After years of affordable housing melting away from Kalispell’s landscape, an initiative to tackle the problem head-on is under way.

It’s called a community land trust and will provide homes for qualified low- and middle-income families — making them affordable by taking the high cost of land out of the equation.

Community Action Partnership of Northwest Montana and the city of Kalispell are collaborating on the effort. They will choose from a list of foreclosed homes, casualties of the Flathead housing market’s meteoric rise just before the nation’s economic dive.

A $4 million grant through the Montana Department of Commerce will make it possible for the trust to buy the homes, keep the land in community ownership, then sell just the improvements on that dirt — the homes — on 99-year renewable leases.

Home buyers become members of the trust. When they sell to the next generation of qualifying families, profits are plowed back into the trust to help it expand and bring more low-income families to home ownership.

“The City Council has long recognized that we have needs for adequate and affordable housing in Kalispell,” Kalispell Community Development Manager Katharine Thompson said. “This allows the city to pursue those priorities. [But] the city is not in a position to try to do this alone.”

The answer was to team up with Community Action Partnership, where Housing Director Marney McCleary will take the lead in administering the program.

“Affordability and perpetuity is how this works,” McCleary said. “And the timing is perfect because there’s lots of inventory out there right now.”

Distasteful as it is that a family must lose its home to foreclosure, this is one way to make the best of a bad situation. It’s another rung, Thompson said, to getting people on the housing affordability ladder.

Doug Rauthe, executive director for Community Action Partnership, agreed.

“This is another form of housing,” Rauthe said. “On the continuum from homelessness to McMansions there are many forms of housing.”

Thompson pointed to the housing affordability gap in Kalispell.

A 2006 study, the most recent figures she had available, showed that the median-priced home in Flathead County was more than $91,000 above what a median-income family could afford. Since then it has gone down to some degree, but the average working family still struggles to find a home it can afford in Kalispell.

“So the project is a unique, one-time opportunity in a substantial way to address work-force housing,” Thompson said.

The program, funded by federal money that is channeled through the state commerce department’s Neighborhood Stabilization Program, will be administered by the nonprofit Community Action Partnership.

Its goal is to buy 22 homes directly from financial institutions — homes that have finished the foreclosure process and are sitting vacant.

Homes must be structurally sound and fairly new to avoid lead-based paint, asbestos and other hazards, McCleary said. But since they will be abandoned foreclosures, the nonprofit plans to hire out rehabilitation work on each home, probably about $20,000 worth.

After factoring in those costs and a 5 percent administration fee that will be allocated to Community Action Partnership, the average purchase price comes to around $152,000. For a three- or four-bedroom home in Kalispell, Thompson said, that’s pretty modest.

If costs come in lower, Community Action Partnership will buy more homes.

“We estimate that we could ultimately be at 40 homes in the trust” after a few years of sales and re-sales, McCleary said.

Families with incomes between 80 percent and 120 percent of the area median income will be chosen to buy 75 percent, or 16, of the homes. For a family of four that translates to household incomes between $55,400 and $64,450 a year.

The other 25 percent, or six, of the homes will be reserved for families making 50 percent or less of the median income — $26,850 a year or less for a family of four.

The bottom line is they must have an income and they must be able to secure credit for the home purchase.

McCleary said Community Action Partnership is generating interest in the land trust from people enrolling in its First Time Home Buyer’s classes. One Saturday a month, she said, 30 or 40 people sit through an eight-hour session at Flathead Valley Community College to learn the ins and outs of home ownership.

The class already is a requirement for the nonprofit’s Self-Help Housing program, and will be a requirement for the land trust.

“We also do a financial fitness class,” she said. Free to Choo$e, the financial literacy course, is not required but “we strongly suggest they take that class. They learn how to manage debt and credit, how to manage checking accounts …”

And each family is assigned a mentor, a local lender who sticks with them throughout that year, she said.

McCleary is arranging a line of credit through NeighborWorks Montana, the statewide arm of a national organization dedicated to providing sustainable housing to low- and moderate-income families.

It will allow for quick home acquisitions, then the program will be reimbursed later with the Department of Commerce money.

Over time, the trust will employ staffers who monitor the properties, she said, making sure yards are well-kept and homes are in good repair.

Time is precious to getting this land trust off the ground, though.

The $4 million, part of the $19.8 million made available to Montana through the Housing and Economic Recovery Act of 2008, must be obligated by Sept. 19, 2010. Any uncommitted money must be turned back to the federal government.

To find out how to qualify for home ownership or learn more about the community land trust, call Community Action Partnership of Northwest Montana at 752-6565.

Reporter Nancy Kimball can be reached at 758-4483 or by e-mail at nkimball@dailyinterlake.com