Indiana Blight Elimination Program Impact Report
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Indiana Blight elimination research

About the Research

WHY WAS THE STUDY CONDUCTED?

​The purpose of this research report  is to examine and evaluate the impact of Indiana’s Blight Elimination Program on stabilizing property values and reducing foreclosures. The housing crisis and the Great Recession led to unprecedented home price declines and high unemployment throughout the country. As a result, in 2010, the Obama Administration created the Hardest Hit Fund (HHF), offering innovative ways to help families stay in their homes or otherwise avoid foreclosure in states experiencing the greatest impact of concentrated economic distress. Specifically, the HHF was developed to 1) assist struggling homeowners, 2) help prevent avoidable foreclosures, and 3) stabilize housing markets.
 
Eighteen states and the District of Columbia were chosen, either because they were struggling with unemployment rates at or above the national average or facing home price declines greater than 20 percent since the housing market downturn (United States Department of the Treasury, 2021). The HHF awarded $7.6 billion to the states and the District of Columbia in areas designated “hardest hit” based on the established criteria of steep home price decline and/or severe economic downturn. Each state was directed to develop locally tailored programs, administered by the state’s Housing Finance Agency (HFA), to address foreclosures and housing stability in hardest hit areas (United States Department of the Treasury, 2021). Map 1 illustrates the 18 states along with the District of Columbia, which were awarded HHF allocations. The states include: Alabama, Arizona, California, Florida, Indiana, Kentucky, Illinois, Michigan, Mississippi, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, and Washington, D.C. 

Map 1. States allocated HHF Dollars

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Source: The United States Department of the Treasury. (2020, December). Hardest Hit Fund: Fourth Quarter 2020 Performance Summary.

As part of their directive, state HFAs have implemented several different programs, including mortgage payment assistance, reinstatement, short sale/transition assistance, principal reduction and modification assistance, down payment assistance, and blight elimination programs. According to the United States Department of the Treasury, the housing market strengthened; however, there was still an ongoing need to assist homeowners and neighborhoods continuing to experience negative effects from the financial crisis. As a result, on February 19, 2016, the US Department of the Treasury announced an additional $2 billion allocation to HHF, for a total allocation of $9.6 billion (United States Department of the Treasury, 2021). As of December 31, 2020, in the aggregate, states have disbursed $8.7 billion in total program and administrative funds of the $9.7 billion allocated from the US Department of the Treasury (United State Department of the Treasury, 2021). States are required to finalize any decisions with respect to underwriting homeowner assistance or blight elimination projects by June 30, 2021.

Chart 1. HHF Program Allocations Q4 2020

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Source: The United States Department of the Treasury. (2020, December). Hardest Hit Fund: Fourth Quarter 2020 Performance Summary.
​Of the 18 states and the District of Columbia receiving HHF dollars, seven have allocated funding to implement blight elimination programs (Fee, 2017; The United States Department of the Treasury, 2020).  The purpose of the Hardest Hit Fund Blight Elimination Programs (BEP) or Blight Reduction Programs (BRP) is to decrease preventable foreclosures and stabilize neighborhoods by strategically targeting those residential areas with vacant and abandoned blighted residential properties in need of demolition and greening (United States Department of the Treasury, 2020). An estimated $776.9 million is allocated for blight elimination in the seven states. The following table and chart show the states participating in the HHF which have blight elimination programs. This study analyzes the impacts of HHF’s Blight Elimination Program (BEP) efforts in the state of Indiana.
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As of December 31, 2020, HHF blight elimination programs disbursed an estimated 92% of the total funding allocation ($714.1 million of $776.9 million) and have demolished and greened 45,063 blighted properties (United States Department of the Treasury, 2020). Indiana ranks third, behind Michigan and Ohio, in terms of funding dollars allocated for blight elimination programs (26.4% of Indiana’s total HHF funding) (The United States Department of the Treasury, 2020). As part of Hardest Hit Fund, Indiana was allocated $283.9 million and committed approximately $75 million on behalf of its INBEP program participants. According to the Indiana Housing and Community Development Authority (IHCDA), the state agency in charge of distributing the funding, Indiana has disbursed approximately $49.8 million of its blight elimination allocation as of the fourth quarter of 2020 (Indiana Housing and Community Development Authority, 2021). 

Table 1. HHF & BEP Allocations by State

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Source: United States Department of the Treasury. (2020). Hardest Hit Fund Program Allocations: State Expense Allocations.
Indiana’s moving towards the end of its blight elimination program term.  At the conclusion of the fourth quarter of 2021, there were an estimated 3,332 completed interventions encompassing 42 of Indiana’s 92 counties. According to IHCDA final blight intervention claims are anticipated to be submitted by the end of June 2021 (Indiana Housing and Community Development Authority, 2021).   

References


Methodology

HOW WAS THE STUDY CONDUCTED?

The research team's primary strategy to measure the Indiana Blight Elimination Program (INBEP) impact relies on a comprehensive model examining differences in property sale and tax assessment values before and after program implementation. The magnitude of this difference before and after implementing the BEP intervention strategy [1] is compared. This difference-in-differences in home sales/property values is a measure of the impact Indiana's Blight Elimination Program (INBEP) intervention strategies have on neighborhoods.

WHERE DID THE DATA COME FROM?

​The Indiana Blight Elimination Program research study required data sharing and cooperation among the Indiana Housing and Community Development Authority,  the Indiana Department of Local Government Finance, the Indiana Gateway open data portal, and RealtyTrac ATTOM datasets. 

[1] For the purpose of this study BEP intervention strategies refer to the demolition of blighted structures and the greening, adaptive re-use, or end-use of the blighted property.

**Disclaimer: The first INBEP awards were made in February 2014 with the first demolitions occurring afterwards in Q2 2015. Blight Elimination Program participants were selected through an application process open to all Indiana communities.  The final program awards were made in January 2017.   The program demolitions concluded in December 2020.  As of December 2020,  there were over 3,000 demolitions completed.  IHCDA Staff anticipate demolitions will continue through February 2021. The Sagamore Institute’s review of INBEP is on-going.  In conjunction with figures and data provided by IHCDA and other sources, statistical analysis relies on the availability of data provided by the Indiana Department of Local Government Finance (DLGF) and RealtyTrac ATTOM Data. The DLGF data is updated on an annual basis and RealtyTrac on a quarterly basis. The figures and statistical analysis available on this site will be updated quarterly. The current analysis available at www.inbep.org reflects the data available through December 31, 2020.  

*NOTE: 
INBEP Intervention treatments: Blighted and/or vacant properties that were demolished and greened as part of the Indiana Blight Elimination Program.
Treatment Area: Area within a 500-foot radius from an INBEP Intervention treatment.
Control Area: Area outside the treatment area but within a 1500-foot radius of an INBEP Intervention treatment.
Study Area: Combination of both the treatment and control areas.
Pretreatment Phase: Occurring BEFORE the implementation of the first INBEP Intervention. 
Posttreatment/ Treatment Phase: Occurring AFTER the implementation of the first INBEP Intervention. 
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