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Missoula Office of Planning & Grants June 3, 2009 Neighborhood Stabilization Program (NSP) Overview NSP provides emergency assistance to state and local governments to acquire and redevelop foreclosed properties that might otherwise become sources of abandonment and blight The use of grant funds must constitute an eligible use under the Housing Economic Recovery Act (HERA) (passed in 2008) Treated as CDBG funds, with some changes The Montana Department of Commerce (MDOC) administers the state’s NSP funds HERA provides $3.92 billion to assist States and localities in redevelopment efforts Senator Baucus amended the law to provide that each state will receive a minimum of $19.6 million; Montana receives $19.6 million Allocation to States and localities was based on need, based on number and percent of home foreclosures, homes financed by a subprime mortgage, and homes in default or delinquency Eligible households to be served Household size 1 2 3 4 5 6 7 8 Missoula FY 2008 Area Median Income (AMI): $55,400 FAMILY OF FOUR Low income (50% AMI) 19,400 22,150 24,950 27,700 29,900 32,150 34,350 36,550 Moderate income (80% AMI) 31,000 35,450 39,850 44,300 47,850 51,400 54,950 58,500 Middle income (120% AMI) 46,550 53,200 59,850 66,500 71,800 77,100 82,450 87,750 ALL HOUSEHOLDS ASSISTED MUST HAVE INCOME AT OR BELOW 120% OF AMI! Uses of NSP funding A. Establish financing mechanisms for purchase & redevelopment of foreclosed upon homes & residential properties including such mechanisms as soft-seconds, loan loss reserves, and shared-equity loans for low-and moderate-income homebuyers a. A “foreclosed” property must have completed the foreclosure process and now owned by the bank (REO) b. “Abandoned” property must have tax/mortgage proceedings begun, no payments made for 90 days and vacant for 90 days B. Purchase and rehabilitate homes and residential properties that have been abandoned or foreclosed upon, in order to sell, rent, or redevelop a. Acquisition must be 5% or more under appraisal b. Rehabilitation and preservation activities are for residential, including single or multi-family rental or single family ownership C. Establish land banks for homes that have been foreclosed upon (must be sold within 10 years) a. Acquisition or more under appraisal) b. Disposition (includes maintenance) c. Must be sold within 10 years d. Cannot be vacant land D. Demolish blighted structures a. Clearance of blighted structures only ---PAGE BREAK--- Missoula Office of Planning & Grants June 3, 2009 b. Can demolish commercial, industrial or other types of structures for the purpose of creating housing c. Can be occupied structures (relocation must be provided) d. Is NOT rehabilitation or rehabilitation of blight e. Structure is NOT required to be foreclosed or abandoned E. Redevelop demolished or vacant properties a. Acquisition or more under appraisal) or disposition b. Public facilities and improvements c. Relocation d. Housing counseling (limited to prospective purchasers or tenants of redeveloped properties) e. New housing construction (single or multifamily rental or homeownership, temporary housing) f. Direct homeownership assistance g. Can’t develop or acquire “greenfield” sites Eligible recipients Must be within a Designated Area of Greatest Need (26 counties + 7 Indian reservations) The State of Montana Any Unit of General Local Government Any CDBG Entitlement Community Any Indian Tribe Any Non-profit Organization (national only) Time frame All funds must be used within 18 months, ending on September 17, 2010 “Use” means obligation of funds, which means a signed contract with a contractor or a buy/sell agreement All funds must be expended on NSP activities within 4 years—by March 17, 2013 HUD will recapture and reallocate any funds not expended Land banks limited to 10 years—March 19, 2019 Distribution of funds First 25% ($4.9 million) of state allocation must go to projects in Uses A & B – foreclosed or abandoned residential properties No firm, fixed amounts; successive and incremental approach NSP funds committed when project activities are ready to be obligated Multiple contracts for NSP funds Applications must go through a unit of local government There is no limit on the number of applications, or the amount, per county Missoula applications by the City or County through the Office of Planning and Grants Visit the Montana Dept. of Commerce website: http://comdev.mt.gov/CDD_CDBG_NSP.asp Or the U.S. Department of Housing and Urban Development website: http://www.hud.gov/offices/cpd/communitydevelopment/programs/neighborhoodspg/