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@nw.org Ascala Tsegaye, atsegaye@nw.org ICF International, www.icfi.com Marsha Tonkovich, mtonkovich@icfi.com Anita Rechler, arechler@icfi.com Brandy Bones, bbones@icfi.com 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/

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 HUD’s 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

16. Eligible NSP Activities

17. Eligible NSP Activities

18. Eligible NSP Activities

19. Eligible NSP Activities

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 < 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

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 <50% 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 • Purchase at discount UNIT FORECLOSED/ ABANDONED UNIT PURCHASED BY GRANTEE/PARTNER 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 • Grantee’s 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/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

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/communitydevelopment/programs/neighborhoodspg/