WASHINGTON — Sacramento, Modesto and Fresno will all be getting new federal funds designed to help buy up foreclosed homes, the Bush administration announced Friday.
The money is part of a new $3.9 billion program that also spans other Central Valley cities stricken by the home mortgage crisis. Communities will essentially use the grants to rehabilitate neighborhoods laid waste by widespread foreclosures.
"We worked hard to get the money to the communities where it made the most sense," Housing and Urban Development Secretary Steve Preston said Friday morning.
The money will be distributed after the communities provide their plans, probably before Dec. 1. The communities will then have 18 months to spend the federal grants, ranging throughout the Valley from $2.4 million for Visalia to $13.2 million for the city of Sacramento.
All told, 45 California cities and communities will receive individual grants. Separately, the state of California will receive $145 million that can be distributed among smaller communities.
The money can be spent in several ways. Communities can buy land, demolish or fix up abandoned homes and assemble properties into "land banks" for better management. They can also provide closing-cost and down-payment assistance for low- and moderate-income homebuyers.
"The states and local governments will be developing their own plans for how to use this money," Preston said.
Congress established the $3.9 billion neighborhood stabilization program as part of a larger housing bill signed by President Bush on July 30. The Bush administration had originally resisted the idea, denouncing it as essentially a "costly bailout" for business.
"The principal beneficiaries of this type of plan would be the private lenders, who are now the owners of the vacant or foreclosed properties, instead of struggling homeowners who are working hard to stay in their homes," the White House Office of Management and Budget declared May 6.
But Bush soon relented in the face of strong congressional momentum, and HUD officials have since been devising the formula for allocating the community development block grants. Officials considered the number of foreclosures, defaults and sub-prime mortgages for each region; they were also hearing from politicians.
Central Valley cities have been at the heart of the foreclosure crisis, and so will be receiving a relatively large share of the funds. Stockton’s foreclosure rate of 12.3 percent, for instance, leads the state and is nearly twice the California average. HUD officials on Friday also cast the risk of home abandonment in Stockton as "high."
Consequently, Stockton is now slated to receive $12.1 million, while San Joaquin County will be getting an additional $9 million.
Other Central Valley city and county funding levels include:
- -- The city and county of Sacramento will receive a total of $31.8 million.
- -- Modesto and Stanislaus County will receive a total of $17.8 million.
- -- Fresno and Fresno County will receive a total of $17.9 million.
ON THE WEB
The Department of Housing and Urban Development news release can be found at http://www.hud.gov/news/release.cfm?content=pr08-148.cfm
The complete list of California cities and counties receiving funds can be found at http://www.hud.gov/offices/cpd/communitydevelopment/programs/neighborhoodspg/states/ca.xls