By Benjamin Lanka
The Journal Gazette

A year after its groundbreaking, Renaissance Pointe suffers the same ills facing much of the nations housing industry.

Home sales have been slower than expected, and a tightened credit market has made it more difficult for people to buy houses, especially in a neighborhood where new construction is an anomaly.

Yet despite the problems, the transformation of the old Hanna-Creighton area is stark. The neighborhood looks more like a construction zone than a decaying century-old urban housing addition.

The city is spending close to $3 million to improve streets, sidewalks and sewers in the area bordered by Pontiac Street, Creighton Avenue, Oliver Street and Hanna Street. Private contractors have constructed model homes, even sold a few new homes, and workers are busy fixing 25 existing homes in the area with new siding, foundations and other amenities.

Byram Trice has lived on John Street for 16 years, just two doors from where his wife, Pecola, grew up. He is encouraged by the development after seeing family after family abandon the area, leaving vacant properties that often weren't maintained.

"I'm pretty excited about being able to have neighbors again," he said.

The change in the neighborhood comes from a public-private effort to revitalize one of the poorest areas of the city. While 13 percent of Fort Wayne residents fell below the poverty line in the 2000 Census, 50 percent of Hanna-Creighton residents are in poverty, the highest rate in the city.

Renaissance Pointe was a plan hatched years ago to focus city and federal resources in one especially needy neighborhood to transform it. The area's demographics made it eligible for an $8 million federal loan, which is helping finance the public portion of the work.

Chris Palladino, director of neighborhood development and finance for Mansur Real Estate Services Inc., said overall there has already been $7.2 million in public and private work done in the neighborhood. Fort Wayne has already demolished 60 vacant and abandoned houses in the area.

"I don't think any neighborhood, urban or suburban, has seen that kind of investment," he said.

Mansur is the master developer for the project and worked on a similar development in Indianapolis.

The early focus has been on the project's western side, especially on John Street, where the city and developers want to create a vision of how the entire 36-block area could look. Several model homes are already up on John from the three builders - Delagrange Homes, Ideal Builders and Lancia Homes - and the city has a welcome center there to provide information to prospective buyers.

Luring buyers

The key to any housing development is finding people to buy homes, and Palladino admits that has been a challenge. So far, only four contracts have been signed. The neighborhood has the capacity for up to 400 new homes and 100 rehabilitated homes.

"Everyone would love to see a lot more contracts at this point," Palladino said.

He said the initial hope was for the first phase of the project - consisting of 106 lots - to be built out in three to four years, but he said it will likely take slightly longer, given the poor housing market. There are two additional phases to the project.

Jim Lancia, president of Lancia Homes, said he was glad to be a partner in the project even if there hasn't been a lot of buying activity. He said it's a new concept in Fort Wayne for builders to work around older homes and to try to get people to move into the city's core, as well as for his company to fit homes on narrow urban lots.

"With these kinds of projects it takes a lot of time and effort to complete them," he said. "It's kind of a learning process for all of us."

Some contracts had to be canceled because buyers couldn't sell their older homes. In fact, Rachel Blakeman, public information officer for Mayor Tom Henry, is in that situation. The former Lancia employee declined to comment on the matter.

To find buyers, the development's marketing campaign has targeted renters and other first-time homebuyers. One of the promotional fliers begins: "It's time for a place of your own. Go ahead. Paint the walls orange."

To entice people to buy homes ranging from about $100,000 to $200,000, the city has offered a host of incentives. The first 10 market-rate homebuyers get a $5,000 down-payment grant, and there is up to $15,000 available for buyers earning less than 80 percent of the area median income, which is almost $50,000 for a family of four. Buyers can also file for a property tax abatement for their homes, saving them about $1,500 in the first year, and people can get a 1.5 percent discount on their mortgages from National City and Fifth Third banks.

Those incentives lured Jessica Coleman and her husband, Gerald, to Renaissance Pointe.

The couple with four children, age 7 months to 5 years, moved into their new home on John Street in late May. Coleman, 28, said she learned about the development when her husband interviewed for his current job at Fellowship Missionary Church in April 2007. Because she came from Rochester, N.Y., and he was from Chicago, an urban lifestyle appealed to them.

But the idea of building a home seemed to be too expensive for their means, she said, so they began searching for older homes throughout the city. Fate seemed to drive the couple back to Renaissance Pointe as one house deal after another fell through, she said.

Coleman said they eventually revisited the urban neighborhood and she learned about the numerous incentives available.

"When we broke down what the final payments could be, I thought 'Maybe we could afford this,' " she said.

Bridging a gap

Although she is pleased with her nearly 2,000-square-foot home, Coleman said the process of applying for and receiving the necessary incentives was trying. Because she was one of the first people to buy a home in the development, Coleman said it took a lot of negotiating to finally get the deal done.

One of the biggest problems encountered in Renaissance Pointe has been a gap between the home's sales price and what a bank believes it is worth. When someone agrees to buy a home on the open market and needs a mortgage, the bank will appraise the home to determine whether it's worth the loan amount. Those appraisals are typically based on similar home sales in the neighborhood.

Heather Presley, Fort Wayne's deputy director for Housing and Neighborhood Services, said because Renaissance Pointe is such a new development, comparable homes did not exist, making banks cautious to appraise the home for the full asking price.

For the first home bought, Presley said this amounted to a $30,000 difference. As more and more homes are bought, the gap should shrink, she said, because there now are a few comparable sales. The second home bought had a $15,000 gap.

That is why the city is offering a subsidy program for developers of up to $30,000 for the first 20 homes bought in Renaissance Pointe, Presley said. This means developers are given money from the city to cover what the bank won't with a mortgage. Presley said the city is using some of its federal money to finance the gaps, which she said are normal for these types of projects.

Coleman said she experienced a gap, which was eventually bridged, but it made her nervous buying a home for more than the bank said it was worth. Now, she is pleased with her home and the work being done in the area, despite skepticism from her friends in town about the project in the historically blighted area.

"I'm seeing it every day," she said. "They are doing what they said they were going to do."

Not just a city project

Finding buyers like Coleman is important, Presley said, because the homes are bought using private bank financing and private developers. She said some people think the city is the developer of the project and will make money available for unqualified buyers, but that is not the case.

Unlike the much-debated $130 million Harrison Square project, which includes an upscale condominium building and a public ballpark, the city's investment in Renaissance Pointe is fairly standard, according to Presley.

"We're not stepping outside of our traditional role of providing infrastructure," she said.

That is why it is so critical to find qualified buyers, Presley said, because banks - one would think - aren't going to lend to people who cant repay the loans. This creates a stable neighborhood of homeowners in an area that at one point was 70 percent rental homes.

And if it takes time for the neighborhood to develop - Presley projects the housing market to turn for the better in 2009 - the public isn't losing money. The public money for the project comes from economic development tax dollars for infrastructure and the U.S. Department of Housing and Urban Development. The city also is paying about $100,000 to the Asher Agency to promote the development.

The city plans to repay the $8 million advance with a variety of sources, including property taxes from people who buy new homes in the area, as the project qualified for a special housing tax increment finance district.

If sales of the homes are slow, she said the city will still have other revenues to repay the debt, including future annual federal money. Presley said the city is already looking to identify the next neighborhood to be targeted when Renaissance Pointe is complete.

Longtime resident Trice said he expects it to take awhile for the development to hit its stride, but in the meantime the program has provided him $40,000 to improve his front porch, roof, siding and foundation.

He said he hopes to see a mix of people, including children, roaming the sidewalks again.

The city gave out eight $40,000 grants to existing homeowners and still has $25,000 grants available to help revitalize the area.

"I'm looking for a diverse neighborhood here," he said. "That's the kind of neighborhood I grew up in."

Coleman said that because her family was not being steeped in the history of Hanna-Creighton, it probably helped sell her on the idea because she doesn't carry the prejudices against the area seen in many longtime city residents. She also said she hoped her family helped show others the area is vibrant, as the neighborhood is of special importance to her church.

"People tell us we live in a bad area," she said.

"It is a part of the church's mission to stay in the southeast. We're excited to be a part of that."