Evanston officials will soon learn whether the federal government will approve the city’s application for a $40 million grant to create affordable housing.

The city applied in July to receive the funds through a component of the 2009 stimulus package called the Neighborhood Stabilization Program 2. Evanston officials have been told the United States Department of Housing and Urban Development will announce the grant winners in January, said Susan Guderly, who works for the city’s Planning Division.

In its application, Evanston proposed to sell foreclosed homes at a reduced cost and develop new mixed-income housing adjacent to Gilbert Park in the west side of the city.

Evanston is competing with other municipal governments across the country to get a slice of $1.9 billion set aside for NSP2. HUD planned to announce the grant winners in December but has yet not released the results, according to three city officials familiar with the application.

Receiving the funds would be an important win for the city, Mayor Elizabeth Tisdahl said.”The success of this application would ensure the continued diversity of the Evanston people,” Tisdahl said. “We need it. Let’s hope we get it.”

If HUD approves Evanston’s proposal, the city will purchase and improve approximately 100 foreclosed or vacant homes, according to the grant application. The city will then sell the units at a reduced cost in an effort to revitalize struggling areas.

“Obviously when you have vacant housing, it is a negative influence in a neighborhood,” said Sarah Flax, Evanston’s Community Development Block Grant Program administrator.

“That’s the key thing to reverse, and of course we want to make (the new housing) affordable.”

The proposal also calls for a private developer to build a new mixed income community over a vacant lot next to Gilbert Park. The community, named “Emerson Square” in the grant proposal, would include 98 units. Most of the units would be for rent, and some would be for purchase.

The units at Emerson Square will be discounted at varying levels. The grant rules require one quarter of all new units to go to families with incomes less than 50 percent of the median area income. All units must go to families with incomes less than 120 percent of the median area income.

– ADAM SEGE