The Chandler City Council could ratify an agreement Thursday to form a land trust wherein the city would buy up to 17 foreclosed homes and turn them into affordable housing.
The council on Monday debated authorizing an agreement with the Tempe-based nonprofit NewTown Community Land Trust to manage the land bank. The nonprofit would oversee the use of $2.4 million in funding from the U.S. Department of Housing and Urban Development for "neighborhood stabilization."
"There is a neighborhood revitalization aspect to what we're doing," said Allen Carlson, NewTown's executive director.
A portion of the federal money will be used to buy up to 17 homes in the 85225 ZIP code, an area bounded by Elliott and Ray roads and from Arizona Avenue to Alma School Road, where the foreclosure rate approaches 40 percent. The program is aimed at preventing the neighborhood's decay because of the high vacancy rate.
Judy Register, Chandler neighborhood resources director, said the trust would buy foreclosed properties as it receives applications from qualified buyers who are ready to purchase a house. That could begin as early as this summer, she said.
"The purchases would only occur once we have buyers in the program," Register said.
The city doesn't want to incur the extra cost of maintaining foreclosed houses while the program awaits buyers, she said.
The city has four years to spend the money.
Register said she expects the program will attract a significant number of applications.
The federal money is part of the nearly $4 billion Housing and Economic Recovery Act signed by in July by then-President George W. Bush to help local governments deal with the high foreclosure rate. If more federal funding becomes available, the program could be spread to other areas of Chandler, city officials have said.
About $1.4 million would be used to buy foreclosed homes, officials have said. The trust would retain title to the land, while potential homeowners would purchase only the home itself. That means a more affordable price.
The sale of trust homes would be restricted to people who earn between 80 percent and 120 percent of the area's median income of $51,350 a year for a family of four, officials have said. Families who earn $41,080 to $77,050 annually would be eligible.
"This is really a good opportunity for them to buy in Chandler," Register said.
Each home would have to be owner-occupied, and not rented out. Any subsequent owners would have to meet those conditions, as well.
Officials also propose to spend $605,000 of the grant money on several foreclosed multi-unit housing complexes. Those units would be rented to families who earn $32,100 a year or less.
Another $100,000 would go toward assisting qualified home buyers with down-payment assistance, secured with a 10-year forgivable lien on the property. And $241,500 would go toward administration costs.
The city is expected to begin looking for additional nonprofit partners to manage the multifamily housing and down-payment assistance programs in the next several weeks, officials have said.