Posted by:
Steve Dubb
$3.92 billion in grants to states, localities
Created as part of the Housing and Economic Recovery Act of 2008, the Neighborhood Stabilization Program at the U.S. Department of Housing & Urban Development (HUD) is a one-time grant program that aims to assist states and localities to acquire foreclosed properties, reduce the impact on neighboring families (who are seeing their property values fall due to a foreclosure-saturated housing market), and rehabilitate them for affordable housing. The Housing and Economy Recovery Act is the same housing and foreclosure bill that C-W.org has blogged about before, i.e., the bill that included the government take-over of Fannie and Freddie Mac as well as the establishment of a national low-income housing trust fund.
HUD’s Neighborhood Stabilization Program specifically comes out of the $3.92 billion included in the legislation to assist communities to acquire and rehabilitate foreclosed properties. The HUD grants provide one-time 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 and is authorized under Title III of the Housing and Economic Recovery Act legislation. The formula developed by HUD awards grants to states and local jurisdictions, using a number of factors, which aim to direct resources to those communities hardest hit by foreclosures and delinquencies.
As with the Community Development Block Grant program, it is up to local communities to develop their own programs and funding priorities. This provides an important opportunity for community wealth builders, such as local community land trusts, community development corporations, and community development financial institutions, to influence implementation at the local level. The opportunity to set up land banks, such as the one in Genesee County (county seat of Flint) in Michigan, is clear. But communities are setting their funding priorities quickly, so the time to act is limited.
According to HUD rules, at least 25 percent of the funds appropriated for the purchase and redevelopment of abandoned or foreclosed homes or residential properties must be used to house individuals or families whose incomes do not exceed 50 percent of the area median income and all funds must be used for individuals and families earning less than 120 percent of area median income
Eligible uses include, but are not limited to:
* Establish financing mechanisms for purchase and redevelopment of foreclosed homes and residential properties;
* Purchase and rehabilitate homes and residential properties abandoned or foreclosed;
* Establish land banks for foreclosed homes;
* Demolish blighted structures;
* Redevelop demolished or vacant properties
In the wake of the debate over $700 billion to save Wall Street from its own excesses, the $3.9 billion provided to cities, counties, and states to intervene in the foreclosure crisis seems like little more than spare change. For instance, the city of Cleveland, Ohio, one of the cities hardest hit by foreclosure (with a 12.7% foreclosure rate (!) according to HUD) gets a little over $16 million.
Still, this is an important opportunity for community wealth builders to design effective strategies to clear vacant land, organize the vacant land in land banks for productive use, and develop a long term vision, so that money spent now may seed efforts for the benefit of long-term community building. As the comments section of this column from a Cleveland Plain Dealer blog makes clear, skeptics abound. But if cities use appropriate community wealth building techniques, then they can counter this skepticism. A good set of resources to get started on designing programs that can work in your community can be found at this National Vacant Properties Coalition site. The organization also maintains a very useful collection of general resources about community foreclosure prevention and intervention efforts here.