The foreclosure recovery aid that Congress approved last summer is almost ready to be put to work in targeted areas of Minneapolis.

The City Council on Friday voted to award nearly $6.5 million to nine nonprofit developers. They plan to buy 175 foreclosed or abandoned houses or apartments and rehab their 236 units for sale or rent.

The money will be used to cover the gap between the purchase and rehab cost, and the anticipated resale price, which is expected to average $25,000.

All units must be sold or rented to people earning no more than 120 percent of the area's median income for their family size. That's just over $97,000 for a family of four. But 130 of the units will be targeted to people earning half or less of area median income. That's a ceiling of $40,450 for a family of four. Just over a third of the units are expected to be rental units, but all single-family housing will be sold to owner-occupants.

The money is the first dose of $14 million in foreclosure recovery funds for Minneapolis, most of it coming from the federal Neighborhood Stabilization Program approved by Congress in July. Some of that money is coming directly to Minneapolis, and even more was awarded through Minnesota Housing to Minneapolis, which has seen the earliest and most concentrated wave of foreclosures in the state.

The city plans to spend another $5.7 million of that sum to demolish an even larger number of units that are judged to be beyond repair. These 320 properties consist of 200 already on the city's vacant and boarded building list, plus another 120 vacant houses that the city's development arm will acquire from banks as they come on the market. The latter group will be banked by the city until the market rebounds enough to support construction of new housing.

The city will use $1 million of the federal money to run the program and set aside another $500,000 to help buyers with down-payment and closing-cost assistance. That's atop another $2 million in such assistance the city already has earmarked from local funds and Federal Home Loan Bank funds for closing-cost help in targeted areas.

The Neighborhood Stabilization Program, administered by the Department of Housing and Urban Development, is a nearly $4 billion program approved last year as part of the Housing and Economic Recovery Act. Minnesota was granted about $58 million in NSP money, with about $47 million going to metro counties and cities and about $11 million to outstate governments.

Minneapolis officials have been impatient with delays in getting contracts for the program approved by federal officials, according to Cherie Shoquist, the city's foreclosure recovery coordinator. That's because the city is a national leader in working with a group of major lenders that are offering it the right of first refusal on foreclosed homes. But now it needs the money to go to work on the houses that the Greater Metropolitan Housing Corporation has identified as worth saving through this First Look program.

St. Paul received two grants of federal aid totaling about $10.5 million. The city will buy about 125 properties. Of those, 37 are slated for demolition, 43 will be held until development conditions improve and the remaining 63 will be fixed up or redeveloped. At least $750,000 will be used for home-buyer programs.

Now Minneapolis must work out agreements with each nonprofit so the work can go ahead.

Those agencies, the money they'll get, the number and type of units involved include: Greater Minneapolis Housing Corporation, $1.39 million, 52 ownership units; Project for Pride in Living, $1.06 million, 42 rental units; Urban Homeworks, $850,000, 23 ownership and rental units; City of Lakes Community Land Trust, $775,000, 30 ownership units; Habitat for Humanity, $740,000, 22 ownership units; Minneapolis Urban League, $675,000, 27 ownership and rental units; Powderhorn Residents Group, $375,000, 15 ownership units; Alliance Housing, $325,000, 13 rental units; and Neighborhood Housing Services of Minneapolis, $300,000, 12 ownership units.

Steve Brandt • 612-673-4438