Maximizing Your Stimulus Part IV: HUD Issues NOFA for Second Round of Neighborhood Stabilization Program

In this latest installment of our Maximizing Your Stimulus e-Alert series, we summarize HUD’s recently issued NOFA for additional Neighborhood Stabilization Program (NSP) funding appropriated through the ARRA. The NSP was established to assist communities suffering from foreclosures and property abandonment.

Earlier this month, HUD issued notice that $1.93 billion has been appropriated for a second round of NSP funding. States, local governments, public and private nonprofits (including public housing authorities), and consortia of nonprofit entities are eligible to compete for the NSP funding. In addition, any eligible entity may submit a proposal in partnership with a for-profit entity provided that the governmental or nonprofit entity is the lead agency. Applications for NSP funds are due on July 17, 2009.

Eligible uses for the funding under the second round of NSP funding include: establishing financing mechanisms for purchase and redevelopment of foreclosed homes and residential properties; purchasing and rehabilitating abandoned or foreclosed homes and residential properties; establishing land banks for foreclosed homes and residential properties; demolishing blighted structures; and redeveloping demolished or vacant properties for residential use. Demolition of public housing is not permitted.

Applications for NSP funding will be judged based on a number of criteria, including the capacity of the applicant, community need in the targeted geographic area as evidenced by foreclosure and vacancy rates, the leveraging potential of the proposal, and the ability of the proposal to achieve significant and measurable neighborhood stabilization.

Applications must be for a minimum of $5 million dollars and must demonstrate that at least 100 abandoned or foreclosed homes will be restored to productive use or that their negative impact on the community will be otherwise mitigated. All applicants must demonstrate that funds will benefit persons whose income does not exceed 120percent of area median income, and that 25percent of the funds will be used for housing for individuals and families whose income does not exceed 50percent of area median income. Housing assisted with NSP funds must remain affordable for the longest feasible term.

In addition, up to $50 million has been allocated for a separate technical assistance round of NSP funding, in which applicants can compete for funding to provide capacity-building services to local communities and other entities awarded NSP funds in Rounds 1 or 2. Applications for NSP technical assistance will be due on June 8, 2009.

Go to the HUD website (Department of Housing and Urband Development) to download copies of the published NOFA.