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The Neighborhood Stabilization Program and Nonprofit Providers NeighborWorks America ICF International October 31, 2008.

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Presentation on theme: "The Neighborhood Stabilization Program and Nonprofit Providers NeighborWorks America ICF International October 31, 2008."— Presentation transcript:

1 The Neighborhood Stabilization Program and Nonprofit Providers NeighborWorks America ICF International October 31, 2008

2 Meeting Facilitators NeighborWorks America Sarah Greenberg, Ascala Tsegaye, ICF International, Marsha Tonkovich, Anita Rechler, Brandy Bones, US Department of Housing and Urban Affairs Stan Gimont, Director of Office of Block Grant Assistance ms/neighborhoodspg/ ms/neighborhoodspg/

3 Training Objectives  Goal –Understand basics of NSP –Identify opportunities to participate in program with local and state governments  Topics –Basic Program Overview –Program Implementation/Administration –Nonprofit Roles

4 A Few Rules for This Webinar …  Please do not place us on hold  Do mute your phone: –If not on phone itself, use *6 –Use *6 to un-mute  If technical difficulties: –Log off and back on –Refresh your screen –Send a chat to the administrator

5 Asking Questions  Use the “raise hand” button –Facilitator will call upon you by log-in name & you will give question verbally –Be sure to lower hand once answered  Please keep questions short & related to program requirements/opportunities – no detailed, project-specific questions  Note: there will be questions without answers yet!! –We will keep and submit parking lot to HUD


7 What is NSP?  Program to stabilize and revitalize communities hard hit by mortgage crisis –$3.92 billion  Funds provided as supplemental appropriation under HUD’s Community Development Block Grant (CDBG) program

8 Funding Formula  $$ based on number and percent of: –Home foreclosures –Homes financed by a subprime mortgage –Homes in default or delinquency  Minimum allocation to states: $19.6M  Implications –Not all CDBG grantees received money –Some grantees received much more than annual regular CDBG grants –States may be working in unfamiliar communities

9 Key Deadlines  15 Day Public Comment Period: Begins by November 16, 2008  Action Plan Due: December 1, 2008  Action Plan Approval: by February 13, 2009  Commit Funds: within 18 months of HUD approval  Expend Funds: within 4 years of HUD approval  Implications –Planning is happening now –Comments needed quickly –Look for plans within next 10 days

10 Period to “Use” Funds  Must USE funds within 18 months after execution of the grant agreement by HUD  USE = obligate for a specific project  Must EXPEND within four years  Must use it or lose it (otherwise funds get reallocated)

11 NSP Action Plan Topics  Summary of needs  Definitions - blight, affordable rents  How funds to be used  Terms and conditions of assistance  Where funds to be used  Budgets  Public Comments  Continued Affordability Standards  Rehabilitation Standards  Counseling for Homebuyers  Method to prohibit new subprime mortgages to assisted buyers

12 Targeting Areas of Greatest Need  Must focus on areas with: –Greatest percentage of home foreclosures; –Highest percentage of homes financed by a subprime mortgage related loan; and –Likely to face a significant rise in the rate of home foreclosures.  Implications –Not a citywide or statewide program –Focus on hard hit neighborhoods –Wider range of target households

13 NSP Uses and Activities  CDBG defines “eligible activities”  HERA defines five “uses” of funds  All uses of HERA funds must be CDBG eligible  HUD has cross referenced HERA uses to CDBG activities  HUD permission needed if CDBG activity not on list

14 Key Definitions in Notice  Abandoned: Mortgage/tax foreclosure proceedings & no payments 90 days & vacant 90 days  Blighted: Objectively determinable deterioration that is threat to human health, public safety, public welfare  Foreclosed: Mortgage/tax foreclosure complete, includes title transfer  Land Bank: Purchase, manage, dispose of vacant land in defined area

15 Eligible NSP Activities Eligible UseEligible Activities 1. Financing mechanisms for purchase & redevelopment of foreclosed upon homes & residential properties  Activity Delivery cost for an eligible activity (designing & setting it up)  The financing of an NSP eligible activity – purchase, redevelopment, demolition, construction, etc.

16 Eligible NSP Activities Eligible UseEligible Activities 2. 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  Acquisition  Disposition  Relocation  Direct homeownership assistance  Eligible rehabilitation and preservation activities for homes and other residential properties  Housing counseling - for those seeking to take part in the activity

17 Eligible NSP Activities Eligible UseEligible Activities 3. Land banks for homes that have been foreclosed upon  Acquisition  Disposition (includes maintenance)

18 Eligible NSP Activities Eligible UseEligible Activities 4. Demolish blighted structures Clearance, for blighted structures only

19 Eligible NSP Activities Eligible UseEligible Activities 5. Redevelop demolished or vacant properties  Acquisition  Disposition  Public facilities and improvements  Housing Counseling Public Services (limited to purchasers or tenants of redeveloped properties)  Relocation  New Housing Construction  Direct homeownership assistance  570.204 activities by CBDOs

20 Ineligible Activities  Generally, if activity 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

21 National Objective  100% of funds must meet HERA low/moderate/middle income National Objective: –Housing: households < 120% of area median income OR –Area benefit: > 51% of residents < 120% of median OR –Jobs created or retained: person < 120% of median OR –Limited clientele: incomes < 120% of median  “Slum/blight” and “urgent need” National Objectives not applicable

22 National Objective (cont)  HERA Low Income Set Aside –At least 25% of funds must be used for activities that provide housing for households with incomes <50% of area median income


24 Program Administration Approaches  NSP grantees may: –Administer directly –Create joint applications with other public agencies –Administer through public or nonprofit subrecipients or state recipients –Procure contracted administrators –Any combination of above

25 State NSP Recipient Administration  Method of distribution for NSP: –May continue to work through UGLG in areas of greatest need OR –Allowed to directly fund projects OR –Can also do combination  May also fund projects in entitlement and tribal areas, if these are greatest need

26 Program Administration Costs  Program Administration –Up to 10% of NSP Grant + program income –Example: planning, reporting, accounting  Activity Delivery –Cost of delivering a service –Example: work write ups, appraisals, surveys, rehabilitation, property maintenance


28 Purchase Discount  Homes must be purchased at the “maximum reasonable discount”  Minimum of 5% per home  15% average for entire portfolio*

29 Rehabilitation Standards  Rehab must comply with: –Applicable codes, laws, requirements for habitability, quality, safety  Grantee’s Action Plan must describe rehab standards  Green building and energy efficiency improvements allowed

30 Sale Price to Buyers  Must be “affordable” –Defined in Action Plan  Sale to assisted household cannot exceed cost to acquire, redevelop –May consider direct and activity delivery costs but … –Cannot include maintenance costs

31 Program Income  Acquire, rehabilitate and redevelop properties (2301(c)(3)(B) and (E)) –Received by govt or subrecipient Before July 30, 2013: Retained & used according to 2301 On or after July 30, 2013: Return to Treasury – Some may be retained if HUD approved request –Received by private individual or entity Treated as PI and returned to govt Same rules above apply

32 Program Income  Establish financing mechanisms for homeownership and rental housing; create land banks; and demolish blighted structures (2301(c)(A)(C) & (D)) –Received by govt or subrecipient Retained and use under 2301 –Received by private individual or entity Returned to govt  PI must be used before additional Treasury withdrawal of NSP $$$

33 Other Key Considerations  Affordability Period –At a minimum, HOME affordability standards apply  Counseling –NSP-assisted homebuyers must complete at least 8 hours  Other federal requirements –Most may be applicable, such as Davis Bacon, Fair Housing, Environmental Review etc  Relocation –One-for-one replacement not required –Other URA requirements still apply


35 Working with Nonprofits  All NSP grantees, including states, can enter into subrecipient agreements with nonprofits to carry out NSP activities  Important point: CDBG definition of “subrecipient” is broad –Has implications for program requirements –CDBG does not really carve out role called “developer” –CBDO exception to this rule  If use subs, grantees must execute written agreements

36 Roles for Nonprofits  Affordable housing development and rehabilitation (more later)  Create special needs permanent supportive housing (more later)  Manage land bank  Redevelop for public facility and possibly commercial uses  Provide services such as: –Property maintenance –Homeowner counseling

37 Housing Activities Examples  Acquire/rehab/resell homebuyer units  Run downpayment/closing cost/financing assistance program for buyers of NSP units  Acquire/rehab and manage rental housing for low income persons  Redevelopment of property into permanent supportive housing units for persons with special needs

38 Assessing Your Capacity  Assess organizational capacity to complete NSP projects –What types of projects has the nonprofit completed in the past? –What types of projects is the nonprofit capable of managing under NSP? –Does the nonprofit have the financial systems to track purchase price, sale price, program income etc? –What other organizations can the nonprofit partner with?

39 Getting Involved with NSP  Find out the amount of NSP funds available in community ( opment/programs/neighborhoodspg/)  Contact jurisdiction to find out how they plan to spend NSP funds  Review/comment on the Action Plan  Provide suggestions for how nonprofits can help administer funding  Apply for NSP funding where opportunities exist

40 Where to Get More Info  NeighborWorks website where you can get more information and continue the conversation in our discussion forum  HUD website: tydevelopment/programs/neighborhoo dspg/

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