California Department of Housing and Community Development Rita Levy, Program Manager – Neighborhood Stabilization P

1. Neighborhood Stabilization Program (NSP) — Application Workshop California Department of Housing and Community Development Rita Levy, Program Manager – Neighborhood Stabilization Program Division of Financial Assistance

3. Agenda • NSP Overview • Federal Overlays • NSP Program Income • NSP Reporting Requirements • NSP Activities • NSP Application • Questions

4. NSP — Overview

5. Housing and Economic Recovery Act of 2008 (HERA) • Provided $3.92 Billion to assist States and localities in redevelopment efforts • Considered a Special Allocation of 2008 CDBG Funds • Amounts determined by formula established by HUD using criteria specified by HERA

6. HUD’s Criteria for Local Distribution • NSP grantees must target funds to give priority emphasis and consideration to areas with greatest need, including those: • With the greatest percentage of home foreclosures; • With the highest percentage of homes financed by a subprime mortgage related loan; and • Identified as likely to face a significant rise in the rate of home foreclosures.

7. NSP Allocations for California • HUD provided $ 384,530,267 in NSP direct allocations to 46 entitlement jurisdictions in California. • HUD provided $ 145,071,506 in NSP funding to the State of California, Department of Housing and Community Development for statewide local distribution. • Total NSP funding for California = $ 529,601,773.

8. Timeline for Use of Funds • The State of California must use NSP funds no later than 18 months after the execution of grant agreement with HUD (March 20, 2009 – Executed). Use = obligate for a specific project Federal Register Notice (pg. 58332): “Funds are obligated for an activity when orders are placed, contracts are awarded, services are received, and similar transactions have occurred that require payment by the state, unit of general local government, or subrecipient during the same or a future period.”

9. Timeline for Use of Funds The Department has established the following timelines in order to achieve compliance: • State NSP grantees must use/obligate 75% of their NSP allocation amount by 12/31/2009 • State NSP grantees must use/obligate 100% of their NSP allocation amount by 3/31/2010 Note: Failure to meet the established timelines for use/obligation of funds will result in the Department recapturing those funds.

10. Expenditure of Funds • The State NSP must expend 100% of NSP funds no later than 48 months after execution of the grant agreement with HUD. • The Department has established the following timeline in order to achieve compliance: • State NSP grantees must expend 100% of all NSP funds by September 30, 2011.

11. Expenditure of Funds Note: Failure to comply with the established milestone for expenditure of funds will result in the Department recapturing those NSP funds.

12. NSP Application Timelines

13. NSP Application Timelines • NOFA Release April 30, 2009 • Application Release April 30, 2009 • App. Workshops May 5-19, 2009 • Applications Due(by 5pm) Round 1 – Tiers 1 & 2 June 15, 2009 Round 2 – County Reallocation July 15, 2009 • Awards Announced Continuously • Contracts Executed July-August, 2009

14. NSP Funding Allocations

15. NSP Funding Allocations Funding allocations for State NSP jurisdictions are identified in the NOFA: • Appendix B (Tier 1) • Appendix C (Tier 2) Exception: Tier 2 county jurisdictions that may receive NSP funds not requested by cities within their county. However, the application must equal or exceed $1 million.

16. NSP Eligible Applicants

17. Eligible Applicants • Tier 1 – Applicants with an NSP Allocation amount of $1 million or more may apply individually. (See Appendix B of the NOFA) • Tier 2 – Applicants with an NSP Allocation of less than $1 million must apply jointly with other jurisdictions to meet the minimum application threshold of $1 million. (See Appendix C of the NOFA)

18. NSP National Objective

19. NSP National Objective • HERA preempts regular CDBG national objectives • HERA directs that all funds be used to benefit individuals at or below 120% of area median income (low-, moderate-, middle-income; also referred to as LMMI) FY 2009 Section 8 Income Limits(50% - 120% - NSP) www.huduser.org/datasets/nsp/FY2009Section8Limits_50_120_reformat.xls FY 2009 Section 8 Income Limits(30% - 80% - CDBG)www.huduser.org/Datasets/IL/IL09/ca.pdf • Slum/blight and urgent need national objectives are NOT applicable to NSP

20. NSP National Objective • Additional HERA requirement - Not less than 25% of funds available to each HUD grantee must be used for housing activities that benefit individuals whose incomes do not exceed 50% of area median income. • The Department will ensure compliance with this requirement by releasing a separate NOFA/Application for these 25% set-aside funds.

21. NSP Eligible Uses

22. NSP Eligible Uses Correlated Activities Eligible Use • 1.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

23. NSP Eligible Uses Eligible Use Correlated 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 & preservation activities for homes & other residential properties • Housing counseling for those seeking to take part in the activity

24. NSP Eligible Uses Eligible Use Correlated Activities 3. Establish land banks for homes that have been foreclosed upon • Acquisition • Disposition (includes maintenance)

25. NSP Eligible Uses Correlated Activities Eligible Use 4. Demolish blighted structures • Clearance, for blighted structures only

26. NSP Eligible Uses Eligible Use Correlated Activities • Acquisition • Disposition • Public facilities and improvements • Housing Counseling Public Services (limited to prospective purchasers or tenants of redeveloped properties) • Relocation 5. Redevelop demolished or vacant properties

27. NSP Eligible Uses Eligible Use Correlated Activities 5. Redevelop demolished or vacant properties (continued) • New housing construction • Direct homeownership assistance • 570.204 activities by Community Based Development Organizations

28. Eligible Use Considerations • All grant funds must be used for an eligible activity according to HERA. • Each activity must also be CDBG-eligible and meet a LMMI national objective. • CDBG regulatory definitions of eligible activities apply to NSP except where specifically modified.

29. Eligible Use Considerations • New construction of housing is an eligible use under NSP’s Redevelopment. This supersedes the limitation on new construction of housing in the CDBG program.

30. Eligible Use Considerations • Housing rehabilitation is currently not a CDBG-correlated eligible activity under Redevelopment. The CDBG regulations on public facilities allow rehabilitation. This is to be amended. • A vacant property acquired, with a structure, under CDBG may be renovated into a public facility, such as a neighborhood center, homeless shelter or halfway house.

31. Affordability Provisions

32. Affordability Provisions • All NSP assisted properties, related to housing, must be subject to continued affordability. HOME requirements are to be followed at minimum. • HOME Affordability Provisions • Rental Housing at 24 CFR 92.252 • Homeownership at 24 CFR 92.254

33. NSP Ineligible Uses

34. 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, except for the Redevelopment use.

35. Funding Factors

36. Funding Factors • Greatest Need. All applicants, grantee or lead agency, must determine by analysis, and demonstrate by data sources and mapping, the defined areas of greatest need in their community(ies). • Capacity. Applicants considered for NSP funding must demonstrate previous and/or current capacity to carry out the proposed NSP activities.

37. Funding Factors • Readiness. All applicants must clearly demonstrate readiness to begin implementing the proposed activity(ies), due to the short timeline to “use” funds. • Eligibility. The proposed activity(ies) must be eligible per the Housing the Economic Recovery Act of 2008 (HERA).

38. Funding Factors • LMMI Benefit. The proposed activity(ies) must clearly demonstrate compliance with the NSP national objective of low-, moderate-, middle-income (LMMI) benefit. Note: For NSP, LMMI benefit includes households whose incomes are up to 120%, or less, of area median income.

39. Federal Overlays

40. Federal Overlays(federal compliance requirements associated with NSP funding) • Citizen Participation • Procurement • NEPA Environmental Review • Labor Standards • Equal Opportunity & Fair Housing • Relocation • Lead-Based Paint

41. Citizen Participation NSP Applicants must comply with proper Citizen Participation Requirements which include: • Properly notice & conduct a public hearing for “program design phase” of the application process • Public noticing must be timely, published in appropriate languages (for limited English proficient), contain all NSP information (max. $, eligible activities, national objective, displacement, etc.) • Public hearing must be held in at a time and place that is convenient/accessible for most residents.

42. Citizen Participation • Properly notice & conduct a public hearing, before the governing board, at the “application submittal phase” • Public notice must be timely, published in appropriate languages (for limited English proficient), contain all NSP Application information(all joint applicants,all activities included in the application, dollar amount requested, the anticipated LMMI benefit, the proposed target areas, etc.) • Public hearing must be held at a time and place that is convenient/accessible for most residents. Refer to NSP website for guidance document at: www.hcd.ca.gov/fa/nsp/final_Citizen_Participation.pdf

43. Procurement • Grantees must have written procurement standards and procedures. • At a minimum, all supplies, equipment, construction, and other services acquired in whole or in part with federal funds must: • Be obtained as efficiently and economically as possible; • Be procured in a manner that provides, to the maximum extent possible, open and free competition; and

44. Procurement • Comply with federal procurement requirements in accordance with 24 CFR Part 85.36 24 CFR, Part 85.36 can be found at: www.hud.gov/offices/lead/library/lead/24_CFRPART_85.pdf

45. Procurement • Solicitations for goods and services must: • be based on a clear and accurate description of the material, product, or service to be procured • cannot contain features which unduly restrict competition • must explain all the requirements that the bidder/offeror has to meet for bid to be evaluated by the grantee

46. Procurement • Awards are to be made to the bidder/offeror whose bid/offer is responsive to the solicitation and is most advantageous to the grantee, price and other factors considered. (contractor integrity, compliance with public policy, record of past performance, and financial and technical resources) • Loss Leader agreements are not allowable

47. Procurement • Unfair competitive advantage is not allowable. (If a grantee used a contractor to develop/draft specifications, requirements, statements of work, invitation for bids, and/or RFPs, the grantee must exclude that contractor from the competition for such.)

48. Procurement • Debarred/ineligible contractors cannot be awarded any funds.(Under Executive Order 12549, “Debarment and Suspension” (24 CFR 85.35), the grantee must ensure that awards are not made to any party which is debarred or suspended or otherwise excluded from participation in federal assistance programs.) • Grantee must check the Excluded Parties List System at: www.epls.gov and maintain a copy of the verification results, (including their own city/county)

49. Procurement • Grantee must ensure that all required contract clauses/provisions are included in all NSP contracts(subrecipients, consultants, contractors, etc.) For additional information regarding required contract clauses/provisions, refer to our NSP website and click on the resource link on the right side of the homepage at: www.hcd.ca.gov/fa/nsp/ For additional information regarding procurement, refer to CDBG Grant Management Manual, Chapter 8 at: www.hcd.ca.gov/fa/cdbg/manual/Chapter8Procurement.doc