Park residents with information on a variety of subjects including mortgage relief, home improvement loan programs, home

repair and Neighborhood Watch. The event has generated ongoing interest among
Hazel Park residents and prompted Congressman Sander Levin’s office to host a similar event on June 30, 2009. Both events were taped for play on the City of Hazel Park’s local cable television channel so residents have ongoing access to the information that was provided at the events.
The HUD Dollar Home Program has also generated positive results. To date, the
City of Hazel Park has acquired ten homes from HUD for the price of one dollar. These homes, which are frequently dilapidated and unfit for occupancy without repair, are then sold to persons at low price who are willing to invest the sweat equity in the home repairs and agree to live in the home for at least three years. Persons interested in purchasing a home must submit an application, and then prove eligibility based on income. Applicants are then ranked by a citizen’s committee, which makes the final determination in approving the applicant for a home purchase. All ten homes have sold, and eight are now occupied. The City of Hazel Park plans to continue to participate in this program.
The City of Hazel Park is also revamping code enforcement operations. The
Hazel Park City Council recently passed an ordinance requiring the owners of vacant properties to pay a monthly fee for each vacant property. All vacant properties in the city are now being identified and catalogued for follow-up action. The fee is intended to create a disincentive for investors to buy and hold vacant property. The city has also stepped up code enforcement operations, with code officers issuing an increased number of warnings and citations. The City of Hazel Park has addressed a record number of blighted properties, ordering the repair or demolition of 41 properties in the past year.

Evaluation of the Solution
On the whole, the Neighborhood Improvement Action Plan appears to be having the desired impact, although delays on the part of the U.S. Department of Housing and
Urban Development in implementing the Neighborhood Stabilization Program have had a negative impact on the overall progress of the NIAP. The City of Hazel Park had hoped to make faster progress in demolishing or renovating dilapidated foreclosed properties.
Unfortunately, NSP funding, which was scheduled to become available in January of
2009, was not available until late March. This delay meant that many properties previously evaluated and targeted for purchase by the City of Hazel Park were no longer available, requiring Hazel Park officials to expend additional time and resources evaluating a new set of properties.
From a quantitative standpoint, except for the initial delay in NSP funding, Hazel
Park is on target to meet the numerical goals established by the NIAP. Properties have been acquired through the NSP, and additional properties are in the process of acquisition. Professional service contracts have been procured in a manner consistent with federal guidelines. From a qualitative perspective, had the City of Hazel Park been granted more discretion for the utilization of funds for this program, it is likely the city would have taken a more holistic approach and utilized a portion of the funding to provide for the enhancement of basic city services in especially troubled areas.
Thanks to increased code enforcement operations, many dilapidated homes have been demolished or renovated. Hazel Park’s Building and Code Enforcement
Department is aggressively enforcing ordinances as evidenced by the increased number of warnings and citations that have been issued.

Hazel Park’s affiliation with Oakland County’s Oak Street Program has provided residents with multiple opportunities to avail themselves of educational resources in order to learn about governmental assistance programs and housing renovation skills.
Officials from Oakland County have committed to continue to support the City of Hazel
Park with resources and professional expertise.
Finally, the selection of the Hazel Park School District as one of ten Promise
Zones in the State of Michigan has the potential to provide mutually reinforcing assistance to the NIAP by adding value to Hazel Park’s housing stock.
To successfully complete this program, the program managers have been required to utilize several of the core public management competencies that are covered in the Certified Public Manager Program at Saginaw Valley State University. Skills utilized have included intergovernmental relations, knowledge of administrative law and due process, organizational management, public speaking, budgeting, and time management. Organizational management skills have played an especially critical role, as numerous municipal departments such as the city attorney’s office, the planning department, the building and code enforcement department, as well as outside contractors have been required to work in concert in order to implement the components of the NIAP.
The Neighborhood Improvement Action Plan remains a work in progress. The
City of Hazel Park will continue to measure outcomes and track statistics such as housing sales and prices, vacancy rates, the frequency of code violations, and the number of building permits issued. The City of Hazel Park remains open to new solutions and is prepared to implement new ideas and best practices as needed.

References:
Oakland County Department of Economic Development. 2008. Informational material for Neighborhood Stabilization Program participants. Pontiac, MI.