The Neighborhood Stabilization Program, a CDBG Component US Dept. of Housing and Urban Development Office 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 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 – 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 Submit questions via website