Posts Tagged ‘Neighborhood Stabilization Program’

Part 2: Neighborhood Stabilization What?

January 30th, 2009

As promised, here are descriptions of the remaining two activities that are included in South Dakota’s Neighborhood Stabilization Program Plan.  If you haven’t read part one, you can check it out here.  We’ve tried hard to distill the information contained in the plan to help you decide if this is an opportunity your community can and should pursue.

Activity 3.  Demolish Blighted Structures

  1. Applicants will be required to provide information, including pictures, of the blighted structures, along with costs associated with the demolition and future plans of the real property upon completion of demolition.
  2. NSP funds can only be used for the cost of clearing the blighted structure. No NSP funds can be requested for purchase of the blighted structure unless the project also qualifies under acquisition of an abandoned or foreclosed property.
  3. NSP funding will be $10,000 for single family homes or $100,000 for all other types of structures.

Only $1 million dollars is allotted towards this activity, so rural communities should not view this as an opportunity to tear down all of their unwanted, blighted properties for free.  However, if you’ve got a property or two that you plan to redevelop into housing, this might be a real opportunity for your community.

A few additional tips to think about if you’re considering Activity 3:

Activity 4.  Redevelop Demolished or Vacant Property

  1. NSP funding will be eligible for acquisition and redevelopment of acquired demolished or vacant property for activities including: new construction of housing, building infrastructure for housing, public facilities and improvements, and non residential uses such as public parks, commercial use, or mixed residential and commercial use.
  2. Providing NSP funds are used only for redevelopment activities, the property does not need to be abandoned, foreclosed upon, or previously residential.
  3. Redevelopment of demolished or vacant property can incorporate the use of a governor’s house
  4. Preference will be given for permanent housing projects serving households at or below 50 and 80% Area Median Income (AMI).

This activity offers great opportunity for a community who sees affordable housing as a strategic goal.  With your city council on board, this activity offers a way to leverage new housing for the community.  The city council could tear down a vacant, blighted structure and NSP funds could be used to construct new housing or put in a governor’s home.  Everyone wins: the city now has a property on the tax role and local businesses have a family who is more permanent and invested.

A few additional tips to think about if you’re considering Activity 3:

That’s all for now on the Neighborhood Stabilization Program.  If you have questions about South Dakota’s plan, I’d encourage you to contact Peggy Severson, the new NSP coordinator for the state.  Also, feel free to submit a question in the comment box, and we’ll do our best to find an answer!

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Neighborhood Stabilization What?

January 28th, 2009

At the Rural Learning Center, we’ve attempted to stay on top of the Neighborhood Stabilization Program requirements for South Dakota.  In an effort to continue that conversation, and provide valuable resources to those of you who are eligible to submit an application, I’d like to contribute a couple of posts that share a more simplified description of the program activities alongside our on-the-ground analysis of how they might be used in communities.  All of the program information provided here has been distilled from South Dakota’s Neighborhood Stabilization Program plan, available here.

The South Dakota plan includes four eligible activities.  The first two activities are described below, and the remaining two will be described in part two of this post tomorrow.  I should note that we’ve taken bits and pieces of the plan that we think are most relevant for communities–please read through the fine print of the plan once you decide the program is for your community.

Activity 1:  Purchase and rehabilitation of homes and residential properties that have been abandoned or foreclosed upon, in order to sell, rent or redevelop such homes and properties.

  1. Funds can be used to acquire and rehabilitate single family homes that have been abandoned or foreclosed upon (definitions of these terms are available here)
  2. Preference given to areas of demonstrate the greatest need-as determined by number/percent of foreclosures, subprime mortgages, estimated foreclosure rate and estimated foreclosure and abandonment risk score per HUD data
  3. Applicants must indicate the total sources and uses of funds for acquisition and rehabilitation of the proposed properties.  In addition, the application must indicate location of the property, number of units to be acquired and rehabilitated along with anticipated resale price or rental income to be received

It’s no secret that purchase, rehab, resell is a favorite housing strategy of ours at the Rural Learning Center.   We’re even more excited about it now that HUD has recognized it as a way to revitalize a struggling housing market.  We hope it means that communities who previously didn’t have the dollars to do purchase, rehab, resell will take advantage of NSP program funds in this area.

A few additional tips to think about if you’re considering Activity A:

Activity 2. Financing Mechanisms for Homeownership Assistance

  1. Financial assistance to purchase foreclosed upon homes.  Homeownership assistance is limited to households of 120% AMI and below, and can be used for down payment assistance, closing costs, subordinated financing, and share-equity loans
  2. Applicants may request NSP funding as either a loan or grant-preference will be given to those that leverage the funding with other sources
  3. Applicants will be required to estimate the number of homes, location of the homes, number of eligible households, and the AMI level they anticipate to serve with NSP funding
  4. NSP funding will be limited to $5000 for households of 120% AMI or less, $10,000 for households of 80% AMI or less, and $14,999 for households of 50% AMI or less
  5. At least 8 hours of homebuyer education is required to receive assistance

This activity helps to fill the gap between what a family can afford to pay and the cost of a quality home.  With that said, this activity probably does not make sense on a community by community basis due to the administrative burden of holding a loan for 15 or 30 years.  We would encourage those who need this assistance to contact larger lending organizations to make sure they’ve submitted an application for these funds.

If you’re still reading, I’m impressed.  This stuff isn’t easily digested.  And if you’re wondering, “now what?” you’re not alone.  The application for funds should be posted on South Dakota Housing Development Authority’s (SDHDA) website during the first week of February.  Staff at SDHDA has indicated that the first round of applications will be due at the end of February.

For now, we’d encourage you to start thinking about how Neighborhood Stabilization Funds could make an impact in your community.  And, watch for part two of this post coming tomorrow!

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Neighborhood Stabilization Program Plan Released

January 21st, 2009

South Dakota Housing Development Authority (SDHDA) has released their Neighborhood Stabilization Program Plan.  The Department of Housing and Urban Development (HUD) required the SDHDA to revise their original plan, which we had blogged about back in November, hence the delay in the plan’s release. 

One of the most notable changes was the elimination of twenty-six counties from the program.   Originally, SDHDA had proposed that all counties in the state would be eligible.  The eliminated counties, all of which are rural (see  non-colored areas on the map), apparently did not demonstrate sufficient needbased on high foreclosures and subprime mortgages rates as well estimates for future foreclosure and abandonment risks. 

The Sioux Falls Argus Leader ran a story on the topic on Monday, eliciting positive comments. I must admit to being frustrated, however; mainly because I know the counties that were left out could really use the help.  Having to make decisions about who needs assistance is never easy nor is it fun.  It’s just too bad some communities get left behind.

Note:  The counties not colored on the map are ineligible for the program.

 

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Communities to benefit from Neighborhood Stabilization Program

November 23rd, 2008

Does your rural community have foreclosed or abandoned properties?  If so, you’d better get your community members together to figure out how to take advantage of the Neighborhood Stabilization Program.

Set up by the Housing and Economic Recovery Act of 2008 (Congress’ first attempt to bailout the housing markets), the Neighborhood Stabilization Program provides grant funds to states and communities. 

The purpose of the money is “to purchase foreclosed or abandoned homes and to rehabilitate, resell, or redevelop these homes in order to stabilize neighborhoods and stem the decline of house values of neighboring homes.” (HUD description) In South Dakota, Governor Rounds authorized South Dakota Housing Development Authority (SDHDA) to administer the program. 

If you hear a clock ticking, it’s because South Dakota should receive its share ($19.6 million) in the first quarter of 2009. (click here for your state’s allocation) Then, states have 18 months to commit those funds to projects.  That’s operating at light speed for the federal government! 

While $19.6 million is a lot of money, there’s going to be tremendous interest in it.  Currently, South Dakota’s plan calls for 20% to go to Sioux Falls, 20% to Rapid City, and 20% to the Indian Reservations.  But let’s get down to the details.  How can your rural community use this infusion of capital? 

What the money can be used for?

That’s a lot to mull over, and you don’t have a lot of time to do it.  Those communities that have a community plan – one like the Rural Housing Playbook advocates – are probably ready to act right away.  I hope those who aren’t ready yet get right to work because I’m sure your community could benefit from this opportunity.   

 

Learn more about the Neighborhood Stabilization Program in your state

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