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NAHRO's CD Edge
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NAHRO's Homepage Notice of Funding Availability for FY 2009; Rural Housing and Economic Development Program (May 4). This publication establishes the funding criteria for the FY 2009 RHED program. A total of $26 million is available. The application deadline date is May 29, 2009. Notice of Funding Availability for FY 2009: Brownfields Economic Development Initiative (May 4). This publication establishes the funding criteria for the FY2009 BEDI program. This Notice of Funding Availability (NOFA) will not be published in the Federal Register. A total of $20 million is available. The application deadline date is June 16, 2009. CPD 09-02N: Instructions for Urban County Qualification for Participation in the Community Development Block Grant (CDBG) Program for Fiscal Years (FYs) 2010-2012 (April 24). This Notice establishes requirements, procedures and deadlines to be followed in the urban county qualification process for FYs 2010-2012. Information concerning specific considerations and responsibilities for urban counties is also provided. HUD Field Offices and urban counties are expected to adhere to the deadlines in this Notice. Federal Register Daily Digest (NAHRO Members): Last 30 days of Housing and Community Development issues published in the Federal Register. NAHRO Resources: NAHRO's 2009 Legislative and Regulatory Agenda: A comprehensive overview of NAHRO's current legislative and regulatory positions. NAHRO's FY 2010 Community Funding Reports(NAHRO Members Only): These reports are based on the President's budget request and provide estimates of FY 2010 formula grant allocations for all CDBG and HOME entitlement communities and state programs. NAHRO Staff: Saul Ramirez, Executive Director NAHRO |
May 14, 2009
Welcome to NAHRO's CD Edge, our free e-newsletter focused on federal community development programs. Please feel free to forward this newsletter to your colleagues. If you're not already subscribed to NAHRO's CD Edge, click here to subscribe. In This Issue: 1. President's FY 2010 Budget Proposal Released 4. HUD Transmits FY 2009 CPD Formula Allocations President's FY 2010 Budget Proposal Released
The White House revealed President Obama's complete Fiscal Year (FY) 2010 budget proposal on May 7 by releasing what is known as the Budget Appendix, a 1,380 page document that provides line-by-line funding recommendations for all federal programs. The President's budget blueprint proposes a total of approximately $3.6 trillion in federal spending for FY 2010, including $1.096 trillion in discretionary spending. FY 2010 is the federal fiscal year that begins on Oct. 1, 2009. NAHRO members: For our initial overview of the FY 2010 budget proposal, as well as NAHRO's coverage of HUD Secretary Shaun Donovan's May 7 briefing, see our May 7 and May 8 Direct News items. (Direct News is NAHRO's members-only email service providing breaking news and information on federal housing and community development programs.) CDBG Program The President's budget requests $4.450 billion for the Community Development Fund, which is the account that includes the CDBG formula program. Within that account, the administration is proposing $4.185 billion in funding for the CDBG formula program for FY 2010, an increase of $543 million above the FY 2009 enacted level. The administration's FY 2010 budget summary for HUD portrays its request for CDBG funding as a fulfillment of President Obama's pledge "to fully fund the program." It should be noted, however, that the CDBG formula program has been funded at higher levels in the past, even before adjusting for inflation. For example, Congress provided $4.410 billion for CDBG formula grants for FY 2001 and $4.331 billion for FY 2004. NAHRO is recommending at least $4.5 billion for the CDBG formula program for FY 2010. The President's FY 2010 budget proposal makes good on the administration's commitment, first announced in February, to seek CDBG program reforms, including a new CDBG funding formula. HUD documents indicate the administration's formula change proposal will include a "hold harmless" provision. According to HUD's budget summary, the administration's proposed funding level for CDBG for FY 2010 will allow HUD to "hold all grantees harmless at their FY 2009 funding amount, leaving the proposed increase to expand funding for the needy communities that do not receive their fair share because of problems in the existing formula." NAHRO notes that the FY 2009 enacted funding level for the CDBG formula program ($3.64 billion) is approximately 18 percent lower than the enacted level for FY 2001 ($4.410 billion), even before adjusting for inflation. NAHRO also notes that a number of additional entitlement communities have become eligible for direct CDBG formula allocations in recent years. Consider, for example, that 1120 entitlement communities shared $3.037 billion in CDBG formula funding for FY 2004, while 1140 entitlement communities received a total of just $2.546 billion in CDBG formula funding for FY 2009. During Secretary Donovan's May 7 briefing on the HUD budget, a representative from one of NAHRO's community development industry group partners asked for how many years HUD's CDBG formula change proposal would hold grantees harmless at their respective FY 2009 allocation levels. Secretary Donovan said that he and other HUD officials "haven't made final decisions" regarding the hold harmless provision. The Secretary also indicated that he recognizes the contentious nature of CDBG formula reform, and that the Department remains "open to discussions" on formula change and will look to consult with members of Congress as well as community development industry groups and practitioners. According to the FY 2010 Budget Appendix, the administration's CDBG reform proposal will also include "CDBG disaster recovery reforms" and "greater accountability and better performance metrics." As far as the expected timing for legislation, the Budget Appendix indicates only that HUD will transmit its CDBG reform proposal to Congress "in mid-2009." Set-asides under the Community Development Fund: The administration's FY 2010 budget proposes several set-asides under the Community Development Fund. Community Development Fund set-asides effectively reduce the amount of funding available for distribution through the CDBG formula. Proposed Community Development Fund set-asides in the FY 2010 budget include the following: The proposed Sustainable Communities Initiative would have three components. First, $100 million would be available for a joint HUD-Department of Transportation Regional Planning Grants program to support the efforts of metropolitan planning organizations and consortia of HUD formula block grant recipients "to build capacity for long-term cross-jurisdictional partnerships, public and private engagement, and ability to integrate resources." Second, $40 million in Metropolitan Challenge Grants would be awarded to "facilitate changes in local zoning and land use policy and practice." This funding is intended to "encourage sustainable growth and reverse counterproductive growth patterns. Lastly, $10 million would be earmarked for a joint HUD-Transportation research effort focused on tracking the linkage between housing and transportation spending in various locations as well as developing broader measures of affordability that consider both housing costs and access to transit options. Rural Innovation Fund: $10 million from the Community Development Fund would be set aside for a new Rural Innovation Fund. This new initiative would supplant the Rural Housing and Economic Development (RHED) program, funding for which is eliminated in the administration's FY 2010 budget. According to the Budget Appendix and HUD's budget summary, the Rural Innovation Fund would provide funding to states through a competitive process "to support a limited number of highly targeted and innovative approaches dedicated to addressing the problem of concentrated rural housing distress and community poverty." University Community Fund: $25 million would be set aside for a new initiative consolidating four existing university and community assistance programs. The new initiative would provide competitive grants to university "that show innovative community development strategies that respond to local needs and build on past experiences." Indian Community Development Block Grant program: The FY 2010 budget sets aside $65 million under the Community Development Fund for the Indian Community Development Block Grant program. As NAHRO noted last Thursday, the budget proposal does not include the expected funding increase for the HOME program previously announced by Community Planning and Development officials during NAHRO's Legislative Conference. Instead of the $1.968 billion figure announced by those officials in March, the President's budget requests $1.825 billion for the HOME account for FY 2010, the same amount appropriated for FY 2009. The President's FY 2010 request proposes no set-asides under the HOME account, meaning that the entire $1.825 billion would be available for HOME formula grants. The FY 2009 omnibus appropriations act sets aside funding for technical assistance and HUD's Working Capital Fund, leaving $1.809 billion available for distribution through the HOME program for FY 2009. NAHRO recommends at least $2 billion for HOME formula grants for FY 2010. American Dream Downpayment Initiative: The administration's FY 2010 budget requests no funding for the American Dream Downpayment Initiative (ADDI), which mirrors NAHRO's recommendation. The FY 2009 omnibus appropriations act also included no funding for the now-expired ADDI. Downpayment assistance is and has always been an eligible activity under the regular HOME program, and in the years since its inception ADDI became the smallest formula-based block grant program in the nation's history. HOME Technical Assistance: The administration's FY 2010 budget requests no new funding for HOME program technical assistance. Instead, the request proposes that any previously appropriated Community Housing Development Organization (CHDO) technical assistance funding that remains available may be used for technical assistance to HOME Participating Jurisdictions. The administration's budget presupposes that future technical assistance for HUD programs will be provided under a newly proposed Transformation Initiative, described below. Section 108 Community Development Loan Guarantee program The summary of the President's FY 2010 budget released in February indicated that the administration would eliminate funding for the Section 108 program, characterizing it as ineffective and duplicative of the CDBG program's eligible activities. The Section 108 program allows CDBG grantees to pledge a portion of its current and future CDBG formula allocation to secure federally guaranteed loans. Because there has never been a default under the program resulting in a repayment by HUD, the only cost to the federal government is the annually appropriated credit subsidy, for which Congress provided $6 million for FY 2009. NAHRO recommends $7 million for the Section 108 program for FY 2010. During last Thursday's briefing, Secretary Donovan emphasized that while the FY 2010 budget proposes eliminating appropriated funding for the Section 108 program, the program itself would continue. The Secretary correctly pointed out that the Budget Appendix includes proposed legislative language authorizing HUD to collect fees from Section 108 borrowers in amounts that would result in a credit subsidy cost of zero. The budget authorizes up to $275 million in total loan principal for FY 2010 under this proposed program model. Secretary Donovan indicated that a formal legislative proposal is forthcoming. Brownfields Economic Development Initiative Whereas the administration intends to continue the Section 108 program in an altered form, the FY 2010 budget proposal would terminate the Brownfields Economic Development Initiative (BEDI), which was funded at $10 million for FY 2009. BEDI is the only HUD program included in OMB's report on Terminations, Reductions and Savings in the FY 2010 budget. That report argues that BEDI is "extremely small relative to other programs that address" needs associated with brownfields, and that "local governments have access to other public and private funds that can address the same purposes." NAHRO supports continued funding for BEDI and recommends $25 million for the program for FY 2010. While other federal brownfields programs (including those administered by the Environmental Protection Agency) focus on environmental remediation, BEDI is the only federal brownfields program devoted exclusively to stimulating the private and public investments needed to achieve the economic redevelopment of brownfield sites. Rural Housing and Economic Development program As mentioned above, the President's FY 2010 budget does not provide funding for the RHED program and instead proposes $25 million for the so-called Rural Innovations Fund as a set-aside under the Community Development Fund. NAHRO recommends $25 million for the RHED program for FY 2010. Housing Trust Fund The President's budget requests $1 billion in appropriated funding for the Housing Trust Fund, which was authorized under the Housing and Economic Recovery Act of 2008 (HERA). This is the first time that an administration has requested an appropriation for the new program, which, once operational, will provide formula-based allocations to states to finance the development, rehabilitation, and preservation of affordable rental and homeowner housing. NAHRO has long supported the creation and funding of a new federal affordable housing production program and supported the creation of the Housing Trust Fund. Under the terms of HERA, the Housing Trust Fund was to be capitalized through mandatory annual contributions by Fannie Mae and Freddie Mac, with each Government Sponsored Enterprise (GSE) contributing an amount equal to 4.2 basis points for each dollar of the unpaid principal balance of its respective total new business purchases. HERA included a provision allowing the director of the Federal Housing Finance Agency (FHFA) (the new regulatory agency created through the bill) to temporarily suspend the contributions if the allocations would contribute to or cause the financial instability or under-capitalization of the GSEs, both of which were placed in federal conservatorship last year. In November, FHFA Director James B. Lockhart ordered that the contributions be suspended. In addition to GSE contributions, HERA included language contemplating the possible availability of additional resources for the Housing Trust Fund. Specifically, the legislation refers to "any amounts as are or may be appropriated, transferred, or credited" to the program "under any provisions of law." Noting the GSEs' financial difficulties, the administration's FY 2010 budget requests $1 billion "for the initial capitalization of the Housing Trust Fund." NAHRO's Legislative and Regulatory Agenda encourages the administration to identify and the Congress to enact at least $1 billion in additional funding for this program for FY 2010 beyond the GSE contributions. McKinney-Vento Homeless Assistance Grants The FY 2010 budget proposal requests $1.794 billion for HUD's McKinney-Vento homeless assistance grant programs, which is an increase over the FY 2009 enacted level of $1.677 billion. NAHRO is recommending at least $2 billion for homeless assistance grants for FY 2010. HUD's FY 2010 budget summary states that the administration "fully supports Congressional efforts to consolidate and streamline existing programs to bring new efficiencies." The Senate recently passed the most recent version of long-gestating McKinney-Vento reauthorization legislation as part of a larger bill dealing with foreclosure relief. HUD's budget summary also indicates that the administration will "continue the focus on homelessness prevention that was initiated in the American Recovery and Reinvestment Act." The American Recovery and Reinvestment Act of 2009 provided $1.5 billion in funding for what is now known as the Homelessness Prevention and Rapid Re-housing Program. Housing Opportunities for Persons with AIDS Funding for the Housing Assistance for Persons with AIDS (HOPWA) program would be level-funded at $310 million for FY 2010 under the President's proposal. NAHRO recommends $360 million for HOPWA for FY 2010. Transformation Initiative The administration's FY 2010 budget does not include funding for HOME, CHDO, CDBG, or HOPWA technical assistance. Instead, those technical assistance programs (along with several HUD research and demonstration programs) are supplanted in the budget proposal by a new agency-wide Transformation Initiative, for which the administration is requesting $434 million. HUD's budget summary claims that Transformation Initiative will allow the Department "to build a transparent and accountable agency that uses metrics to gauge performance, research to evaluate programs, demonstrations to illustrate the broader impact of federal interventions, technical assistance to identify and diffuse innovation and technology to track spending, inform decisions and curb fraud waste and abuse." According to HUD's budget summary, the Transformation Initiative would provide the HUD Secretary with the ability to provide technical assistance "across programs, given the common challenges�that face HUD's disparate programs." HUD could also use Transformation Initiative funding to support its efforts to develop next generation information technology systems.
HUD has released the highly anticipated notice governing the use of nearly $1 billion in Community Development Block Grant (CDBG) funding provided through the American Recovery and Reinvestment Act of 2009 (ARRA). HUD is referring to the implementation of these funds as the CDBG Recovery program, or CDBG-R. The notice's release was delayed by over a month, reportedly because of the White House's insistence that HUD warn grantees against using CDBG-R funding to support supposedly "imprudent projects." HUD's press release notes that HUD Secretary Shaun Donovan has sent a letter to all CDBG-R grantees encouraging them to "be good stewards of these precious taxpayer dollars by focusing your efforts on the Recovery Act goals of investing in infrastructure that will create or sustain jobs in the near-term and generate maximum economic benefits in the long-term." The CDBG-R notice is available here. HUD previously announced CDBG-R formula allocations (Excel file) in late February. All CDBG grantees that received allocations for FY 2008 were eligible to receive CDBG-R formula grants. In accordance with ARRA, CDBG-R allocations were made pursuant to the regular CDBG program's existing formula. Highlights of the CDBG-R Notice Substantial amendment to the action plan: Entitlement grantees, Insular Areas, and non-entitlement counties in Hawaii must submit substantial amendments to their Program Year 2008 action plans to their HUD field office no later than June 5. States have until June 29 to submit substantial amendments. The CDBG-R notice provides detailed information on the required components of the substantial amendment. HUD is providing an alternative to the regular CDBG program's citizen participation requirement. Grantees must provide no fewer than 7 calendar days for citizen comments regarding the substantial amendment. Each grantee must post the amendment and any subsequent CDBG-R amendments on its official website along with a summary of citizen comments received within the 7-day comment period. The CDBG-R notice points out that the substantial amendment deadline for the Homelessness Prevention and Rapid Re-housing Program (HPRP) is May 18. Grantees wising to submit a single substantial amendment for both programs may do so but must meet the May 18 HPRP deadline. CDBG-R grantees are permitted to incur pre-award costs associated with the development of the substantial amendment "as if each grantee was a new grantee preparing to receive its first allocation of CDBG funds." Expenditure deadlines: Grantees must expend their entire allocation of CDBG-R funds by September 30, 2012. All CDBG-R funding not expended by that deadline will be recaptured and returned to the U.S. Treasury. CDBG-R funds will not be considered when determining a grantee's compliance with the regular CDBG program's timely expenditure requirements. Planning and administration costs: Grantees may use up to 10 percent of their CDBG-R allocation for eligible planning and general administration activities. Ineligible activities: Activities generally prohibited under the regular CDBG program are also prohibited under CDBG-R. The CDBG-R notice reflects additional prohibitions included in ARRA regarding certain specified activities and projects. Accordingly, CDBG-R funding may not be used for swimming pools, golf courses, zoos, aquariums, and casinos or other gambling establishments. Beyond these special prohibitions, the notice states that "the full range of activities is available to grantees." However, HUD suggests that "grantees incorporate consideration of the public perception of the intent of [ARRA] in identifying and selecting projects for CDBG-R funding." The notice also states "Congress clearly intends that CDBG-R funds should primarily be invested in economic development, housing, infrastructure, and other public facilities activities that will quickly spur further economic investment, increased energy efficiency, and job creation or retention." Program income: Program income resulting from the use of CDBG-R funds is to be treated as "program income to the regular CDBG program, not as program income to the CDBG-R program." Accordingly, grantees and subrecipients will not need to disburse program income generated through the use of CDBG-R funds before drawing down additional CDBG-R funding, as the program income will not be considered part of the CDBG-R program. Urgent need under CDBG-R: The Department is eliminating the requirement that grantees document the nature, degree, and timing of the seriousness of the condition to be addressed by the activity if the urgent need is based on current economic conditions. HUD will instead accept a grantee's certification that current economic conditions are of recent origin and represent a serious and immediate threat to a community's welfare. The grantee must still demonstrate that it is unable to finance the activity on its own and that other funding sources are unavailable. Public services cap: Grantees may use up to 15 percent of their CDBG-R funding for public service activities. Because there will be no program income attributed to the CDBG-R program, compliance with the public services cap will be based on overall expenditures of CDBG-R funding. Section 108 and CDBG-R: Because CDBG-R is a one-time appropriation, CDBG-R funds may not be used as a pledge of security for the repayment of a Section 108 loan. CDBG-R funds may not be used to securitize borrowing under the Section 108 program, nor may these funds be used to repay an existing Section 108 loan. Tracking CDBG-R funding: Grantees will track CDBG-R funding separately from regular CDBG funding in the Integrated Disbursement and Information System (IDIS). CDBG-R funding will have separate contract language and a different grant number. HUD cautions grantees against commingling regular CDBG and CDBG-R funds, although grantees are not prohibited from using CDBG-R funding in conjunction with an existing activity funded with regular CDBG funds. However, the additional funding must be covered under a new contract or subrecipient agreement. Additional reporting requirements: ARRA imposes additional reporting requirements beyond those required by the regular CDBG program. Recipients of ARRA funding through HUD are required to submit quarterly reports that contain: (1) the total amount of ARRA funding received from HUD; (2) the amount of ARRA funding received that was expended or obligated to projects or activities; and (3) a detailed list of all projects or activities for which ARRA funds were expended or obligated, including the name of the project or activity; a description of the project or activity; an evaluation of the completion status of the project or activity; an estimate of the number of jobs created and the number of jobs retained by the project or activity; and for infrastructure investments made by state and local governments, the purpose, total cost, and rationale of the agency for funding the infrastructure investment with funds made available under ARRA and the name of the person to contact at the agency if there are concerns with the infrastructure investment. These reports must then be placed online within 30 days. For each CDBG-R activity, grantees must report on the number of jobs created and retained, if applicable, in addition to the regular CDBG accomplishments and performance measures for the activity. The CDBG-R notice states that HUD will implement and disseminate information on additional reporting requirements required under ARRA at a later date. These requirements relate to the environmental review process, the expected completion of activities, types of activities, and the location of activities. HUD webcast on the CDBG-R program: HUD held a webcast on the CDBG-R program on May 13. The webcast reviewed the CDBG-R application process and deadlines associated with the program. It also discussed project selection and prudent spending criteria and identified the reporting requirements that accompany CDBG-R funding. An archive of the webcast is available here.
HUD has posted a Notice of Funding Availability (NOFA) for $1.93 billion in competitive Neighborhood Stabilization Program (NSP) funding appropriated as part of the American Recovery and Reinvestment Act of 2009 (ARRA). The new NSP NOFA is available here. Background The NSP program was created last year under the Housing and Economic Recovery Act of 2008 (HERA) to support state and local efforts to stabilize neighborhoods impacted by the foreclosure crisis. HERA authorized a special appropriation of Community Development Block Grant (CDBG) funding "for assistance to states and units of general local government....for the redevelopment of abandoned and foreclosed upon homes and residential properties." HUD coined the Neighborhood Stabilization Program name to describe the essentially new program created through the appropriation of these CDBG funds. In accordance with HERA, HUD allocated $3.9 billion in NSP funding to states and local governments in late September 2008 pursuant to a statutorily mandated formula. ARRA, enacted in February, provided an additional $2 billion for the NSP program. Unlike HERA, ARRA included language requiring HUD to allocate the second round of NSP funding through a competition. In order to differentiate between the two rounds of NSP funding, HUD is now referring to the funds authorized by HERA as "NSP1," while the funding provided through ARRA will be known as "NSP2." While the NSP1 statutory requirements as previously outlined under HERA will generally govern the use of the NSP2 funding, ARRA attached a number of additional requirements to NSP2 funding. As a result, NSP1 and NSP2 are now effectively separate programs. Accordingly, HUD has updated the NSP website to reflect this reality. The NSP2 NOFA includes as an appendix a detailed overview of the "ways in which the requirements for NSP2 vary from regular CDBG and NSP1 program rules." Highlights of the NSP2 NOFA Applications for NSP2 funding must be received by HUD no later than 5:00 pm EDT on July 17, 2009. Applications are to be submitted via paper submission. Eligible applicants: As defined by ARRA, eligible applicants for NSP2 funding are state governments, units of general local government, and nonprofit entities and consortia of nonprofit entities. Each consortium of nonprofit entities applying for NSP2 funding must designate a lead agency. Eligible applicants may also submit a funding request in partnership with a for-profit organization. No entity may be the lead applicant on more than one NSP2 proposal, and no one entity may be an applicant under more than one NSP2 proposal for a particular target geography or subset thereof. The NOFA states that "single neighborhood, city-wide, metropolitan area-wide, regional, and national scale NSP2 applications are all possible," and that an application's "proposed target geography need not be contiguous." The NSP2 NOFA defines nonprofit entities as "public and private nonprofit organizations, including governmental entities, that are organized under state, local or tribal laws for other than profit-making activities." The NOFA states that "public nonprofits include states, local governments, Indian tribes, and public housing authorities." A separate passage in the NOFA lists "regional or local planning or development authorities" as other examples of public nonprofits. Nonprofit entities that choose to apply to HUD for NSP funding must describe in their applications how they qualify as an eligible applicant and "provide evidence of [their] public or private nonprofit status, such as a current Internal Revenue Service (IRS) ruling that [their] organization is exempt from taxation under section 501(c) of the Internal Revenue Code of 1986." Nonprofits (including many PHAs and redevelopment authorities) that do not have such a ruling must provide "a signed and dated letter from the state attorney general or other appropriate state official that [their] organization is duly organized under state law as a nonprofit." Each member of a consortium "must submit evidence of its nonprofit status to the lead applicant for inclusion in the consortium's application package." Minimum grant size: ARRA authorized the HUD Secretary to specify a minimum grant size for the NSP2 competition. Accordingly, the NSP2 NOFA requires that each applicant request no less than $5 million. Furthermore, the NOFA requires that each applicant's grant request "must have the effect of either returning a minimum of 100 abandoned or foreclosed homes back to productive use or otherwise eliminating or mitigating their negative effects on the stability of the target geography." Rating factors: Applications for NSP2 funding will be rated according to the following factors, with the maximum number of points awarded being 150: Factor 1: Need/extent of the problem (40 points) Factor 2: Demonstrated capacity of the applicant and relevant organizational staff (40 points) Factor 3: Soundness of approach (45 points) Factor 4: Leveraging other funds, or removal of substantial negative effects (10 points) Factor 5: Energy efficiency improvement and sustainable development factors (10 points) Factor 6: Neighborhood transformation and economic opportunity (5 points) NSP Technical Assistance NOFA: Concurrent with the NSP2 NOFA, HUD is allocating $50 million on a competitive basis to Technical Assistance (TA) providers. The NSP-TA program is open to both national and local TA providers. Under this competition, $11.5 million is available for local TA activities with the remaining $38.5 million available for national and regional TA activities. NSP-TA-funded technical assistance may be provided to NSP1 grantees and NSP2 recipients. Highlights of NSP2 Program Requirements Appendix 1 of the NSP2 NOFA discusses the "ways in which the requirements for NSP2 vary from regular CDBG and NSP1 program rules." This appendix should not be confused with the forthcoming NSP1 "bridge notice," which HUD is expected to publish soon. The NSP 1 bridge notice will update the original NSP1 Federal Register notice to account for statutory changes imposed by ARRA. Purchase discount requirement: Significantly, HUD has adopted a new purchase discount policy for NSP2. HERA requires that any purchase of a foreclosed upon home or residential property using NSP funding "be at a discount from the current market appraised value of the home or property." Although HERA did not specify the amount of the required discount, HUD's original NSP1 Federal Register notice required that each purchase be at a discount of at least five percent from the current market appraised value. For purchase transactions in the aggregate, HUD required that an individual NSP grantee's average purchase discount for all properties purchased with NSP funds be at least fifteen percent during the eighteen month use period. NAHRO joined with other community development interest groups to express concern over HUD's interpretation of HERA's discount requirement. In a positive development, HUD has chosen not to apply the current NSP1 discount requirement to NSP2. Instead, HUD will require "a minimum discount of one percent for each residential property purchased with NSP funds and a minimum average discount of five percent for all residential properties purchased with NSP2 funds during the three year expenditure period." It remains unclear whether the upcoming bridge notice will apply the updated purchase discount requirement to NSP1. Timeliness: NSP2 recipients must expend 50 percent of their NSP2 funds on eligible activities within 2 years and 100 percent of their NSP2 funds within 3 years of receipt of funding. HUD will consider a recipient to have received its NSP2 grant at the time HUD signs the grant agreement. Program income: For revenues generated by NSP2-assisted activities, regular CDBG rules governing program income will apply. This is notable in that ARRA repealed the section of HERA governing the use of revenues generated through the sale of NSP-assisted housing. Currently, HUD's outdated NSP1 requirements generally indicate that all revenues generated by the sale of an NSP-assisted home must be returned to the grantee if the seller is a private individual. NAHRO and other community development interest groups had expressed concern that homebuyers who purchase NSP-assisted homes from grantees would be unable to retain any of the equity they have built in their homes upon resale, thus making it difficult for grantees to design NSP home-ownership programs. The upcoming NSP1 bridge notice is expected to apply regular CDBG program income rules to revenues generated by NSP1-assisted activities.
HUD recently announced FY 2009 allocations for the following Community Planning and Development (CPD) formula programs: Community Development Block Grants (CDBG); the Home Investment Partnerships (HOME) Program; Housing Opportunities for Persons with AIDS (HOPWA); and Emergency Shelter Grants. Allocations for all CPD formula grantees are available on HUD's website. Click here to join NAHRO. Click here to sign up to receive CD Edge. |
