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NEIBORHOOD STABLIZATION PROGRAM – NSP 2008. Stakeholder’s Meeting. INTRODUCTIONS & WELCOME. CONGRESS PASSES H.R. 3321 KNOWN AS HOUSING and ECONOMIC RECOVERY ACT OF 2008.

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CONGRESS PASSES H.R. 3321 KNOWN AS HOUSING and ECONOMIC RECOVERY ACT OF 2008

On July 26, 2008 Congress passed bill H.R. 3221 commonly referred as the Housing and Economic Recovery Act of 2008. Under this section, $3.92 billion is set aside to provide emergency assistance for the redevelopment of abandoned and foreclosed homes. Congress also indicated in the bill that the U.S. Department of Housing and Urban Development (HUD) would establish the formula allocation and fund “states and units of general local government with the greatest need, as such need is determined in the discretion of the Secretary”.

HUD RELEASES METHODOLGY FOR ALLOCATION

On September 26, HUD released their Methodology for Allocation of $3.92 billion along with the list of states and local governments who will receive the allocation and their amounts.

Louisiana’s state allocation amount is $34,183,994 Local government allocation for

Baton Rouge is $2,308,848 million and New Orleans is $2,302,208.

LHFA AND LOUISIANA OCD PARTNERS

On September 29, the Federal Register published and released HUD’s notice to implement its newly created program, Neighborhood Stabilization Program (NSP). NSP will be regulated under HUD’s existing Community and Development Planning through Community Development Block Grant (CDBG). LHFA will develop the Action Plan through OCD, who will serve as the lead and responsible entity. OCD will monitor LHFA as it implements the NSP Action Plan.

BACKGROUND
uses of nsp funding
ELIGIBLE USE

ELIGIBLE ACTIVITIES

Uses of NSP Funding
  • A. Establish financing mechanisms for purchase & redevelopment of foreclosed upon homes & residential properties…
  • As an activity delivery cost for an eligible activity (designing & setting it up)
  • Financing of an NSP eligible activity, to carry out that activity, is eligible as part of that activity

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uses of nsp funding1
ELIGIBLE ACTIVITIES

ELIGIBLE USE

Uses of NSP Funding
  • 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

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

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uses of nsp funding2
ELIGIBLE USE

ELIGIBLE ACTIVITIES

Uses of NSP Funding
  • Acquisition
  • Disposition (includes maintenance)

C. Establish land banks for homes that have been foreclosed upon

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uses of nsp funding3
ELIGBLE USE

ELIGIBLE ACTIVITIES

Uses of NSP Funding

Clearance, for blighted structures only

D. Demolish blighted structures

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slide8
ELIGIBLE USE

ELIGIBLE ACTIVITIES

ELIGIBLE USE & ACTIVTIES

  • Acquisition
  • Disposition
  • Public facilities and improvements
  • Housing Counseling Public Services (limited to prospective purchasers or tenants of redeveloped properties)
  • Relocation

E. Redevelop demolished or vacant properties

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uses of nsp funding4
ELIGIBLE USE

ELIGIBLE ACTIVITIES

Uses of NSP Funding
  • New housing construction
  • Direct homeownership assistance
  • 570.204 activities by Community Based Development Organizations

E. Redevelop demolished or vacant properties (continued)

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eligible uses summary
Eligible Uses Summary
  • All grant funds must be used for an eligible activity according to HERA
  • Each activity must also be CDBG eligible and meet a LM national objective
  • HUD must grant written approval for any CDBG activities not listed for that eligible use
  • CDBG regulatory definitions of eligible activities apply to NSP except where specifically modified
  • New housing construction is eligible as redevelopment

ELIGIBLE USE & ACTIVTIES

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ineligible activities
Ineligible Activities:

Generally, if an activity is 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
Ineligible Activities

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nsp income targeting
Income eligibility for NSP based on 120% of area median income
  • Metro area median or state non metro median, based on where the activity is undertaken
  • HUD is providing 120% AMI data on website – www.hud.gov/nsp

NEW TERMINOLOGY

    • Low
    • Moderate
    • Middle-Income
    • 80-120% of median = Middle Income
  • CDBG Low/Mod benefit national objective criteria apply, except beneficiaries can be Low, Moderate and Middle Income
NSP Income Targeting

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nsp income targeting1
Housing Counseling
  • Limited clientele activities
  • Housing counseling for prospective purchasers/tenants
  • Public facilities such as emergency shelters, group homes
  • Land Banks – benefit a defined service area if maintenance and demolition also take place
  • Land Banks – NSP-funded properties must be obligated for a specific, eligible redevelopment within 10 years

Land Bank

Acquisition, rehabilitation, rental, sale, conversion, construction of housing unit

  • Discount for purchase properties – single family purchase
  • Homeownership assistance
  • Infrastructure for housing as part of redevelopment
  • All units must be LMMI-occupied

Housing Activities

NSP Income Targeting

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nsp income targeting2
25% to 50% of median income targeting
  • Each grantee must use at least 25% of its NSP grant plus program income for purchase/redevelopment of abandoned/foreclosed residential properties to house individuals or families with incomes at/below 50% of area median income
NSP Income Targeting

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25 set a side requirement
Applies to each direct NSP grant, not to each project/ activity or the NSP program as a whole

Grantee action plan amendment must show how grantee will comply

Final determination of actual compliance upon completion of the grant

Compliance based on dollars, not number of units

25% set a side requirement

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25 set aside requirement
Principal way to comply will be through rental housing

New construction or conversion

Acquisition or acquisition + rehab

Affordable rents & affordability period

Address needs in Continuum of Care

25% set aside requirement

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rehabilitation standards
Any purchase of a foreclosed upon home or residential property under this section should be at a discount from the current market appraised value of the home or property.

Current condition must be taken into account

Rehabilitation Standards

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rehabilitation standards1
Any rehabilitation of a foreclosed-upon home or residential property should be to the extent necessary to comply with applicable laws, codes, and other requirements. This requirement differs from the “regular” CDBG program.

Rehabilitation may include improvements to increase the energy efficiency of conservation of such homes and properties or provide a renewable energy source or sources for such homes and properties.

Rehabilitation Standards

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sale of homes
The sale of an abandoned or foreclosed upon home or residential property to an individual as a primary residence must be in an amount equal to or less than the cost to acquire and redevelop or rehabilitate such home or property up to a decent, safe, and habitable condition. Sale of Homes

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sale of homes1
Maximum sales price for a property is determined by aggregating the costs of acquisition, rehabilitation and redevelopment

Grantees must maintain sufficient documentation

Maintenance of the property w/o other NSP assisted activities not considered redevelopment or rehabilitation costs

Sale of Homes

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revenue from sale rental project
Any revenue from the sale, rental, redevelopment, rehabilitation or any other eligible use of NSP funds must be provided to and used by the State or unit of general local government.

This includes revenue received by a private individual or other entity that is not a sub-recipient.

Revenue from sale, rental project

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project area
Projects Areas
  • Shreveport
  • Alexandria
  • Monroe
  • Baton Rouge
  • New Orleans
  • Lake Charles
  • Bastrop
  • New Iberia
  • Kentwood/Tangipahoa Village
  • Winnsboro
  • Homer

FORECLSOURE RISK MAP

Project area
funding consideration
Funding Consideration
  • Provide funding set-asides for rehab and redevelopment projects (rental and homeowner) that did not receive a direct set -aside under the NSP as identified by HUD within their datasets:
  • Provide a general funding round through a request for proposal (RFP) for rehab and redevelopment projects (rental and homeowner) outside of the set-aside established by HUD.
  • Explore partnerships with land banks of foreclosed and abandon properties to place back into commerce.
  • Provide soft-seconds to low, moderate and middle income Louisiana residents for purchase and redevelopment of foreclosure properties. Utilize LHFA’s existing Mortgage Revenue Bond Program and other mortgage products to allow families to purchase these properties.
Funding consideration
funding priorities
Funding Priorities

Caddo Shreveport

Rapides Alexandria

Ouachita Monroe

*East Baton Rouge Baton Rouge

*Orleans New Orleans

Calcasieu Lake Charles

Morehouse Bastrop

Iberia New Iberia

Tangipahoa Kentwood/Tangipahoa Village

Franklin Winnsboro

Claiborne Homer

  • with the greatest percentage of home foreclosures;
  • with the highest percentage of homes financed by a subprime related loan;
  • indentified by the State or local government as likely to face a significant rise in the rate of home foreclosures.
Funding priorities
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