Neighborhood Stabilization Program

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Neighborhood Stabilization Program
Melinda Pollack Senior Program Director Enterprise
Community Partners April 10, 2009
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Agenda

• NSP II 2009 Stimulus Bill
• NSP Research Project Overview

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ARRA Overview

• American Recovery and Reinvestment Act of 2009
• Signed into law on February 17, 2009
• 787 billion package of which 25.21 billion
  allocated to housing-related programs
• 13.61 billion in HUD-administered programs.

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NSP II - According to ARRA

• 2 billion allocation
• ARRA statutory changes can be divided into
• Changes that will affect the first and second
  rounds of NSP
• Changes that will affect only the second round of
  NSP
• HUD has not released official guidance
  on ARRA NSP therefore subject to change
  pending HUD regulations

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NSP I and NSP II

• Repeal of the Program Income Section
• Reinvestment of profits from sales,
  rentals, and redevelopment
• Deposits in the Treasury Profits
  after 5-year period
• Expansion of Land Bank Eligible Use
• Establish and operate land banks for homes and
  residential properties that have been foreclosed
  upon
• Redevelopment as Housing Only
• Housing must be the end result of redevelopment
  activities (Eligible use E)

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NSP II Only

• Competitive Allocation Process
• 2 billion in funding will be allocated by
  competition.
• Eligible entities
• States
• Units of local government
• Nonprofit entities or a consortia of nonprofit
  entities that may partner with for-profit
  entities
• No More Formula.

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NSP II Only

• Competition Timeline
• HUD Secretary must publish criteria within 75
  days
• Approximately April 30, 2009
• Applications must be submitted to HUD within 150
  days
• Approximately July 15, 2009
• HUD must obligate all funds within one year
• February 17, 2010
• Timeline may be moved up.

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NSP II Only

• Criteria for Allocation
• HUD must ensure that grantees are located in
  areas of greatest need (number and percentage of
  foreclosures).
• Additional criteria
• Capacity to execute projects
• Leveraging potential
• Concentration of investment to achieve
  neighborhood stabilization
• Any additional factors determined by the HUD
  Secretary
• How will need and capacity be balanced by
  HUD?

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NSP II Only

• Expenditure Timeline
• Grantees must expend 50 of allocated funds
  within 2 years
• Grantees must expend 100 of allocated funds
  within 3 years
• Clock starts once funds are made available to the
  grantee

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ENSAP

• Enterprise Neighborhood Stabilization Analysis
  Project
• Learn what localities are doing with their
  allocation
• Individual programs, leveraging, targeting,
  etc.
• Aggregate percentage spent on each eligible
  use, number of units purchased and rehabilitated,
  green building, etc.
• Share promising practices
• Innovative program ideas
• Programs that will likely be high-impact /
  high-success

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ENSAP

• Research and Analysis of the NSP Action Plans for
  States, Cities, and Counties
• Quantitative and Qualitative Analysis
• 87 Plans Analyzed
• Account for 2.26 billion of the total 3.92
  billion (58)
• Plans analyzed in sample range from 2.1 to 145
  million
• Beginning process of sharing results

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ENSAP Allocation by Eligible Use
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ENSAP Allocation by Program Type
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ENSAP Categories

• Acquisition and discount strategies
• Disposition strategies
• Geographic targeting
• Green building and rehab
• Income targeting and long term affordability
• Leveraging NSP Funds
• Partnerships and management

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Acquisition and discount

• Strategy Homebuyer Selection
• Use NSP to offer financing to homebuyers
• Los Angeles
• Walk in homebuyer program under 120 AMI
• Buyer finds home within target area
• At least 5 discount
• City provides mortgage assistance and rehab loan
  with NSP

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Disposition Strategies

• Strategy Lease purchase
• Allow potential buyers to occupy property as
  tenants while taking steps to qualify for a
  traditional mortgage
• San Diego
• Use program to meet 50 and below requirement
• Market to Section 8 voucher holders
• SDHC or nonprofit will own and rent home until
  family can purchase

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Geographic Targeting

• Strategy Targeting different strategies based on
  neighborhood characteristics
• Atlanta
• Stable (few REOs, minor disrepair) use soft
  second mortgages, acq rehab and resale
• Declining (high rate REO, small multi-family)
  acquire and rehab with combo of for sale and
  rental
• Distressed (significant blight, little demand)
  acquisition, demolition and redevelopment, land
  banking, parcel assemblage

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Green building and rehab

• Strategies Enterprise Green Communities and
  deconstruction
• Columbus, OH
• Requirement to meet or exceed E Star and GC
  criteria for sub rehab
• City to require waste and deconstruction
  management plan to optimize recycling and limit
  materials costs
• Homebuyers and renters will receive a guide to
  home features and info on additional measures
  they can take

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Income Targeting/Affordability

• Strategy Construction or rehab of rental with
  LIHTC
• Hamilton County, OH
• Dedicated 25 of NSP to redevelopment
• Will use LIHTC and HOME for a deal that will
  demolish existing property
• Result will be 69 homes rented at 50 to 60 AMI

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Leveraging NSP

• Strategy Mortgage loan loss reserves
• Use NSP to credit enhance a mortgage pool by
  forming a pool of funds that take elevated risk
  on a group of mortgages. Can help to make
  financing more available for lower income
  households.
• Chicago
• Creating mortgage loan credit enhancement or
  reserve pool
• Based on existing Neighborhood Lending Program
  using 4 mil CDBG to leverage 30 mil mortgage
  program

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Partnerships and management

• Strategy Subcontracting for housing counseling
• NSP requires homebuyers complete 8 hours of
  counseling. Some grantees are setting aside funds
  and contracting with HUD approved agencies.
• Prince Georges County, MD
• Local and county agencies will identify pools of
  buyers for each home
• Purchasers use NSP for down payment, closing
  costs and counseling
• Goal of 675 sales 1,000 households to be
  couseled
• 35.00 per hour, 8 hours per household

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Thank You!

• For more information
• Melinda Pollack
• mpollack_at_enterprisecommunity.org
• [phone]

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