What is the NSP Program, and how is it to be used? Here is what I found from the MPLP web site,
The Neighborhood Stabilization Program
by Jim Schaafsma, MPLP Housing Law Attorney
As previously reported, Section 2301 of the Housing and Economic Recovery Act (HERA), enacted on July 30, 2008, appropriated nearly $4 billion to state and local governments for the purchase and redevelopment of abandoned and foreclosed upon residential properties (covered properties), creating the Neighborhood Stabilization Program (NSP). The act essentially says that NSP funds shall be treated as CDBG funds (HUD regards NSP funds as a special allocation of FY 2008 CDBG funding). It further prescribes that this money be allocated according to a greatest need criteria reflecting the number and percentage of home foreclosures, subprime mortgage loans, and homes in default or delinquency in each state or local government. As a result, HUD awarded Michigan and 22 of its local governments more than $263 million. (3rd highest among the states, trailing California and Florida; see Exhibit 1 for the distribution of the $263M; for MSHDAs proposed action plan including its proposed distribution of the nearly $98.7M allocated to it, see Exhibit 2)
Eligible Uses There are 5 eligible uses for these funds, which must be used within 18 months of receipt:
Income Targeting All funds must be used for households with incomes at or below 120% of the area median income (AMI); at least 25% of funds must be used to provide housing for households with income at or below 50% of AMI. To the maximum extent practicable and for the longest feasible term properties that are sold, rented or redeveloped under the NSP shall remain affordable to the low-moderate income households noted above.
Action Plan The act also lets HUD in its administration of NSP to specify alternative requirements to any CDBG provision, consistent with Section 2301. In issuing its notice implementing the program, HUD did specify such requirements, including that a state or local government allocated NSP funds submit an application for its allocation (action plan) by December 1, and that that application be for its total allocation. The action plan2 must be open to public comment for at least 15 days and be posted prominently on the grantees web site. The notice also defines several terms relevant to the program (e.g. abandoned; blighted structure; foreclosed defined to include tax foreclosure)
Cooperation between local governments The Notice also encourages local governments to consider applying for less than their full allocation, in which case the balance will pass to their state agency. It also encourages cooperation between local governments in several forms: joint requests from contiguous local governments; allowing existing CDBG cooperation agreements between city and county governments to cover NSP funding; and allowing a local government to forge a subrecipient agreement with another jurisdiction or a non-profit to administer the NSP grant. The guidance allows 10% of NSP funds to go to general administration and planning.
1 for 1 waived, relocation assistance not The guidance waivers the One for One dwelling unit replacement requirement in the CDBG statute (the Housing and Community Development Act of 1974, at 42 U.S.C. 5304(d)), saying the requirement would be onerous for many local governments where there is a surplus of covered properties, as well as for HUD, and would delay NSP program operations. But, it does not waive the generous relocation assistance provisions of 5304(d) or the Uniform Relocation Assistance Act.
Certification HUD requires that NSP grantees submit 14 certifications related to their NSP program, including that it will affirmatively further fair housing; that it is consistent with its HUD approved consolidated plan; that NSP funds will be used within 18 months; and that those funds will be used only with respect to households with income not above 120% of AMI.
HUD Website The HUD guidance (Federal Register Notice) and much more information (see, e.g. detailed local foreclosure information under NSP Grantee Data Resources Data at the Program Management Resources link) about the NSP are available on HUDs website: http://www.hud.gov/offices/cpd/communitydevelopment/programs/neighborhoodspg/
As noted above, NSP grantees must submit their action plans to HUD by December 1. These plans must be available to the public and online, and open to comment. The time for making comments on a proposed plan is now. In thinking about making comments to your local government, here are some areas to consider:
|MI||MICHIGAN STATE PROGRAM||$98,653,915|
MSHDAs Draft NSP Action PlanMSHDA is the state agency administering Michigans nearly $99M NSP state program. Observing that Michigans generally affordable housing market has meant that the neighborhood impacts of foreclosure are far more deeply felt in low and moderate income neighborhoods, MSHDAs plan prioritize[s] funding for high poverty communities with high projected foreclosure rates and high vacancy rates relative to other communities.
Distribution and Uses of NSP funds MSHDA proposes to distribute money as follows:
MSHDA proposes the following (6) eligible uses/activities for NSP funds (it also identifies eligible applicants, methods of application direct or RFP, eligible end uses and the number of NSP Units and dollars):
The draft plan provides specific activity information for each of these eligible uses, including an activity description, requirements, and performance measures.
Blighted structure public nuisance under local code or ordinance; attractive nuisance because of condition or use; dangerous fire hazard; utilities/mechanicals disconnected/ineffective for a year or more.
Affordable rents the HOME program definition (at 24 CFR 92.,252 the lesser of the FMR or 30% of 65% of AMI, plus a utility allowance)
“Continued affordability” the HOME program standard (minimum affordability period of 5-20 years depending on amount of funds expended per unit)
“Rehabilitation standards” compliance with local codes and standards