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
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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
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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
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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
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Amounts determined by formula established
by HUD using criteria specified by HERA
Need is based on number and percent of:
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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
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NSP grantees must target funds to give
priority emphasis and consideration to areas
with greatest need, including those:
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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
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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
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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
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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
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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
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Establish and operate land banks for
homes that have been foreclosed
upon
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Demolish blighted structures
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Redevelop demolished or vacant
properties (under NSP 2, must be for
housing purposes)
The Neighborhood Stabilization Program, a CDBG Component
Ineligible Activities
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Ineligible Activities:
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Generally, if an activity is ineligible under
CDBG, it is ineligible under NSP
Not eligible under HERA:
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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
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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 nonprofits eligible to apply
All may bring for-profit partners
The Neighborhood Stabilization Program, a CDBG Component
NSP 2
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$50 million for NSP technical assistance
Recovery Act provisions
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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
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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
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Bridge notice issued on June 15, 2009
Does three things
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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
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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
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NSP TA and NSP 2 notices issued on
May 4, 2009
NSP TA is $50 million
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Applications were due June 8, 2009
NSP 2 is $1.93 billion
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Applications due July 17, 2009
The Neighborhood Stabilization Program, a CDBG Component
NSP Information
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Extensive information available on HUD’s website –
www.hud.gov/nsp
Includes
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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
The Neighborhood Stabilization Program, a CDBG Component