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Tuesday, May 25, 2010

Bankrupt City Uses Federal $ To Outbid Private Home Buyers

Last week I chronicled the saga of Central Falls, Rhode Island, which has filed for receivership, the state equivalent of bankruptcy, under the weight of union contracts and debt, Has First Public Sector Union Domino Fallen?

Now it turns out that Central Falls has been using federal money to outbid private purchasers in order to acquire foreclosed properties. As reported by the local NBC affiliate:

One of the most financially troubled cities in Rhode Island—Central Falls—has been spending money to buy up foreclosed properties.

This story came to light when a real estate agent found out Central Falls was buying property. Bruce Gagnon said he offered his services for free to save the city the brokers’ fee.

But then he said he found himself bidding against the city for a property he wanted to save but that the city wanted to tear down.

Hundreds of homes in Central Falls have been foreclosed and boarded up.

Last year, five sellers got rid of their foreclosed properties by selling them to the city. The money to buy the homes came from federal taxpayers. It was part of a program to improve housing by tearing down foreclosed homes and rebuilding affordable units on the empty lots.

Surprise, surprise, it appears that the City overpaid for the properties it acquired using federal money, and there is a question of whether the purchases were intended to help friends of the Mayor:

The five properties sold for a total of $223,100, most within several thousands dollars of the asking price—a level that Gagnon said was unusual a year ago when the purchases were made and when he bought a foreclosed property for much less than the listed price....

Each of the properties was supposed to be bulldozed, but they are still standing. The city planner said demolition will take time.

But as soon as the houses were purchased, the city paid board-up fees of more than $29,000 to Mike Bouthillette, a friend of Mayor Charles Moreau.

Bouthillette had liens on each of the properties bought by the city, a total of more than $84,000 and none of the houses have been demolished.

Central Falls is a disaster at so many levels. The wasting of federal money is just the tip of the iceberg.

I said it before, if you want to see our future, come to Rhode Island.

Related Posts:
Rhode Island City Files For Receivership
Unions Pushing States Toward Broken Promises
High Taxes And Union Pensions Are Killing Rhode Island. Duh!

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1 comment:

  1. I wish we could find out the names of the people who owned those houses before the city bought them. Also, isn't there already a corruption scandal involving the CF mayor and his friend, Mike Bouthillette?