Program Name: Neighborhood Stabilization Program 2
Point of Contact: Deborah McColloch, Director of Housing
Federal Grant Name: Neighborhood Stabilization Program 2
Programs Supported Through Funding: Affordable Housing Acquisition, Rehabilitation, Redevelopment and Re-sale or Re-Use
Amount Applied For: $58,875,000
Funds Awarded: Competitive grant program; awards have not yet been made, but announcements are expected by December 1, 2009
Point(s) of Contact for Project(s):
HUD’s competitive round of Neighborhood Stabilization Program funding (the only one through ARRA) was a highly proscriptive, competitive application process. While a range of possible activities was allowed, HUD tightly defined eligible census tracts and eligible activities. The City’s application, a joint effort between OHCD and the Redevelopment Authority (with OHCD as applicant) is a very aggressive funding request, designed to treat two kinds of areas in the City, described in this excerpt from the application:
The City recognizes that different sets of interventions will be more likely to stabilize the two kinds of areas identified: Conservation Areas and Redevelopment Areas. The Conservation neighborhoods, located in an ‘arc” at a distance from Center City, will be where most of the homebuyer incentives and acquisition/rehab/resale activity will take place. The homebuyer incentives will allow counseled homebuyers to purchase foreclosed home that need modest levels of attention, and the acquisition/rehab financing will help developers address the more deteriorated foreclosed homes and return them to homeowners. These interventions will address incipient blight and neighborhood decline, support value in the housing market, and stabilize these census tracts.
In the Redevelopment Areas [Point Breeze, Mantua, Nicetown/Wayne Junction], NSP2 activities will be targeted more specifically, based on each neighborhood’s challenges and opportunities. In general, these neighborhoods need larger scale redevelopment to “jump start” the market, and selective demolition, particularly of larger, vacant, obsolete industrial structures. They will also need the full complement of homebuyer incentives and acquisition, rehab and re-sale offered in the Conservation areas.
The following activities were proposed in the City’s application:
Homebuyer Incentives Coupled with Housing Counseling
The City will use NSP2 funds to assist income-eligible first-time homebuyers to address the issue of cash required to purchase foreclosed upon homes in the targeted areas. The City will offer “soft second” loans for up to $25,000 to cover down payment and closing costs, as well as an allowance for code compliance, lead-based paint abatement, and energy efficiency improvements. The home buyer will be required to provide at least 3.5% of the purchase price and to receive pre-purchase counseling offered by a HUD-approved housing counseling agency. This activity will be available throughout the entire target area. 200 soft second loans are anticipated. $5,300,000.
Loan Loss Reserves For Construction Financing
The City proposes to work with the National Community Stabilization Trust to establish a loan loss reserve fund for financing construction loans for affordable housing development in targeted NSP2-eligible neighborhoods. The fund will support construction financing for affordable housing development (rehabilitation or new construction) of key homeownership or rental projects of sufficient scale or importance to affect the local housing market positively. NSP2 funds will be held as security for larger construction loans, which will be offered at zero percent or a blended, below market rate to the developer/borrower. The loan loss reserve funds will be used for projects in the three redevelopment areas (Mantua, Point Breeze, Nicetown/Wayne Junction). $1,875,000.
Acquisition and Renovation of Vacant, Foreclosed Homes
Vacant homes, either long-term vacant structures already owned by the City or foreclosed property owned by lenders, will be renovated and resold under this component of the program, under similar terms to the work already underway through NSP. Average subsidy levels will be roughly $75,000. Developers, both for-profit and nonprofit, will receive a developers’ fee for their services upon sale of the property to an income-eligible buyer. This effort is an expansion of the City’s current NSP1 program. This activity will be made available throughout the entire target area. 100 units are anticipated. $7,500,000.
Purchase, Rehabilitation and Re-Use of Foreclosed Upon Structures as Multifamily Housing
Vacant or occupied multifamily structures that are in need of substantial rehabilitation and are facing foreclosure will be acquired and redeveloped under this component of the program. The City has identified a number of older affordable housing developments in need of substantial investment if they are to continue to operate. The activity may be used throughout the target area. 100 units are anticipated. $20,000,000.
Redevelopment of Vacant Land as Housing
In the three Redevelopment neighborhoods – Point Breeze, Mantua, and Nicetown/Wayne Junction – the City will complete the assembly of land and finance the development of up to three large-scale affordable housing developments. At least one of these developments will be for homeownership targeted to families with incomes up to 120 percent of the Area Median Income. 100 housing units are anticipated. $14,000,000.
Demolition of Blighted Structures
The City expects that most of its proposed Demolition budget will be used to demolish commercial and industrial buildings, rather than residential units. Some demolition of uninhabitable, severely deteriorated, long-term vacant residential units may be required to remove blighting influences or to assemble a larger site for redevelopment. Approximately 50 commercial and/or residential demolitions are anticipated. $5,000,000.
Administrative Costs, as allowed (up to 10% of total)
The NSP2 application template did not request this information and no estimates have been made.