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Government officials in San Bernardino and Riverside county agencies are set to receive about $125 million from the U.S. Department of Housing and Urban Development to fuel redevelopment work. Nationwide, the Neighborhood Stabilization Program calls for the feds to pass out $3.92 billion.
The program is based on the idea that if local officials can convert recently vacated dwellings into actual homes, they can prevent some foreclosed houses from becoming economic black holes that suck property values from surrounding homes.
UC Riverside economist Mason Gaffney said that although he did know the details of the Neighborhood Stabilization Program, the basic thrust of the policy seems to be a step in the right direction.
Gaffney maintained that using federal dollars to rehabilitate abandoned homes is more credible than the proposed $700 billion Wall Street bailout that the House of Representatives rejected on Monday.
"It makes a lot more sense than bailing out the crooks on Wall Street. That's a loser from the start," Gaffney said. "The public has risen up against it and their representatives have heard them."
The bailout, as proposed and supported by President Bush and House leadership, would have allowed the federal government to assume billions in new debt to buy troubled mortgages from private investors.
Bailout supporters said the gambit was necessary to prevent economic turmoil, the worry being that American commerce would slow to a crawl if banks cannot make new loans while rotten mortgages remain on their books.
Opponents cried foul at the notion of asking taxpayers to support a plan to rescue institutions that assumed capitalism's inherent risks when the moment they entered the subprime mortgage business.
Gaffney said he likes the stabilization plan's focus on rebuilding vacant properties and Washington's decision to allow local authorities to decide how to use the money in their own communities.
"You've got bumblers at every level, but they (municipal officials) are motivated," he said.
Jim Mulvihill, a geography professor at Cal State San Bernardino who studies urban planning, said the federal program "will at least make a dent" in the Inland Empire's foreclosure problem.
Mulvihill said much of the plan's ultimate success will rest on local redevelopment officials' abilities to put federal dollars to good use.
"It's a good program if you've got people in the ... (Economic Development Agency) who are virtually in the mortgage business themselves," Mulvihill said.
In this regard, he praised Carey Jenkins, the San Bernardino Economic Development Agency official working on the program.
San Bernardino is set to receive $8.4 million to put vacant homes back on the market. Jenkins has said that skillful negotiations may make it possible for the EDA to acquire as many as 100 foreclosed homes.
More than 1,700 San Bernardino homes have been foreclosed upon between Aug. 2007 and Aug. 2008, according to Jenkins.
Mulvihill was more reserved in its praise while discussing the federal requirement that 25 percent of stabilization grants be used to house low-income persons.
In San Bernardino, that could mean EDA officials would be mandated to help individuals or families earning less than $25,000 per year, Mulvihill said.
On one hand, Mulvihill said it's understandable that officials would want to more people to own their own homes, but somebody who makes less than $25,000 is likely to have trouble paying for the repairs and routine maintenance that goes alone with owning one's own castle.
"What happens if the furnace goes out?," Mulvihill asked. "For any homeowner, you don't want that to happen."
Agencies using Neighborhood Stabilization dollars are required to craft a plan to use the money by Dec. 1. The federal government requires the money to be spent within 18 months.
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