Money on the house

When Paul Desch and his wife, Beth, bought an old, boarded-up brick house in Pottstown's historic district two years ago, they got not just a home, but a deal.

The town lent him $5,000 merely for buying the house and $15,000 more for converting it back into a single-family home by ripping out an apartment. Best of all, the interest-free loans will become grants if the Desch family lives in the house for seven years.

"It was something I wanted to do, but I couldn't have without that money," Desch said. "It was fantastic."

For those in the market for a home, Pottstown has an unusual offer aimed at attracting middle-class residents and ending a long bout of economic malaise. A New Jersey town has a similar program, and the idea could be attractive to other struggling communities with sound housing stock.

Buyers of houses in a district that covers about a third of Pottstown immediately qualify for $5,000. If the house is a single-family home that has been carved up into apartments, the borough will lend up to $15,000 to remove one apartment, an additional $10,000 to remove the second, and $5,000 for any additional unit.

"We are trying to entice people to come to Pottstown to buy residences and live in them," economic-development director Terri Lampe said. "There is no criteria for income eligibility or anything like that."

So far, 72 home buyers have participated, but only five undertook apartment conversions, a number officials hope will rise as word spreads about the offer - and the availability of $400,000 for loans this year. Seventeen other applications are pending.

"As far as I can tell, we are the only ones in the state" with such a program, code-enforcement officer Bill Sharon said. In New Jersey, Collingswood has had a similar, and successful, program since 1999.

Pottstown has plenty to offer: a professional symphony, a growing arts community, the Schuylkill hiking and biking trail, a branch of Montgomery County Community College, and good restaurants, among other attractions. It is also home to the Hill School, one of the region's finest preparatory schools.

And there's a wealth of older homes, dating from the late 1700s, with features such as tiled vestibules, hardwood floors, stained-glass windows, and rich architectural details.

"The prices are still affordable," Sharon said. In 2006, the median sales price for a home was $130,750, substantially below Montgomery County's median of $275,000.

About 44 percent of the borough's 9,996 housing units were rentals in 2000, according to the census, compared with about 26 percent countywide. The current borough rental figure is closer to 50 percent, Lampe said.

The public school system of 2,800 students serves only the borough. All the public schools are meeting No Child Left Behind performance goals.

Like many older towns in Pennsylvania, Pottstown has a storied manufacturing history with good-paying union jobs that allowed blue-collar workers to own homes in their community.

Firestone and Bethlehem Steel had a presence, but those jobs left years ago. And when homeowners and speculators started carving up houses into apartments in the 1970s, there was no municipal oversight over design or construction, said Jack Wolf, whose term as Borough Council president expired last month.

"We ended up with all sorts of wacky things happening," he said. "And it changed the town."

The owners became absentee landlords and the tenants transients, he said.

"We had a lot of disadvantaged people attracted by less-than-savory landlords, and it became problematic," Wolf said. "We figured if we have people invest in their own home and we help them, we will have stable neighborhoods."

Launched in 2003, the loans are financed by Montgomery County's Revitalization Fund.

Anthony Flint at the Lincoln Institute of Land Policy, a think tank in Cambridge, Mass., said that despite concerns about transients and absentee landlords, eradicating apartments was not necessarily a good thing.

"Sustainability and affordability goals require a range and variety of housing," he said. "This sounds like it might result in stability, perhaps at the cost of diversity."

Montgomery County planner Brian O'Leary said that in an economically distressed town like Pottstown, you want to encourage home ownership.

"We are advocates for rental housing, but you can have too much of it," he said. "This is a technique for upgrading old housing stock, making it competitive in the market, and attracting new homeowners."

In Collingswood, next door to Camden, the program "took off," said John Kane, director of community development. "About 150 homes have been converted back to single-family homes, and the most blighted properties have all gone. Basically, property values have tripled."

Desch said he and his family had lived on Walnut Street in a four-apartment building that he bought about 20 years ago before he purchased his current home.

He enclosed two porches and broke through brick walls to open up the floor plan.

"We have totally remodeled the place," said Desch, who did much of the work himself. "It is very livable and very usable."

Kane, a Pottstown resident for 12 years, said his house had been owned by an absentee landlord who hadn't kept up with maintenance.

When his kitchen floor collapsed, he had to jack up the second floor to install a new wall. The grant money helped pay for that plus a new roof, he said.

Both men said the paperwork was daunting. The borough and county review applications, and no check is issued until the work is done. Homeowners must apply for the loans within a year of buying the house, and they have to submit three bids before the borough approves the work.

Of the homeowners who have applied for the programs, only two have sold their homes within seven years. The loan balance is collected at settlement and returned to the fund, Lampe said.

Kane and Desch said they talked up Pottstown's programs every chance they got.

"I tell them to go for it," said Desch, 49. "I can't say enough about it. It helps everyone - the neighbors, the homeowners, the Police Department, everyone."