Module 1: Eligible Uses, Activities and Properties, and Income Rules
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Module 1: Eligible Uses, Activities and Properties, and Income Rules . Neighborhood Stabilization Program. Funded provision under the Housing and Economic Recovery Act of 2008 (HERA) Created to mitigate the negative impact of the nation’s economic decline and housing market collapse.

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Neighborhood Stabilization Program Income Rules

  • Funded provision under the Housing and Economic Recovery Act of 2008 (HERA)

  • Created to mitigate the negative impact of the nation’s economic decline and housing market collapse.

  • Intended to stabilize and revitalize communities/areas hit the hardest


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NSP Grantees Income Rules

  • 55 States & Territorial Entities

  • 254 Cities and Counties


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Eligible Uses and Activities Income Rules

Eligible Properties

Overall Benefit

Qualifying Activities Under the NSP Objective

25% Low-Income Set-Aside

Module 1 Content



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Five Eligible NSP Uses Income Rules

  • USE A—Financing Mechanisms

  • USE B—Purchase and Rehabilitation of Abandoned or Foreclosed Homes

  • USE C—Land Banks

  • USE D—Demolition of Blighted Structures

  • USE E—Redevelopment of Demolished or Vacant Properties


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NSP-Eligible Use (A)—Establish financing mechanisms for purchase and redevelopment of foreclosed upon homes and residential properties, including such mechanisms as soft-seconds, loan loss reserves, and shared-equity loans for low- and moderate-income homebuyers.

Correlates with CDBG-Eligible Activities:

The eligible activities listed for other NSP Uses to the extent financing mechanisms are used to carry them out.

As part of an activity delivery cost for an eligible activity as defined in 24 CFR 570.206.

NSP-Eligible Uses and Correlating CDBG-Eligible Activities


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NSP-Eligible Uses and Correlating CDBG-Eligible Activities purchase and redevelopment of foreclosed upon homes and residential properties, including such mechanisms as soft-seconds, loan loss reserves, and shared-equity loans for low- and moderate-income homebuyers.(continued)

NSP-Eligible Use (B)—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.

Correlates with CDBG-Eligible Activities:

  • 24 CFR 570.201(a) Acquisition, (b) Disposition, (i) Relocation, and (n) Direct homeownership assistance (expanded to include LMMI persons).

  • 24 CFR 570.202 Eligible Rehab and preservation

  • Required Homebuyer counseling for above


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NSP-Eligible Use (C)—Establish and operate land banks for foreclosed homes and residential properties

Correlates with CDBG-Eligible Activities:

24 CFR 570.201(a) Acquisition and (b)‮ Disposition.

Required homebuyer counseling for above

NSP-Eligible Uses and Correlating CDBG-Eligible Activities (continued)


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NSP-Eligible Use (D)—Demolish blighted structures foreclosed homes and residential properties

Correlates with CDBG-Eligible Activities:

24 CFR 570.201(d) Clearance, but limited to blighted structures.

NSP Eligible Uses and Correlating CDBG-Eligible Activities (continued)


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NSP-Eligible Use (E) foreclosed homes and residential properties—Redevelop demolished or vacant properties

Correlates with CDBG-Eligible Activities:

570.201(a) Acquisition, (b) Disposition, (c) Public facilities and improvements, (e) Public services for housing counseling, but only to the extent that counseling beneficiaries is limited to prospective purchasers or tenants of the redeveloped properties, (i) Relocation, and (n) Direct homeownership assistance (as modified below)

570.202, eligible rehabilitation and preservation activities

570.204 Special Activities by CBDO’s

Required homebuyer counseling for above

NSP-Eligible Uses and Correlating CDBG-Eligible Activities (continued)


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Eligible Properties foreclosed homes and residential properties


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Eligible Properties Under NSP foreclosed homes and residential properties

Property Characteristic Eligible NSP Use Category(ies)Types of Eligible Activities

  • Foreclosed upon homes A, B or C Finance purchase and redevelopment;

    (vacant or occupied) purchase and rehab to sell, rent or

    redevelop; or establish land bank and

    acquire properties to hold

  • Foreclosed upon A, B or C Finance purchase and redevelopment;

    residential properties or purchase and rehabilitate to sell, rent

    (vacant or occupied) or redevelop

  • Abandoned homes B Purchase and rehabilitate to sell, rent

    or redevelop

  • Abandoned residential B Purchase and rehabilitate to sell, rent

    properties or redevelop

  • Blighted structures of D Demolish

    any type (vacant or

    occupied)

  • Demolished properties E Redevelop

    (vacant or occupied)

  • Vacant properties of E Redevelop

    any type


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Income Rules foreclosed homes and residential properties

  • Overall Benefit

  • Qualifying Activities Under NSP National Objective

  • 25% Low-Income Objective


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Overall Benefit foreclosed homes and residential properties


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CDBG 70% vs NSP 100% foreclosed homes and residential properties

CDBG 3 Objectives vs NSP One Objective

CDBG Income Eligibility Based on 80% of Median vs NSP Based on 120%

Overall Benefit Distinctions


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Income Categories in Relation to the Area’s Median Income foreclosed homes and residential properties

NSP

CDBG


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NSP—One Objective foreclosed homes and residential properties

NSP—100% LMMI

No Slums/Blight or Urgent Needs Under NSP

NSP Based on 120% of Area Median Income

NSP Overall Benefit


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Qualifying Activities foreclosed homes and residential properties

Under the NSP Objective


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LMMI Persons Benefit foreclosed homes and residential properties

Use Modified CDBG Rules

Qualifying Activities Under the NSP Objective


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24 CFR Part 570.208(a): foreclosed homes and residential propertiesCDBGNSP

(1) Area Benefit Yes Yes

(2) Limited Clientele Yes Yes

(3) Housing Yes Yes

(4) Jobs Yes No

Four Ways to Meet Income-based National Objective


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Area benefit requires at least 51% LMMI; no exceptions as in CDBG

Housing must qualify under housing objective, but can use proportionate allocation approach for multifamily

Non-housing can qualify under limited clientele or area benefit—but only if service area is residential

Qualifying Activities Under the NSP Objective (continued)


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HUD Supplies Census Data CDBG

As in CDBG, grantee Defines ‘Income’ (See 570.3)

Documenting Income - Can Use ‘Self Certification‘ But Need to Verify

Qualifying Activities Under the NSP Objective (continued)


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570.208(d)(1) —Property Acquisition CDBG

Be alert to Change of Use [570.505 and 570.503(c)(8)]

570.208(d)(2)

Other Related Requirements



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25% Low-Income Set-Aside CDBG

  • At Least 25% of NSP Funds

  • Based Only on Housing Low-Income (50% of Area Median Income)

  • 25% of Total Funds, Not Beneficiaries; Not Applied to Each Activity


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25% Low-Income Set-Aside CDBG(continued)

  • Use Abandoned or Foreclosed Properties Only

  • Must Provide ‘Permanent’ Housing

  • No Group Homes or Shelters


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25% Low-Income Set-Aside CDBG(continued)

  • Maintain Accurate Records to Account for 25% Set-Aside

  • Identify and Report Allowable Costs Directly Attributable to the Resulting Low-Income Units through DRGR

  • Plan and Implement your NSP Initiatives Carefully


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Eligible Uses/Activities/Properties CDBG

NSP National Objective

Meeting the National Objective

25% Low-Income Set-Aside

www.hud.gov/nsp

Module 1 Summary


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