Transcript Slide 1
Federal Reserve Survey of Neighborhood Stabilization Program Paul Wenske Senior Community Affairs Advisor January 27, 2010 What is the NSP? • $3.92 billion HUD grant on September 27, 2008. • Additional $2 billion allocated in 2009 Stimulus. • Provides emergency assistance to state and local governments. • Encourages acquisition and redevelopment of foreclosed properties. • Grantees have 18 months to obligate funds and four years to expend them. NSP Goals • Buy abandoned or foreclosed homes. • Redevelop demolished or vacant properties • Demolish or rehabilitate abandoned, foreclosed or blighted properties. • Offer down payment and closing cost assistance to low- and moderate-income homebuyers. • Reuse properties for affordable rental housing. Need for Evaluation • • • • • • • Daunting task to address national problem. Funding is generally insufficient for task. Program time frame is compressed. Little hands-on training provided. Varying technical capacity among grantees. Need to provide timely information. Identify and replicate early successes. Face Of Need: Foreclosed properties that become vacant or abandoned are more vulnerable to neglect and crime, leading to destabilized and dangerous neighborhoods. Effect of Foreclosed and Vacant Homes • Surrounding properties within 1/8 mile (660) feet are negatively affected. • Banks face dilemma of selling houses at steeply lower prices. • Tax revenues fall as values plummet or homes are abandoned; utility bills aren’t paid. • Governments may have to raise taxes elsewhere. Survey Structure • • • • • • System-wide, written survey questions. Conducted with officials implementing NSP. Responses are entered into a database. NSP case studies in selected areas. Creation of a final report on NSP. Circulation of report throughout system. Share of Communities Working on Single Family Housing Eligible Use Are Not • Purchase and rehab: 86% 5% • Financing mechanism: 81 % 17 % • Demolition: 61 % 33 % • Redevelopment: 53 % 32 % • Land Banking 29 % 65 % Top Five Challenges to Administer • Time to implement: 45 % • Complexity of program: 25 % • Working with very low income: 15 % • Changes in program: 13 % • Discount: 13 % Top Five Hurdles Encountered (Outside HUD Control) • Capacity 18 % • Investors: 15 % • Time: 15 % • State-related: 15 % • Availability of Housing: 09 % Crunch Time • • • • Deadline to obligate funds is September 18, 2010. Money not obligated by then can be lost. What if you can’t buy REO properties in time? Scenario One: Need to contract with lender before home is sold to private investor. • Scenario Two: Need to obligate funds by deadline or lose money to buy homes in future. Some Relief Conditional Contracts: • Before: HUD frowned on conditional contracts. Required reviews could take 60 to 90 days. • Now: HUD will allow conditional contract language for environmental reviews. Contracting with Third Party to Buy Homes: • Before: Money not committed to purchase contracts by deadline could be forfeited. • Now: HUD expected to allow communities to obligate funds by contracting with third-party to buy homes. For More Information • Federal Reserve Bank: www.federalreserve.gov • U.S. Housing and Urban Development: www.hud.gov • NSP Data: www.huduser.org/datasets/nsp.html • National Community Stabilization Trust: www.stabilizationtrust.com Paul Wenske Senior Community Affairs Advisor Community Affairs Department 1 Memorial Drive Kansas City, MO 64198 (816) 881-2886