The first home in Kalispell’s community land trust could be a mere two weeks away from reality.

Katharine Thompson, community development manager for the city, said Wednesday that negotiations are under way on four homes, three of them in south Kalispell and a fourth one just north of the city center.

“We’re looking at the first week in February to have a house close,” Thompson said. “But this [land trust paperwork] has to be done before then.”

The Kalispell City Council cleared away one hurdle Tuesday night when it approved an interlocal agreement with Community Action Partnership of Northwest Montana.

The Montana Department of Commerce, the state conduit for the federal housing program, requires Neighborhood Stabilization Program grant money to go to the city. The city then passes it directly to Community Action Partnership, which carries out the program.

The $4 million grant will help buy 22 homes that have been foreclosed upon within city limits. Administrators then will go through the legal paperwork to separate ownership of the land from the house, put the land in a community trust and sell the house at an affordable price.

When the house is resold, the land stays in the trust.

It’s aimed at providing affordable housing primarily for the city’s work force. A portion of the homes will be reserved specifically for low-income buyers.

To receive the full grant, however, all $4 million must be committed by Sept. 19 this year.

The agreement between the city and Community Action Partnership sets out intentions for using the money, how it will be administered and other legalities of the partnership.

Mayor Tammi Fisher also asked for, and won, specific dates for accountability. The nonprofit must file its first progress report with the city on June 1 this year, with subsequent annual reports due on the same date. Quarterly updates also are required.

Council member Wayne Saverud questioned Thompson on purchase prices for the homes.

Thompson explained Wednesday that when the program was launched, the Department of Housing and Urban Development required each home to be bought at least 5 percent below appraised value. When taken together, all homes in the program would have had to come in 15 percent below appraisal.

That requirement was removed when HUD officials realized the negative pressure it would put on property values of the surrounding neighborhoods.

New regulations require that homes be bought at appraised value or no more than 1 percent below that value.

Tim Kluesner, a council member and loan officer with Three Rivers Bank, asked Thompson whether program administrators in Kalispell will keep the money in local banks to boost the local economy rather than sending it out of state.

Thompson pledged that officials plan to work with local banks when financing the homes.

In addition, any rehabilitation work that will have to be done after buying the foreclosed homes — she expects that to be minimal — will be done by local firms contracted by Community Action Partnership.

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