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HUD to send valley millions

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WASHINGTON -- Sacramento, Modesto and Fresno will be getting federal money to help buy up foreclosed homes, the Bush administration said Friday.

The money is part of a new $3.9 billion program that helps Central Valley cities stricken by the home mortgage crisis.

The Community Development Block Grants can be used to rehabilitate neighborhoods laid to waste by 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.

Cities and counties will receive money. Modesto, for instance, will get $8.1 million and Stanislaus County will get $9.7 million.

"That would definitely be wonderful," said Stanislaus County Chief Executive Officer Rick Robinson.

"This is new information to me," he added. "I haven't researched the ways the funds can be used. It's wonderful news if we can spend it to benefit our community and residents in foreclosure.

"We definitely have a need in this entire region."

Fresno will receive $10.9 million and Fresno County will get $7 million.

"We're very excited about it," said Gigi Gibbs, community development manager for Fresno County. "We had actually been hearing that we might not get anything, so we're very happy."

Gibbs said county officials soon will meet with their counterparts in the smaller cities to plan how to spend the money.

Forty-five California cities and communities were designated to receive grants. The state will receive $145 million that can be distributed among smaller communities that didn't secure their own grants.

Merced, Madera and Turlock didn't make the cut for a direct federal grant but still could get money in the state distribution.

"Considering that Merced County has one of the highest foreclosure rates in the nation, it's both surprising and disappointing that it was left off ... (the) list of California communities eligible for the direct allocation of funds," said Mark Hendrickson, director of governmental affairs for Merced County.

Hendrickson added that county officials "will remain hopeful" that money will be available through the state.

The money will be distributed once communities provide their plans, probably before Dec. 1. The communities will have 18 months to spend the federal grants.

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 provide assistance with closing costs and down payments for low- and moderate-income home buyers.

'Unacceptable,' senators write

Even so, California's two Democratic senators, Dianne Feinstein and Barbara Boxer, complained the Bush admini- stration had shortchanged the state.

They noted that although California is receiving $529 million, that is only 13 percent of the national funding. California accounts for 25 percent of national foreclosures. Florida has fewer foreclosures but is getting more money.

"This makes no sense and is totally unacceptable," Boxer and Feinstein wrote in a letter sent to HUD on Friday afternoon.

Congress established the $3.9 billion neighborhood sta- bilization program as part of a larger housing bill signed by President Bush on July 30.

Originally, the administration resisted the idea, denouncing it as essentially a "costly bailout" for business.

But the president relented, and HUD officials since have been devising the formula for allocating the grants. Officials considered the number of foreclosures, defaults and subprime mortgages for each region, among other factors.

HUD plans to host a national housing summit in Washington, D.C., on Oct. 7-8 as well as a series of regional conferences to explain the details of the program to governors, mayors, county executives, and other state and local leaders.

Central Valley cities are 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 Friday cast the risk of home abandonment in Stockton as "high."

Stockton is slated to receive $12.1 million. San Joaquin County will get $9 million.

Bee staff writer Tim Moran contributed to this report.

Bee Washington Bureau reporter Michael Doyle can be reached at or 202-383-0006.