Desert Hot Springs Spends Big Bucks On Foreclosed Houses

In March, the city of Desert Hot Springs bought the three bedroom, two bath rundown foreclosed house for $84,150 using tax dollars: a grant through the Federal Neighborhood Stabilization Program.

It’s a billion dollar federal fund available nationwide.

Two weeks ago, the DHS City Council approved spending another $94,000 to fix the home up and sell it.

In the end, the city will likely spend twice the current property value. The city refinanced the loan with Riverside County for $211,000.

Jilline Holliday sells homes for Nextage The Mantelli Group in Palm Desert. She’s an expert here in the Coachella Valley. She’s trying to sell three homes in the same Desert Hot Springs neighborhood.

“It’s a huge waste,” she said. “There’s a lot of inventory 10 years newer and in a more desirable neighborhood.”

Neighbors want the house fixed up. It’s been vacant for months.

“That’s ridiculous,” said Cynthia Heth, a DHS resident. “It needs landscaping, but the inside is beautiful.”

The city received four bids from contractors to fix up the house. Three of them came in much lower than $94,000, but got rejected because those contractors didn’t fill out the paperwork completely. Nicol Construction in Desert Hot Springs won the project.

It will fix up the yard and install a fence. It will also install a new dishwasher for $1,700 and a refrigerator for $1,400.

Last but not least, the company will reface the kitchen cabinets for almost $18,000. The photos from the listing show the house appears to be in pretty good shape, appliances and all.

“We will only pay for the work done. We have to install energy-efficient appliances according to the program. We believe when we’re done we’ll have good house”, Desert Hot Springs City Manager Rick Daniels said. “That is just a do not exceed bid, we believe the actual cost will be less than half of the bid amount.”

He blames the high bid amount on the high efficiency appliances that have to be installed to comply with the program’s requirements.

Desert Hot Springs City Council member Russell Betts voted against the project. He’s the only one who did.

“We got to make sure we do this properly with taxpayer dollars it is important,” he said. “We’ve got to be good stewards of that.”

Months down the road, when it’s ready to sell, City Manager Rick Daniels hopes the city will only lose 5 to 10 thousand dollars.

“It’s gonna be in the low 90’s, even if it is an extreme remodel it will only sell in the 80s, 90s maybe low 100s.”

Desert Hot Springs has also bought 13 other properties. It must sell them by June 30, 2011, in order to comply with the program.

So far the city has received a $2.8 million from the taxpayer funded program.