LOUISVILLE, Ky. — On Monday, Louisville Mayor Craig Greenberg announced the launch of a program to turn foreclosed homes into affordable housing.
According to the city, many vacant and abandoned homes have thousands of dollars in liens as a result of regular code enforcement activities through Metro’s Department of Codes & Regulations.
They say a significant number of these properties are presumed to be abandoned. Currently, the city uses legal tools, such as foreclosure, to collect the fines and facilitate the return of the properties to responsible ownership.
However there are instances when an owner or heir can be contacted, but due to liens placed on the property, they are not in a financial position to sell or rehab the home.
For those homes, the city says their new pilot program can make a difference.
The Affordable Housing Lien Forgiveness Pilot Program will:
- Create homeownership opportunities throughout the Louisville Metro area for low-to-moderate income families;
- Revitalize neighborhoods that are being harmed by vacant and abandoned properties;
- Provide an opportunity for residents to unlock the value of a home they may have inherited and cannot afford to maintain; and
- Support local homeownership and generational wealth building by preventing out-of-state developers from buying these properties.
The goal for this program is to create newly renovated, affordable homes and support the redevelopment of vacant and blighted residential structures through the forgiveness of code enforcement liens.
“Affordable housing is one of the pillars of our administration’s goal to promote a safer, healthier, and stronger Louisville. This new program is another essential step toward our goal to create 15,000 affordable housing units across our city,” Greenberg said. “As we created the ‘My Louisville Home’ plan, one of the strategies we identified was to implement a lien forgiveness program. This will relieve the financial burden for families looking to sell a property and remove a costly barrier for buyers looking to redevelop a home.”
To qualify for the program, applicants must be Kentucky residents or registered Kentucky businesses that are majority-owned by Kentucky residents. Additionally, applicants must meet the following criteria:
- All other debt attached to property must be settled, including delinquent property taxes.
- The applicant must have a plan of rehab, budget, timeline, and proof of funds.
- Property must be considered vacant for one year by the Department of Codes and Regulations.
- Rehab must take place within a one-year timeframe.
- The applicant must either occupy the home as their primary residence or agree to sell or rent the property to an income-eligible household.
- If selling, property must be sold at or below a home-value limit determined by the U.S. Department of Housing and Urban Development (HUD).
- If renting, property must be rented at or below HUD-determined allowable rent limits for a 10-year period.
Each application will be reviewed on a case-by-case basis, and checks are put in place to ensure compliance. This includes the timely completion of repairs and properties are rented or sold to income-eligible households.
The Office of House and Community Development (OHCD) will be responsible for implementing the program. OHCD Director Laura Grabowski says this program can be one step toward transforming neighborhoods.
“There are more than a thousand vacant and abandoned homes across the city, with most concentrated in west Louisville neighborhoods. We have witnessed firsthand how one rehabilitated home can uplift the neighbors around them,” Grabowski said. “This program supports more homeownership for low-to-moderate income families, creates generational wealth, and promotes reinvestment in neighborhoods. By taking boarded-up, empty homes, and bringing families back, communities will be improved and revitalized.”
Many of the vacant and abandoned properties are in areas that were impacted by redlining, which means that some homebuyers could be eligible for REVERT program funds.
REVERT was approved by Metro Council in 2022 to provide homeownership opportunities for families disproportionately impacted by redlining in previously redlined areas. The Louisville Affordable Housing Trust Fund is still accepting applications for the REVERT program.
Down Payment Assistance (DPA) is another important program operated by Louisville Metro’s Office of Housing and Community Development.
DPA provides low-to-moderate income homebuyers with down payment and closing cost assistance in purchasing a home in the Louisville Metro area.
The lien forgiveness program is expected to launch December 2, and the pilot will consist of approximately 100 homes.
There is a path forward for homeowners facing liens that don’t qualify for the pilot.
They can contact the Louisville Metro Office of Management and Budget to go through the standard lien reduction/waiver program. Owners may also request property tax payment plans through the Jefferson County Attorney’s office.
For more information about the Affordable Housing Lien Forgiveness Pilot Program, visit the Office of Housing and Community Development’s website.
For more information about REVERT, visit the Louisville Affordable Housing Trust Fund page.