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The Neighborhood Stabilization Program and Nonprofit Providers
NeighborWorks America
ICF International
October 31, 2008
Meeting Facilitators
NeighborWorks America
Sarah Greenberg, [email protected]
Ascala Tsegaye, [email protected]
ICF International, www.icfi.com
Marsha Tonkovich, [email protected]
Anita Rechler, [email protected]
Brandy Bones, [email protected]
US Department of Housing and Urban Affairs
Stan Gimont, Director of Office of Block Grant Assistance http://www.hud.gov/offices/cpd/communitydevelopment/programs/neighborhoodspg/
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
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
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
BASIC PROGRAM OVERVIEW
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
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
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
Period to “Use” Funds
Must USE funds within 18 months after execution of the grant agreement by HUD
USE = obligate for a specific projectMust EXPEND within four yearsMust use it or lose it (otherwise
funds get reallocated)
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
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
NSP Uses and Activities
CDBG defines “eligible activities”HERA defines five “uses” of fundsAll uses of HERA funds must be
CDBG eligible HUD has cross referenced HERA
uses to CDBG activitiesHUD permission needed if CDBG
activity not on list
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
Eligible NSP Activities
Eligible Use Eligible 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.
Eligible NSP ActivitiesEligible Use Eligible 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
Eligible NSP Activities
Eligible Use Eligible Activities3. Land banks for homes that have been foreclosed upon
Acquisition Disposition
(includes maintenance)
Eligible NSP Activities
Eligible Use Eligible Activities
4. Demolish blighted structures
• Clearance, for blighted structures only
Eligible NSP Activities
Eligible Use Eligible 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
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
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
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
PROGRAM IMPLEMENTATION/ADMINISTRATION
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
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
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
Typical NSP Unit Process
Purchase at discount
UNIT FORECLOSED/ABANDONED
UNIT PURCHASED BYGRANTEE/PARTNER
UNIT REHABBED/DEMOLISHED/REDEVELOPED
UNIT SOLD TO HOMEBUYER OR RENTED
OR RE-USED
PROGRAM INCOMETRACKED/USED/REMITTED
Rehab to standards
Sale price cannot exceed cost
Use of PI depends on date & NSP activity
Purchase Discount
Homes must be purchased at the “maximum reasonable discount”
Minimum of 5% per home15% average for entire portfolio*
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
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
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
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 $$$
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
NONPROFIT ROLES
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
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
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
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?
Getting Involved with NSP Find out the amount of NSP funds
available in community (http://www.hud.gov/offices/cpd/communitydevelopment/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
Where to Get More Info
NeighborWorks website where you can get more information and continue the conversation in our discussion forum
www.stablecommunities.org
HUD website:
http://www.hud.gov/offices/cpd/communitydevelopment/programs/neighborhoodspg/
