The Neighborhood Stabilization Program and Nonprofit Providers

1
The Neighborhood Stabilization Program and
Nonprofit Providers

• NeighborWorks America
• ICF International
• October 31, 2008

2
Meeting Facilitators

• NeighborWorks America
• Sarah Greenberg, sgreenberg_at_nw.org
• Ascala Tsegaye, atsegaye_at_nw.org
• ICF International, www.icfi.com
• Marsha Tonkovich, mtonkovich_at_icfi.com
• Anita Rechler, arechler_at_icfi.com
• Brandy Bones, bbones_at_icfi.com
• US Department of Housing and Urban Affairs
• Stan Gimont, Director of Office of Block Grant
  Assistance http//www.hud.gov/offices/cpd/commu
  nitydevelopment/programs/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

6
BASIC PROGRAM OVERVIEW
7
What is NSP?

• Program to stabilize and revitalize communities
  hard hit by mortgage crisis
• 3.92 billion
• Funds provided as supplemental appropriation
  under HUDs 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 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.
16
Eligible NSP Activities
Eligible 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
17
Eligible NSP Activities
Eligible Use Eligible Activities
3. Land banks for homes that have been foreclosed upon Acquisition Disposition (includes maintenance)
18
Eligible NSP Activities
Eligible Use Eligible Activities
4. Demolish blighted structures Clearance, for blighted structures only
19
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
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 lt 120 of area median income
  OR
• Area benefit gt 51 of residents lt 120 of
  median OR
• Jobs created or retained person lt 120 of
  median OR
• Limited clientele incomes lt 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
  lt50 of area median income

23
PROGRAM IMPLEMENTATION/ADMINISTRATION
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

27
Typical NSP Unit Process
UNIT FORECLOSED/ ABANDONED
UNIT PURCHASED BY GRANTEE/PARTNER

• Purchase at discount

UNIT REHABBED/ DEMOLISHED/ REDEVELOPED

• Rehab to standards

UNIT SOLD TO HOMEBUYER OR RENTED OR RE-USED

• Sale price cannot exceed cost

• Use of PI depends on date NSP activity

PROGRAM INCOME TRACKED/USED/REMITTED
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
• Grantees 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

34
NONPROFIT ROLES
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 (http//www.hud.gov/offices/cpd/communit
  ydevelopment/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
• www.stablecommunities.org
• HUD website
• http//www.hud.gov/offices/cpd/communitydevelopmen
  t/programs/neighborhoodspg/