Officials with the county and city of Fresno are nearly ready to start using $18 million in federal funds to help stabilize neighborhoods reeling from an abundance of foreclosed properties.
Fresno officials this month will interview and select a handful of developers to buy troubled houses in bulk, rehabilitate them and then resell or rent them to low-income families, said Claudia Cãzares, interim manager of the Housing and Community Development Division.
The City Council could approve the developer contracts in May, with purchases to start soon after. The city will receive nearly $11 million in grant funds from the U.S. Department of Housing and Urban Development approved in the Neighborhood Stabilization Program last year.
Fresno County was allocated $7 million and anticipates the first purchases in June, said Yvette Quiroga, program manager. Nationwide, about $4 billion was authorized.
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The objective is to buy abandoned or foreclosed properties and put them into the hands of new owners, thus keeping neighborhoods strong. A second goal is to generate construction jobs through the remodeling.
Local officials are targeting neighborhoods with high percentages of existing or potential foreclosures, such as the inner core of Fresno and communities such as Calwa, Sanger and Malaga.
Together, the county and city hope to buy and refurbish at least 265 houses, although the number could be higher if prices continue to fall or the purchases are combined with other financing programs that stretch the grants further.
HUD requires the properties to be bought at discounts of at least 15% below market prices, although officials hope that prices will be even lower.
Another round of financing could come through the recently passed federal stimulus package. About $2 billion will be available nationwide, and any city, nonprofit agency or housing authority can compete, said Rollie Smith, HUD's field director in Fresno.
The city could receive $2 million to $5 million in additional funds through that program, said Lee Brand, a Fresno City Council member who has been involved with the neighborhood stabilization effort.
Brand said he expects many of the foreclosure purchases to be south of Ashlan Avenue.
"They will probably have to cluster in areas. They will buy 20 or 30 homes in one area and have a bigger impact on stabilizing the neighborhood," Brand said.
Fresno is home to an estimated 3,000 foreclosures.
County and city officials will use at least 25% of the funds to help families earning 50% or less of the area's median income. Houses also can be sold to households earning up to 120% of the area's median income, or up to $66,950 for a family of four.
Those families usually earn too much money to take advantage of special financing programs but often can't afford to buy a house.
"They couldn't afford a house before," said Rebecca Madrigal, assistant division manager of the county's Planning Community Development department. "This is a whole new area of people we couldn't normally serve."