A local version of "Flip This House" is coming to Monterey County.

Supervisors Tuesday approved an agreement with several cities hardest hit by the housing market downturn to buy foreclosed houses and sell them to lower-income buyers.

Under the agreement, the county Housing and Redevelopment Agency would apply for about $2.1 million in federal stimulus grant money on behalf of the county and the cities of Marina, Seaside, Soledad, Gonzales, King City and Greenfield, for use in a local Neighborhood Stabilization Program.

Under the program, the county and the six cities would purchase already foreclosed homes at 15 percent below market rate, make minor repairs and upgrades, and re-sell them to qualified very-low-, low- and moderate-income buyers.

Those categories would include families earning up to 120 percent of the area's median income. The funding would be used to educate prospective buyers and provide some down-payment assistance.

The city of Salinas is applying on its own for $2.6 million in federal funding for the program.

According to county Director of Redevelopment and Housing Jim Cook, who first proposed the program in February, the program is designed to restore the quality of the area's housing stock. It would reduce the number of homes vacant due to foreclosure but which haven't been re-sold, and the associated problems of blight, vandalism and theft. As a result, the program is expected to help stabilize plummeting home values.

According to the county's numbers, home prices have dropped precipitously in many local communities during the past year, ranging from about 27 percent in Seaside, 37 percent in Marina and 38 percent in North County to a whopping 66 percent in Greenfield.

And a glut of foreclosed homes is making things worse. In North County, including Prunedale and Castroville, there are 317 foreclosed homes, while in Soledad there are 257 bank-owned units and in Greenfield there are 166. In Seaside, there are 135 foreclosed houses.

Team approach

Cook said the collaboration between the county and the cities allows the smaller local governments to qualify for the funding, which requires a minimum $1 million bid. He pointed out that the housing problem is a countywide issue and could be most effectively dealt with through a team approach.

Under the agreement, the county would retain jurisdiction over the funding and pass it along to the cities. Cook estimated about 40 homes could be flipped under the program, with potentially more in the future as other funding becomes available and the initial investments are paid back.

Supervisor Simon Salinas praised the program and said the county should vigorously pursue the funding.

"This is something where I think we'd be remiss if we didn't do something," Salinas said.

Cook noted that the funding must be spent by Dec. 30, meaning the county and local cities would have to move quickly if they qualify for the stimulus money to purchase available homes.

River Road plan OK'd

Tuesday, the board narrowly approved a long-debated and controversial 14-lot River Road subdivision on former farmland. But the project is almost certain to draw a court challenge.

By a 3-2 vote, with Supervisors Dave Potter and Jane Parker dissenting, the board offered a series of approvals ranging from certifying the project's environmental impact report and a general plan amendment to lot line adjustment and zoning change, as well as a combined development permit, for the project.

Located on property zoned for agriculture and owned by a three families — the Mohsins, the Samoskes and the Riehls — the project was fiercely opposed by slow-growth groups, including LandWatch Monterey County, and a neighborhood group dubbed the River Road Ranchers for Responsible Growth.

At Tuesday's hearing, attorney and former LandWatch Executive Director Gary Patton led a cadre of opponents who argued that the project was inappropriate, and even illegal, because it converted farmland. The groups sued to halt the county's previous approval of an earlier version of the project, arguing that it required an EIR, a position with which the state Supreme Court agreed.

But supporters, including attorney Tony Lombardo representing the project applicants, argued that the land is not viable for farming and has been planned for development for decades, noting the presence of another subdivision nearby.

Despite concerns from Potter and Parker about the expense and potential exposure to the county of a lawsuit, Supervisor Lou Calcagno said the property wasn't good for much else besides housing, and Salinas and Supervisor Fernando Armenta concurred.

The project includes a 150-acre conservation easement for cattle grazing.

Jim Johnson can be reached at 753-6753 or jjohnson@montereyherald.com.