Porterville prepares to buy foreclosed homes

After playing the waiting game, the city of Porterville is scoping out foreclosed and abandoned homes that it will buy, flip and sell to income qualified residents.

Community development staff has until March 31 to identify the houses — there will likely be five initially— and submit its proposal. The city was allocated approximately $700,000 as part of the Housing and Economic Recovery Act of 2008 to rejuvenate neighborhoods plagued by foreclosures.

“We’re going to put homeowners in homes that they couldn’t otherwise afford,” Community Development Director Brad Dunlap.

It has been a year since the City Council opted to enter into a joint powers agreement with Tulare County in order to tap into $3.92 billion in funds, which were distributed to the state and appropriated to multiple local jurisdictions in California. The decision to move forward with the project was awarded by the Porterville City Council on Tuesday night in a 3-2 vote.

“Until we had been given the green light we didn’t want to begin property acquisitions,” Development Associate Denise Marchant said.

The program requires that the properties be purchased at one percent discount from appraisal values in the current market. The city can only sell the homes for the price that it paid for combined with the amount of money spent on rehabilitation work.

The offers will likely require a deposit from $1,000 to 10 percent of the asking price, which will be refundable if escrow is not opened. It will be up to the council to authorize the funds for the deposit on each of the properties.

Escrow will be opened on the property when the offer is accepted, but will not close until the City Council votes to approve it.

The city might enter into an agreement with Community Services Employment Training (CSET) for rehabilitation work.

Once ready to sell, the homes will be sold to buyers who have an income equal to 120 percent or less of the median income, which is about $47,000 in the Visalia-Porterville metropolitan area. The money will be recycled and used again to buy additional houses in a five year period, according to Marchant.

On Tuesday night, Councilmen Brian Ward and Cameron Hamilton voted against moving forward with submitting offers on eligible properties.

“It sounds like we’re going into the real estate business,” Ward said.

Dunlap admitted that searching for homes, submitting offers and reselling them will require significant staff time.

Mayor Pete McCracken and Councilmen Pedro Martinez and Felipe Martinez voted to move forward with the program without comment.

Contact Jenna Chandler at 784-5000, Ext. 1050, or jchandler@portervillerecorder.com.