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New Initiative Aims to Increase Homeownership in Student Neighborhoods

by on May 30, 2014 6:00 AM

The make-up of neighborhoods near Penn State's campus could change in the coming years.

Officials are executing a program intended to increase homeownership in areas with high student populations.

Last month, State College Borough Council agreed to provide collateral for a $5 million line of credit, which allows the Redevelopment Authority (RDA) to move forward with its homeownership initiative.

Under the Homestead Investment Program, the RDA will buy and resell properties within a half-mile of University Park to diversify neighborhoods and expand opportunities for home ownership.

The RDA says the goal is to obtain homes traditionally rented to students and other rental homes by converting them back into owner-occupied housing. The RDA will buy the homes through the open market and then resell them after creating restrictive covenants requiring owner-occupancy.

The goal is not to turn a profit, says RDA Chair Sally Lenker, who is also a real estate agent for Coldwell Banker. Instead, she says it will likely address growing nuisance issues among college students – such as noise, littering, public urination and vandalism – while giving professionals and families an opportunity to live close to campus and the downtown area.

The State College project is similar to other efforts in other college towns, such as a 2012 initiative by West Chester Borough Council in Chester County, which included approving an ordinance limiting the number of students residing in the borough's downtown area. West Chester is home to West Chester University of Pennsylvania.

Students are not included in the Fair Housing Act, a federal law that prohibits discrimination in the sale, rental, and financing of housing based on race, color, national origin, religion, sex, familial status and disability.

The RDA developed the project, under the leadership of former chair Carl Hess, after neighborhood associations, like College Heights and Holmes Foster, asked the RDA to develop a solution to rowdiness attributed to students.

Under the plan, the RDA will buy homes in areas with high student populations as they go on the market and in turn decrease the number of rental properties in a neighborhood.

The RDA's budget ranges between $150,000 and $400,000 per home.

In an attempt to evenly distribute the purchases among local real estate agents, the RDA met with the Centre County Association of Realtors and plans to use a list of real estate offices who have sold a property in the borough within the last year. When the RDA finds a property it is interested in, Lenker says the RDA will contact the next broker of record on the list who will then assign the property to a real estate agent with experience selling homes in the borough.

"We need an experienced realtor, who is experienced in State College, to work with us to purchase property," says Lenker. "With the realtor working on our behalf then we're sure appraisals and home inspections will be done to determine feasibility of purchasing that property."

When the RDA re-sells a home it will include a deed restriction saying for 99 years the home must remain owner-occupied. The owner will only be allowed to rent out the property for one year at a time with the borough's approval under unique circumstances, such as military leave, illness or professional sabbatical.

As students leave the borough limits for newer, more inclusive housing options with amenities like pools and free bus passes, Lenker says the RDA's plan will provide prospective homeowners with more options in downtown State College.

"Many people like to live in the confines of the borough where they can walk to campus, walk to the Bryce Joran Center, walk downtown," Lenker says. "The benefit is they have that opportunity now, where in the past they might have been forced to move out further because there aren't that many properties for sale in the borough."

Additionally, the RDA says the program may expand the borough's Earned Income Tax base under the belief that many students use their permanent address, not their local address, for tax purposes.

Lenker says the project will not immediately change neighborhoods, but is instead a long-term plan.

"This is not happening overnight. This is a plan put in place for perpetuity," Lenker says.

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Jennifer Miller is a reporter for StateCollege.com. She has worked in journalism since 2005. She's covered news at the local, state and national level with an emphasis on crime and local government.
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