The city of Colorado Springs is one step closer to securing at least $3.9 million from the U.S. Department of Housing and Urban Development to help snap up foreclosed properties and turn them into housing for low- and moderate-income residents.

City housing officials met a Dec. 1 deadline to submit an action plan outlining how the money would be used to keep neighborhoods from falling into blighted status by buying foreclosed properties, rehabbing them and getting them occupied.

The allocation is part of nearly $4 billion available to cities and states through the Neighborhood Stabilization Plan that Congress passed July 30 as part of the Housing and Economic Recovery Act.

Record foreclosures in El Paso County for the past two years made the Springs a prime candidate to receive a direct allocation from HUD, said Chad Wright, affordable housing program manager for the city.

“Colorado generally doesn’t get allocated big numbers on these kinds of programs because we generally don’t have enough poor people,” said Rich Strycker, executive director of Greccio Housing, one of several local nonprofits that would acquire foreclosed properties, if HUD accepts the proposal.

This time, Wright said, “the city scored high enough on need.”

Foreclosures filed in El Paso County jumped by 32 percent in the first three quarters of this year over last year, the highest percentage increase in the state. From January through November, 4,174 foreclosure filings had been made in the county.

The local proposal was prepared in conjunction with the state of Colorado to lessen bureaucratic red tape, Wright said, and also enable Colorado Springs to become eligible for additional funds from the state’s total allocation of $34 million.

The state would administer and operate the local plan, and the city would work with nonprofit organizations that focus on housing to accomplish the goals within HUD’s 18-month deadline.

The plan calls for the city and local nonprofits to buy foreclosed single and multifamily properties, primarily in the southeastern and eastern areas of town, where foreclosures have been particularly high, Wright said.

Multifamily units could be used for programs for the homeless, or as affordable housing units, he said, and the plan includes provisions for low- and moderate-income families to be able to buy homes.

HUD approval of the plan is expected in mid-January, he said.

The new program could make a major impact on the local market, Strycker said.

“It’s a big deal. It could mean fairly significant growth for our organization,” he said.

Greccio owns 193 affordable housing units for working low-income people and manages another 32.

“At completion, we could come close to doubling our size,” Strycker said.

The program has been on a fast track since Congress released the funds, Wright said, indicating it’s a high priority for the federal government to help the housing market recover, salvage property values and assist low- and moderate-income families secure housing.

“We hope to be a part of it simply because we see the need and demand for affordable housing increasing fairly dramatically over the next year or two in Colorado Springs,” Strycker said.