Just more than $7 million in federal money is headed for Pierce County and Tacoma to help governments deal with foreclosed properties.
U.S. Housing and Urban Development Secretary Steve Preston announced Monday that the state of Washington will receive $28 million from the $3.9 billion program Congress approved in July as part of a massive housing bill. That bill also allowed almost a half-million home-owners facing foreclosure to refinance their mortgage with a federally backed loan and created a first-time home buyer tax credit.
The $3.9 billion is meant to help communities that are at risk for property abandonment and blight because of foreclosures.
“Stabilizing neighborhoods is what this program is all about,” Preston said in a statement. “HUD will continue to work closely with these communities to make certain these funds are targeted to neighborhoods with the greatest needs.”
The states eligible for the most federal money are Florida and California, at $541 million and $529 million respectively. Those states are at the epicenter of the nation’s subprime mortgage debacle, and some cities have neighborhoods full of empty houses.
Under the program, governments can buy foreclosed homes at a discount, then rehabilitate or redevelop them. The funds also can be used for down-payment assistance programs for people with low and moderate incomes.
Pierce County is eligible for about $4.4 million, and the City of Tacoma is eligible for about $2.9 million. Both amounts are the highest in the state, because both areas have the highest foreclosure rates.
Local officials acknowledge the program’s limitations.
“Three million dollars in the housing market is a grain of sand,” said Rick Teasley, housing division manager for the City of Tacoma. “At the very best, we can hope to help maybe 100 to 200 home buyers get into houses.”
Teasley said the city has drafted some proposals for possible uses for the money, but that he and the county are awaiting clarification from HUD on exactly how the money can be used because the language from Congress was, as bills go, pretty general.
“Ultimately the City Council and County Council will be final say on what we do,” Teasley said.
Housing officials from Pierce County couldn’t be reached for comment Monday.
Washington’s funds will be distributed to local governments through the state’s Community, Trade and Economic Development department. The state has set a Jan. 15 deadline for governments to send a letter indicating they’ll participate in the federal program. Bill Cole of CTED said Tacoma submitted its letter Monday.
By April 1, the governments must submit a detailed plan on how they’ll use the money.
Leland Jones, a spokesman for HUD in Seattle, said the idea was to get the money into local jurisdictions so it could be spent quickly, effectively and efficiently. He understands the frustrations of homeowners on the brink, who are not helped by this particular program.
“The banks are getting money, the auto companies are getting money, what about me?” he said. “The only thing I can say to that is … this program is … intended to deal with the broken windows theory.
“If a community doesn’t deal with foreclosed properties early, over time those properties will begin to gobble up property values, tax bases and all sorts of other things,” Jones said. This money “allows communities to begin to get a handle on how to deal with that.”
Kathleen Cooper: 253-597-8546