The Kalispell City Council voted on Monday to accept $1.5 million in federal funding to buy and renovate more foreclosed houses to add to the Northwest Montana Community Land Trust.

Funding comes from a third round of the Neighborhood Stabilization Program, this time through the Wall Street Reform Act of 2010. A total of $5 million was allocated for Montana.

The Neighborhood Stabilization Program, created as part of the Housing and Economic Recovery Act of 2008, aims to reduce the negative impact of widespread foreclosures in a collapsed housing market.

It’s estimated the $1.5 million will buy and renovate eight more houses for the Northwest Montana Community Land Trust. An earlier award of $2.64 million in 2009 bought and renovated 16 houses.

The nonprofit land trust is a joint affordable housing project launched by the city of Kalispell and Community Action Partnership of Northwest Montana.

The land trust houses, all of which were vacant bank-owned foreclosures, have been up for sale to qualified buyers since June. They range in price from $81,000 up to $140,000.

Doug Rauthe, director of Community Action Partnership, told the council the first land trust sale is expected to close this month, with a second on track to close early next year.

The council voted 9-0 to accept the second round of funding.

But with 14 land trust houses still on the market after six months of a “major selling season,” Mayor Tammi Fisher said she would hesitate to accept any more funding unless the houses start to sell.

“I don’t know if this will be a successful program,” Fisher said. “They went out for a grant and were successful and we approved it, I just don’t know if I’ll support [more].”

The funding is awarded to the city but will be channeled to Community Action Partnership, which administers the program.

With the grant funneled through the Montana Department of Commerce, the state keeps 5 percent of the federal funding for administrative fees.

Rauthe compared the Northwest Montana Community Land Trust to a startup business and told council members that it will take patience to grow.

People are showing interest in the land trust houses, but financing sales and finding lower-income people who are confident enough in their employment to want to buy a house can be a challenge at this time, he said.

The land trust houses are available to qualified buyers earning up to 120 percent of the county’s area median income, a figure adjusted each year.

For 2011, the area median income is $57,000 for a family of four.

Houses are sold separately from the land, which remains owned by the land trust and is leased to the home buyer. That helps keep the houses affordable, as do resale price restrictions that let sellers recoup only a “fair amount” of their equity.

Money raised through land leases and house sales goes to maintain houses and purchase new houses for the land trust.

While the land trust is a new model of home ownership for Kalispell, the houses  can be owned as long as a person wants and are inheritable, Rauthe said.

Council member Jim Atkinson said creating the land trust and seeding it with houses was a risk, but one worth taking.

“All we have to do is hope for the market to start picking up, then I think this will work and work well ... And when it does, we will have a step up above other communities because we’ll have some affordable housing that can stay affordable as we grow,” he said.

For more information about the land trust houses or to schedule a viewing, call coordinator Jared Johnson at 752-6565.

Reporter Tom Lotshaw may be reached at 758-4483 or by email at tlotshaw@dailyinterlake.com.