Housing-Crisis Grants Force Cities to Make Tough Choices

By MICHAEL M. PHILLIPS and BOBBY WHITE

AVONDALE, Ariz. -- In this Phoenix suburb, two townhouses stand vacant, filled with trash and abutting an empty neighborhood swimming pool covered with graffiti. But to Gina Ramos Montes and other city officials, the dilapidated properties seem promising.

As part of the $4 billion Neighborhood Stabilization Program authorized by Congress in July, Avondale is set to receive $2.5 million to redevelop neighborhoods blighted by abandoned and repossessed homes.

The money, figured Ms. Montes, director of neighborhood and family services, could be used to refurbish the townhouses, fill the pool and build two additional rental units for low-income families. The hitch: Such a project would eat up a quarter of the city's $2.5 million grant, leaving roughly 2,600 other Avondale homes in bank hands or about to enter foreclosure.