One qualified buyer will receive a recently fixed up home for $397,000.
The City Council Monday is approving a funding agreement with the Housing Trust of Santa Clara County to spend $25 million in federal stimulus money. The funding, from the American Recovery and Reinvestment Act, will be used to buy and fix up approximately 250 abandoned and foreclosed homes.
Kevin Zwick, the executive director of the Housing Trust of Santa Clara County will be the lead agency for the Neighborhood Stabilization Program or NSP2.
"Again, what we are really trying to do is put a silver lining on the foreclosure crisis and use this as an opportunity to create some new affordable homes in the community," says Zwick.
The city will target buying foreclosed properties in the four hardest hit zip codes at a price at least one percent below market value.
"Most of the houses are pretty much gutted by the time we get it and by that I mean kitchens are gone, all appliances are usually gone, all the light fixtures," says Weda Gray with the Community Rehabilitation Partners.
Those wanting to participate in the program must not currently own a home, but they do not have to be a first time homebuyer. Also, applicants cannot make more than more than 120 percent of area's median income. In San Jose, that would be about $126,600 for a family of four.
"We're looking at putting families in the home who can afford to stay there and afford to maintain the home," says James Stagi from the San Jose Housing Department.
The program not only gets qualified people into affordable homes, but the mayor says it cleans up blighted neighborhoods and generates jobs in the hard hit construction industry.
"It's good for our efforts to clean up our neighborhoods to make sure we don't have them dragging it down, and of course people were hired to go to work to fix up the houses to get them habitable," says Mayor Chuck Reed.
Of the $25 million pot that the city has to work with, roughly $20 million will be used to buy and fix up the foreclosed property, and another $5 million is being set aside for loan assistance.
A similar program, called NSP1, was funded in October 2008. San Jose's share of the stimulus money was $5.6 million. San Jose, as well as other cities receiving funding, spent some time putting together a comprehensive program that followed federal guidelines, so NSP1 got a slow start in actually putting the money to work. So far, San Jose has purchased six homes using NSP1 money.
The first renovated home is now ready to be sold, and after sifting through qualified applications, the first buyer under that program could find out as early as tomorrow that he or she has been selected to purchase the property.