IRIS SMOOT/Acorn Newspapers OPPORTUNITY?—Simi Valley and other cities in Ventura County are looking to use federal money to buy foreclosed homes like this one on Royal Avenue and resell them at affordable prices. With the national foreclosure rate continuing to rise, the federal government has allocated a total of $3.92 billion to states and local governments to acquire and redevelop foreclosed and abandoned properties.

This grant from the Department of Housing and Urban Development (HUD) is part of the Neighborhood Stabilization Program, which was created by the Housing and Economic Recovery Act of 2008.

Here in Ventura County, several cities are hoping to utilize the money to turn their vacant singlefamily homes and condominiums into much-needed— and required— affordable stock.

Rob Bruce, deputy director of housing and special projects for the city of Simi Valley, said the program will allow cities like Simi to address two problems at once: a shortage of affordable homes and an increasing number of vacancies.

"Every program that helps us provide affordable housing and reduces the number of vacant units in the city is great," Bruce said. "It helps us meet our affordable housing requirements and helps us put a floor in the real estate market by reducing the amount of time these units are sitting vacant."

In November, the state's Department of Housing and Community Development received its share of these funds, and the city of Simi Valley is eligible to receive up to $843,868, enough to possibly acquire five or six properties, Bruce said.

To apply for these funds, the city has entered into a joint agreement with the county and the cities of Camarillo, Ventura and Thousand Oaks. According to a staff report, the city needed to enter into a partnership with a contiguous jurisdiction in order to meet the minimum $1million application threshold.

While Simi could have partnered with just one or two cities to meet the minimum, Bruce said, city officials believed the current arrangement made the most economic sense.

"Since we are all in the same boat and the county decided to spearhead this, we thought it was a great idea to work together," he said.

Not all cities in the county received an allocation. The city of Oxnard, for example, which has the highest foreclosure rate in the county, had already received a direct entitlement in a previous round of funding and didn't need to partner with any other city, Bruce said.

At its Feb. 23 meeting, the Simi Valley City Council approved a design plan outlining how the funds would be spent.

The city's design plan is twopronged.

First, the plan uses the funding for Simi's First Time Homebuyer Program, which offers down payment assistance to lowincome homebuyers. Second, the plan uses funds to buy and rehabilitate foreclosed or abandoned homes with the intention of selling them to eligible low-income applicants.

For either of these options, restrictive covenants are recorded against the properties to ensure that the homes remain affordable to low-income homebuyers for 55 years.

The city must follow a set of criteria when using the funds to purchase and rehabilitate abandoned or foreclosed homes.

•Mortgage or tax foreclosure proceedings must already be initiated on the property, no mortgage or tax payments may have been made for at least 90 days, and the property must have been vacant for at least 90 days.

•Properties must be discounted 15 percent below market value.

•The city must ensure the longest feasible affordability term.

•Properties are priced equal to or less than the cost to acquire and redevelop them.

•Homebuyers' income cannot exceed 120 percent of the area's median income and they must occupy the homes as their primary residence.

The city's greatest challenge will be locating properties that have been vacant for 90 days and obtaining them at a 15 percent discount, Bruce said.

"We are going to be working with different realtors and experts in the community to identify projects that are eligible," he said.

While Bruce was unsure of the number of eligible foreclosed units, he said the city anticipates redeveloping about five or six homes with the NSP funds. However, the final number depends on the price of the units and the number of bedrooms each offers, he said.

He added that the money gained from selling a redeveloped home will be put back into another piece of property.

"We are going to try to do as much as we can with the money," Bruce said.

The county will submit the application to the state. Once approved, the funds will be passed through the county to the cities. Simi will be required to report to the county on the progress of the program and the utilization of funds.

Once the contract between the county and the state is signed, the city will have 18 months to use the funds.

Simi is eligible for the largest allocation of funds—nearly $844,000. The other cities and the county could receive grants ranging from $237,326 to $636,245.

In total, the county could get almost $2.7 million to redevelop its foreclosed properties.

If the city does not request reimbursement of the full amount, the leftover funds will be forfeited to the United States Treasury.

After July 30, 2013, any profits generated from the program must be forwarded to the Treasury.

Bruce said the ultimate goal of the program is to stabilize home prices, which have continued to soften as the number of foreclosed units has greatly exceeded demand.

"We want to hit bottom sooner than later so we can start climbing back up, and every little program like this is just one step closer," he said.