Transcript Dealing with a New Market Place: Managing Mortgage

The Neighborhood Stabilization
Program and Nonprofit Providers
NeighborWorks America
ICF International
October 31, 2008
Meeting Facilitators
NeighborWorks America
Sarah Greenberg, [email protected]
Ascala Tsegaye, [email protected]
ICF International, www.icfi.com
Marsha Tonkovich, [email protected]
Anita Rechler, [email protected]
Brandy Bones, [email protected]
US Department of Housing and Urban Affairs
Stan Gimont, Director of Office of Block Grant Assistance
http://www.hud.gov/offices/cpd/communitydevelopment/progra
ms/neighborhoodspg/
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
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
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
BASIC PROGRAM OVERVIEW
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
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
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
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)
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
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
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
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
Eligible NSP Activities
Eligible Use
Eligible Activities
1. Financing
 Activity Delivery
mechanisms for
cost for an eligible
purchase &
activity (designing
redevelopment of
& setting it up)
foreclosed upon
 The financing of an
homes & residential
NSP eligible
properties
activity –
purchase,
redevelopment,
demolition,
construction, etc.
Eligible NSP Activities
Eligible Use
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
Eligible Activities




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
Eligible NSP Activities
Eligible Use
3. Land banks for
homes that have
been foreclosed
upon
Eligible Activities
 Acquisition
 Disposition
(includes
maintenance)
Eligible NSP Activities
Eligible Use
4. Demolish
blighted structures
Eligible Activities
• Clearance, for
blighted structures
only
Eligible NSP Activities
Eligible Use
5. Redevelop
demolished or
vacant properties
Eligible Activities
 Acquisition
 Disposition
 Public facilities and
improvements
 Housing Counseling Public
Services (limited to purchasers
or tenants of redeveloped
properties)
 Relocation
 New Housing Construction
 Direct homeownership
assistance
 570.204 activities by CBDOs
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
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

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
PROGRAM IMPLEMENTATION/
ADMINISTRATION
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
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
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
Typical NSP Unit Process
UNIT FORECLOSED/
ABANDONED
UNIT PURCHASED BY
GRANTEE/PARTNER
UNIT REHABBED/
DEMOLISHED/
REDEVELOPED
UNIT SOLD TO
HOMEBUYER OR RENTED
OR RE-USED
PROGRAM INCOME
TRACKED/USED/REMITTED
Purchase at discount
Rehab to standards
Sale price cannot exceed cost
Use of PI depends on date &
NSP activity
Purchase Discount
Homes must be purchased at the
“maximum reasonable discount”
Minimum of 5% per home
15% average for entire portfolio*
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
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
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
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 $$$
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
NONPROFIT ROLES
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
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
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
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?
Getting Involved with NSP
 Find out the amount of NSP funds
available in community
(http://www.hud.gov/offices/cpd/communitydevel
opment/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
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/communit
ydevelopment/programs/neighborhood
spg/