The Neighborhood Stabilization Program offers communities an opportunity to create affordable housing
While continuums were busy preparing their annual applications to HUD for the Continuum of Care program, Congress was busy passing and enacting the Housing and Economic Recovery Act of 2008. Signed into law July 30th, 2008, this Act provides for the creation of a National Housing Trust Fund, the creation of a Capital Magnet Fund, reforms to the Low Income Tax Credit Program, and the Neighborhood Stabilization Program among other things.
Under the Neighborhood Stabilization Program, New Jersey has been awarded about $64 million in emergency assistance to state and local governments to acquire and redevelop foreclosed properties that might otherwise become sources of abandonment and blight within their communities. For New Jersey, the awards are as follows:
$51 million – State of New Jersey
$2.1 million – Jersey City
$2 million – Bergen County
$3.4 million – Newark
$2.2 million – Paterson
$2.6 million – Union County
Funding provided through the Neighborhood Stabilization Program may be used to:
1) Establish financing mechanisms for purchase and redevelopment of foreclosed homes and residential properties;
2) Purchase and rehabilitate homes and residential properties abandoned or foreclosed;
3) Establish land banks for foreclosed homes;
4) Demolish blighted structures;
5) Redevelop demolished or vacant properties
The Neighborhood Stabilization Program is designed to benefit low and moderate income households. Funds may not be used to aid families making more than 120% of the area median income. 25% of the funds must be set aside to serve those making 50% of the area median income.
The six designated NSP grantees in New Jersey are preparing their action plans detailing the intended use of funds which must be submitted to HUD by December 1, 2008.
With the majority of funds for New Jersey going through the Department of Community Affairs, we encourage all communities to develop local action plans that would adequately address the foreclosure crisis in their own area. The eligible uses of the funds along with the 25% set aside for low income households makes this one time infusion perfect for the development of affordable housing opportunities for the homeless and other special needs populations. HUD encourages the participation of local Continuums of Care in the community planning process as these funds can be tied directly to the on-going work of the continuums.
The designated NSP grantees have a very short timeframe in which to expend the funds. Once funding has been released by HUD, these entities have 18 months to obligate all funds. Any funds not obligated within 18 months and spent within 4 years will be recaptured by HUD and redistributed to other communities.
Given this short time frame, it is imperative that communities begin to look at the trends they are currently facing and devising plans that would work to effectively diminish the effects of the foreclosure crisis. Communities who are able to offer NSP grantees prepared proposals with complete spending plans may be in a better position to access the funds provided through the Neighborhood Stabilization Program and ensure their communities receive the help they need.
To view the Neighborhood Stabilization Program fact sheet click here.
To view the Neighborhood Stabilization Program frequently asked questions click here.
To view the latest on NJ DCA action with regards the Neighborhood Stabilization Program click here
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