The Neighborhood Stabilization Program, a CDBG Component

US Dept. of Housing and Urban DevelopmentOffice of Community Planning and

Development

Neighborhood Stabilization Program

NCDA Annual Meeting – San Antonio, TX

June 17, 2009

The Neighborhood Stabilization Program, a CDBG Component

NSP Overview HERA and NSP 1 NSP Basics ARRA and NSP 2 Status of NSP 1 and NSP 2 Summary with Q and A

The Neighborhood Stabilization Program, a CDBG Component

NSP 1 Background Title III of Division B of the Housing

and Economic Recovery Act, 2008 (HERA)

Enacted July 30, 2008 Section 2301-Emergency Assistance

for the Redevelopment of Abandoned and Foreclosed Homes

Funded NSP at $3.92 billion

The Neighborhood Stabilization Program, a CDBG Component

Rules of Construction Treat NSP funds as CDBG funds Alternative requirements to

expedite use of funds published in the Notice published in the Federal Register on October 6, 2008

HERA displaces several key CDBG provisions

The Neighborhood Stabilization Program, a CDBG Component

NSP 1 Allocations Amounts determined by formula

established by HUD using criteria specified by HERA

Need is based on number and percent of: Home foreclosures in each State or unit of

general local government Homes financed by a subprime mortgage

related loan in each State or UGLG Homes in default or delinquency in each State

or Unit of General Local Government (UGLG)

The Neighborhood Stabilization Program, a CDBG Component

Criteria for Local Distribution

NSP grantees must target funds to give priority emphasis and consideration to areas with greatest need, including those: With the greatest percentage of home

foreclosures; With the highest percentage of homes

financed by a subprime mortgage related loan; and

Identified as likely to face a significant rise in the rate of home foreclosures.

The Neighborhood Stabilization Program, a CDBG Component

Period to Use NSP 1 Funds NSP grantees must use funds to

purchase and redevelop abandoned and foreclosed homes and residential properties no later than 18 months after execution of the grant agreement

“Use” means obligate funds for a specific project

The Neighborhood Stabilization Program, a CDBG Component

National Objective Issues Directs that all funds be used to

benefit individuals at or below 120% of area median income

Additional HERA requirement - Not less than 25% of funds available to each grantee must be used for housing activities that benefit individuals whose incomes do not exceed 50% of area median income

The Neighborhood Stabilization Program, a CDBG Component

Uses of NSP Funding Five eligible uses specified by HERA Eligible uses have root in CDBG

program with exception of land banking

Recovery Act made change to land banking under NSP 1

HUD tied NSP eligible uses to Entitlement CDBG eligibility provisions

The Neighborhood Stabilization Program, a CDBG Component

Uses of NSP Funding Establish financing mechanisms for

purchase & redevelopment of foreclosed upon homes & residential properties

Purchase and rehabilitate homes and residential properties that have been abandoned or foreclosed upon, in order to sell, rent, or redevelop such homes and properties

The Neighborhood Stabilization Program, a CDBG Component

Uses of NSP Funding• Establish and operate land banks

for homes that have been foreclosed upon

• Demolish blighted structures

• Redevelop demolished or vacant properties (under NSP 2, must be for housing purposes)

The Neighborhood Stabilization Program, a CDBG Component

Ineligible Activities Ineligible Activities:

Generally, if an activity is ineligible under CDBG, it is ineligible under NSP

Not eligible under HERA: Foreclosure prevention Demolition of non-blighted structures Purchase of properties not abandoned or

foreclosed upon

The Neighborhood Stabilization Program, a CDBG Component

NSP 2 Background American Recovery and

Reinvestment Act of 2009 (Recovery Act or ARRA)

Provides additional $2 billion for NSP Competition vs. formula distribution States, local governments and non-

profits eligible to apply All may bring for-profit partners

The Neighborhood Stabilization Program, a CDBG Component

NSP 2 $50 million for NSP technical

assistance Recovery Act provisions

Repeal of HERA “revenue” provision Tweak land banking and

redevelopment eligible uses Establish tenant protection provisions

The Neighborhood Stabilization Program, a CDBG Component

NSP 1 Status All Action Plan Amendments

received by December 1, 2008 Grant agreements issued by March

31, 2009 meaning that 18 month use period will terminate in Sept. 2010

144 grants unblocked in DRGR, accounting for more than $2 billion

The Neighborhood Stabilization Program, a CDBG Component

NSP 1 Status Bridge notice issued on June 15,

2009 Does three things

Corrects errors and omissions in October 6, 2008 notice

Makes policy changes Implements Recovery Act changes

applicable to NSP 1

The Neighborhood Stabilization Program, a CDBG Component

Bridge Notice Changes

Establishes CDBG-like treatment of NSP program income

Purchase discount reduced to 1 percent Appraisal requirements loosened on

properties under $25,000 Implements tenant protection

provisions Redefinition of land bank – more narrow

The Neighborhood Stabilization Program, a CDBG Component

NSP 2 Status NSP TA and NSP 2 notices issued

on May 4, 2009 NSP TA is $50 million

Applications were due June 8, 2009 NSP 2 is $1.93 billion

Applications due July 17, 2009

The Neighborhood Stabilization Program, a CDBG Component

NSP Information Extensive information available on HUD’s

website – www.hud.gov/nsp Includes

NSP 2 and NSP TA NOFAs NSP bridge notice Statutory language from HERA and ARRA Federal Register Notice – October 6, 2008 Action plan amendments guidance Area median income data required by NSP HUD targeting data Best practices

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