Notice of Formula Allocations and Program Requirements for Neighborhood Stabilization Program Formula Grants, 64322-64348 [2010-26292]
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[FR Doc. 2010–26287 Filed 10–18–10; 8:45 am]
BILLING CODE 9110–04–P
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
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[Docket No. FR–5447–N–01]
Notice of Formula Allocations and
Program Requirements for
Neighborhood Stabilization Program
Formula Grants
Office of the Secretary, HUD.
Notice of allocation method,
waivers granted, alternative
requirements applied, and statutory
program requirements.
AGENCY:
ACTION:
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This notice advises the public
of the allocation formula and allocation
amounts, the list of grantees, alternative
requirements, and the waivers of
regulations granted to grantees under
Section 2301(b) of the Housing and
Economic Recovery Act of 2008 (Pub. L.
110–289, approved July 30, 2008)
(HERA), as amended, and an additional
allocation of funds provided under
Section 1497 of the Wall Street Reform
and Consumer Protection Act of 2010
(Pub. L. 111–203, approved July 21,
2010) (Dodd-Frank Act) for additional
assistance in accordance with the
second undesignated paragraph under
the heading ‘Community Planning and
Development—Community
Development Fund’ in Title XII of
Division A of the American Recovery
and Reinvestment Act of 2009 (Pub. L.
111–5, approved February 17, 2009)
(Recovery Act), as amended, for the
purpose of assisting in the
redevelopment of abandoned and
foreclosed homes. Except where
provided for otherwise, these amounts
are distributed based on funding
formulas for such amounts established
by the Secretary in accordance with
HERA.
The additional allocation represents
the third round of Neighborhood
Stabilization Program funding and is
referred to throughout this notice as
NSP3. HERA provided a first round of
formula funding to States and units of
general local government, and is
referred to herein as NSP1. The
Recovery Act provided a second round
of funds awarded by competition and is
referred to herein as NSP2. The three
rounds of funding are collectively
referred to as NSP. As described in the
Supplementary Information section of
this notice, HUD is authorized by statute
to specify alternative requirements and
make regulatory waivers for this
purpose. This notice also notes statutory
issues affecting program design and
implementation.
SUMMARY:
Note: This notice is intended to provide
unified program requirements for grantees of
the two formula NSP grant programs, NSP1
and NSP3. The allocation and application
information under Section I.A and Section
II.B below is only applicable to NSP3 grants.
For NSP1, HUD awarded grants to a total of
309 grantees including the 55 states and
territories and selected local governments to
stabilize communities hardest hit by
foreclosures and delinquencies. For the
allocation formula and application process
for NSP1, please see the October 6, 2008
Federal Register Notice (73 FR 58330), as
amended by the June 19, 2009 ‘‘Bridge’’
Notice (74 FR 29223), and Appendix A
attached hereto. For NSP2, HUD awarded a
combined total $1.93 billion in NSP2 grants
to 56 grantees nationwide on January 14,
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2010. Funds under NSP2 were distributed by
competition under criteria described in the
May 4, 2009 Notice of Funding Availability.
Where requirements differ between the
rounds of funding, it is so noted.
DATES:
Effective Date: October 19, 2010.
FOR FURTHER INFORMATION CONTACT:
Stanley Gimont, Director, Office of
Block Grant Assistance, Department of
Housing and Urban Development, 451
Seventh Street, SW., Room 7286,
Washington, DC 20410, telephone
number 202–708–3587. Persons with
hearing or speech impairments may
access this number via TTY by calling
the Federal Information Relay Service at
800–877–8339. FAX inquiries may be
sent to Mr. Gimont at 202–401–2044.
(Except for the ‘‘800’’ number, these
telephone numbers are not toll-free.)
SUPPLEMENTARY INFORMATION:
Program Background and Purpose
Recipients will use the funds awarded
under this notice to stabilize
neighborhoods whose viability has
been, and continues to be, damaged by
the economic effects of properties that
have been foreclosed upon and
abandoned. In 2008, Congress
appropriated funds for neighborhood
stabilization under HERA. In 2009,
Congress appropriated additional
neighborhood stabilization funds under
the Recovery Act. In 2010, Congress
appropriated a third round of
neighborhood stabilization funds in the
Dodd-Frank Act.
When referring to a provision of the
first appropriations statute, this notice
will refer to HERA; when referring to a
provision of the second appropriations
statute, this notice will refer to the
Recovery Act; and when referring to the
third appropriations statute this notice
will refer to the Dodd-Frank Act. When
referring to the grants, grantees, assisted
activities, and implementation rules
under the Dodd-Frank Act, this notice
will use the term ‘‘NSP3.’’ When
referring to the grants, grantees, assisted
activities, and implementation rules
under the Recovery Act, this notice will
use the term ‘‘NSP2’’. When referring to
the grants, grantees, assisted activities,
and implementation rules under HERA,
this notice will use the term ‘‘NSP1.’’
Collectively, the grants, grantees,
assisted activities, and implementation
rules under these three rounds of
funding is referred to as NSP. NSP is a
component of the Community
Development Block Grant (CDBG)
program (authorized under Housing and
Community Development Act of 1974,
as amended (42 U.S.C. 5301 et seq.)
(HCD Act)).
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Program Principles
Programs under NSP should aim to
integrate the following principles:
• Retain CDBG distinctive
requirements. Congress gave HUD broad
waiver and alternative requirement
authority, which HUD used in designing
NSP program requirements. However,
distinctive characteristics of the CDBG
program including the objectives of the
HCD Act, financial accountability, local
citizen participation and information,
grantee selection of activities within
broad Federal policy parameters, and
income targeting of beneficiaries were
retained. All of these elements are
required in NSP1, NSP2, and NSP3.
• Target and reconnect
neighborhoods. Invest funds in
programs and projects that will
revitalize targeted neighborhood(s) and
reconnect those targeted neighborhoods
with the economy, housing market, and
social networks of the community and
metropolitan area as a whole.
• Rapidly arrest decline. Support NSP
uses and activities that will rapidly
arrest the decline of a targeted
neighborhood(s) that has been
negatively affected by abandoned or
foreclosed properties.
• Assure compliance with the NSP
‘‘deep targeting’’ requirement. No less
than 25 percent of the funds shall be
used to house individuals and families
whose incomes do not exceed 50
percent of area median income.
• Ensure longest feasible continued
affordability. Invest in affordable
housing that will remain desirable and
affordable for the longest feasible
period.
• Support projects that optimize
economic activity, and the number of
jobs created or retained or that will
provide other long-term economic
benefits.
• Build inclusive and sustainable
communities free from discrimination.
• Coordinate planning and resources.
Integrate neighborhood stabilization
programs with other Federal policy
priorities and investments, including
energy conservation and efficiency,
sustainable and transit-oriented
development, integrated metropolitan
area-wide planning and coordination,
improvements in public education, and
access to healthcare.
• Leverage resources and remove
destabilizing influences. Augment
neighborhood stabilization programs
with other Federal, public and private
resources. Eliminate destabilizing
influences, such as blighted homes, that
can prevent programs from producing
results.
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• Set goals. Set aggressive, but
achievable, goals for outputs and
outcomes.
• Ensure accountability. Ensure
accountability for all programs, keep
citizens actively informed, and provide
all required NSP reporting elements.
Objectives and Outcomes
1. Objectives. The primary objective of
the CDBG program is the development
of viable urban communities, by
providing decent housing, a suitable
living environment, and economic
opportunity, principally for persons of
low- and moderate-income. NSP
grantees must strive to meet this
objective in neighborhoods that are in
decline (or further decline) due to the
negative effects of a high number and
percentage of homes that have been
foreclosed upon. The first goal is to
arrest the decline. Then the grantee
must stabilize the neighborhood and
position it for a sustainable role in a
revitalized community.
2. Outcomes. Measurable NSP short
term program outcomes may include,
but are not limited to:
• Arresting decline in home values
based on average sales price in targeted
neighborhoods, and
• Reduction or elimination of vacant
and abandoned residential property in
targeted neighborhoods.
The long term outcomes may include,
but are not limited to:
• Increased sales of residential
property in targeted neighborhoods, and
• Increased median market values of
real estate in targeted neighborhoods.
Authority To Provide Alternative
Requirements and Grant Regulatory
Waivers
The Dodd-Frank Act states that,
except where provided for otherwise,
assistance shall be provided in
accordance with the same provisions
applicable under the NSP2
authorization. In turn, the Recovery Act
provides that assistance shall be made
available as authorized under HERA.
The Recovery Act authorizes the
Secretary to specify waivers and
alternative requirements for any
provision of any statute or regulation in
connection with the obligation by the
Secretary or the use of funds except for
requirements related to fair housing,
nondiscrimination, labor standards, and
the environment (including lead-based
paint), upon a finding that such a
waiver is necessary to expedite or
facilitate the use of such funds.
The Secretary finds that the following
alternative requirements are necessary
to expedite the use of these funds for
their required purposes.
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Except as described in this notice,
statutory and regulatory provisions
governing the CDBG program, including
those at 24 CFR part 570 subpart I for
states, and those at 24 CFR part 570
subparts A, C, D, J, K, and O for CDBG
entitlement communities, as
appropriate, shall apply to the use of
these funds. The State of Hawaii will be
allocated funds and will be subject to
part 570, subpart I, as modified by this
notice. Other sections of the notice
provide further details of the changes,
the majority of which deal with
adjustments necessitated by statutory
provisions, simplify program rules to
expedite administration, or relate to the
ability of state grantees to act directly
instead of solely through distribution to
local governments. Additional guidance
and technical assistance will be
available at https://www.hud.gov/nspta.
Table of Contents
I. Allocations
A. Formula: NSP3 Allocation
B. Formula: Reallocation
II. Alternative Requirements and Regulatory
Waivers
A. Definitions for Purposes of the CDBG
Neighborhood Stabilization Program
B. NSP3 Pre-Grant Process
1. General
2. Contents of an NSP Action Plan
Substantial amendment or abbreviated
plan
3. Continued affordability
4. Citizen participation alternative
requirement
5. Joint requests
6. Effect of existing cooperation agreements
governing joint programs and urban
counties
C. Reimbursement for Pre-Award Costs
D. Grantee Capacity and Grant Conditions
E. Income Eligibility Requirement Changes
F. State Distribution to Entitlement
Communities and Indian Tribes
G. State’s Direct Action
H. Eligibility and Allowable Costs
I. Rehabilitation Standards
J. Sale of Homes
K. Acquisition and Relocation
L. Note on Eminent Domain
M. Timeliness of Use and Expenditure of
NSP Funds
N. Alternative Requirement for Program
Income (Revenue) Generated by
Activities Assisted With Grant Funds
O. Reporting
P. FHA First Look
Q. Purchase Discount
R. Removal of Annual Requirements
S. Affirmatively Furthering Fair Housing
T. Certifications
U. Additional NSP3 Requirements—
Preferences for Rental Housing and Local
Hiring
V. Note on Statutory Limitation on
Distribution of Funds
W. Information Collection Approval Note
X. Duration of Funding
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I. Allocations
A. Formula: Allocation. Grants
awarded under NSP1 were allocated to
States and local governments according
to the formula described in Attachment
A. The Dodd-Frank Act makes available
an additional $1 billion that is generally
to be construed as CDBG program funds
(NSP3) for the communities and in the
amounts listed in Attachment B to this
notice.
B. Formula: Reallocation.
1.a. Failure to Apply (NSP3). To
expedite the use of NSP3 funds, the
Department is specifying alternative
requirements to 42 U.S.C. 5306(c). If a
unit of general local government
receiving an allocation of NSP3 funds
under this notice (as designated in
Attachment B) fails to submit a
substantially complete application for
its grant allocation by March 1, 2011, or
submits an application for less than the
total allocation amount, HUD will notify
the jurisdiction of the cancellation of all
or part of its allocation amount and
proceed to reallocate the funds to the
state in which the jurisdiction is
located.
b. If a state or insular area receiving
an allocation of funds under this notice
fails to submit a substantially complete
application for its allocation by March
1, 2011, or submits an application for
less than the total allocation amount,
HUD will notify the state or insular area
of the reduction in its allocation amount
and proceed to reallocate the funds to
the 10 highest-need states based on
original rankings of need.
2.a. Failure to Meet 18-Month
Obligation Deadline (NSP1). Consistent
with the August 23, 2010 Notice of NSP
Reallocation Process Changes (Docket
No. FR–5435–N–01), HUD will block
each grantee’s ability to obligate NSP1
grant funds in the Disaster Recovery
Grant Reporting System (DRGR) on the
first business day after the statutory 18month deadline for use of funds. HUD
will notify the grantee of this action by
electronic mail. Grantees will not be
able to obligate grant funds after the
deadline without requesting and
receiving permission from HUD, and
HUD determines that the grantee is not
high risk consistent with this notice.
The grantee will still be able to expend
grant funds obligated before the
deadline. Receipt and use of any
program income will also be unaffected.
b. Grantees that fail to obligate an
amount equal to or greater than its
initial grant amount may submit
information to HUD, for up to 30 days
following its 18-month deadline,
documenting any additional obligation
of funds not already recorded in the
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DRGR system and demonstrating to
HUD that the obligation occurred on or
before the 18-month deadline. Before
the 18-month deadline, each grantee
should also review its recorded
obligations and notify HUD within 30
days following the deadline of any
necessary adjustments to the amount
and the reason for such an adjustment.
For example, the grantee has become
aware that an obligation amount that
was previously recorded for an
acquisition will not proceed, therefore a
downward adjustment is necessary.
c. After the deadline, if a grantee
needs to decrease or increase the
amount of grant funds obligated to an
activity, it must first ask HUD to remove
the DRGR block on changing the amount
obligated. If the amount of decrease is
more than 15 percent of the obligation
for any activity, the grantee must submit
to HUD a written request that clearly
demonstrates with compelling
information that factors beyond the
grantee’s reasonable control caused the
need to adjust after the deadline. If HUD
agrees to grant the request, it will restore
the grantee’s ability to obligate grant
funds in DRGR. If HUD does not grant
the request, the grantee must either
complete the activity as originally
obligated or the amount previously
obligated for that activity will be
recaptured. HUD may also remove the
obligations block following risk
assessment of the grantee or a review of
some or all of a grantee’s obligation
documentation.
d. Before HUD determines the
appropriate corrective action or
recaptures grant funds, HUD will review
the submitted information, consider the
grantee’s capacity as described in 24
CFR 570.905 and 24 CFR 570.493, and
the grantee’s continuing need for the
funds.
e. Following the review and
consistent with the procedures
described in 24 CFR 570.900(b), HUD
will proceed to notify the grantee of the
selected corrective action it is required
to undertake.
f. HUD will recapture and reallocate
up to $19.6 million from any state
grantee with unused NSP1 grant funds.
Additional corrective actions may be
taken related to any amount of unused
funds greater than $19.6 million.
g. HUD will reallocate recaptured
NSP1 grant funds in accordance with
the reallocation formula described in a
separate reallocation notice. A grantee
receiving a reallocation must apply for
the grant in accordance with the NSP1
Notice or this notice, as applicable. A
nonentitlement grantee that is not
required to submit a consolidated plan
to HUD under the CDBG program will
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prepare an abbreviated plan. The
substance of an abbreviated plan must
include all the required elements that
entitlement communities provide as
part of an NSP Action Plan substantial
amendment as described under Section
II.B.2 of the NSP1 Notice or this Notice,
as applicable.
h. Each grantee must meet the
statutory requirement to expend 25
percent of its grant amount for activities
that will provide housing for
households whose income is at or under
50 percent of area median income. This
cannot occur unless the funds are first
obligated to activities for this purpose,
or program income is received and used
for eligible activities. Therefore, if a
grantee fails to obligate or record
program income use of at least 25
percent of its original grant amount for
activities that will provide housing for
households whose income is at or under
50 percent of area median income, HUD
may issue a concern or a finding of
noncompliance. Consistent with the
procedures described in 24 CFR
570.900(b), HUD will require as a
corrective action that the grantee either
adjust its remaining NSP1 planned
activities to ensure that 25 percent of
the original NSP1 formula grant amount
and program income supports activities
providing housing to households with
incomes at or under 50 percent of area
median income, or make a firm
commitment to provide such housing
with nonfederal funds in an amount
sufficient to offset any deficiency to
comply with the requirement before the
expenditure deadline for the NSP1
grant.
i. The NSP1 Notice allows each
grantee to use up to 10 percent of its
NSP1 grant for general administration
and planning activities. If HUD
recaptures funds from a grant, this
percentage limitation will still apply to
the remaining grant funds, reducing the
amount available for administration
activities.
3. Failure to Meet Expenditure
Deadline for NSP3.
NSP3 grantees must expend 50
percent of their grants within 2 years
and 100 percent of their grants within
3 years. HUD will recapture and
reallocate the amount of funds not
expended by those deadlines or provide
for other corrective action(s) or sanction.
Further guidance will be issued prior to
the deadline.
II. Alternative Requirements and
Regulatory Waivers
This section of the notice briefly
provides a justification for alternative
requirements, where additional
explanation is necessary, and describes
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the necessary basis for each regulatory
waiver. This section also highlights
some of the statutory requirements
applicable to the grants. This
background narrative is followed by the
NSP requirements. While program
requirements across the three rounds of
NSP funding are similar, certain
requirements differ in accordance to
statutory provisions.
Each grantee eligible for an NSP grant
that already receives annual CDBG
allocations has carried out needs
hearings, has a consolidated plan, an
annual action plan, a citizen
participation plan, a monitoring plan,
an analysis of impediments to fair
housing choice, and has made CDBG
certifications. The consolidated plan
already discusses housing needs related
to up to four major grant programs:
CDBG, HOME, Emergency Shelter
Grants (ESG), and Housing
Opportunities for Persons with AIDS
(HOPWA). A grantee’s annual action
plan describes the activities budgeted
under each of those annual programs.
HUD is treating a state and
entitlement grantee’s use of its NSP
grant to be a substantial amendment to
its current approved consolidated plan
and 2010 annual action plan. The NSP
grant is a special CDBG allocation to
address the problem of abandoned and
foreclosed homes. Treating NSP3 as a
substantial amendment will expedite
the distribution of NSP3 funds, while
ensuring citizen participation on the
specific use of the funds. HUD is
waiving the consolidated plan
regulations on the certification of
consistency with the consolidated plan
to the extent necessary to mean NSP
funds will be used to meet the
congressionally identified needs of
abandoned and foreclosed homes in the
targeted areas set forth in the grantee’s
substantial amendment. In addition,
HUD is waiving the consolidated plan
regulations to the extent necessary to
adjust reporting to fit the requirements
of HERA and the use of DRGR.
Non-entitlement local government
grantees receiving NSP3 funds that are
not required to submit a consolidated
plan to HUD under the CDBG program
will prepare an abbreviated plan. The
substance of an abbreviated plan must
include all the required elements that
entitlement communities provide as
part of an NSP Action Plan substantial
amendment as described under Section
II.B.2.
The waivers, alternative requirements,
and statutory changes apply only to the
grant funds appropriated under NSP
and not to the use of regular formula
allocations of CDBG, even if they are
used in conjunction with NSP funds for
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a project. They provide expedited
program implementation and
implement statutory requirements
unique to the covered NSP
appropriations.
A. Definitions for Purposes of the
Neighborhood Stabilization Program
Background
Certain terms are used in HERA that
are not used in the regular CDBG
program, or the terms are used
differently in HERA and the HCD Act.
In the interest of clarity of
administration, HUD is defining these
terms in this notice for all grantees,
including states. For the same reason,
HUD is also defining eligible fund uses
for all grantees, including states. States
may define other program terms under
the authority of 24 CFR 570.481(a), and
will be given maximum feasible
deference in accordance with 24 CFR
570.480(c) in matters related to the
administration of their NSP programs.
Requirement
Abandoned. A home or residential
property is abandoned if either (a)
mortgage, tribal leasehold, or tax
payments are at least 90 days
delinquent, or (b) a code enforcement
inspection has determined that the
property is not habitable and the owner
has taken no corrective actions within
90 days of notification of the
deficiencies, or (c) the property is
subject to a court-ordered receivership
or nuisance abatement related to
abandonment pursuant to state or local
law or otherwise meets a state definition
of an abandoned home or residential
property.
Blighted structure. A structure is
blighted when it exhibits objectively
determinable signs of deterioration
sufficient to constitute a threat to
human health, safety, and public
welfare.
CDBG funds. CDBG funds means, in
addition to the definition at 24 CFR
570.3, grant funds distributed under this
notice.
Current market appraised value. The
current market appraised value means
the value of a foreclosed upon home or
residential property that is established
through an appraisal made in
conformity with either: (1) The
appraisal requirements of the URA at 49
CFR 24.103, or (2) the Uniform
Standards of Professional Appraisal
Practice (USPAP), or (3) the appraisal
requirements of the Federal Housing
Administration (FHA) or a government
sponsored enterprise (GSE); and the
appraisal must be completed or updated
within 60 days of a final offer made for
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the property by a grantee, subrecipient,
developer, or individual homebuyer.
However, if the anticipated value of the
proposed acquisition is estimated at
$25,000 or less, the current market
appraised value of the property may be
established by a valuation of the
property that is based on a review of
available data and is made by a person
the grantee determines is qualified to
make the valuation.
Date of Notice of Foreclosure. For
purposes of the NSP tenant protection
provisions described at Section K, the
date of notice of foreclosure shall be
deemed to be the date on which
complete title to a property is
transferred to a successor entity or
person as a result of an order of a court
or pursuant to provisions in a mortgage,
deed of trust, or security deed. If none
of these events occur in the acquisition
of a foreclosed property (e.g. in a short
sale), in order to ensure fair and
equitable treatment of bona fide tenants
and consistency with the NSP definition
of foreclosed, the date of notice of
foreclosure shall be deemed to be the
date on which the property is acquired
for the NSP-assisted project. Note: This
definition does not affect or otherwise
alter the definition of ‘‘foreclosed’’ as
provided in this notice.
Foreclosed. A home or residential
property has been foreclosed upon if
any of the following conditions apply:
(a) The property’s current delinquency
status is at least 60 days delinquent
under the Mortgage Bankers of America
delinquency calculation and the owner
has been notified; (b) the property
owner is 90 days or more delinquent on
tax payments; (c) under state, local, or
tribal law, foreclosure proceedings have
been initiated or completed; or (d)
foreclosure proceedings have been
completed and title has been transferred
to an intermediary aggregator or servicer
that is not an NSP grantee, contractor,
subrecipient, developer, or end user.
Land bank. A land bank is a
governmental or nongovernmental
nonprofit entity established, at least in
part, to assemble, temporarily manage,
and dispose of vacant land for the
purpose of stabilizing neighborhoods
and encouraging re-use or
redevelopment of urban property. For
the purposes of NSP, a land bank will
operate in a specific, defined geographic
area. It will purchase properties that
have been foreclosed upon and
maintain, assemble, facilitate
redevelopment of, market, and dispose
of the land-banked properties. If the
land bank is a governmental entity, it
may also maintain foreclosed property
that it does not own, provided it charges
the owner of the property the full cost
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of the service or places a lien on the
property for the full cost of the service.
Subrecipient. Subrecipient shall have
the same meaning as at the first
sentence of 24 CFR 570.500(c). This
includes any nonprofit organization
(including a unit of general local
government) that a state awards funds
to.
Use (for the purposes of HERA section
2301(c)(1)). Funds are used when they
are obligated by a state, unit of general
local government, or any subrecipient
thereof, for a specific NSP activity; for
example, for acquisition of a specific
property. Funds are obligated for an
activity when orders are placed,
contracts are awarded, services are
received, and similar transactions have
occurred that require payment by the
state, unit of general local government,
or subrecipient during the same or a
future period. Note that funds are not
obligated for an activity when
subawards (e.g., grants to subrecipients
or to units of local government) are
made.
Vicinity. For the purposes of NSP3,
HUD defines ‘‘vicinity’’ as each
neighborhood identified by the NSP3
grantee as being the areas of greatest
need.
B. NSP3 Pre-Grant Process
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Background
With this notice, HUD is establishing
the NSP3 allocation formula, including
reallocation provisions, and announcing
the distribution of funds. CDBG grantees
receiving NSP3 allocations may
immediately begin to prepare and
submit action plan substantial
amendments for NSP3 funds, in
accordance with this notice. (Insular
areas should follow the requirements for
entitlement communities.) Nonentitlement local government grantees
will follow entitlement requirements
except for the submission of an
abbreviated plan rather than a
substantial amendment or as otherwise
explained in this notice.
To receive NSP3 funding, each
grantee listed in Attachment B must
submit an action plan substantial
amendment or abbreviated plan to HUD
in accordance with this notice by March
1, 2011.
HUD encourages each grantee to carry
out its NSP activities in the context of
a comprehensive plan for the
community’s vision of how it can make
its neighborhoods not only more stable,
but also more sustainable, inclusive,
competitive, and integrated into the
overall metropolitan fabric, including
access to transit, affordable housing,
employers, and services. HUD also
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encourages grantees to incorporate green
and sustainable development practices,
such as the examples in Attachment C.
HUD encourages each local
jurisdiction receiving an allocation to
carefully consider its administrative
capacity to use the funds within the
statutory deadline.
Jurisdictions may cooperate to carry
out their grant programs through a joint
request to HUD. HUD is providing
regulatory waivers and alternative
requirements to allow joint requests
among units of general local government
and to allow joint requests between
units of general local government and a
state. Any two or more contiguous units
of general local government that are in
the same metropolitan area and that are
eligible to receive an NSP grant may
instead make a joint request to HUD to
implement a joint NSP program. A
jurisdiction need not have a joint
agreement with an urban county under
the regular CDBG entitlement program
to request a joint program for NSP
funding. Similarly, any community
eligible to receive an NSP grant may
instead make a request for a joint NSP
program with its state. An NSP joint
request under a cooperation agreement
results in a single combined grant and
a single action plan substantial
amendment. Potential requestors should
contact HUD as soon as possible (as far
as possible in advance of publishing a
proposed NSP substantial amendment)
for technical guidance. The requestors
will specify which jurisdiction will
receive the funds and administer the
combined grant on behalf of the
requestors; in the case of a joint request
between a local government jurisdiction
and a state, the state will administer the
combined grant. (Grantees choosing this
option should consider the
Consolidated Plan and citizen
participation implications of this
approach. The lead entity’s substantial
amendment or abbreviated plan will
cover any participating members. The
citizen participation process must
include citizens of all jurisdictions
participating in the joint NSP program,
not just those of the lead entity.)
Given the rule of construction in
HERA that NSP funds generally are
construed as CDBG program funds,
subject to CDBG program requirements,
HUD generally is treating NSP3 funds as
a special allocation of Fiscal Year (FY)
2010 CDBG funding. This has important
consequences for local governments
presently participating in an existing
urban county program, and for
metropolitan cities that have joint
agreements with urban counties. HUD
will consider any existing cooperation
agreements between a local government
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and an urban county governing FY2010
CDBG funding (for purposes of either an
urban county or a joint program) to
automatically cover NSP funding as
well. These cooperation agreements will
continue to apply to the use of NSP
funds for the duration of the NSP grant,
just as cooperation agreements covering
regular CDBG Entitlement program
funds continue to apply to any use of
the funds appropriated during the 3year period covered by the agreements.
For example, a local government
presently has a cooperation agreement
covering a joint program or participation
in an urban county for Federal FYs
2009, 2010 and 2011. The local
government may choose to discontinue
its participation with the county at the
end of the applicable qualification
period for purposes of regular CDBG
entitlement funding. However, the
county will still be responsible for any
NSP3 projects funded in that
community, and for any NSP3 funding
the local government receives from the
county, until those funds are expended
and the funded activities are completed.
A third method of cooperating is also
available. A jurisdiction may choose to
apply for its entire grant, and then enter
into a subrecipient agreement with
another jurisdiction or nonprofit entity
to administer the grant. In this manner,
for example, all of the grantees
operating in a single metropolitan area
could designate the same land-bank
entity (or the state housing finance
agency) as a subrecipient for some or all
of their NSP activities.
Each NSP3 grantee will have until
March 1, 2011, to complete and submit
a substantial amendment to its annual
action plan or an abbreviated plan. A
grantee that wishes to submit its action
plan amendment to HUD electronically
in the DRGR system rather than by
paper may do so by contacting its local
field office for the DRGR submission
directions. Paper submissions to HUD
also will be allowed, although each
grantee must set up its action plan in
DRGR prior to the deadline for the first
required performance report after
receiving a grant.
HUD encourages grantees, during
development of their action plan
amendments or abbreviated plans, to
contact HUD field offices for guidance
in complying with these requirements,
or if they have any questions regarding
meeting grant requirements.
Normally, in the CDBG program, a
grantee takes at least 30 days soliciting
comment from its citizens before it
submits an annual action plan to HUD,
which then has 45 days to accept or
reject the plan. To expedite the process
and to ensure that the NSP grants are
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awarded in a timely manner, while
preserving reasonable citizen
participation, HUD is waiving the
requirement that the grantee follow its
citizen participation plan for this
substantial amendment. HUD is
shortening the minimum time for
citizen comments and requiring the
substantial amendment or abbreviated
plan to be posted on the grantee’s
official Web site as the materials are
developed, published, and submitted to
HUD.
A grantee will be deemed by HUD to
have received its NSP grant at the time
HUD signs its NSP grant agreement (or
amendment thereof, in the case of a
state that later receives reallocated grant
funds).
Grantees are cautioned that, despite
the expedited application and plan
process, they are still responsible for
ensuring that all citizens have equal
access to information about the
programs. Among other things, this
means that each grantee must ensure
that program information is available in
the appropriate languages for the
geographic area served by the
jurisdiction. This will be a particular
issue for states that make grants
covering regular CDBG entitlement areas
(or to entitlement grantees). Because
regular State CDBG funds are not used
in entitlement areas, State CDBG staffs
may not be aware of limited English
proficient (LEP) speaking populations in
those metropolitan jurisdictions.
HUD will review each grantee
submission for completeness and
consistency with the requirements of
this notice and will disapprove
incomplete and inconsistent action plan
amendments or abbreviated plans. HUD
will allow revision and resubmission of
a disapproved amendment or
abbreviated plan in accordance with 24
CFR 91.500(d) so long as any such
resubmission is received by HUD 45
days or less following the date of first
disapproval.
In combination, the notice alternative
requirements provide the following
expedited steps for NSP grants:
• Proposed action plan amendment or
abbreviated plan published via the
usual methods and on the Internet for
no less than 15 calendar days of public
comment;
• Final action plan amendment or
abbreviated plan posted on the Internet
and submitted to HUD by March 1, 2011
(grant application includes Standard
Form 424 (SF–424) and certifications);
• HUD expedites review;
• HUD accepts the plan and prepares
a cover letter, grant agreement, and
grant conditions;
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• Grant agreement signed by HUD
and immediately transmitted to the
grantee;
• Grantee signs and returns the grant
agreements;
• HUD establishes the line of credit
and the grantee requests and receives
DRGR access (if it does not already have
access);
• After completing the environmental
review(s) pursuant to 24 CFR part 58
and, as applicable, receiving from HUD
or the state an approved Request for
Release of Funds and certification, the
grantee may draw down funds from the
line of credit.
In consideration of the shortened
comment period, it is essential that
grantees ensure that affected parties
have sufficient notice of the opportunity
to comment. The action plan substantial
amendment or abbreviated plan and
citizen participation alternative
requirement will permit an expedited
grant-making process, but one that still
provides for public notice, appraisal,
examination, and comment on the
activities proposed for the use of NSP3
grant funds.
Note: HUD believes an adequate and
acceptable substantial amendment or
abbreviated plan should be no longer than 25
pages. A plan should provide sufficient detail
for citizens and HUD reviewers. Internet
address links can be provided to longer
elements that may change, such as detailed
rehabilitation standards.
Requirement
1. General. Except as described in this
notice, statutory and regulatory
provisions governing the CDBG program
for states and entitlement communities,
as applicable, shall apply to the use of
these funds. Except as described in this
notice, non-entitlement local
government grantees receiving a grant
directly from HUD shall follow statutory
and regulatory provisions governing the
CDBG program for entitlement
communities.
2. Contents of an NSP Action Plan
substantial amendment or abbreviated
plan. The elements in the NSP
substantial amendment to the Annual
Action Plan or an abbreviated plan
required for the CDBG program under
part 91 are:
a. General information about needs,
distribution, use of funds, and
definitions:
i. Each grantee must use the HUD
Foreclosure Need Web site as linked to
from https://www.hud.gov/nsp to submit
to HUD the locations of its NSP3 areas
of greatest need. On this site, HUD
provides estimates of foreclosure need
and a foreclosure related needs scores at
the Census Tract level. The score rank
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need from 1 to 20, with 20 being census
tracts with the HUD-estimated greatest
need.
ii. The neighborhood or
neighborhoods identified by the NSP3
grantee as being the areas of greatest
need must have an individual or average
combined index score for the grantee’s
identified target geography that is not
less than the lesser of 17 or the
twentieth percentile most needy score
in an individual state. For example, if a
state’s twentieth percentile most needy
census tract is 18, the requirement will
be a minimum need of 17. If, however,
a state’s twentieth percentile most
needy census tract is 15, the
requirement will be a minimum need of
15. HUD will provide the minimum
threshold for each state at its Web site
https://www.hud.gov/nsp. If more than
one neighborhood is identified in the
Action Plan, HUD will average the
neighborhood NSP3 scores, weighting
the scores by the estimated number of
housing units in each identified
neighborhood.
iii. A narrative describing how the
distribution and uses of the grantee’s
NSP funds will meet the requirements
of Section 2301(c)(2) of HERA, as
amended by the Recovery Act and the
Dodd-Frank Act;
iv. For the purposes of the NSP3, the
narratives will include:
(A) A definition of ‘‘blighted
structure’’ in the context of state or local
law;
(B) A definition of ‘‘affordable rents;’’
(C) A description of how the grantee
will ensure continued affordability for
NSP-assisted housing; and
(D) A description of housing
rehabilitation standards that will apply
to NSP-assisted activities.
b. Information by activity describing
how the grantee will use the funds,
identifying:
i. The eligible use of funds under
NSP3;
ii. The eligible CDBG activity or
activities;
iii. The areas of greatest need
addressed by the activity or activities;
vi. The expected benefit to incomequalified persons or households or
areas;
v. Appropriate performance measures
for the activity (e.g., units of housing to
be acquired, rehabilitated, or
demolished for the income levels
represented in DRGR, which are
currently 50 percent of area median
income and below, 51 to 80 percent, and
81 to 120 percent);
vi. Amount of funds budgeted for the
activity;
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vii. The name and location of the
entity that will carry out the activity;
and
viii. The expected start and end dates
of the activity.
c. A brief description of the general
terms under which assistance will be
provided, including:
i. Range of interest rates (if any);
ii. Duration or term of assistance;
iii. Tenure of beneficiaries (e.g.,
renters or homeowners); and
vi. If the activity produces housing,
how the design of the activity will
ensure continued affordability;
v. How the grantee shall, to the
maximum extent feasible, provide for
the hiring of employees who reside in
the vicinity of NSP3 projects or contract
with small businesses that are owned
and operated by persons residing in the
vicinity of such project, including
information on existing local ordinances
that address these requirements;
vi. The procedures used to create
preferences for the development of
affordable rental housing developed
with NSP3 funds; and
vii. Whether the funds used for the
activity are to count toward the
requirement to provide benefit to lowincome persons (earning 50 percent or
less of area median income).
d. The action plan narrative should
specifically address how the grantee’s
program design will address the local
housing market conditions.
e. Information on how to contact
grantee program administrators, so that
citizens and other interested parties
know whom to contact for additional
information.
3. Continued affordability. Grantees
shall ensure, to the maximum extent
practicable and for the longest feasible
term, that the sale, rental, or
redevelopment of abandoned and
foreclosed-upon homes and residential
properties under this section remain
affordable to individuals or families
whose incomes do not exceed 120
percent of area median income or, for
units originally assisted with funds
under the requirements of section
2301(f)(3)(A)(ii) of HERA, as amended,
remain affordable to individuals and
families whose incomes do not exceed
50 percent of area median income.
a. In its NSP action plan substantial
amendment, a grantee will define
‘‘affordable rents’’ and the continued
affordability standards and enforcement
mechanisms that it will apply for each
(or all) of its NSP activities. HUD will
consider any grantee adopting the
HOME program standards at 24 CFR
92.252(a), (c), (e), and (f), and 92.254, to
be in minimal compliance with this
standard and expects any other
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standards proposed and applied by a
grantee to be enforceable and longer in
duration. (Note that HERA’s continued
affordability standard is longer than that
required of subrecipients and
participating units of general local
government under 24 CFR 570.503 and
570.501(b).)
b. The grantee must require each NSPassisted homebuyer to receive and
complete at least 8 hours of homebuyer
counseling from a HUD-approved
housing counseling agency before
obtaining a mortgage loan. If the grantee
is unable to meet this requirement for a
good cause (e.g., there are no HUDapproved housing counseling agencies
within the grantee’s jurisdiction, or
there are no HUD-approved housing
counseling agencies within the grantee’s
jurisdiction that engage in homebuyer
counseling), the grantee may submit a
request for an exception to this
requirement to the responsible HUD
field office, and the HUD field office has
the authority to grant an exception for
good cause. The grantee must ensure
that the homebuyer obtains a mortgage
loan from a lender who agrees to
comply with the bank regulators’
guidance for non-traditional mortgages
(see, Statement on Subprime Mortgage
Lending issued by the Office of the
Comptroller of the Currency, Board of
Governors of the Federal Reserve
System, Federal Deposit Insurance
Corporation, Department of the
Treasury, and National Credit Union
Administration, available at https://
www.fdic.gov/regulations/laws/rules/
5000–5160.html). Grantees must design
NSP programs to comply with this
requirement and must document
compliance in the records, for each
homebuyer. Grantees are cautioned
against providing or permitting
homebuyers to obtain subprime
mortgages for whom such mortgages are
inappropriate, including homebuyers
who qualify for traditional mortgage
loans.
4. Citizen participation alternative
requirement. HUD is providing an
alternative requirement to 42 U.S.C.
5304(a)(2) and (3), to expedite
distribution of grant funds and to
provide for expedited citizen
participation for the NSP substantial
amendment. Provisions of 24 CFR
91.105(k), 91.115(i), 570.302 and
570.486, with respect to following the
citizen participation plan, are waived to
the extent necessary to allow
implementation of the requirements
below.
a. Initial Allocation. To receive its
grant allocation, a grantee must submit
to HUD for approval an NSP3
application by March 1, 2011. This
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submission will include a signed SF–
424, signed certifications, and a
substantial action plan amendment or
abbreviated plan meeting the
requirements of paragraph b below. (24
CFR 91.505 is waived to the extent
necessary to require submission of the
substantial amendment to HUD for
approval in accordance with this
notice.)
Reallocation. To receive an NSP
reallocation, a grantee must submit to
HUD for approval an NSP application
by the deadline indicated in a
reallocation announcement. This
submission will include a signed
standard Federal form SF–424, signed
certifications, and a substantial action
plan amendment or abbreviated plan
meeting the requirements of paragraph
B.3.b below. (24 CFR 91.505 is waived
to the extent necessary to require
submission of the substantial
amendment to HUD for approval in
accordance with this notice.)
b. Each grantee must prepare and
submit its annual Action Plan
amendment or abbreviated plan to HUD
in accordance with the consolidated
plan procedures under the CDBG
program as modified by this notice, or
HUD will reallocate the funds allocated
for that grantee. HUD is providing
alternative requirements to 42 U.S.C.
5304(a)(2) and waiving 24 CFR
91.105(c)(2), 91.105(k), 91.115(c)(2), and
91.115(i) to the extent necessary to
allow the grantee to provide no fewer
than 15 calendar days for citizen
comment (rather than 30 days) for its
initial NSP submission and any
subsequent substantial NSP action plan
amendment, and to require that, at the
time of submission to HUD, each
grantee post its approved action plan
amendment and any subsequent NSP
amendments on its official Web site
along with a summary of citizen
comments received within the 15-day
comment period. After HUD processes
and approves the plan amendment and
both HUD and the grantee have signed
the grant agreement, HUD will establish
the grantee’s line of credit in the amount
of funds included in the Action Plan
amendment, up to the allocation
amount.
5. Joint requests. To expedite the use
of funds, HUD is providing an
alternative requirement to 42 U.S.C.
5304(i) and is waiving 24 CFR 570.308
to the extent necessary to allow for
additional joint programs described
below.
a. Unit of General Local Government
Joint Agreements. Two or more
contiguous jurisdictions that are eligible
to receive a NSP allocation and are
located in the same metropolitan area
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may enter into joint agreements. All
members to the joint agreement must be
eligible to receive NSP1 or NSP3 funds,
and one unit of general local
government must be designated as the
lead entity. The lead entity must
execute the NSP grant agreement with
HUD. Consistent with 24 CFR 570.308,
the lead entity must assume
responsibility for administering the NSP
grant on behalf of all members, in
compliance with applicable program
requirements. The lead entity’s
substantial amendment to the action
plan or abbreviated plan will include all
participating communities.
b. Joint agreements with a state. Any
jurisdiction that is eligible to receive an
NSP allocation may enter into a joint
agreement with its state. The state shall
be the lead entity and must assume
responsibility for administering the NSP
grant on behalf of the local government,
in compliance with applicable program
requirements. The substantial
amendment to the state’s action plan
will include any participating unit of
general local government.
c. Local jurisdictions receiving
reallocation funds may enter into joint
agreements in accordance with
paragraph B.5.a. or b., regardless of
whether the local jurisdiction had a
joint agreement for the original NSP
allocation.
6. Effect of existing cooperation
agreements governing joint programs
and urban counties for NSP3 (see NSP1
Notice for parallel language for NSP1
grantees). Any cooperation agreement
between a unit of general local
government and a county, concerning
either a joint program or participation in
an urban county under 24 CFR 570.307
or 570.308, and governing CDBG funds
appropriated for Federal FY 2010, will
be considered to incorporate and apply
to NSP3 funding. Any such cooperation
agreements will continue to apply to the
use of NSP3 funds until the NSP3 funds
are expended and the NSP3 grant is
closed out. Grantees should note that
certain provisions in existing
cooperation agreements that govern
CDBG funding may be inconsistent with
parts of HERA, the Recovery Act, the
Dodd-Frank Act or this notice. For
instance, set minimum and/or
maximum allocation amounts may
conflict with priority distributions to
areas of greatest need identified in the
grantee’s action plan substantial
amendment. Conforming amendments
should be made to existing cooperation
agreements, as necessary, to comply
with NSP statutory requirements and
this notice.
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C. Reimbursement for Pre-Award Costs
Background
NSP grantees will need to move
forward rapidly to prepare the NSP
substantial amendment or abbreviated
plan and to undertake other
administrative actions, including
environmental reviews, as soon as
allocations are known. Therefore, HUD
is granting permission to states and
jurisdictions receiving a direct
allocation of NSP funds to incur preaward costs as if each was a new grantee
preparing to receive its first allocation of
CDBG funds.
Requirement
HUD is waiving 24 CFR 570.200(h) to
the extent necessary to grant permission
to jurisdictions receiving a direct NSP
allocation under this notice to incur preaward costs as if each was a new grantee
preparing to receive its first allocation of
CDBG funds. Similarly, in accordance
with OMB Circular A–87, Attachment B,
paragraph 31, HUD is allowing states to
incur pre-award costs as if each was a
new grantee preparing to receive its first
allocation of CDBG funds. NSP grantees
will be allowed to incur costs necessary
to develop the NSP substantial action
plan amendment and undertake other
administrative actions necessary to
receive its first grant, prior to the costs
being included in the final plan,
provided that the other conditions of 24
CFR 570.200(h) are met. (For units of
general local government applying to
the state (including entitlements not
receiving a direct NSP allocation under
this notice), 24 CFR 570.489(b) applies
unmodified. Units of general local
government receiving direct NSP
allocations may incur pre-award costs as
would an entitlement community.)
D. Grantee Capacity and Grant
Conditions
Background
In the October 6, 2008 Notice, HUD
encouraged each local jurisdiction
receiving an allocation to carefully
consider its administrative capacity to
use the funds within the statutory
deadline. To support this consideration,
HUD will provide each grantee a selfassessment tool that grantees may find
useful in better understanding their
capacity to undertake and manage NSP
activities. This is essentially the same
self-assessment tool that is used for NSP
Technical Assistance purposes and it
will allow HUD to more rapidly identify
capacity gaps and technical assistance
needs and to provide appropriate
technical assistance. Although HUD
suggests that every NSP grantee
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complete and submit the selfassessment with its substantial
amendment or abbreviated plan, HUD
will require some grantees to complete
and submit such a self-assessment as a
special condition of receiving funding.
Requirement
For NSP grantees that HUD
determines are high risk in accordance
with 24 CFR 85.12(a), HUD will apply
additional grant conditions in
accordance with 24 CFR 85.12(b).
E. Income Eligibility Requirement
Changes
Background
The NSP program includes two lowand moderate-income requirements at
HERA section 2301(f)(3)(A) that
supersede existing CDBG income
qualification requirements. Under the
heading ‘‘Low and Moderate Income
Requirement,’’ HERA states that:
all of the funds appropriated or otherwise
made available under this section shall be
used with respect to individuals and families
whose income does not exceed 120 percent
of area median income.
This provision does two main things.
First, for the purposes of NSP, it
effectively supersedes the overall
benefit provisions of the HCD Act and
the CDBG regulations, which allow up
to 30 percent of a grant to be used for
activities that meet a national objective
other than low- and moderate-income
benefit. Thus, NSP allows the use of
only the low- and moderate-income
benefit national objective. Activities
may not qualify under NSP using the
‘‘prevent or eliminate slums and blight’’
or ‘‘address urgent community
development needs’’ objectives.
Second, this provision also redefines
and supersedes the definition of ‘‘lowand moderate-income,’’ effectively
allowing households whose incomes
exceed 80 percent of area median
income but do not exceed 120 percent
of area median income to qualify as if
their incomes did not exceed the
published low- and moderate-income
levels of the regular CDBG program. To
prevent confusion, HUD will refer to
this new income group as ‘‘middle
income,’’ and keep the regular CDBG
definitions of ‘‘low-income’’ and
‘‘moderate income’’ in use. Further, HUD
will characterize aggregated households
whose incomes do not exceed 120
percent of median income as ‘‘low-,
moderate-, and middle-income
households,’’ abbreviated as LMMH. For
the purposes of NSP only, an activity
may meet the HERA low- and moderateincome national objective if the assisted
activity:
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• Provides or improves permanent
residential structures that will be
occupied by a household whose income
is at or below 120 percent of area
median income (abbreviated as LMMH);
• Serves an area in which at least 51
percent of the residents have incomes at
or below 120 percent of area median
income (LMMA); or
• Serves a limited clientele whose
incomes are at or below 120 percent of
area median income (LMMC).
HUD will use the parenthetical terms
above to refer to NSP national objectives
in program implementation, to avoid
confusion with the regular HCD Act
definitions.
Land banks are not allowed in the
regular CDBG program because of the
very high risk that the delay between
acquiring property and meeting a
national objective can be excessively
long, attenuating the intended CDBG
program benefits by delaying benefit far
beyond the annual or even the 5-year
consolidated plan cycles. In the regular
CDBG program (and in NSP other than
in an eligible land-bank use), a property
acquisition activity is dependent on the
subsequent re-use of the property
meeting a national objective in order to
demonstrate program compliance. Given
this, the HERA direction that assistance
to land banks is an eligible use of NSP
funds requires an alternative
requirement and policy clarification.
For grantees choosing to assist land
banks or demolition of structures with
NSP funds, the change to the income
qualification level for low-, moderateand middle-income areas will likely
include most of the neighborhoods
where property stabilization is required.
If an assisted land bank is not merely
acquiring properties, but is also working
in an area in which other activities are
being carried out that are intended to
arrest neighborhood decline, such as
maintenance, demolition, and
facilitating redevelopment of the
properties, HUD will, for NSP-assisted
activities only, accept that the
acquisition and management activities
of the land bank may provide sufficient
benefit to an area generally (as described
in 24 CFR 570.208(a)(1) and
570.483(b)(1)) to meet a national
objective (LMMA) prior to final
disposition of the banked property.
HUD notes that the grantee must
determine the actual service area
benefiting from a land bank’s activities,
in accordance with the regulations.
However, HUD does not believe the
benefits of just holding property are
sufficient to stabilize most
neighborhoods or that this is the best
use of limited NSP funds absent a re-use
plan. Therefore, HUD requires that a
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land bank may not hold a property for
more than 10 years without obligating
the property for a specific, eligible
redevelopment of that property in
accordance with NSP requirements.
Note that if a state provides funds to
an entitlement community, the
entitlement community must apply the
area median income levels applicable to
its regular CDBG program geography
and not the ‘‘balance of state’’ levels.
Other than the change in the
applicable low- and moderate-income
qualification level from 80 percent to
120 percent and this notice’s change to
the calculation at 570.483(b)(3), the area
benefit, housing, and limited clientele
benefit requirements at 24 CFR
570.208(a) and 570.483(b) remain
unchanged, as does the required
documentation.
The other NSP low- and moderateincome related provision, as modified
by the Dodd-Frank Act, states that:
‘‘not less than 25 percent of the funds
appropriated or otherwise made available
under this section shall be used to house
individuals or families whose incomes do not
exceed 50 percent of area median income.’’
The Dodd-Frank Act struck language
in HERA that specified that funds
meeting the 25 percent requirement
must be used specifically for the
purchase and redevelopment of
abandoned and foreclosed homes or
residential properties. This means that,
as of the effective date of the DoddFrank Act, any NSP eligible activity
used to house individuals or families at
or below 50 percent area medium
income may be used to satisfy this
requirement (i.e., vacant properties that
are not abandoned or foreclosed may be
used to meet the requirement as well as
eligible commercial properties that are
reused to house individuals and
families at or below 50% AMI).
However, NSP1 and NSP2 funds already
obligated or expended prior July 21,
2010, do not retroactively satisfy this
requirement.
HUD advises grantees to take note of
this threshold as they design NSP
activities. This provision does not have
a parallel in the regular CDBG program.
Grantees must document that an amount
equal to at least 25 percent of a grantee’s
NSP grant (initial allocation plus any
program income) has been budgeted in
the initial approved action plan
substantial amendment or abbreviated
plan for activities that will provide
housing for income-qualified
individuals or families. Prior to and at
grant closeout, HUD will review
grantees for compliance with this
provision by determining whether at
least 25 percent of grant funds have
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been expended for housing for
individual households whose incomes
do not exceed 50 percent of area median
income.
HUD is providing a waiver and
alternative requirement to allow
grantees to determine low- and
moderate income benefit on a unit basis
to allow greater support of mixed
income housing than the structure basis
required by 24 CFR 570.483(b)(3).
(Under the cited regulation, the general
rule is that at least 51 percent of the
residents of an assisted structure must
be income eligible.) Under the unit
approach, one or more of the units in a
structure must house income-eligible
families, but the remainder of the units
may be market rate, so long as the
proportion of assistance provided
compared to the overall project budget
is no more than the proportion of units
that will be occupied by income-eligible
households compared to the number of
units in the overall project. Under the
unit approach, the number of incomeeligible units is proportional to the
amount of assistance provided. Note
that this approach may only be used if
the units are generally comparable in
size and finishes. Based on HUD
experience, this approach is generally
more compatible with large-scale
development of mixed-income housing
than the structure approach under
which a dollar of CDBG assistance to a
structure means that 51 percent of the
units must meet income requirements.
For the purposes of NSP, adopting the
unit basis continues to benefit
individuals and families whose income
does not exceed 120 percent of area
median income by limiting the
proportion of the funding to the
proportion of units that are being
assisted with NSP funds. This approach
also helps to avoid displacing existing
over-income tenants in a building being
treated with NSP. Finally, it promotes
the type of mixed-income developments
that experience shows to be more
successful both economically and
socially. Therefore, the waiver and
alternative requirements allow the
grantee a choice. The grantee may
measure benefit within a housing
development project (1) according to the
existing CDBG requirements, (2)
according to the HOME program
requirements at 24 CFR 92.205(d) or (3)
according to the modified CDBG
alternative requirements specified in
this notice, which extend the CDBG
exception noted above. The grantee
must select and use just one method for
each project.
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Requirements
1. Overall benefit supersession and
alternative requirement. The
requirements at 42 U.S.C. 5301(c), 42
U.S.C. 5304(b)(3)(A), 24 CFR 570.484
(for states), and 24 CFR 570.200(a)(3)
that 70 percent of funds are for activities
that benefit low- and moderate-income
persons are superseded and replaced by
section 2301(f)(3)(A) of HERA. One
hundred percent of NSP funds must be
used to benefit individuals and
households whose income does not
exceed 120 percent of area median
income. NSP shall refer to such
households as ‘‘low-, moderate-, and
middle-income.’’
2. National objectives supersession
and alternative requirements. The
requirements at 42 U.S.C 5301(c) are
superseded and 24 CFR 570.208(a) and
570.483 are waived to the extent
necessary to allow the following
alternative requirements:
a. for purposes of NSP only, the term
‘‘low- and moderate-income person’’ as
it appears throughout the CDBG
regulations at 24 CFR part 570 shall be
defined as a member of a low-,
moderate-, and middle-income
household, and the term ‘‘low- and
moderate-income household’’ as it
appears throughout the CDBG
regulations shall be defined as a
household having an income equal to or
less than 120 percent of area median
income, measured as 2.4 times the
current Section 8 income limit for
households below 50 percent of median
income, adjusted for family size. A state
choosing to carry out an activity directly
must apply the requirements of 24 CFR
570.208(a) to determine whether the
activity has met the low-, moderate-,
and middle-income (LMMI) national
objective and must maintain the
documentation required at 24 CFR
570.506 to demonstrate compliance to
HUD.
b. The national objectives related to
prevention and elimination of slums
and blight and addressing urgent
community development needs (24 CFR
570.208(b) and (c) and 570.483(c) and
(d)) are not applicable to NSP-assisted
activities.
c. Each grantee whose plan includes
assisting rental housing shall develop
and make public its definition of
affordable rents for NSP-assisted rental
projects.
d. An NSP-assisted property may not
be held in a land bank for more than 10
years without obligating the property for
a specific, eligible redevelopment of that
property in accordance with NSP
requirements.
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e. Not less than 25 percent of any NSP
grant shall be used to house individuals
or families whose incomes do not
exceed 50 percent of area median
income.
f. HUD will consider assistance for a
multi-unit housing project involving
new construction, acquisition,
reconstruction, or rehabilitation to
benefit LMMI households in the
following circumstances:
(i)(A) The NSP assistance defrays the
development costs of a housing project
providing eligible permanent residential
units that, upon completion, will be
occupied by income-qualified
households; and
(B) if the project is rental, the units
occupied by income-qualified
households will be leased at affordable
rents. The grantee or unit of general
local government shall adopt and make
public its standards for determining
‘‘affordable rents’’ for this purpose; and
(C) The proportion of the total cost of
developing the project to be borne by
NSP assistance is no greater than the
proportion of units in the project that
will be occupied by income-qualified
households; or
(ii) When NSP assistance defray the
development costs of eligible permanent
residential units, such assistance shall
be considered to benefit LMMI persons
if the grantee follows the provisions of
24 CFR 92.205(d); or
(iii) The requirements of 24 CFR
570.208(a)(3) or 570.483(b)(3) are met,
as applicable.
(iv) The grantee must select and use
just one method for each project.
(v) The term ‘‘project’’ will be defined
as in the HOME Program at 24 CFR 92.2.
(vi) If the grantee applies option (i) or
(ii) above to a housing project, 24 CFR
570.208(a)(3) or 570.483(b)(3), as
applicable, is waived for that project.
F. State Distribution to Entitlement
Communities and Indian Tribes
Background
This notice includes an alternative
requirement to the HCD Act and a
regulatory waiver allowing distribution
of funds by a state to CDBG regular
entitlement communities and Tribes.
This is consistent with the provision of
HERA that specifically sets distribution
priorities for areas with the greatest
need, including ‘‘metropolitan areas,
metropolitan cities, urban areas, rural
areas, low- and moderate-income areas
* * *.’’ Therefore, states receiving
allocations under this notice may
distribute funds to or within any
jurisdiction within the state that is
among those with the greatest need,
even if the jurisdiction is among those
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receiving a direct formula allocation of
funds from HUD under the regular
CDBG program or this notice.
Requirement
Alternative requirement for
distribution to CDBG metropolitan
cities, urban counties, and Tribes. In
accordance with the direction of HERA
that grantees distribute funds to the
areas of greatest need, HUD is providing
an alternative requirement to 42 U.S.C.
5302(a)(7) (definition of ‘‘nonentitlement
area’’) and waiving provisions of 24 CFR
part 570, including 24 CFR 570.480(a),
that would prohibit states electing to
receive CDBG funds from distributing
such funds to units of general local
government in entitlement communities
or to Tribes. The appropriations law
supersedes the statutory distribution
prohibition at 42 U.S.C. 5306(d)(1) and
(2)(A). Alternatively, the state is
required to distribute funds without
regard to a local government status
under any other CDBG program and
must use funds in entitlement
jurisdictions if they are identified as
areas of greatest need, regardless of
whether the entitlement receives its
own NSP allocation.
G. State’s Direct Action
Background
In the State CDBG Program, states
receiving CDBG funds may not directly
use the funds for activities, but must
distribute them to units of general local
government, which then use the funds
for program activities. HUD also notes
the language of HERA section 2301(c)
that says, in part, that:
‘‘Any State * * * that receives amounts
pursuant to this section shall * * * use such
amounts to purchase and redevelop * * *.’’
This clearly speaks to the states using
funds directly for projects and
supersedes the HCD Act direction for
states to only distribute funds to
nonentitlement areas. Direct use of
funds by a state may also result in more
expeditious use of NSP funds.
Therefore, a state receiving NSP funds
may carry out NSP activities directly for
some or all of its assisted grant
activities, just as CDBG entitlement
communities do under 24 CFR
570.200(f), including, but not limited to,
carrying out activities using its own
employees, procuring contractors,
private developers, and providing loans
and grants through nonprofit
subrecipients (including local
governments and other public
nonprofits such as regional or local
planning or development authorities
and public housing authorities).
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For those activities a state chooses to
carry out directly, HUD strongly advises
the state to adopt the recordkeeping
required for an entitlement community
at 24 CFR 570.506 and the subrecipient
agreement provisions at 24 CFR
570.503. Also, in such cases, as an
alternative requirement to 42 U.S.C.
5304(i), the state may retain and re-use
program income as if it were an
entitlement community.
HUD is granting regulatory waivers of
State CDBG regulations to conform the
applicable management, real property
change of use, and recordkeeping rules
when a state chooses to carry out
activities as if it were an entitlement
community.
Requirements
1. Responsibility for state review and
handling of noncompliance. This
change conforms NSP requirements
with the waiver allowing the state to
carry out activities directly. 24 CFR
570.492 is waived and the following
alternative requirement applies: The
state shall make reviews and audits,
including on-site reviews of any
subrecipients, designated public
agencies, and units of general local
government as may be necessary or
appropriate to meet the requirements of
42 U.S.C. 5304(e)(2), as amended, as
modified by this notice. In the case of
noncompliance with these
requirements, the state shall take such
actions as may be appropriate to prevent
a continuance of the deficiency, mitigate
any adverse effects or consequences,
and prevent a recurrence. The state shall
establish remedies for noncompliance
by any designated public agencies or
units of general local governments and
for its subrecipients.
2. Change of use of real property for
state grantees acting directly. This
waiver conforms the change of use of
real property rule to the waiver allowing
a state to carry out activities directly.
For purposes of this program, in 24 CFR
570.489(j), (j)(1), and the last sentence of
(j)(2), ‘‘unit of general local government’’
shall be read as ‘‘unit of general local
government or state.’’
3. Recordkeeping for a state grantee
acting directly. Recognizing that the
state may carry out activities directly, 24
CFR 570.490(b) is waived in such a case
and the following alternative provision
shall apply:
State Records. The state shall
establish and maintain such records as
may be necessary to facilitate review
and audit by HUD of the state’s
administration of NSP funds under 24
CFR 570.493. Consistent with applicable
statutes, regulations, waivers and
alternative requirements, and other
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Federal requirements, the content of
records maintained by the state shall be
sufficient to: (1) Enable HUD to make
the applicable determinations described
at 24 CFR 570.493; (2) make compliance
determinations for activities carried out
directly by the state; and (3) show how
activities funded are consistent with the
descriptions of activities proposed for
funding in the action plan. For fair
housing and equal opportunity
purposes, and as applicable, such
records shall include data on the racial,
ethnic, and gender characteristics of
persons who are applicants for,
participants in, or beneficiaries of the
program.
4. State compliance with certifications
for state grantees acting directly. This is
a conforming change related to the
waiver to allow a state to act directly.
Because a state grantee under this
appropriation may carry out activities
directly, HUD is applying the
regulations at 24 CFR 570.480(c) with
respect to the basis for HUD
determining whether the state has failed
to carry out its certifications, so that
such basis shall be that the state has
failed to carry out its certifications in
compliance with applicable program
requirements.
5. Clarifying note on the process for
environmental release of funds when a
state carries out activities directly.
Usually, a state distributes CDBG funds
to units of local government and takes
on HUD’s role in receiving
environmental certifications from the
grantees and approving releases of
funds. For NSP, HUD allows a state
grantee to also carry out activities
directly instead of distributing them to
other governments. According to the
environmental regulations at 24 CFR
58.4, when a state carries out activities
directly, the state must submit the
certification and request for release of
funds to HUD for approval.
H. Eligibility and Allowable Costs
Background
Most of the activities eligible under
NSP are correlated with CDBG-eligible
activities under 42 U.S.C. 5305(a). This
correlation reduces implementation
risks, because it ensures that the NSP
grants are administered largely in
accordance with long-established CDBG
rules and controls. The table in the
requirements paragraph below shows
the eligible uses under NSP and the
eligible activities from the regulations
for the regular CDBG entitlement
program that HUD has determined best
correspond to those uses. If a grantee
creates a program design that includes
a CDBG-eligible activity that is not
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shown in the table to support an NSPeligible use, the Department is
providing an alternative requirement to
42 U.S.C. 5305(a) that HUD may allow
a grantee an additional eligible-activity
category if HUD finds the activity to be
in compliance with NSP statutory
requirements. As under the regular
CDBG program, grantees may fund
costs, such as reasonable developer’s
fees, related to NSP-assisted housing
rehabilitation or construction activities.
Only NSP1 funds may be used to
redevelop acquired property for
nonresidential uses, such as public
parks, commercial uses, or mixed
residential and commercial uses.
Redevelopment activities using NSP2
and NSP3 funds must be for housing.
The annual entitlement CDBG
program allows up to 20 percent of any
grant amount plus program income may
be used for general administration and
planning costs. The State CDBG
Program is also subject to the 20 percent
limitation, but within that cap up to 3
percent may be used by the state for
state administrative costs and technical
assistance to potential local government
program grantees, with the remainder
available to be granted to local
government grantees for their
administrative costs. Because some of
the costs usually allocated under these
caps are not applicable to NSP grants
(for example, the costs of completing the
entire consolidated plan process), these
amounts seem excessive to HUD in the
context of the NSP program. On the
other hand, HUD wants to encourage
and support expeditious, appropriate,
and compliant use of grant funds, and
to prevent fraud, waste, and abuse of
funds. Therefore, HUD is providing an
alternative requirement that an amount
of up to 10 percent of an NSP grant
provided to a jurisdiction and of up to
10 percent of program income earned
may be used for general administration
and planning activities as those are
defined at 24 CFR 570.205 and 206. For
all grantees, including states, the 10
percent limitation applies to the grant as
a whole.
The regulatory and statutory
requirements for state match for
program administration at 24 CFR
570.489(a)(i) are superseded by the
statutory direction at section 2301(e)(2)
of HERA that no matching funds shall
be required for a state or unit of general
local government to receive a grant.
Requirements
1. Use of grant funds must constitute
an eligible use under HERA.
2. In addition to being an eligible NSP
use of funds, each activity funded under
NSP must also be CDBG-eligible under
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42 U.S.C. 5305(a) and meet a CDBG
national objective.
3.a. Certain CDBG-eligible activities
correlate to specific NSP-eligible uses
and vice versa. 42 U.S.C. 5305(a) and 24
CFR 570.201–207 and 570.482(a)
through (d) are superseded to the extent
necessary to allow the eligible uses
described under section 2301(c)(4) of
HERA in accordance with this
paragraph (including the table and
subparagraphs below) or with
permission granted, in writing, by HUD
64333
upon a written request by the grantee
that demonstrates that the proposed
activity constitutes an eligible use under
NSP. All NSP grantees, including states,
will use the NSP categories and CDBG
entitlement regulations listed below.
NSP-eligible uses
Correlated eligible activities from the CDBG entitlement regulations
(A) Establish financing mechanisms for purchase and redevelopment of
foreclosed upon homes and residential properties, including such
mechanisms as soft-seconds, loan loss reserves, and shared-equity
loans for low- and moderate-income homebuyers.
(B) Purchase and rehabilitate homes and residential properties that
have been abandoned or foreclosed upon, in order to sell, rent, or redevelop such homes and properties.
• As part of an activity delivery cost for an eligible activity as defined
in 24 CFR 570.206.
• Also, the eligible activities listed below to the extent financing mechanisms are used to carry them out.
• 24 CFR 570.201(a) Acquisition (b) Disposition, (i) Relocation , and
(n) Direct homeownership assistance (as modified below);
• 24 CFR 570.202 eligible rehabilitation and preservation activities for
homes and other residential properties.
• HUD notes that any of the activities listed above may include required homebuyer counseling as an activity delivery cost.
• 24 CFR 570.201(a) Acquisition and (b) Disposition.
• HUD notes that any of the activities listed above may include required homebuyer counseling as an activity delivery cost.
• 24 CFR 570.201(d) Clearance for blighted structures only.
• 24 CFR 570.201(a) Acquisition, (b) Disposition, (c) Public facilities
and improvements, (e) Public services for housing counseling, but
only to the extent that counseling beneficiaries are limited to prospective purchasers or tenants of the redeveloped properties, (i) Relocation, and (n) Direct homeownership assistance (as modified
below).
• 24 CFR 570.202 Eligible rehabilitation and preservation activities for
demolished or vacant properties.
• 24 CFR 570.204 Community based development organizations.
• HUD notes that any of the activities listed above may include required homebuyer counseling as an activity delivery cost.
(C) Establish and operate land banks for homes and residential properties that have been foreclosed upon.
(D) Demolish blighted structures ..............................................................
(E) Redevelop demolished or vacant properties as housing.* .................
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* NSP1 funds used under eligible use (E) may be used for nonresidential purposes, while NSP2 and NSP3 funds must be used for housing.
b. HUD will not consider requests to
allow foreclosure prevention activities,
or to allow demolition of structures that
are not blighted. Neither will it allow
purchase of residential properties and
homes that have not been abandoned or
foreclosed upon, except under
paragraph (E) of the eligible use chart
above. HUD does not have the authority
to permit uses or activities not
authorized by HERA.
c. New construction of housing is
eligible as part the redevelopment of
demolished or vacant properties as
provided in paragraph (E) of the eligible
use chart above.
d. 24 CFR 570.201(n) is waived and
an alternative requirement provided for
42 U.S.C. 5305(a) to the extent necessary
to allow provision of NSP-assisted
homeownership assistance to persons
whose income does not exceed 120
percent of median income.
e. No NSP2 or NSP3 funds may be
used to demolish any public housing (as
defined by Section 3 of the U.S. Housing
Act of 1937 (42 U.S.C. 1437a)).
f. For NSP2 and NSP3, a grantee may
not use more than 10 percent of its grant
for demolition activities under HERA
sections 2301(c)(4)(C) and (D), unless
the Secretary determines that such use
represents an appropriate response to
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local market conditions. NSP2 and
NSP3 grantees seeking to use more than
10 percent of their grant amounts on
demolition activities must request a
waiver from HUD.
4. Alternative requirement for the
limitation on planning and
administrative costs. 24 CFR 570.200(g)
and 570.489(a)(3) are waived to the
extent necessary to allow each grantee
under this notice to expend no more
than 10 percent of its grant amount, plus
10 percent of the amount of program
income received by the grantee, for
activities eligible under 24 CFR 570.205
or 206. The requirements at 24 CFR
570.489 are waived to the extent that
they require a state match for general
administrative costs. (States may use
NSP funds under this 10 percent
limitation to provide technical
assistance to local governments and
nonprofit program participants.)
I. Rehabilitation Standards
Background
HERA provides that any NSP-assisted
rehabilitation of a foreclosed-upon
home or residential property shall be to
the extent necessary to comply with
applicable laws, codes, and other
requirements relating to housing safety,
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quality, and habitability, in order to sell,
rent, or redevelop such homes and
properties. HUD is also imposing this
requirement for NSP3-assisted new
construction. This imposes a
requirement that does not exist in the
CDBG program. This means that each
grantee must describe or reference in its
NSP action plan amendment what
rehabilitation standards it will apply for
NSP-assisted rehabilitation. As a
reminder, grantees are subject to Section
504 of the Rehabilitation Act of 1973
and the Fair Housing Act, including
their respective provisions related to
physical accessibility standards for
persons with disabilities. See 24 CFR
part 8; 24 CFR 100.205. See also 24 CFR
570.487 and 24 CFR 570.602. HUD will
monitor to ensure the standards are
implemented.
HERA defines rehabilitation to
include improvements to increase the
energy efficiency or conservation of
such homes and properties or to provide
a renewable energy source or sources for
such homes and properties. Such
improvements are also eligible under
the regular CDBG program. HUD
strongly encourages grantees to use NSP
funds not only to stabilize
neighborhoods in the short-term, but to
strategically incorporate modern, green
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building and energy-efficiency
improvements in all NSP activities to
provide for long-term affordability and
increased sustainability and
attractiveness of housing and
neighborhoods. At minimum, NSP3
grantees must have the rehabilitation
standards required below. See
Appendix C for examples of green and
energy-efficiency actions. Additional
resources related to sustainable and
energy-efficient construction are
available on the NSP Resource Exchange
Web site (https://www.hud.gov/nspta).
Requirement. For NSP3, HUD is
requiring that all gut rehabilitation (i.e.,
general replacement of the interior of a
building that may or may not include
changes to structural elements such as
flooring systems, columns or load
bearing interior or exterior walls) or new
construction of residential buildings up
to three stories must be designed to
meet the standard for Energy Star
Qualified New Homes. All gut
rehabilitation or new construction of
mid -or high-rise multifamily housing
must be designed to meet American
Society of Heating, Refrigerating, and
Air-Conditioning Engineers (ASHRAE)
Standard 90.1–2004, Appendix G plus
20 percent (which is the Energy Star
standard for multifamily buildings
piloted by the Environmental Protection
Agency and the Department of Energy).
Other rehabilitation must meet these
standards to the extent applicable to the
rehabilitation work undertaken, e.g.,
replace older obsolete products and
appliances (such as windows, doors,
lighting, hot water heaters, furnaces,
boilers, air conditioning units,
refrigerators, clothes washers and
dishwashers) with Energy Star-labeled
products. Water efficient toilets,
showers, and faucets, such as those with
the WaterSense label, must be installed.
Where relevant, the housing should be
improved to mitigate the impact of
disasters (e.g., earthquake, hurricane,
flooding, fires).
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J. Sale of Homes
Background
Section 2301(d)(3) of HERA directs
that, if an abandoned or foreclosed-upon
home or residential property is
purchased, redeveloped, or otherwise
sold to an individual as a primary
residence, then such sale shall be in an
amount equal to or less than the cost to
acquire and redevelop or rehabilitate
such home or property up to a decent,
safe, and habitable condition. (Sales and
closing costs are eligible NSP
redevelopment or rehabilitation costs).
Note that the maximum sales price for
a property is determined by aggregating
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all costs of acquisition, rehabilitation,
and redevelopment (including related
activity delivery costs, which generally
may include, among other items, costs
related to the sale of the property).
Requirements
1. In its records, each grantee must
maintain sufficient documentation
about the purchase and sale amounts of
each property and the sources and uses
of funds for each activity so that HUD
can determine whether the grantee is in
compliance with this requirement. A
grantee will be expected to provide this
documentation individually for each
activity.
2. In determining the sales price
limitation, HUD will not consider the
costs of boarding up, lawn mowing,
simply maintaining the property in a
static condition, or, in the absence of
NSP-assisted rehabilitation or
redevelopment of the property, the costs
of completing a sales transaction or
other disposition to be redevelopment
or rehabilitation costs. These costs may
not be included by the grantee in the
determination of the sales price for an
NSP-assisted property.
3. For reporting purposes only, for a
housing program involving multiple
single-family structures under the
management of a single entity, HUD will
permit reporting the aggregation of
activity delivery costs across the total
portfolio of projects until completion of
the program or closeout of the grant
with HUD, whichever comes earlier.
K. Acquisition and Relocation
Background
Acquisition of Foreclosed-Upon
Properties. HUD notes that section
2301(d)(1) of HERA conflicts with
section 301(3) of the URA (42 U.S.C.
4651) and related regulatory
requirements at 49 CFR 24.102(d). As
discussed further, section 2301(d)(1) of
HERA requires that any acquisition of a
foreclosed-upon home or residential
property under NSP be at a discount
from the current market-appraised value
of the home or property and that such
discount shall ensure that purchasers
are paying below-market value for the
home or property. Section 301(3) of the
URA, as implemented at 49 CFR
24.102(d), provides that an offer of just
compensation shall not be less than the
agency’s approved appraisal of the fair
market value of such property. These
URA acquisition policies apply to any
acquisition of real property for a
federally funded project, except for
acquisitions described in 49 CFR
24.101(b)(1) through (5) (commonly
referred to as ‘‘voluntary acquisitions’’).
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As the more recent and specific
statutory provision, section 2301(d)(1)
of HERA prevails over section 301 of the
URA for purposes of NSP-assisted
acquisitions of foreclosed-upon homes
or residential properties.
NSP Appraisal Requirements. Section
2301(d)(1) of HERA requires an
appraisal for purposes of determining
the statutory purchase discount. This
appraisal requirement applies to any
NSP-assisted acquisition of a foreclosedupon home or residential property
(including voluntary acquisitions). As
noted above, section 301 of the URA
does not apply to voluntary
acquisitions. While the URA and its
regulations do not require appraisals for
such acquisitions, the URA acquisition
policies do not prohibit acquiring
agencies from obtaining appraisals.
Appendix A, 49 CFR 24.101(b)(1)(iv)
and (2)(ii), acknowledges that acquiring
agencies may still obtain an appraisal to
support their determination of fair
market value.
One-for-One Replacement. HUD is
providing an alternative requirement to
the one-for-one replacement
requirements set forth in 42 U.S.C.
5304(d)(2), as implemented at 24 CFR
42.375. The Department anticipates a
large number of requests from grantees
for whom the requirements will be
onerous given the pressing rush to
implement NSP, and several of the
major housing markets affected by the
foreclosure crisis have a surplus of
abandoned and foreclosed-upon
residential properties. The additional
workload of reviewing requests under
42 U.S.C. 5304(d)(3) and 24 CFR
42.375(d) could cause a substantial
backlog at HUD and delay NSP program
operations. Therefore, the alternative
requirement is that an NSP grantee is
not required to meet the requirements of
42 U.S.C. 5304(d), as implemented at 24
CFR 42.375, to provide one-for-one
replacement of low- and moderateincome dwelling units demolished or
converted in connection with activities
assisted with NSP funds. Alternatively,
each grantee must submit the
information described below relating to
its demolition and conversion activities
in its action plan substantial
amendment or abbreviated plan. The
grantee will report to HUD and citizens
(via prominent posting of the DRGR
reports on the grantee’s official Internet
site) on progress related to these
measures until the closeout of its grant
with HUD. HUD reminds grantees to be
aware of the requirement to have and
follow a residential antidisplacement
and relocation plan for the CDBG and
HOME programs. This requirement is
not waived for those programs and
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continues to apply to activities assisted
with regular CDBG and HOME funds.
Relocation Assistance. HUD is not
waiving or specifying alternative
requirements to the URA’s relocation
provisions. Those requirements that do
not conflict with HERA continue to
apply. HUD is not specifying alternative
requirements to the relocation
assistance provisions at 42 U.S.C.
5304(d). Guidance on meeting these
requirements is available on the HUD
Web site and through local HUD field
offices. HUD urges grantees to consider
URA requirements in designing their
programs and to remember that there are
URA obligations related to voluntary
and involuntary property acquisition
activities, even for vacant and
abandoned property.
Tenant Protections. The Recovery Act
included tenant protections applicable
to NSP grants. First, the Recovery Act
included a provision applicable to any
foreclosed upon dwelling or residential
real property that was acquired by the
initial successor in interest pursuant to
the foreclosure after February 17, 2009
and was occupied by a bona fide tenant
at the time of foreclosure. The use of
NSP funds for acquisition of such
property is subject to a determination by
the grantee that the initial successor in
interest complied with these
requirements. Second, NSP grantees
may not refuse to lease a dwelling unit
in housing with such loan or grant to a
participant under section 8 of the
United States Housing Act of 1937 (42
U.S.C 1437f) because of the status of the
prospective tenant as such a participant.
Requirements
One for One Replacement
Requirements.
1. The one-for-one replacement
requirements at 24 CFR 570.488,
570.606(c), and 42.375 are waived for
low- and moderate-income dwelling
units demolished or converted in
connection with an activity assisted
with NSP funds. As an alternative
requirement to 42 U.S.C.
5304(d)(2)(A)(i) and (ii), each grantee
planning to demolish or convert any
low- and moderate-income dwelling
units as a result of NSP-assisted
activities must identify all of the
following information in its NSP
substantial amendment or abbreviated
plan:
(a) The number of low- and moderateincome dwelling units reasonably
expected to be demolished or converted
as a direct result of NSP-assisted
activities;
(b) The number of NSP affordable
housing units (made available to low-,
moderate-, and middle-income
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households) reasonably expected to be
produced, by activity and income level
as provided for in DRGR, by each NSP
activity providing such housing
(including a proposed time schedule for
commencement and completion); and
(c) The number of dwelling units
reasonably expected to be made
available for households whose income
does not exceed 50 percent of area
median income.
The grantee must also report on actual
performance for demolitions and
production, as required elsewhere in
this notice.
Tenant Protections.
2. The following requirements apply
to any foreclosed upon dwelling or
residential real property that was
acquired by the initial successor in
interest pursuant to the foreclosure after
February 17, 2009 and was occupied by
a bona fide tenant at the time of
foreclosure. The use of NSP funds for
acquisition of such property is subject to
a determination by the grantee that the
initial successor in interest complied
with these requirements.
a. The initial successor in interest in
a foreclosed upon dwelling or
residential real property shall provide a
notice to vacate to any bona fide tenant
at least 90 days before the effective date
of such notice. The initial successor in
interest shall assume such interest
subject to the rights of any bona fide
tenant, as of the date of such notice of
foreclosure: (i) Under any bona fide
lease entered into before the date of
notice of foreclosure to occupy the
premises until the end of the remaining
term of the lease, except that a successor
in interest may terminate a lease
effective on the date of sale of the unit
to a purchaser who will occupy the unit
as a primary residence, subject to the
receipt by the tenant of the 90-day
notice under this paragraph; or (ii)
without a lease or with a lease
terminable at will under State law,
subject to the receipt by the tenant of
the 90-day notice under this paragraph,
except that nothing in this section shall
affect the requirements for termination
of any Federal- or State-subsidized
tenancy or of any State or local law that
provides longer time periods or other
additional protections for tenants.
b.i. In the case of any qualified
foreclosed housing in which a recipient
of assistance under section 8 of the
United States Housing Act of 1937 (42
U.S.C 1437f) (the ‘‘Section 8 Program’’)
resides at the time of foreclosure, the
initial successor in interest shall be
subject to the lease and to the housing
assistance payments contract for the
occupied unit.
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ii. Vacating the property prior to sale
shall not constitute good cause for
termination of the tenancy unless the
property is unmarketable while
occupied or unless the owner or
subsequent purchaser desires the unit
for personal or family use.
iii. If a public housing agency is
unable to make payments under the
contract to the immediate successor in
interest after foreclosure, due to (A) an
action or inaction by the successor in
interest, including the rejection of
payments or the failure of the successor
to maintain the unit in compliance with
the Section 8 Program or (B) an inability
to identify the successor, the agency
may use funds that would have been
used to pay the rental amount on behalf
of the family—(1) to pay for utilities that
are the responsibility of the owner
under the lease or applicable law, after
taking reasonable steps to notify the
owner that it intends to make payments
to a utility provider in lieu of payments
to the owner, except prior notification
shall not be required in any case in
which the unit will be or has been
rendered uninhabitable due to the
termination or threat of termination of
service, in which case the public
housing agency shall notify the owner
within a reasonable time after making
such payment; or (2) for the family’s
reasonable moving costs, including
security deposit costs.
c. For purposes of this section, a lease
or tenancy shall be considered bona fide
only if: (i) the mortgagor under the
contract is not the tenant; (ii) the lease
or tenancy was the result of an arm’s
length transaction; and (iii) the lease or
tenancy requires the receipt of rent that
is not substantially less than fair market
rent for the property. See Section II.A
for the definition of date of notice of
foreclosure.
d. The grantee shall maintain
documentation of its efforts to ensure
that the initial successor in interest in
a foreclosed upon dwelling or
residential real property has complied
with the requirements under section
K.2.a. and K.2.b. If the grantee
determines that the initial successor in
interest in such property failed to
comply with such requirements, it may
not use NSP funds to finance the
acquisition of such property unless it
assumes the obligations of the initial
successor in interest specified in section
K.2.a. and K.2.b.
e. Grantees must provide the
relocation assistance required pursuant
to 24 CFR 570.606 to tenants displaced
as a result of an NSP-assisted activity
and maintain records in sufficient detail
to demonstrate compliance with the
provisions of that section. For purposes
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of clarification, grantees need to be
aware that the NSP tenant protection
requirements under the Recovery Act
are separate and apart from the
obligations imposed on grantees by the
URA. The URA applies to any person
displaced as a direct result of
acquisition, rehabilitation, and/or
demolition of real property for a
federally-assisted project. Eligibility
determinations under the URA and the
required notices and relocation
assistance requirements are separate and
distinct from the NSP tenant protections
in the Recovery Act. Grantees cannot
assume that a person entitled to the NSP
tenant protections under the Recovery
Act is also eligible for assistance under
the URA (or vice versa). Any tenant
lawfully occupying the property evicted
by the owner/mortgagor in order to
facilitate an acquisition under the NSP
program (including short sales) is most
likely eligible for URA relocation
assistance and payments as a displaced
person.
3. The grantee of any grant or loan
made from NSP funds may not refuse to
lease a dwelling unit in housing with
such loan or grant to a participant under
the Section 8 Program because of the
status of the prospective tenant as such
a participant.
4. This section shall not preempt any
Federal, State or local law that provides
more protections for tenants.
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L. Note on Eminent Domain
Although section 2303 of HERA
appears to allow some use of eminent
domain for public purposes, HUD
cautions grantees that HERA section
2301(d)(1) may effectively ensure that
all NSP-assisted property acquisitions
must be voluntary acquisitions as the
term is defined by the URA and its
implementing regulations. Section
2301(d)(1) of HERA directs that any
purchase of a foreclosed-upon home or
residential property under NSP be at a
discount from the current market
appraised value of the home or
residential property and that such
discount shall ensure that purchasers
are paying below-market value for the
home or property. However, the Fifth
Amendment to the U.S. Constitution
provides that private property shall not
be taken for public use without just
compensation. The Supreme Court has
ruled that a jurisdiction must pay fair
market value for the purchase of
property through eminent domain. A
grantee contemplating using NSP funds
to assist an acquisition involving an
eminent domain action is advised to
consult appropriate legal counsel before
taking action.
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M. Timeliness of Use and Expenditure
of NSP Funds
Background
One of the most critical NSP1
provisions is the HERA requirement at
section 2301(c)(1) that any grantee
receiving a grant:
‘‘* * * shall, not later than 18 months after
the receipt of such amounts, use such
amounts to purchase and redevelop
abandoned and foreclosed homes and
residential properties.’’
HUD has defined the term ‘‘use’’ in
this notice to include obligation of
funds.
A further complication is that HERA
clearly expects grantees to earn program
income under this grant program. As
provided under 24 CFR 85.21,
entitlements grantees and subrecipients
shall disburse program income before
requesting additional cash withdrawals
from the U.S. Treasury. States are
governed similarly by 24 CFR
570.489(e)(3) and 31 CFR part 205. This
requirement is reflected in the
regulations governing use of program
income by states and units of general
local government under the CDBG
program. This means that a grantee that
successfully and quickly deploys its
program and generates program income
may obligate, draw down, and expend
an amount equal to its NSP1 allocation
amount, and still have funds remaining
in its line of credit, possibly subject to
recapture at the 18-month deadline.
On consideration, the Department
chose to implement the NSP1 use test
based on whether the state or unit of
general local government has expended
or obligated the NSP1 grant funds and
program income in an aggregate amount
at least equal to the NSP1 allocation.
HUD also imposed a deadline for
expending NSP1 grant funds because
the intent of these grants clearly is to
quickly address an emergency situation
in areas of the greatest need.
NSP2 and NSP3 grants follow the
statutory expenditure deadlines
described under the Recovery Act,
which provides that grantees:
‘‘shall expend at least 50 percent of
allocated funds within 2 years of the date
funds become available to the [recipient] for
obligation, and 100 percent of such funds
within 3 years of such date.’’
NSP2 and NSP3 expenditure
timelines are tighter than under NSP1.
In the NSP2 NOFA, HUD required NSP2
grantees to expend their entire grant,
including program income, within the
statutory timeframes. Upon reflection,
HUD has determined that the better
interpretation would be similar to the
NSP1 requirement that requires the
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expenditure of grant funds and program
income in an aggregate amount at least
equal to the NSP2 or NSP3 allocation.
HUD is therefore including a revision to
the NSP2 NOFA program requirements
in this Notice. If any NSP grantee fails
to meet the requirement to expend an
amount equal to its grant within the
relevant timelines, HUD, on the first
business day after that deadline, will
notify the grantee and restrict the
amount of unused funds in the grantee’s
line of credit. HUD will allow the
grantee 30 days to submit information to
HUD regarding any additional
expenditure of funds not already
recorded in DRGR. Then HUD may
proceed to recapture the unused funds
or provide for other corrective action(s)
or sanction.
Requirements
1. Timely use of NSP1 funds. At the
end of the statutory 18-month use
period, which begins when the NSP
grantee receives its funds from HUD, the
state or unit of general local government
NSP grantee’s accounting records and
DRGR information must reflect outlays
(expenditures) and unliquidated
obligations for approved activities that,
in the aggregate, are at least equal to the
NSP allocation. (The DRGR system
collects information on expenditures
and obligations.) Grantees receiving a
reallocation of NSP1 funds must also
comply with the 18-month use
requirement.
2. Timely expenditure of NSP1 funds.
The timely distribution or expenditure
requirements of sections 24 CFR
570.494 and 570.902 are waived to the
extent necessary to allow the following
alternative requirement: All NSP1
grantees must expend on eligible NSP
activities an amount equal to or greater
than the initial allocation of NSP1 funds
within 4 years of receipt of those funds
or HUD will recapture and reallocate the
amount of funds not expended.
3. Timely expenditure of NSP2 and
NSP3 funds. The timely distribution or
expenditure requirements of sections 24
CFR 570.494 and 570.902 are waived to
the extent necessary to allow the
following alternative requirement: NSP2
and NSP3 grantees must expend on
eligible NSP activities an amount equal
to or greater than the 50 percent of the
initial allocation of NSP funds within 2
years of receipt of those funds and 100
percent of the initial allocation of NSP
funds within 3 years of receipt of those
funds or HUD will recapture and
reallocate the amount of funds not
expended or provide for other corrective
action(s) or sanction. A grantee will be
deemed by HUD to have received its
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NSP grant at the time HUD signs its NSP
grant agreement.
N. Alternative Requirement for
Program Income (Revenue) Generated
By Activities Assisted With Grant
Funds
Requirement
1. Revenue (i.e., gross income)
received by a state, unit of general local
government, or subrecipient (as defined
at 24 CFR 570.500(c)) that is directly
generated from the use of CDBG funds
(which term includes NSP grant funds)
constitutes CDBG program income. To
ensure consistency of treatment of such
program income, the definition of
program income at 24 CFR 570.500(a)
shall be applied to amounts received by
states, units of general local
government, and subrecipients.
2. Cash management. Substantially all
program income must be disbursed for
eligible NSP activities before additional
cash withdrawals are made from the
U.S. Treasury.
3. Agreements with subrecipients.
States and units of general local
government must incorporate in
subrecipient agreements such
provisions as are necessary to ensure
compliance with the requirements of
this section.
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O. Reporting
Background
HUD is requiring regular reporting on
each NSP grant in the DRGR system to
ensure the Department has sufficient
management information to follow-up
promptly if a grantee lags in
implementation and risks recapture of
its grant funds. For NSP, HUD is
waiving the annual reporting
requirements of the consolidated plan to
allow HUD to collect more regular
information on various aspects of the
uses of funds and of the activities
funded with these grants. HUD will use
the reports to exercise oversight for
compliance with the requirements of
this notice and for prevention of fraud,
waste, and abuse of funds.
The regular CDBG performance
measurement requirements will not
apply to the NSP funds. HUD has
configured DRGR performance measures
to fit the NSP activities and will provide
additional guidance on NSP
performance measures.
To collect these data elements and to
meet its reporting requirements, HUD is
requiring each grantee to report on its
NSP funds to HUD using the online
DRGR system, which uses a
streamlined, Internet-based format. HUD
will use grantee reports to monitor for
anomalies or performance problems that
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suggest fraud, waste, and abuse of
funds; to reconcile budgets, obligations,
fund draws, and expenditures; to
calculate applicable administrative and
public service limitations and the
overall percent of benefit to LMMI
persons; and as a basis for risk analysis
in determining a monitoring plan.
The grantee must post the NSP report
on a Web site for its citizens when it
submits the report to HUD (DRGR
generates a version of the report that the
grantee can download, save, and post).
The Office of Management and Budget
has established October 1, 2010 as the
deadline for Federal agencies to initiate
sub-award reporting in compliance with
the Federal Funding Accountability and
Transparency Act (Pub. L. 109–282)
(FFATA). NSP3 grantees will be
required to comply with this additional
reporting requirement. Additional HUD
guidance on compliance with the
FFATA requirements is forthcoming.
report will include information about
the uses of funds, including, but not
limited to, the project name, activity,
location, national objective, funds
budgeted and expended, the funding
source and total amount of any non-NSP
funds, numbers of properties and
housing units, beginning and ending
dates of activities, beneficiary
characteristics, and numbers of low- and
moderate-income persons or households
benefiting. Reports must be submitted
using HUD’s web-based DRGR system
and, at the time of submission, be
posted prominently on the grantee’s
official Web site.
c. Additional reporting requirements
consistent with the Federal Funding
Accountability and Transparency Act
will be required for NSP3 Grantees.
HUD guidance on these requirements is
forthcoming.
Requirements
1. Performance report alternative
requirement. The Secretary may specify
the form and timing of reports provided
by the grantee under both 42 U.S.C.
5304(e) (the HCD Act) and 42 U.S.C.
12708 (NAHA). Therefore, the
consolidated plan regulation at 24 CFR
91.520 is waived and the alternative
reporting form and timing for the NSP
funds is that:
a. Each grantee must enter its NSP
Action Plan amendment or abbreviated
plan into HUD’s web-based DRGR
system in sufficient detail to meet the
NSP action plan content requirements of
this notice and to serve as the basis for
acceptable performance reports.
b. NSP1 and NSP3 grantees must
submit a quarterly performance report,
as HUD prescribes, no later than 30 days
following the end of each quarter,
beginning 30 days after the completion
of the first full calendar quarter after
grant award and continuing until the
end of the grant. In addition to this
quarterly performance reporting,
beginning three months prior to its use
or expenditure deadline, as applicable,
each grantee will report monthly on its
NSP use and expenditure of funds, and
continuing monthly until reported total
uses or expenditure of funds are equal
to or greater than the total NSP grant or
the deadline occurs. After HUD has
accepted a report from a grantee
showing such use or expenditure of
funds, the monthly reporting
requirement will end. Quarterly reports
will continue until all NSP funds
(including program income) have been
expended and those expenditures are
included in a report to HUD, or until
HUD issues other instructions. Each
The Department notes that it is an
eligible use of NSP grant funds to
acquire and redevelop FHA foreclosed
properties. The Federal Housing
Administration’s (FHA) First Look sales
method provides NSP grantees
exclusive access to review and purchase
newly conveyed FHA real estate-owned
(REO) properties that are located in their
designated areas. Grantees will have the
opportunity to make a purchase offer on
a property prior to it being made
available to other entities. NSP grantees
can purchase these properties at up to
a 10% discount from the appraised
value. Further information about First
Look was published in the Federal
Register on July 15, 2010 (75 FR 41225),
and is also available online at: https://
edocket.access.gpo.gov/2010/pdf/
2010-17335.pdf.
HUD will provide technical assistance
on its Web site regarding how these
programs can effectively interact.
Grantees may also contact their local
HUD FHA field office for further
information.
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P. FHA First Look Program
Q. Purchase Discount
Background
HERA Section 2301(d)(1) limits the
purchase price of a foreclosed home or
residential property, as follows:
Any purchase of a foreclosed upon home
or residential property under this section
shall be at a discount from the current market
appraised value of the home or property,
taking into account its current condition, and
such discount shall ensure that purchasers
are paying below-market value for the home
or property.
To ensure that uncertainty over the
meaning of this section does not delay
program implementation, HUD is
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defining ‘‘current market appraised
value’’ in this notice. For mortgagee
foreclosed properties, HUD is requiring
that grantees seek to obtain the
‘‘maximum reasonable discount’’ from
the mortgagee, taking into consideration
likely ‘‘carrying costs’’ of the mortgagee
if it were to not sell the property to the
grantee or subrecipient. HUD has
adopted an approach that requires a
minimum discount of one percent for
each foreclosed upon home or
residential property purchased with
NSP funds.
Requirements
1. Individual purchase transaction.
Each foreclosed-upon home or
residential property shall be purchased
at a discount of at least one percent from
the current market-appraised value of
the home or property.
2. An NSP grantee may not provide
NSP funds to another party to finance
an acquisition of tax foreclosed (or any
other) properties from itself, other than
to pay necessary and reasonable costs
related to the appraisal and transfer of
title. If NSP funds are used to pay such
costs when property owned by the
grantee is conveyed to a subrecipient,
homebuyer, developer, or other
jurisdiction, the property is NSPassisted and subject to all program
requirements, such as requirements for
NSP-eligible use and benefit to incomequalified persons. This section does not
preclude payment of tax liens on
property that is not owned by the
grantee or payment of current taxes
while the property is being redeveloped
or held in a land bank.
3. The address, appraised value,
purchase offer amount, and discount
amount of each property purchase must
be documented in the grantee’s program
records. The address of each acquired
property must be recorded in DRGR.
R. Removal of Annual Requirements
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Requirement
Throughout 24 CFR parts 91 and 570,
all references to ‘‘annual’’ requirements
such as submission of plans and reports
are waived to the extent necessary to
allow the provisions of this notice to
apply to NSP funds, with no recurring
annual requirements other than those
related to civil rights and fair housing
certifications and requirements.
S. Affirmatively Furthering Fair
Housing
Nothing in this notice may be
construed as affecting each grantee’s
responsibility to carry out its
certification to affirmatively further fair
housing. HUD encourages each grantee
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to review its analysis of impediments to
fair housing choice to determine
whether an update is necessary because
of current market conditions or other
factors. Non-entitlement local
government grantees must affirmatively
further fair housing by adopting and
following procedures and requirements
to affirmatively market NSP3-assisted
housing opportunities. This means that
they will affirmatively market NSP3
assisted units and carry out NSP3
activities that further fair housing
through innovative housing design or
construction to increase access for
persons with disabilities, language
assistance services to persons with
limited English proficiency (on the basis
of national origin), or location of new or
rehabilitated housing in a manner that
provides greater housing choice or
mobility for persons in classes protected
by the Fair Housing Act, and maintain
records reflecting the actions in this
regard.
T. Certifications
Background
HUD is substituting alternative
certifications. The alternative
certifications are tailored to NSP3 grants
and remove certifications and references
that are appropriate only to the annual
CDBG formula program. NSP1 and
NSP2 certifications have already been
submitted to HUD in accordance with
the requirements of the NSP1 Notice
and the NSP2 NOFA.
Requirements
1. Certifications for states and for
entitlement communities, alternative
requirement. Although the NSP3 is
being implemented as a substantial
amendment to the current annual action
plan, HUD is requiring submission of
this alternative set of certifications as a
conforming change, reflecting
alternative requirements and waivers
under this notice. Each jurisdiction will
submit the following certifications:
1. Affirmatively furthering fair
housing. The jurisdiction certifies that it
will affirmatively further fair housing,
which means that it will conduct an
analysis to identify impediments to fair
housing choice within the jurisdiction,
take appropriate actions to overcome the
effects of any impediments identified
through that analysis, and maintain
records reflecting the analysis and
actions in this regard.
2. Anti-displacement and relocation
plan. The applicant certifies that it has
in effect and is following a residential
anti-displacement and relocation
assistance plan.
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3. Anti-lobbying. The jurisdiction
must submit a certification with regard
to compliance with restrictions on
lobbying required by 24 CFR part 87,
together with disclosure forms, if
required by that part.
4. Authority of jurisdiction. The
jurisdiction certifies that the
consolidated plan or abbreviated plan,
as applicable, is authorized under state
and local law (as applicable) and that
the jurisdiction possesses the legal
authority to carry out the programs for
which it is seeking funding, in
accordance with applicable HUD
regulations and other program
requirements.
5. Consistency with plan. The
jurisdiction certifies that the housing
activities to be undertaken with NSP
funds are consistent with its
consolidated plan or abbreviated plan,
as applicable.
6. Acquisition and relocation. The
jurisdiction certifies that it will comply
with the acquisition and relocation
requirements of the Uniform Relocation
Assistance and Real Property
Acquisition Policies Act of 1970, as
amended (42 U.S.C. 4601), and
implementing regulations at 49 CFR part
24, except as those provisions are
modified by the notice for the NSP
program published by HUD.
7. Section 3. The jurisdiction certifies
that it will comply with section 3 of the
Housing and Urban Development Act of
1968 (12 U.S.C. 1701u), and
implementing regulations at 24 CFR part
135.
8. Citizen participation. The
jurisdiction certifies that it is in full
compliance and following a detailed
citizen participation plan that satisfies
the requirements of Sections 24 CFR
91.105 or 91.115, as modified by NSP
requirements.
9. Following a plan. The jurisdiction
certifies it is following a current
consolidated plan (or Comprehensive
Housing Affordability Strategy) that has
been approved by HUD. [Only States
and entitlement jurisdictions use this
certification.]
10. Use of funds. The jurisdiction
certifies that it will comply with the
Dodd-Frank Wall Street Reform and
Consumer Protection Act and Title XII
of Division A of the American Recovery
and Reinvestment Act of 2009 by
spending 50 percent of its grant funds
within 2 years, and spending 100
percent within 3 years, of receipt of the
grant.
11. The jurisdiction certifies:
a. That all of the NSP funds made
available to it will be used with respect
to individuals and families whose
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incomes do not exceed 120 percent of
area median income; and
b. The jurisdiction will not attempt to
recover any capital costs of public
improvements assisted with CDBG
funds, including Section 108 loan
guaranteed funds, by assessing any
amount against properties owned and
occupied by persons of low- and
moderate-income, including any fee
charged or assessment made as a
condition of obtaining access to such
public improvements. However, if NSP
funds are used to pay the proportion of
a fee or assessment attributable to the
capital costs of public improvements
(assisted in part with NSP funds)
financed from other revenue sources, an
assessment or charge may be made
against the property with respect to the
public improvements financed by a
source other than CDBG funds. In
addition, with respect to properties
owned and occupied by moderateincome (but not low-income) families,
an assessment or charge may be made
against the property with respect to the
public improvements financed by a
source other than NSP funds if the
jurisdiction certifies that it lacks NSP or
CDBG funds to cover the assessment.
12. Excessive force. The jurisdiction
certifies that it has adopted and is
enforcing:
a. A policy prohibiting the use of
excessive force by law enforcement
agencies within its jurisdiction against
any individuals engaged in nonviolent
civil rights demonstrations; and
b. A policy of enforcing applicable
state and local laws against physically
barring entrance to, or exit from, a
facility or location that is the subject of
such nonviolent civil rights
demonstrations within its jurisdiction.
13. Compliance with antidiscrimination laws. The jurisdiction
certifies that the NSP grant will be
conducted and administered in
conformity with Title VI of the Civil
Rights Act of 1964 (42 U.S.C. 2000d),
the Fair Housing Act (42 U.S.C. 3601–
3619), and implementing regulations.
14. Compliance with lead-based paint
procedures. The jurisdiction certifies
that its activities concerning lead-based
paint will comply with the requirements
of part 35, subparts A, B, J, K, and R of
this title.
15. Compliance with laws. The
jurisdiction certifies that it will comply
with applicable laws.
2. Certifications for Non-Entitlement
Local Governments, alternative
requirement.
For non-entitlement local government
grantees that do not have annual action
plans to amend, NSP3 is being
implemented through the submission of
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an abbreviated plan under 25 CFR
91.235. HUD is requiring submission of
this alternative set of certifications as a
conforming change, reflecting
alternative requirements and waivers
under this notice. Each jurisdiction will
submit the following certifications:
1. Affirmatively furthering fair
housing. The jurisdiction certifies that it
will affirmatively further fair housing.
2. Anti-displacement and relocation
plan. The applicant certifies that it has
in effect and is following a residential
anti-displacement and relocation
assistance plan.
3. Anti-lobbying. The jurisdiction
must submit a certification with regard
to compliance with restrictions on
lobbying required by 24 CFR part 87,
together with disclosure forms, if
required by that part.
4. Authority of jurisdiction. The
jurisdiction certifies that the
consolidated plan or abbreviated plan,
as applicable, is authorized under state
and local law (as applicable) and that
the jurisdiction possesses the legal
authority to carry out the programs for
which it is seeking funding, in
accordance with applicable HUD
regulations and other program
requirements.
5. Consistency with plan. The
jurisdiction certifies that the housing
activities to be undertaken with NSP
funds are consistent with its
consolidated plan or abbreviated plan,
as applicable.
6. Acquisition and relocation. The
jurisdiction certifies that it will comply
with the acquisition and relocation
requirements of the Uniform Relocation
Assistance and Real Property
Acquisition Policies Act of 1970, as
amended (42 U.S.C. 4601), and
implementing regulations at 49 CFR part
24, except as those provisions are
modified by the notice for the NSP
program published by HUD.
7. Section 3. The jurisdiction certifies
that it will comply with section 3 of the
Housing and Urban Development Act of
1968 (12 U.S.C. 1701u), and
implementing regulations at 24 CFR part
135.
8. Citizen participation. The
jurisdiction certifies that it is in full
compliance and following a detailed
citizen participation plan that satisfies
the requirements of Sections 24 CFR
91.105 or 91.115, as modified by NSP
requirements.
9. Use of funds. The jurisdiction
certifies that it will comply with the
Dodd-Frank Wall Street Reform and
Consumer Protection Act and Title XII
of Division A of the American Recovery
and Reinvestment Act of 2009 by
spending 50 percent of its grant funds
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64339
within 2 years, and spending 100
percent within 3 years, of receipt of the
grant.
10. The jurisdiction certifies:
a. That all of the NSP funds made
available to it will be used with respect
to individuals and families whose
incomes do not exceed 120 percent of
area median income; and
b. The jurisdiction will not attempt to
recover any capital costs of public
improvements assisted with CDBG
funds, including Section 108 loan
guaranteed funds, by assessing any
amount against properties owned and
occupied by persons of low- and
moderate-income, including any fee
charged or assessment made as a
condition of obtaining access to such
public improvements. However, if NSP
funds are used to pay the proportion of
a fee or assessment attributable to the
capital costs of public improvements
(assisted in part with NSP funds)
financed from other revenue sources, an
assessment or charge may be made
against the property with respect to the
public improvements financed by a
source other than CDBG funds. In
addition, with respect to properties
owned and occupied by moderateincome (but not low-income) families,
an assessment or charge may be made
against the property with respect to the
public improvements financed by a
source other than NSP funds if the
jurisdiction certifies that it lacks NSP or
CDBG funds to cover the assessment.
11. Excessive force. The jurisdiction
certifies that it has adopted and is
enforcing:
a. A policy prohibiting the use of
excessive force by law enforcement
agencies within its jurisdiction against
any individuals engaged in nonviolent
civil rights demonstrations; and
b. A policy of enforcing applicable
state and local laws against physically
barring entrance to, or exit from, a
facility or location that is the subject of
such nonviolent civil rights
demonstrations within its jurisdiction.
12. Compliance with antidiscrimination laws. The jurisdiction
certifies that the NSP grant will be
conducted and administered in
conformity with Title VI of the Civil
Rights Act of 1964 (42 U.S.C. 2000d),
the Fair Housing Act (42 U.S.C. 3601–
3619), and implementing regulations.
13. Compliance with lead-based paint
procedures. The jurisdiction certifies
that its activities concerning lead-based
paint will comply with the requirements
of part 35, subparts A, B, J, K, and R of
this title.
14. Compliance with laws. The
jurisdiction certifies that it will comply
with applicable laws.
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U. Additional NSP3 Requirements—
Preferences for Rental Housing and
Local Hiring
The NSP3 allocation included
statutory language requiring grantees to
‘‘establish procedures to create
preferences for the development of
affordable rental housing for properties
assisted with NSP3 funds.’’ HUD is
requiring grantees to describe such
procedures as part of their substantial
amendments or abbreviated plans as
described in Section II.B. above.
Grantees also ‘‘shall, to the maximum
extent feasible, provide for the hiring of
employees who reside in the vicinity, as
such term is defined by the Secretary, of
projects funded under this section or
contract with small businesses that are
owned and operated by persons residing
in the vicinity of such projects.’’ For the
purposes of administering this
requirement, HUD is adopting the
Section 3 applicability thresholds for
community development assistance at
24 CFR 135.3(a)(3)(ii). Note: The NSP3
local hiring requirement does not
replace the responsibilities of grantees
under Section 3 of the Housing and
Urban Development Act of 1968 (12
U.S.C. 1701u), and implementing
regulations at 24 CFR part 135, except
to the extent the obligations may be in
direct conflict.
For the purposes of NSP3, HUD
defines ‘‘vicinity’’ as each neighborhood
identified by the NSP3 grantee as being
the areas of greatest need. See section
II.B.2. Small business means a business
that meets the criteria set forth in
section 3(a) of the Small Business Act.
See 42 U.S.C. 5302(a)(23).
V. Note on Statutory Limitation on
Distribution of Funds
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Section 2304 of HERA and
1479(a)(7)(A) of the Dodd-Frank Act
states that none of the funds made
available under this Title or title IV
shall be distributed to an organization
that has been convicted of a violation
under Federal law relating to an election
for Federal office; or an organization
that employs applicable individuals.
Section 1479(a)(7)(B) defines applicable
individuals.
Seventh Street, SW., Room 10276,
Washington, DC 20410–0500.
W. Information Collection Approval
Note
HUD has approval from the Office of
Management and Budget (OMB) for
information collection requirements in
accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501–
3520). OMB approval is under OMB
control number 2506–0165. In
accordance with the Paperwork
Reduction Act, HUD may not conduct or
sponsor and a person is not required to
respond to, a collection of information,
unless the collection displays a valid
control number.
The funding formula set out in
Attachment B to this notice was
established by HUD on August 18, 2010.
X. Duration of Funding
The appropriation accounting
provisions in 31 U.S.C. 1551–1557,
added by section 1405 of the National
Defense Authorization Act for Fiscal
Year 1991 (Pub. L. 101–510), limit the
availability of certain appropriations for
expenditure. Such a limitation may not
be waived. The appropriations acts for
NSP1 and NSP3 grants direct that these
funds be available until expended.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic
Assistance numbers for grants made
under NSP are as follows: 14.218;
14.225; and 14.228.
Finding of No Significant Impact
A Finding of No Significant Impact
with respect to the environment has
been made in accordance with HUD
regulations at 24 CFR part 50, which
implement section 102(2)(C) of the
National Environmental Policy Act of
1969 (42 U.S.C. 4332(C)(2)). The
Finding of No Significant Impact is
available for public inspection between
8 a.m. and 5 p.m. weekdays in the
Office of the Rules Docket Clerk, Office
of General Counsel, Department of
Housing and Urban Development, 451
Statewide Allocation = $3.92 billion *
{[0.70 * (State’s number of foreclosure starts in last 6 quarters) * ...........
National number of foreclosure starts in last 6 quarters ..........................
0.15 * (State’s number of subprime loans) * .............................................
National number of subprime loans ..........................................................
0.10 * (State’s number of loans in default (90+ days delinquent).*
National number of loans in default ..........................................................
0.05 * (State’s number of loans 60 to 89 days delinquent).*
National number of loans 60 to 89 days delinquent ................................
Establishment of Formula
Dated: October 13, 2010.
´
Mercedes M. Marquez,
Assistant Secretary for Community Planning
and Development.
Attachments
A—Formula Allocation
B—NSP3 Formula and Allocation of Funds
C—Recommended Green and Sustainable
Practices
Attachment A
HUD’s Methodology for Allocating the Funds
for Neighborhood Stabilization Program 1
(NSP1)
HERA calls for allocating funds ‘‘to States
and units of general local government with
the greatest need, as such need is determined
in the discretion of the Secretary based on—
(A) The number and percentage of home
foreclosures in each State or unit of general
local government;
(B) the number and percentage of homes
financed by a subprime mortgage related loan
in each State or unit of general local
government; and
(C) the number and percentage of homes in
default or delinquency in each State or unit
of general local government.’’
It further directs that ‘‘each State shall
receive not less than 0.5 percent of funds’’.
The allocation formula operates as follows. In
this formula, the primary data on foreclosure
rates, subprime loan rates, and rates of loans
delinquent or in default come from the
Mortgage Bankers Association National
Delinquency Survey (MBA–NDS). Because
the MBA–NDS may have uneven coverage
from state-to-state in respect to the total
number of mortgages reported, the total count
of mortgages is calculated as the number of
owner-occupied mortgages from the 2006
American Community Survey increased with
data from the Home Mortgage Disclosure Act
to capture the proportion of total mortgages
made within a state made to investors
between 2004 and 2006. The first step of the
allocation is to make a ‘‘statewide’’ allocation
using the following formula:
(Percent of all loans in state to enter foreclosure last 6 quarters) +
Percent of all loans in nation to enter foreclosure last 6 quarters
(Percent of all loans in state subprime) +
Percent of all loans in nation subprime
(Percent of all loans in state in default) +
Percent of all loans in nation in default
Percent of all loans in state 60 to 89 days delinquent)] *
National percent of all loans 60 to 89 days delinquent
(Pct of all addresses in state vacant in Census Tracts where more than 40% of the 2004 to 2006 loans were high cost)}
Pct of all addresses in nation vacant in Census Tracts where more than 40% of the 2004 to 2006 loans were high cost
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This formula allocates 70 percent of the
funds based on the number and percent of
foreclosures, 15 percent for subprime loans,
10 percent for loans in default (delinquent 90
days or longer), and 5 percent for loans
delinquent 60 to 90 days. The higher weight
on foreclosures is based on the emphasis the
statute places on targeting foreclosed homes.
The percentage adjustments, the rate of a
problem in a state relative to the national rate
of a problem, are restricted such that a state’s
allocation based on its proportional share of
a problem cannot be increased or decreased
by more than 30 percent.
Because HERA specifically indicates that
the funds are needed for the ‘‘redevelopment
of abandoned and foreclosed upon homes
and residential properties,’’ HUD has
included a variable to proxy where
abandonment of homes due to foreclosure is
more likely, specifically each state’s rate of
vacant residential addresses in
neighborhoods with a high proportion (more
than 40 percent) of loans in 2004 to 2006 that
were high cost. Information on vacant
addresses is based on United States Postal
Service data as of June 30, 2008 aggregated
by HUD to the Census Tract level. The
residential vacancy adjustment factor reflects
a state’s vacancy rate relative to the national
average and cannot increase or decrease a
state’s proportional share of the allocation
based on foreclosures, subprime loans, and
delinquencies and defaults by more than 10
percent.
Finally, if a statewide allocation is less
than $19.6 million, the statewide grant is
increased to $19.6 million. Because this
approach will result in a total allocation in
excess of appropriation, all grant amounts
above $19.6 million are reduced pro-rata to
make the total allocation equal to the total
appropriation.
From each statewide allocation, a substate
allocation is made as follows:
• Each state government is allocated $19.6
million
• If the statewide allocation is more than
$19.6 million, the remaining funds are
allocated to FY 2008 CDBG entitlement
cities, urban counties, and non-entitlement
balance of state proportional to relative need.
• If a local government receives less than
$2 million under this sub-allocation, their
grant is rolled up into the state government
grant.
Note that HUD has determined that
HERA’s direction that a minimum of $19.6
64341
million be allocated to the state means that
a minimum grant must be provided to each
state government of $19.6 million. As a
result, this approach provides state
governments with proportionally more
funding than their estimated need. As such,
state governments should use their best
judgment to serve both those areas not
receiving a direct grant and those areas that
do receive a direct grant, making sure that the
total of all funds in the state are going
proportionally more to those places (as
prescribed by HERA):
• ‘‘With the greatest percentage of home
foreclosures;
• With the highest percentage of homes
financed by a subprime mortgage related
loan; and
• Identified by the State or unit of general
local government as likely to face a
significant rise in the rate of home
foreclosures.’’
For the amount of funds above each state’s
$19.6 million, the remaining funds are
allocated among the entitlement
communities and non-entitlement balances
using the following formula:
Local Allocation = (Statewide Allocation¥$19,600,000) *
[(Local estimated number of foreclosure starts in last 6 quarters) *
State total number of foreclosure starts in last 6 quarters
Local vacancy rate in Census Tracts with more than 40% of the loans High-cost)]
State vacancy rate in Census Tracts with more than 40% of the loans High-cost
Where: The residential vacancy rate
adjustment cannot increase or reduce a local
jurisdiction’s allocation by more than 30
percent and the estimated number of
foreclosures is calculated based on a
predicted foreclosure rate times the estimated
number of mortgages in a community.
HUD analysis shows that 75 percent of the
variance between states on foreclosure rates
can be explained by three variables available
from public data:
• Office of Federal Housing Enterprise
Oversight (OFHEO) data on change in home
values as of June 2008 compared to peak
home value since 2000.
• Percent of all loans made between 2004
and 2006 that are high cost as reported in the
Home Mortgage Disclosure Act (HMDA).
• Unemployment rate as of June 2008
(from Bureau of Labor Statistics).
Because these three variables are publicly
available for all CDBG eligible communities
and they are good predictors of foreclosure
risk, they are used in a model to calculate the
estimated number of foreclosures in each
jurisdiction within a state. The formula used
is as follows:
Predicted Foreclosure Rate = ¥2.211
¥(0.131 × Percent change in MSA OFHEO
current price relative to the maximum in past
8 years)
+ (0.152*Percent of total loans made between
2004 and 2006 that are high cost)
+ (0.392*Percent unemployed in the place
our county in June 2008).
This predicted foreclosure rate is then
multiplied times the estimated number of
mortgages within a jurisdiction (number of
HMDA loans made between 2004 and 2006
times the ratio of ACS 2006 data on total
mortgages in state/HMDA loans in state).
This ‘‘estimated number of mortgages in the
jurisdiction’’ is further adjusted such that the
estimated number of foreclosures from the
model will equal the total foreclosure starts
in the state from the Mortgage Bankers
Association National Delinquency Survey.
As noted above, for entitlement cities and
urban counties that would receive an NSP
allocation of less than $2 million, the funds
are allocated to the state grantee. The District
of Columbia and the four Insular Areas
receive direct allocations and are not subject
to the minimum grant threshold.
Because this funding is one-time funding
and the eligible activities under the program
are different enough from the regular
program, HUD believes that a grantee must
receive a minimum amount of $2 million to
have adequate staffing to properly administer
the program effectively. In addition, fewer
grants will allow HUD staff to more
effectively monitor grantees to ensure proper
implementation of the program and reduce
the risk for fraud, waste, and abuse.
Attachment B
HUD’s Methodology for Allocating the Funds
for Neighborhood Stabilization Program 3
(NSP3)
NEIGHBORHOOD STABILIZATION PROGRAM (NSP3) FUNDING UNDER DODD-FRANK WALL STREET REFORM AND
CONSUMER PROTECTION ACT
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State
Grantee
Alaska .........................................................................................
Alabama ......................................................................................
State of Alaska ...........................................................................
State of Alabama .......................................................................
Birmingham ................................................................................
$5,000,000
5,000,000
2,576,151
Arkansas .....................................................................................
Arizona ........................................................................................
Alabama Total ........................................................................
State of Arkansas ......................................................................
Avondale City .............................................................................
State of Arizona .........................................................................
7,576,151
5,000,000
1,224,903
5,000,000
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NEIGHBORHOOD STABILIZATION PROGRAM (NSP3) FUNDING UNDER DODD-FRANK WALL STREET REFORM AND
CONSUMER PROTECTION ACT—Continued
State
Grantee
NSP3 Grant
Chandler .....................................................................................
Glendale .....................................................................................
Maricopa County ........................................................................
Mesa ..........................................................................................
Mohave County ..........................................................................
Peoria City .................................................................................
Phoenix ......................................................................................
Pinal County ...............................................................................
Surprise City ..............................................................................
Tucson .......................................................................................
California .....................................................................................
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Colorado ......................................................................................
Connecticut .................................................................................
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1,332,011
3,718,377
4,257,346
4,019,457
1,990,744
1,198,780
16,053,525
3,168,315
1,329,844
2,083,771
Arizona Total ..........................................................................
Apple Valley ...............................................................................
Bakersfield .................................................................................
State of California ......................................................................
Compton .....................................................................................
Contra Costa County .................................................................
Corona .......................................................................................
Fontana ......................................................................................
Fresno ........................................................................................
Fresno County ...........................................................................
Hemet .........................................................................................
Hesperia .....................................................................................
Imperial County ..........................................................................
Indio City ....................................................................................
Kern County ...............................................................................
Lancaster ...................................................................................
Long Beach ................................................................................
Los Angeles ...............................................................................
Los Angeles County ...................................................................
Madera County ..........................................................................
Merced .......................................................................................
Merced County ...........................................................................
Modesto .....................................................................................
Monterey County ........................................................................
Moreno Valley ............................................................................
Oakland ......................................................................................
Ontario .......................................................................................
Orange County ...........................................................................
Palmdale ....................................................................................
Perris City ..................................................................................
Pomona ......................................................................................
Rialto ..........................................................................................
Richmond ...................................................................................
Riverside ....................................................................................
Riverside County ........................................................................
Sacramento ................................................................................
Sacramento County ...................................................................
San Bernardino ..........................................................................
San Bernardino County .............................................................
San Joaquin County ..................................................................
Santa Ana ..................................................................................
Solano County ...........................................................................
Stanislaus County ......................................................................
Stockton .....................................................................................
Tulare County ............................................................................
Vallejo ........................................................................................
Victorville ....................................................................................
45,377,073
1,463,014
3,320,927
7,777,019
1,436,300
1,871,294
1,317,310
2,695,735
3,547,219
2,739,766
1,360,197
1,785,047
1,708,780
1,092,071
5,202,037
2,364,566
1,567,935
9,875,577
9,532,569
1,659,017
1,196,182
2,705,877
2,951,549
1,284,794
3,687,789
2,070,087
1,872,853
1,004,948
2,310,023
1,342,449
1,235,629
1,936,370
1,153,172
3,202,152
14,272,400
3,762,329
4,595,671
3,277,401
10,438,181
4,398,543
1,464,113
1,622,757
4,175,947
4,280,994
2,845,529
1,744,593
2,159,937
California Total .......................................................................
Adams County ...........................................................................
Aurora ........................................................................................
State of Colorado .......................................................................
Colorado Springs .......................................................................
Denver ........................................................................................
Greeley .......................................................................................
Pueblo ........................................................................................
Weld County ..............................................................................
149,308,651
1,997,322
2,445,282
5,098,309
1,420,638
2,700,279
1,203,745
1,460,506
1,023,188
Colorado Total ........................................................................
Bridgeport ...................................................................................
17,349,270
1,215,150
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64343
NEIGHBORHOOD STABILIZATION PROGRAM (NSP3) FUNDING UNDER DODD-FRANK WALL STREET REFORM AND
CONSUMER PROTECTION ACT—Continued
State
Grantee
NSP3 Grant
State of Connecticut ..................................................................
Hartford ......................................................................................
New Haven ................................................................................
Waterbury ...................................................................................
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District of Columbia .....................................................................
Delaware .....................................................................................
Florida .........................................................................................
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5,000,000
1,029,926
1,041,579
1,036,101
Connecticut Total ...................................................................
Washington, DC .........................................................................
State of Delaware ......................................................................
Boynton Beach ...........................................................................
Brevard County ..........................................................................
Broward County .........................................................................
Cape Coral .................................................................................
Charlotte County ........................................................................
Citrus County .............................................................................
Clearwater ..................................................................................
Collier County ............................................................................
Coral Springs .............................................................................
Davie ..........................................................................................
Daytona Beach ..........................................................................
Deerfield Beach .........................................................................
Deltona .......................................................................................
Escambia County .......................................................................
State of Florida ..........................................................................
Ft Lauderdale .............................................................................
Ft Myers .....................................................................................
Hernando County .......................................................................
Hialeah .......................................................................................
Hillsborough County ...................................................................
Hollywood ...................................................................................
Indian River County ...................................................................
Jacksonville-Duval County .........................................................
Kissimmee ..................................................................................
Lake County ...............................................................................
Lakeland .....................................................................................
Lauderhill ....................................................................................
Lee County .................................................................................
Manatee County .........................................................................
Margate ......................................................................................
Marion County ............................................................................
Martin County .............................................................................
Melbourne ..................................................................................
Miami ..........................................................................................
Miami Beach ..............................................................................
Miami Gardens City ...................................................................
Miami-Dade County ...................................................................
Miramar ......................................................................................
North Miami ................................................................................
Orange County ...........................................................................
Orlando ......................................................................................
Osceola County .........................................................................
Palm Bay ....................................................................................
Palm Beach County ...................................................................
Palm Coast City .........................................................................
Pasco County .............................................................................
Pembroke Pines .........................................................................
Pinellas County ..........................................................................
Plantation ...................................................................................
Polk County ................................................................................
Pompano Beach ........................................................................
Port St Lucie ..............................................................................
Sanford .......................................................................................
Sarasota .....................................................................................
Sarasota County ........................................................................
Seminole County ........................................................................
St Petersburg .............................................................................
St. Lucie County ........................................................................
Sunrise .......................................................................................
Tamarac .....................................................................................
Tampa ........................................................................................
Titusville .....................................................................................
Volusia County ...........................................................................
9,322,756
5,000,000
5,000,000
1,168,808
3,032,850
5,457,553
3,048,214
2,022,962
1,005,084
1,385,801
3,884,165
1,657,845
1,171,166
1,127,616
1,183,897
1,964,066
1,210,487
8,511,111
2,145,921
1,539,941
1,953,975
2,198,194
8,083,062
2,433,001
1,500,428
7,102,937
1,042,299
3,199,585
1,303,139
1,500,609
6,639,174
3,321,893
1,148,877
4,589,714
1,563,770
1,257,986
4,558,939
1,475,088
1,940,337
20,036,303
2,321,827
1,173,374
11,551,158
3,095,137
3,239,646
1,764,032
11,264,172
1,375,071
5,185,778
2,330,542
4,697,519
1,216,427
5,443,116
1,500,572
3,515,509
1,037,697
1,038,811
3,949,541
3,995,178
3,709,133
1,947,657
1,775,162
1,427,857
4,691,857
1,005,731
3,670,516
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NEIGHBORHOOD STABILIZATION PROGRAM (NSP3) FUNDING UNDER DODD-FRANK WALL STREET REFORM AND
CONSUMER PROTECTION ACT—Continued
State
Grantee
NSP3 Grant
West Palm Beach ......................................................................
2,147,327
Florida Total ...........................................................................
Atlanta ........................................................................................
Augusta-Richmond County ........................................................
Carroll County ............................................................................
Clayton County ..........................................................................
Cobb County ..............................................................................
Columbus-Muscogee County .....................................................
Dekalb County ...........................................................................
Douglas County .........................................................................
Fulton County .............................................................................
State of Georgia .........................................................................
Gwinnett County ........................................................................
Henry County .............................................................................
Macon ........................................................................................
Paulding County .........................................................................
Savannah ...................................................................................
208,437,144
4,906,758
1,161,297
1,190,390
3,796,167
2,415,784
1,128,174
5,233,105
1,628,471
3,094,885
18,679,977
2,065,581
1,217,736
1,503,897
1,372,214
1,027,553
Georgia Total ..........................................................................
State of Hawaii ...........................................................................
State of Iowa ..............................................................................
State of Idaho ............................................................................
Chicago ......................................................................................
Cook County ..............................................................................
State of Illinois ...........................................................................
Lake County ...............................................................................
50,421,988
5,000,000
5,000,000
5,000,000
15,996,360
7,776,324
5,000,000
1,370,421
Illinois Total ............................................................................
Anderson ....................................................................................
Elkhart ........................................................................................
Elkhart County ...........................................................................
Fort Wayne ................................................................................
Gary ...........................................................................................
Hammond ...................................................................................
State of Indiana ..........................................................................
Indianapolis ................................................................................
Kokomo ......................................................................................
Lake County ...............................................................................
Muncie ........................................................................................
South Bend ................................................................................
30,143,105
1,219,200
1,022,717
1,193,194
2,374,450
2,717,859
1,243,934
8,235,625
8,017,557
1,014,327
1,613,168
1,148,363
1,708,707
Kansas ........................................................................................
Indiana Total ...........................................................................
Kansas City ................................................................................
State of Kansas .........................................................................
31,509,101
1,137,796
5,000,000
Kentucky .....................................................................................
Louisiana .....................................................................................
Massachusetts ............................................................................
Kansas Total ..........................................................................
Commonwealth of Kentucky ......................................................
State of Louisiana ......................................................................
Commonwealth of Massachusetts .............................................
Springfield ..................................................................................
Worcester County ......................................................................
6,137,796
5,000,000
5,000,000
5,000,000
1,197,000
1,190,994
Maryland .....................................................................................
Massachusetts Total ..............................................................
State of Maryland .......................................................................
Prince George’s County .............................................................
7,387,994
5,000,000
1,802,242
Maryland Total ........................................................................
State of Maine ............................................................................
Dearborn ....................................................................................
Detroit .........................................................................................
Flint ............................................................................................
Genesee County ........................................................................
Grand Rapids .............................................................................
Jackson County .........................................................................
Lansing .......................................................................................
Macomb County .........................................................................
State of Michigan .......................................................................
Muskegon County ......................................................................
Oakland County .........................................................................
Pontiac .......................................................................................
6,802,242
5,000,000
1,027,354
21,922,710
3,076,522
2,663,219
1,378,788
1,162,482
1,162,508
2,536,817
5,000,000
1,071,900
2,080,700
1,410,621
Georgia .......................................................................................
Hawaii .........................................................................................
Iowa .............................................................................................
Idaho ...........................................................................................
Illinois ..........................................................................................
Indiana ........................................................................................
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Maine ..........................................................................................
Michigan ......................................................................................
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64345
NEIGHBORHOOD STABILIZATION PROGRAM (NSP3) FUNDING UNDER DODD-FRANK WALL STREET REFORM AND
CONSUMER PROTECTION ACT—Continued
State
Grantee
NSP3 Grant
Saginaw .....................................................................................
Southfield ...................................................................................
St. Clair County ..........................................................................
Warren .......................................................................................
Wayne County ...........................................................................
Minnesota ....................................................................................
Missouri .......................................................................................
Mississippi ...................................................................................
Montana ......................................................................................
North Carolina .............................................................................
North Dakota ...............................................................................
Nebraska .....................................................................................
New Hampshire ..........................................................................
New Jersey .................................................................................
New Mexico ................................................................................
Nevada ........................................................................................
New York ....................................................................................
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Ohio .............................................................................................
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1,242,318
1,084,254
1,129,355
1,735,633
7,839,293
Michigan Total ........................................................................
Anoka County ............................................................................
Hennepin County .......................................................................
Minneapolis ................................................................................
State of Minnesota .....................................................................
St Paul .......................................................................................
57,524,473
1,226,827
1,469,133
2,671,275
5,000,000
2,059,877
Minnesota Total ......................................................................
Kansas City ................................................................................
State of Missouri ........................................................................
St Louis ......................................................................................
St. Louis County ........................................................................
12,427,113
1,823,888
5,000,000
3,472,954
2,813,762
Missouri Total .........................................................................
State of Mississippi ....................................................................
State of Montana .......................................................................
State of North Carolina ..............................................................
State of North Dakota ................................................................
State of Nebraska ......................................................................
Omaha .......................................................................................
13,110,604
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
1,183,085
Nebraska Total .......................................................................
State of New Hampshire ............................................................
Essex County .............................................................................
Newark .......................................................................................
State of New Jersey ..................................................................
Paterson .....................................................................................
Union County .............................................................................
6,183,085
5,000,000
1,851,984
2,018,637
5,000,000
1,196,877
1,574,051
New Jersey Total ...................................................................
State of New Mexico ..................................................................
Clark County ..............................................................................
North Las Vegas ........................................................................
Henderson ..................................................................................
Las Vegas ..................................................................................
State of Nevada .........................................................................
Reno ...........................................................................................
Washoe County .........................................................................
11,641,549
5,000,000
16,156,114
4,097,147
3,901,144
10,450,623
5,000,000
1,973,724
1,735,918
Nevada Total ..........................................................................
Islip Town ...................................................................................
Nassau County ..........................................................................
New York ...................................................................................
State of New York ......................................................................
Suffolk County ............................................................................
43,314,669
1,429,561
2,116,070
9,787,803
5,000,000
1,501,506
New York Total .......................................................................
Akron ..........................................................................................
Butler County .............................................................................
Canton ........................................................................................
Cincinnati ...................................................................................
Clark County ..............................................................................
Cleveland ...................................................................................
Columbus ...................................................................................
Cuyahoga County ......................................................................
Dayton ........................................................................................
East Cleveland ...........................................................................
Euclid .........................................................................................
Hamilton County ........................................................................
Lorain County .............................................................................
Montgomery County ...................................................................
State of Ohio ..............................................................................
Richland County .........................................................................
Toledo ........................................................................................
Trumbull County .........................................................................
19,834,940
2,674,298
1,327,123
1,233,756
3,160,661
1,105,306
6,793,290
4,843,460
2,551,533
3,115,780
1,068,142
1,031,230
1,469,242
1,619,474
1,145,712
11,795,818
1,022,278
3,591,715
1,143,889
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Federal Register / Vol. 75, No. 201 / Tuesday, October 19, 2010 / Notices
NEIGHBORHOOD STABILIZATION PROGRAM (NSP3) FUNDING UNDER DODD-FRANK WALL STREET REFORM AND
CONSUMER PROTECTION ACT—Continued
State
Grantee
NSP3 Grant
Youngstown ...............................................................................
1,096,328
Oklahoma ....................................................................................
Oregon ........................................................................................
Pennsylvania ...............................................................................
Puerto Rico .................................................................................
Rhode Island ...............................................................................
Ohio Total ...............................................................................
State of Oklahoma .....................................................................
State of Oregon .........................................................................
Commonwealth of Pennsylvania ...............................................
Commonwealth of Puerto Rico ..................................................
Providence .................................................................................
State of Rhode Island ................................................................
51,789,035
5,000,000
5,000,000
5,000,000
5,000,000
1,309,231
5,000,000
South Carolina ............................................................................
Rhode Island Total .................................................................
State of South Carolina .............................................................
6,309,231
5,615,020
South Dakota ..............................................................................
Tennessee ..................................................................................
South Carolina Total ..............................................................
State of South Dakota ...............................................................
Memphis .....................................................................................
State of Tennessee ....................................................................
5,615,020
5,000,000
5,195,848
5,000,000
Tennessee Total .....................................................................
Dallas .........................................................................................
Dallas County .............................................................................
Harris County .............................................................................
Hidalgo County ..........................................................................
Houston ......................................................................................
State of Texas ............................................................................
10,195,848
2,356,962
1,364,426
1,925,917
1,716,924
3,389,035
7,284,978
Utah .............................................................................................
Virginia ........................................................................................
Texas Total .............................................................................
State of Utah ..............................................................................
Richmond ...................................................................................
Commonwealth of Virginia .........................................................
18,038,242
5,000,000
1,254,970
5,000,000
Vermont .......................................................................................
Washington .................................................................................
Wisconsin ....................................................................................
Virginia Total ..........................................................................
State of Vermont ........................................................................
State of Washington ..................................................................
Milwaukee ..................................................................................
State of Wisconsin .....................................................................
6,254,970
5,000,000
5,000,000
2,687,949
5,000,000
West Virginia ...............................................................................
Wyoming .....................................................................................
Insular Areas ...............................................................................
Wisconsin Total ......................................................................
State of West Virginia ................................................................
State of Wyoming ......................................................................
....................................................................................................
7,687,949
5,000,000
5,000,000
300,000
Total ....................................................................................
970,000,000
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Texas ..........................................................................................
Overview
The Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 provided
an additional $1 billion for the Neighborhood
Stabilization Program (NSP) that was
originally established under the Housing and
Economic Recovery Act of 2008.
The statute calls for allocating funds to
States and local governments with the
greatest need, as determined by:
(A) ‘‘The number and percentage of home
foreclosures in each State or unit of general
local government;
(B) ‘‘The number and percentage of homes
financed by a subprime mortgages in each
State or unit of general local government; and
(C) ‘‘The number and percentage of homes
in default or delinquency in each State or
unit of general local government.’’
The statute also requires that a minimum
of 0.5 percent of the appropriation, $5
million be provided to each state.
The Department has determined that for
NSP3, the states and local governments with
the greatest need for neighborhood
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stabilization funding are those communities
that have high numbers of foreclosed and/or
vacant properties in the neighborhoods with
the highest concentrations of foreclosures,
delinquent loans, and subprime loans. The
basic formula allocates funds based on the
number of foreclosures and vacancies in the
20 percent of U.S. neighborhoods (Census
Tracts) with the highest rates of homes
financed by a subprime mortgage, are
delinquent, or are in foreclosure. This basic
allocation is adjusted to ensure that every
state receives a minimum of $5 million. The
net result is that these funds are highly
targeted to communities with the most severe
neighborhood problems associated with the
foreclosure crisis.
Estimating Greatest Need
To target the funds to States and local
communities with the greatest need, HUD
estimated the number of loans 90 days
delinquent or in foreclosure for each Census
Tract in America. This estimate was based on
a model that was comprised of three factors
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that explain most foreclosures and
delinquent loans (see note 1):
• Rate of Subprime Loans. This is
measured with HMDA data on high cost and
high leverage loans made between 2004 and
2007. These data are available at the Census
Tract (neighborhood) level.
• Increase in Unemployment Rate between
March 2005 and March 2010. These data are
from the BLS Local Area Unemployment
Statistics, at the city and county level.
• Fall in Home Value from Peak to Trough.
Home value data at the Metropolitan Area
level is available quarterly through March
2010 from the Federal Housing Finance
Agency Home Price Index.
In addition to wanting to capture loans that
are currently delinquent or in the foreclosure
process, HUD sought to capture the aggregate
impact of the foreclosure crisis on individual
neighborhoods between 2007 and 2010. To
do this, HUD estimated for each
neighborhood the number of foreclosure
starts between January 2007 and March 2010
as well as the number of foreclosure
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completions between January 2007 and June
2010 (see note 2). Each neighborhood was
assigned the larger of the two estimates.
Finally, HUD has administrative data from
the United States Postal Service on addresses
not picking up mail for 90 days or longer.
These data are very good current indicators
of neighborhood stress from vacant housing.
This number is adjusted using Census 2000
tract level data to remove vacant vacation
properties from the count.
The Formula
Using the estimated rate of loans in
foreclosure or delinquent, HUD identified the
20 percent of neighborhoods likely to be most
distressed. This equates to an estimated
serious delinquency rate (90 days delinquent
or in foreclosure) of greater than 17.8 percent.
Using the methodology described above, the
national rate was estimated at 8.9 percent.1
For each place and balance of county in the
United States we add up only from the 20
percent of neighborhoods with the greatest
need the number of foreclosed homes
between 2007 and 2010 and separately the
number units 90 days or more vacant in
March 2010.
This ‘‘jurisdiction level’’ file is then used to
run a formula to allocate the funds available,
$969,700,000. Sixty percent of these funds
are allocated based on each jurisdiction’s
share of foreclosures and 40 percent of the
funds are allocated based on each
jurisdiction’s share of vacancies.
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Minimum Grant Threshold
If a place gets less than HUD’s established
minimum grant threshold of $1 million, its
grant is rolled up into the county grant. If the
county grant is less than the minimum grant
threshold of $1 million, its grant is rolled up
into the state grant.
State Minimum Grant of $5 million
For any state government that would
receive less than $5 million, its grant is
increased to $5 million with all grant
amounts above the minimum grant threshold
reduced on a pro-rata basis to only allocate
the amounts available.
Note 1: Identifying Census Tracts with
High Rates of Foreclosures, Delinquencies,
and Subprime Loans:
To estimate which neighborhoods are
likely to have high rates of foreclosures,
delinquencies, and subprime loans, HUD
used a July 2010 extract of county level
serious delinquency rates from McDash
Analytics to develop a predictive model
using public data that was available for every
Census Tract in the United States. The
predictive model, which was weighted on
number of mortgages in each county, was
able to predict most of the variance between
counties in their serious delinquency rate (Rsquare of 0.821). The model used is as
follows:
0.523 (intercept)
+0.476 Unemployment Change 3/2005 to 3/
2010 (BLS LAUS)
1 This less than the Mortgage Bankers Association
National Delinquency Survey rate of 9.54 percent
for March 2010 and slightly more than the McDash
Analytics rate of 8.39 percent as of July 2010.
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Jkt 223001
¥0.176 Rate of low cost high leverage loans
2004 to 2007 (HMDA)
+0.521 Rate of high cost high leverage loans
2004 to 2007 (HMDA)
+0.090 Rate of high cost low leverage loans
2004 to 2007 (HMDA)
¥0.188 Fall in Home Value Since Peak
(FHFA Metro and Non-Metro Area)
The predictive rate of seriously delinquent
mortgages was multiplied times the number
of loans made between 2004 and 2007 in a
Census Tract to estimate the number of
seriously delinquent loans in a Census Tract.
Note 2: Calculating Number of
Foreclosures at the Neighborhood Level:
To estimate the number of homes in a
neighborhood that have completed, or are at
risk of becoming Real Estate Owned in a
Census Tract, was done by allocating the
statewide total of the greater of the sum of
all foreclosure completions between January
2007 and June 2010 (from RealtyTrac) or the
sum of all foreclosure starts between January
2007 and March 2010 (from the Mortgage
Bankers Association) based on each Tracts
share of a states estimated number of
seriously delinquent loans. The estimated
number of seriously delinquent loans was
calculated by multiplying the estimated rate
of seriously delinquent loans times the
number of mortgages made between 2004 and
2007 (from Home Mortgage Disclosure Act
data).
Attachment C
NSP Recommended Energy Efficient and
Environmentally-Friendly Green Elements
HUD strongly recommends that your
proposed NSP3 program incorporate the
following energy efficient and
environmentally-friendly Green elements. No
specific element is required. HUD encourages
thoughtful, achievable consideration and
implementation of energy efficient and
environmentally friendly elements inside
your NSP3 program.
HUD is providing the guidance below
because the Department has become aware
during the implementation of NSP1 that
many grantees are not aware that many of
their common community development
practices, such as trying to help police and
teachers live in the neighborhood in which
they work, are also considered sustainable
and environmentally friendly. Similarly,
most affordable housing units are also
smaller and can easily be made more energy
efficient than larger units. The increased
energy efficiency then serves to increase the
long-term affordability of the units.
Transit Accessibility
Select NSP target areas that are transit
accessible, for example those that are in a
census tract with convenient bus service
(local bus service every 20 minutes during
rush hour or an express commuter bus); or
bordering a census tract with a passenger rail
stop or station (including, for example,
commuter rail, subway, light rail, and
streetcars).
Green Building Standards
Comply with the required NSP
rehabilitation standards and also fund new
construction and gut rehabilitation activities
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64347
that will exceed the Energy Star for New
Homes standard. Ensure that moderate
rehabilitation or energy retrofits will
purchase only Energy Star products and
appliances. You may go further and require
NSP homes to achieve an established
environmental or energy efficiency standard
such as Green Communities or equivalent.
Re-Use Cleared Sites
Re-use cleared sites in accordance with a
comprehensive or neighborhood plan. Plan to
re-use all demolition sites within the term of
your NSP grant as replacement housing, for
use as a community resource, or to provide
an environmental function. Examples
include community gardens, pocket parks, or
floodplain impoundment areas.
Deconstruction
Deconstruction means salvaging and reusing materials resulting from demolition
activities. It recycles building materials, and
provides employment.
Renewable Energy
1. Passive Solar. Orient the building to
make the greatest use of passive solar heating
and cooling.
2. Photovoltaic-ready. Site, design,
engineer and wire the development to
accommodate installation of photovoltaic
panels in the future.
Sustainable Site Design
1. Transportation Choices. Locate projects
within a one-quarter mile of at least two, or
one-half mile of at least four community and
retail facilities.
2. Connections to Surrounding
Neighborhoods. Provide three separate
connections from the development to
sidewalks or pathways in surrounding
neighborhoods.
3. Protecting Environmental Resources. Do
not locate the project within 100 feet of
wetlands; 1,000 feet of a critical habitat; or
on steep slopes, prime farmland or park land.
4. Erosion and Sediment Control.
Implement EPA’s Best Management Practices
for erosion and sedimentation control during
construction.
5. Sustainable Landscaping. Select native
trees and plants that are appropriate to the
site’s soils and microclimate.
6. Energy Efficient Landscaping. Locate
trees and plants to provide shading in the
summer and allow for heat gain in the
winter.
Water Conservation
1. Efficient Irrigation. Install low volume,
non-spray irrigation system (such as drip
irrigation, bubblers, or soaker hose).
Energy Efficient Materials
1. Durable Materials. Use materials that
last longer than conventional counterparts
such as stone, brick or concrete.
2. Resource Efficient Materials. Use layouts
and advanced building techniques that
reduce the amount of homebuilding material
required.
3. Heat Absorbing Materials. Use materials
that retain solar heat in winter and remain
cool in summer.
4. Solar-Reflective Paving. Use lightcolored/high-albedo materials and/or open-
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64348
Federal Register / Vol. 75, No. 201 / Tuesday, October 19, 2010 / Notices
grid pavement with a minimum Solar
Reflective index of 0.6 over at least 30
percent of the site’s hardscaped areas.
5. Local Source Materials. Use materials
from local sources that are close to the job
site.
6. Green Roofing. Use Energy Starcompliant and high-emissive roofing, and/or
install a Green (vegetated) roof for at least 50
percent of the roof area; or a combination of
high-albedo and vegetated roof covering 75
percent of the roof area.
Healthy Homes
1. Green Label Certified Floor Covering. Do
not install carpets in basements, entryways,
laundry rooms, bathrooms or kitchens; if
using carpet, use the Carpet and Rug
Institute’s Green Label certified carpet and
pad.
2. Healthy Flooring Materials: Alternatives.
Use non-vinyl, non-carpet floor coverings in
all rooms.
3. Healthy Flooring Materials: Reducing
Dust. Install a whole-house vacuum system
with high-efficiency particulate air filtration.
4. Sealing Joints. Seal all wall, floor and
joint penetrations to prevent pest entry;
provide rodent and corrosion proof screens
(e.g., copper or stainless steel mesh) for large
openings.
5. Termite-Resistant Materials. Use termiteresistant materials in areas known to be
infested.
6. Tub and Shower Enclosures: Moisture
Prevention. Use one-piece fiberglass or
similar enclosure or, if using any form of
grouted material, use backing materials such
as cement board, fiber cement board, fiberglass reinforced board or cement plaster.
7. Green Maintenance Guide. Provide a
guide for homeowners and renters that
explains the intent, benefits, use and
maintenance of Green building features, and
encourages additional Green activities such
as recycling, gardening and use of healthy
cleaning materials.
8. Resident Orientation. Provide a walkthrough and orientation to the homeowner or
new tenants.
[FR Doc. 2010–26292 Filed 10–18–10; 8:45 am]
BILLING CODE 4210–67–P
DEPARTMENT OF THE INTERIOR
Bureau of Ocean Energy Management,
Regulation and Enforcement
[Docket No. BOEM–2010–0052]
mstockstill on DSKH9S0YB1PROD with NOTICES
BOEMRE Information Collection
Activity: 1010–0182, Increased Safety
Measures for Energy Development on
the OCS NTL, Extension of a
Collection; Comment Request
Bureau of Ocean Energy
Management, Regulation and
Enforcement (BOEMRE), Interior.
ACTION: Notice of an extension of an
information collection (1010–0182).
AGENCY:
To comply with the
Paperwork Reduction Act of 1995
SUMMARY:
VerDate Mar<15>2010
16:24 Oct 18, 2010
Jkt 223001
(PRA), BOEMRE is inviting comments
on a collection of information that we
will submit to the Office of Management
and Budget (OMB) for review and
approval. The information collection
request (ICR) concerns the paperwork
requirements in Notice to Lessees and
Operators (NTL) ‘‘No. 2010–N05,
Increased Safety Measures for Energy
Development on the OCS.’’
DATES: Submit written comments by
December 20, 2010.
FOR FURTHER INFORMATION CONTACT:
Cheryl Blundon, Regulations and
Standards Branch at (703) 787–1607.
You may also contact Cheryl Blundon to
obtain a copy, at no cost, of NTL No.
2010–N05 that requires the subject
collection of information.
ADDRESSES: You may submit comments
by either of the following methods listed
below.
• Electronically: go to https://
www.regulations.gov. In the entry titled
‘‘Enter Keyword or ID,’’ enter docket ID
BOEM–2010–0052 then click search.
Follow the instructions to submit public
comments and view supporting and
related materials available for this
collection. BOEMRE will post all
comments.
• E-mail cheryl.blundon@boemre.gov.
Mail or hand-carry comments to the
Department of the Interior; Bureau of
Ocean Energy Management, Regulation
and Enforcement; Attention: Cheryl
Blundon; 381 Elden Street, MS–4024;
Herndon, Virginia 20170–4817. Please
reference ICR 1010–0182 in your
comment and include your name and
return address.
SUPPLEMENTARY INFORMATION:
Title: Increased Safety Measures for
Energy Development on the OCS, NTL
No. 2010–N05.
OMB Control Number: 1010–0182.
Abstract: The Outer Continental Shelf
(OCS) Lands Act, as amended (43 U.S.C.
1331 et seq. and 43 U.S.C. 1801 et seq.),
authorizes the Secretary of the Interior
(Secretary) to prescribe rules and
regulations to manage the mineral
resources of the OCS. Such rules and
regulations will apply to all operations
conducted under a lease, right-of-use
and easement, and pipeline right-ofway. Operations on the OCS must
preserve, protect, and develop oil and
natural gas resources in a manner that
is consistent with the need to make such
resources available to meet the Nation’s
energy needs as rapidly as possible; to
balance orderly energy resource
development with protection of human,
marine, and coastal environments; to
ensure the public a fair and equitable
return on the resources of the OCS;
preserve and maintain free enterprise
PO 00000
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Fmt 4703
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competition; and ensure that the extent
of oil and natural gas resources of the
OCS is assessed at the earliest
practicable time. 43 U.S.C. 1332(6)
states that ‘‘operations in the outer
Continental Shelf should be conducted
in a safe manner by well-trained
personnel using technology,
precautions, and techniques sufficient
to prevent or minimize the likelihood of
blowouts, loss of well control, fires,
spillages, physical obstruction to other
users of the waters or subsoil and
seabed, or other occurrences which may
cause damage to the environment or to
property, or endanger life or health.’’
To carry out these responsibilities,
BOEMRE issues regulations to ensure
that operations in the OCS will meet
statutory requirements; provide for
safety and protect the environment; and
result in diligent exploration,
development, and production of OCS
leases. In addition, we also issue NTLs
that provide clarification, explanation,
and interpretation of our regulations.
These NTLs are also used to convey
purely informational material and to
cover situations that might not be
adequately addressed in our regulations.
The latter is the case for the information
collection required in the NTL. Because
of the unusual nature of this
information collection, issuing an NTL
is the appropriate means to collect the
information at the time of the event.
The subject of this ICR is an NTL
based on the recommendations in the
May 27, 2010, Report from the Secretary
of the Interior to the President of the
United States, Increased Safety
Measures for Energy Development on
the Outer Continental Shelf (Report).
BOEMRE issued NTLs for operators to
comply with the requirements and
recommendations of the report as a
result of the Deepwater Horizon oil spill
in the Gulf of Mexico. This collection
pertains to one NTL, covered under the
regulations at 30 CFR part 250, subparts,
A, D, E, and F. The primary information
collections for these regulations are
approved under the Office of
Management and Budget (OMB) Control
Numbers 1010–0114, 1010–0141, 10100067, and 1010–0043, respectively.
However, BOEMRE believes that the
paperwork burdens in the NTL are in
addition to those currently approved.
Only one of the requirements in the
NTL has not yet been fully met;
therefore, we are renewing that
requirement in this collection to allow
operators and/or lessees more response
time than allowed by the original
emergency OMB request.
BOEMRE issued this NTL for lessees
and operators to comply with the
requirements and recommendations of
E:\FR\FM\19OCN1.SGM
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Agencies
[Federal Register Volume 75, Number 201 (Tuesday, October 19, 2010)]
[Notices]
[Pages 64322-64348]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-26292]
=======================================================================
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-5447-N-01]
Notice of Formula Allocations and Program Requirements for
Neighborhood Stabilization Program Formula Grants
AGENCY: Office of the Secretary, HUD.
ACTION: Notice of allocation method, waivers granted, alternative
requirements applied, and statutory program requirements.
-----------------------------------------------------------------------
SUMMARY: This notice advises the public of the allocation formula and
allocation amounts, the list of grantees, alternative requirements, and
the waivers of regulations granted to grantees under Section 2301(b) of
the Housing and Economic Recovery Act of 2008 (Pub. L. 110-289,
approved July 30, 2008) (HERA), as amended, and an additional
allocation of funds provided under Section 1497 of the Wall Street
Reform and Consumer Protection Act of 2010 (Pub. L. 111-203, approved
July 21, 2010) (Dodd-Frank Act) for additional assistance in accordance
with the second undesignated paragraph under the heading `Community
Planning and Development--Community Development Fund' in Title XII of
Division A of the American Recovery and Reinvestment Act of 2009 (Pub.
L. 111-5, approved February 17, 2009) (Recovery Act), as amended, for
the purpose of assisting in the redevelopment of abandoned and
foreclosed homes. Except where provided for otherwise, these amounts
are distributed based on funding formulas for such amounts established
by the Secretary in accordance with HERA.
The additional allocation represents the third round of
Neighborhood Stabilization Program funding and is referred to
throughout this notice as NSP3. HERA provided a first round of formula
funding to States and units of general local government, and is
referred to herein as NSP1. The Recovery Act provided a second round of
funds awarded by competition and is referred to herein as NSP2. The
three rounds of funding are collectively referred to as NSP. As
described in the Supplementary Information section of this notice, HUD
is authorized by statute to specify alternative requirements and make
regulatory waivers for this purpose. This notice also notes statutory
issues affecting program design and implementation.
Note: This notice is intended to provide unified program
requirements for grantees of the two formula NSP grant programs,
NSP1 and NSP3. The allocation and application information under
Section I.A and Section II.B below is only applicable to NSP3
grants. For NSP1, HUD awarded grants to a total of 309 grantees
including the 55 states and territories and selected local
governments to stabilize communities hardest hit by foreclosures and
delinquencies. For the allocation formula and application process
for NSP1, please see the October 6, 2008 Federal Register Notice (73
FR 58330), as amended by the June 19, 2009 ``Bridge'' Notice (74 FR
29223), and Appendix A attached hereto. For NSP2, HUD awarded a
combined total $1.93 billion in NSP2 grants to 56 grantees
nationwide on January 14, 2010. Funds under NSP2 were distributed by
competition under criteria described in the May 4, 2009 Notice of
Funding Availability. Where requirements differ between the rounds
of funding, it is so noted.
DATES: Effective Date: October 19, 2010.
FOR FURTHER INFORMATION CONTACT: Stanley Gimont, Director, Office of
Block Grant Assistance, Department of Housing and Urban Development,
451 Seventh Street, SW., Room 7286, Washington, DC 20410, telephone
number 202-708-3587. Persons with hearing or speech impairments may
access this number via TTY by calling the Federal Information Relay
Service at 800-877-8339. FAX inquiries may be sent to Mr. Gimont at
202-401-2044. (Except for the ``800'' number, these telephone numbers
are not toll-free.)
SUPPLEMENTARY INFORMATION:
Program Background and Purpose
Recipients will use the funds awarded under this notice to
stabilize neighborhoods whose viability has been, and continues to be,
damaged by the economic effects of properties that have been foreclosed
upon and abandoned. In 2008, Congress appropriated funds for
neighborhood stabilization under HERA. In 2009, Congress appropriated
additional neighborhood stabilization funds under the Recovery Act. In
2010, Congress appropriated a third round of neighborhood stabilization
funds in the Dodd-Frank Act.
When referring to a provision of the first appropriations statute,
this notice will refer to HERA; when referring to a provision of the
second appropriations statute, this notice will refer to the Recovery
Act; and when referring to the third appropriations statute this notice
will refer to the Dodd-Frank Act. When referring to the grants,
grantees, assisted activities, and implementation rules under the Dodd-
Frank Act, this notice will use the term ``NSP3.'' When referring to
the grants, grantees, assisted activities, and implementation rules
under the Recovery Act, this notice will use the term ``NSP2''. When
referring to the grants, grantees, assisted activities, and
implementation rules under HERA, this notice will use the term
``NSP1.'' Collectively, the grants, grantees, assisted activities, and
implementation rules under these three rounds of funding is referred to
as NSP. NSP is a component of the Community Development Block Grant
(CDBG) program (authorized under Housing and Community Development Act
of 1974, as amended (42 U.S.C. 5301 et seq.) (HCD Act)).
[[Page 64323]]
Program Principles
Programs under NSP should aim to integrate the following
principles:
Retain CDBG distinctive requirements. Congress gave HUD
broad waiver and alternative requirement authority, which HUD used in
designing NSP program requirements. However, distinctive
characteristics of the CDBG program including the objectives of the HCD
Act, financial accountability, local citizen participation and
information, grantee selection of activities within broad Federal
policy parameters, and income targeting of beneficiaries were retained.
All of these elements are required in NSP1, NSP2, and NSP3.
Target and reconnect neighborhoods. Invest funds in
programs and projects that will revitalize targeted neighborhood(s) and
reconnect those targeted neighborhoods with the economy, housing
market, and social networks of the community and metropolitan area as a
whole.
Rapidly arrest decline. Support NSP uses and activities
that will rapidly arrest the decline of a targeted neighborhood(s) that
has been negatively affected by abandoned or foreclosed properties.
Assure compliance with the NSP ``deep targeting''
requirement. No less than 25 percent of the funds shall be used to
house individuals and families whose incomes do not exceed 50 percent
of area median income.
Ensure longest feasible continued affordability. Invest in
affordable housing that will remain desirable and affordable for the
longest feasible period.
Support projects that optimize economic activity, and the
number of jobs created or retained or that will provide other long-term
economic benefits.
Build inclusive and sustainable communities free from
discrimination.
Coordinate planning and resources. Integrate neighborhood
stabilization programs with other Federal policy priorities and
investments, including energy conservation and efficiency, sustainable
and transit-oriented development, integrated metropolitan area-wide
planning and coordination, improvements in public education, and access
to healthcare.
Leverage resources and remove destabilizing influences.
Augment neighborhood stabilization programs with other Federal, public
and private resources. Eliminate destabilizing influences, such as
blighted homes, that can prevent programs from producing results.
Set goals. Set aggressive, but achievable, goals for
outputs and outcomes.
Ensure accountability. Ensure accountability for all
programs, keep citizens actively informed, and provide all required NSP
reporting elements.
Objectives and Outcomes
1. Objectives. The primary objective of the CDBG program is the
development of viable urban communities, by providing decent housing, a
suitable living environment, and economic opportunity, principally for
persons of low- and moderate-income. NSP grantees must strive to meet
this objective in neighborhoods that are in decline (or further
decline) due to the negative effects of a high number and percentage of
homes that have been foreclosed upon. The first goal is to arrest the
decline. Then the grantee must stabilize the neighborhood and position
it for a sustainable role in a revitalized community.
2. Outcomes. Measurable NSP short term program outcomes may
include, but are not limited to:
Arresting decline in home values based on average sales
price in targeted neighborhoods, and
Reduction or elimination of vacant and abandoned
residential property in targeted neighborhoods.
The long term outcomes may include, but are not limited to:
Increased sales of residential property in targeted
neighborhoods, and
Increased median market values of real estate in targeted
neighborhoods.
Authority To Provide Alternative Requirements and Grant Regulatory
Waivers
The Dodd-Frank Act states that, except where provided for
otherwise, assistance shall be provided in accordance with the same
provisions applicable under the NSP2 authorization. In turn, the
Recovery Act provides that assistance shall be made available as
authorized under HERA. The Recovery Act authorizes the Secretary to
specify waivers and alternative requirements for any provision of any
statute or regulation in connection with the obligation by the
Secretary or the use of funds except for requirements related to fair
housing, nondiscrimination, labor standards, and the environment
(including lead-based paint), upon a finding that such a waiver is
necessary to expedite or facilitate the use of such funds.
The Secretary finds that the following alternative requirements are
necessary to expedite the use of these funds for their required
purposes.
Except as described in this notice, statutory and regulatory
provisions governing the CDBG program, including those at 24 CFR part
570 subpart I for states, and those at 24 CFR part 570 subparts A, C,
D, J, K, and O for CDBG entitlement communities, as appropriate, shall
apply to the use of these funds. The State of Hawaii will be allocated
funds and will be subject to part 570, subpart I, as modified by this
notice. Other sections of the notice provide further details of the
changes, the majority of which deal with adjustments necessitated by
statutory provisions, simplify program rules to expedite
administration, or relate to the ability of state grantees to act
directly instead of solely through distribution to local governments.
Additional guidance and technical assistance will be available at
https://www.hud.gov/nspta.
Table of Contents
I. Allocations
A. Formula: NSP3 Allocation
B. Formula: Reallocation
II. Alternative Requirements and Regulatory Waivers
A. Definitions for Purposes of the CDBG Neighborhood
Stabilization Program
B. NSP3 Pre-Grant Process
1. General
2. Contents of an NSP Action Plan Substantial amendment or
abbreviated plan
3. Continued affordability
4. Citizen participation alternative requirement
5. Joint requests
6. Effect of existing cooperation agreements governing joint
programs and urban counties
C. Reimbursement for Pre-Award Costs
D. Grantee Capacity and Grant Conditions
E. Income Eligibility Requirement Changes
F. State Distribution to Entitlement Communities and Indian
Tribes
G. State's Direct Action
H. Eligibility and Allowable Costs
I. Rehabilitation Standards
J. Sale of Homes
K. Acquisition and Relocation
L. Note on Eminent Domain
M. Timeliness of Use and Expenditure of NSP Funds
N. Alternative Requirement for Program Income (Revenue)
Generated by Activities Assisted With Grant Funds
O. Reporting
P. FHA First Look
Q. Purchase Discount
R. Removal of Annual Requirements
S. Affirmatively Furthering Fair Housing
T. Certifications
U. Additional NSP3 Requirements-- Preferences for Rental Housing
and Local Hiring
V. Note on Statutory Limitation on Distribution of Funds
W. Information Collection Approval Note
X. Duration of Funding
[[Page 64324]]
I. Allocations
A. Formula: Allocation. Grants awarded under NSP1 were allocated to
States and local governments according to the formula described in
Attachment A. The Dodd-Frank Act makes available an additional $1
billion that is generally to be construed as CDBG program funds (NSP3)
for the communities and in the amounts listed in Attachment B to this
notice.
B. Formula: Reallocation.
1.a. Failure to Apply (NSP3). To expedite the use of NSP3 funds,
the Department is specifying alternative requirements to 42 U.S.C.
5306(c). If a unit of general local government receiving an allocation
of NSP3 funds under this notice (as designated in Attachment B) fails
to submit a substantially complete application for its grant allocation
by March 1, 2011, or submits an application for less than the total
allocation amount, HUD will notify the jurisdiction of the cancellation
of all or part of its allocation amount and proceed to reallocate the
funds to the state in which the jurisdiction is located.
b. If a state or insular area receiving an allocation of funds
under this notice fails to submit a substantially complete application
for its allocation by March 1, 2011, or submits an application for less
than the total allocation amount, HUD will notify the state or insular
area of the reduction in its allocation amount and proceed to
reallocate the funds to the 10 highest-need states based on original
rankings of need.
2.a. Failure to Meet 18-Month Obligation Deadline (NSP1).
Consistent with the August 23, 2010 Notice of NSP Reallocation Process
Changes (Docket No. FR-5435-N-01), HUD will block each grantee's
ability to obligate NSP1 grant funds in the Disaster Recovery Grant
Reporting System (DRGR) on the first business day after the statutory
18-month deadline for use of funds. HUD will notify the grantee of this
action by electronic mail. Grantees will not be able to obligate grant
funds after the deadline without requesting and receiving permission
from HUD, and HUD determines that the grantee is not high risk
consistent with this notice. The grantee will still be able to expend
grant funds obligated before the deadline. Receipt and use of any
program income will also be unaffected.
b. Grantees that fail to obligate an amount equal to or greater
than its initial grant amount may submit information to HUD, for up to
30 days following its 18-month deadline, documenting any additional
obligation of funds not already recorded in the DRGR system and
demonstrating to HUD that the obligation occurred on or before the 18-
month deadline. Before the 18-month deadline, each grantee should also
review its recorded obligations and notify HUD within 30 days following
the deadline of any necessary adjustments to the amount and the reason
for such an adjustment. For example, the grantee has become aware that
an obligation amount that was previously recorded for an acquisition
will not proceed, therefore a downward adjustment is necessary.
c. After the deadline, if a grantee needs to decrease or increase
the amount of grant funds obligated to an activity, it must first ask
HUD to remove the DRGR block on changing the amount obligated. If the
amount of decrease is more than 15 percent of the obligation for any
activity, the grantee must submit to HUD a written request that clearly
demonstrates with compelling information that factors beyond the
grantee's reasonable control caused the need to adjust after the
deadline. If HUD agrees to grant the request, it will restore the
grantee's ability to obligate grant funds in DRGR. If HUD does not
grant the request, the grantee must either complete the activity as
originally obligated or the amount previously obligated for that
activity will be recaptured. HUD may also remove the obligations block
following risk assessment of the grantee or a review of some or all of
a grantee's obligation documentation.
d. Before HUD determines the appropriate corrective action or
recaptures grant funds, HUD will review the submitted information,
consider the grantee's capacity as described in 24 CFR 570.905 and 24
CFR 570.493, and the grantee's continuing need for the funds.
e. Following the review and consistent with the procedures
described in 24 CFR 570.900(b), HUD will proceed to notify the grantee
of the selected corrective action it is required to undertake.
f. HUD will recapture and reallocate up to $19.6 million from any
state grantee with unused NSP1 grant funds. Additional corrective
actions may be taken related to any amount of unused funds greater than
$19.6 million.
g. HUD will reallocate recaptured NSP1 grant funds in accordance
with the reallocation formula described in a separate reallocation
notice. A grantee receiving a reallocation must apply for the grant in
accordance with the NSP1 Notice or this notice, as applicable. A
nonentitlement grantee that is not required to submit a consolidated
plan to HUD under the CDBG program will prepare an abbreviated plan.
The substance of an abbreviated plan must include all the required
elements that entitlement communities provide as part of an NSP Action
Plan substantial amendment as described under Section II.B.2 of the
NSP1 Notice or this Notice, as applicable.
h. Each grantee must meet the statutory requirement to expend 25
percent of its grant amount for activities that will provide housing
for households whose income is at or under 50 percent of area median
income. This cannot occur unless the funds are first obligated to
activities for this purpose, or program income is received and used for
eligible activities. Therefore, if a grantee fails to obligate or
record program income use of at least 25 percent of its original grant
amount for activities that will provide housing for households whose
income is at or under 50 percent of area median income, HUD may issue a
concern or a finding of noncompliance. Consistent with the procedures
described in 24 CFR 570.900(b), HUD will require as a corrective action
that the grantee either adjust its remaining NSP1 planned activities to
ensure that 25 percent of the original NSP1 formula grant amount and
program income supports activities providing housing to households with
incomes at or under 50 percent of area median income, or make a firm
commitment to provide such housing with nonfederal funds in an amount
sufficient to offset any deficiency to comply with the requirement
before the expenditure deadline for the NSP1 grant.
i. The NSP1 Notice allows each grantee to use up to 10 percent of
its NSP1 grant for general administration and planning activities. If
HUD recaptures funds from a grant, this percentage limitation will
still apply to the remaining grant funds, reducing the amount available
for administration activities.
3. Failure to Meet Expenditure Deadline for NSP3.
NSP3 grantees must expend 50 percent of their grants within 2 years
and 100 percent of their grants within 3 years. HUD will recapture and
reallocate the amount of funds not expended by those deadlines or
provide for other corrective action(s) or sanction. Further guidance
will be issued prior to the deadline.
II. Alternative Requirements and Regulatory Waivers
This section of the notice briefly provides a justification for
alternative requirements, where additional explanation is necessary,
and describes
[[Page 64325]]
the necessary basis for each regulatory waiver. This section also
highlights some of the statutory requirements applicable to the grants.
This background narrative is followed by the NSP requirements. While
program requirements across the three rounds of NSP funding are
similar, certain requirements differ in accordance to statutory
provisions.
Each grantee eligible for an NSP grant that already receives annual
CDBG allocations has carried out needs hearings, has a consolidated
plan, an annual action plan, a citizen participation plan, a monitoring
plan, an analysis of impediments to fair housing choice, and has made
CDBG certifications. The consolidated plan already discusses housing
needs related to up to four major grant programs: CDBG, HOME, Emergency
Shelter Grants (ESG), and Housing Opportunities for Persons with AIDS
(HOPWA). A grantee's annual action plan describes the activities
budgeted under each of those annual programs.
HUD is treating a state and entitlement grantee's use of its NSP
grant to be a substantial amendment to its current approved
consolidated plan and 2010 annual action plan. The NSP grant is a
special CDBG allocation to address the problem of abandoned and
foreclosed homes. Treating NSP3 as a substantial amendment will
expedite the distribution of NSP3 funds, while ensuring citizen
participation on the specific use of the funds. HUD is waiving the
consolidated plan regulations on the certification of consistency with
the consolidated plan to the extent necessary to mean NSP funds will be
used to meet the congressionally identified needs of abandoned and
foreclosed homes in the targeted areas set forth in the grantee's
substantial amendment. In addition, HUD is waiving the consolidated
plan regulations to the extent necessary to adjust reporting to fit the
requirements of HERA and the use of DRGR.
Non-entitlement local government grantees receiving NSP3 funds that
are not required to submit a consolidated plan to HUD under the CDBG
program will prepare an abbreviated plan. The substance of an
abbreviated plan must include all the required elements that
entitlement communities provide as part of an NSP Action Plan
substantial amendment as described under Section II.B.2.
The waivers, alternative requirements, and statutory changes apply
only to the grant funds appropriated under NSP and not to the use of
regular formula allocations of CDBG, even if they are used in
conjunction with NSP funds for a project. They provide expedited
program implementation and implement statutory requirements unique to
the covered NSP appropriations.
A. Definitions for Purposes of the Neighborhood Stabilization Program
Background
Certain terms are used in HERA that are not used in the regular
CDBG program, or the terms are used differently in HERA and the HCD
Act. In the interest of clarity of administration, HUD is defining
these terms in this notice for all grantees, including states. For the
same reason, HUD is also defining eligible fund uses for all grantees,
including states. States may define other program terms under the
authority of 24 CFR 570.481(a), and will be given maximum feasible
deference in accordance with 24 CFR 570.480(c) in matters related to
the administration of their NSP programs.
Requirement
Abandoned. A home or residential property is abandoned if either
(a) mortgage, tribal leasehold, or tax payments are at least 90 days
delinquent, or (b) a code enforcement inspection has determined that
the property is not habitable and the owner has taken no corrective
actions within 90 days of notification of the deficiencies, or (c) the
property is subject to a court-ordered receivership or nuisance
abatement related to abandonment pursuant to state or local law or
otherwise meets a state definition of an abandoned home or residential
property.
Blighted structure. A structure is blighted when it exhibits
objectively determinable signs of deterioration sufficient to
constitute a threat to human health, safety, and public welfare.
CDBG funds. CDBG funds means, in addition to the definition at 24
CFR 570.3, grant funds distributed under this notice.
Current market appraised value. The current market appraised value
means the value of a foreclosed upon home or residential property that
is established through an appraisal made in conformity with either: (1)
The appraisal requirements of the URA at 49 CFR 24.103, or (2) the
Uniform Standards of Professional Appraisal Practice (USPAP), or (3)
the appraisal requirements of the Federal Housing Administration (FHA)
or a government sponsored enterprise (GSE); and the appraisal must be
completed or updated within 60 days of a final offer made for the
property by a grantee, subrecipient, developer, or individual
homebuyer. However, if the anticipated value of the proposed
acquisition is estimated at $25,000 or less, the current market
appraised value of the property may be established by a valuation of
the property that is based on a review of available data and is made by
a person the grantee determines is qualified to make the valuation.
Date of Notice of Foreclosure. For purposes of the NSP tenant
protection provisions described at Section K, the date of notice of
foreclosure shall be deemed to be the date on which complete title to a
property is transferred to a successor entity or person as a result of
an order of a court or pursuant to provisions in a mortgage, deed of
trust, or security deed. If none of these events occur in the
acquisition of a foreclosed property (e.g. in a short sale), in order
to ensure fair and equitable treatment of bona fide tenants and
consistency with the NSP definition of foreclosed, the date of notice
of foreclosure shall be deemed to be the date on which the property is
acquired for the NSP-assisted project. Note: This definition does not
affect or otherwise alter the definition of ``foreclosed'' as provided
in this notice.
Foreclosed. A home or residential property has been foreclosed upon
if any of the following conditions apply: (a) The property's current
delinquency status is at least 60 days delinquent under the Mortgage
Bankers of America delinquency calculation and the owner has been
notified; (b) the property owner is 90 days or more delinquent on tax
payments; (c) under state, local, or tribal law, foreclosure
proceedings have been initiated or completed; or (d) foreclosure
proceedings have been completed and title has been transferred to an
intermediary aggregator or servicer that is not an NSP grantee,
contractor, subrecipient, developer, or end user.
Land bank. A land bank is a governmental or nongovernmental
nonprofit entity established, at least in part, to assemble,
temporarily manage, and dispose of vacant land for the purpose of
stabilizing neighborhoods and encouraging re-use or redevelopment of
urban property. For the purposes of NSP, a land bank will operate in a
specific, defined geographic area. It will purchase properties that
have been foreclosed upon and maintain, assemble, facilitate
redevelopment of, market, and dispose of the land-banked properties. If
the land bank is a governmental entity, it may also maintain foreclosed
property that it does not own, provided it charges the owner of the
property the full cost
[[Page 64326]]
of the service or places a lien on the property for the full cost of
the service.
Subrecipient. Subrecipient shall have the same meaning as at the
first sentence of 24 CFR 570.500(c). This includes any nonprofit
organization (including a unit of general local government) that a
state awards funds to.
Use (for the purposes of HERA section 2301(c)(1)). Funds are used
when they are obligated by a state, unit of general local government,
or any subrecipient thereof, for a specific NSP activity; for example,
for acquisition of a specific property. Funds are obligated for an
activity when orders are placed, contracts are awarded, services are
received, and similar transactions have occurred that require payment
by the state, unit of general local government, or subrecipient during
the same or a future period. Note that funds are not obligated for an
activity when subawards (e.g., grants to subrecipients or to units of
local government) are made.
Vicinity. For the purposes of NSP3, HUD defines ``vicinity'' as
each neighborhood identified by the NSP3 grantee as being the areas of
greatest need.
B. NSP3 Pre-Grant Process
Background
With this notice, HUD is establishing the NSP3 allocation formula,
including reallocation provisions, and announcing the distribution of
funds. CDBG grantees receiving NSP3 allocations may immediately begin
to prepare and submit action plan substantial amendments for NSP3
funds, in accordance with this notice. (Insular areas should follow the
requirements for entitlement communities.) Non-entitlement local
government grantees will follow entitlement requirements except for the
submission of an abbreviated plan rather than a substantial amendment
or as otherwise explained in this notice.
To receive NSP3 funding, each grantee listed in Attachment B must
submit an action plan substantial amendment or abbreviated plan to HUD
in accordance with this notice by March 1, 2011.
HUD encourages each grantee to carry out its NSP activities in the
context of a comprehensive plan for the community's vision of how it
can make its neighborhoods not only more stable, but also more
sustainable, inclusive, competitive, and integrated into the overall
metropolitan fabric, including access to transit, affordable housing,
employers, and services. HUD also encourages grantees to incorporate
green and sustainable development practices, such as the examples in
Attachment C.
HUD encourages each local jurisdiction receiving an allocation to
carefully consider its administrative capacity to use the funds within
the statutory deadline.
Jurisdictions may cooperate to carry out their grant programs
through a joint request to HUD. HUD is providing regulatory waivers and
alternative requirements to allow joint requests among units of general
local government and to allow joint requests between units of general
local government and a state. Any two or more contiguous units of
general local government that are in the same metropolitan area and
that are eligible to receive an NSP grant may instead make a joint
request to HUD to implement a joint NSP program. A jurisdiction need
not have a joint agreement with an urban county under the regular CDBG
entitlement program to request a joint program for NSP funding.
Similarly, any community eligible to receive an NSP grant may instead
make a request for a joint NSP program with its state. An NSP joint
request under a cooperation agreement results in a single combined
grant and a single action plan substantial amendment. Potential
requestors should contact HUD as soon as possible (as far as possible
in advance of publishing a proposed NSP substantial amendment) for
technical guidance. The requestors will specify which jurisdiction will
receive the funds and administer the combined grant on behalf of the
requestors; in the case of a joint request between a local government
jurisdiction and a state, the state will administer the combined grant.
(Grantees choosing this option should consider the Consolidated Plan
and citizen participation implications of this approach. The lead
entity's substantial amendment or abbreviated plan will cover any
participating members. The citizen participation process must include
citizens of all jurisdictions participating in the joint NSP program,
not just those of the lead entity.)
Given the rule of construction in HERA that NSP funds generally are
construed as CDBG program funds, subject to CDBG program requirements,
HUD generally is treating NSP3 funds as a special allocation of Fiscal
Year (FY) 2010 CDBG funding. This has important consequences for local
governments presently participating in an existing urban county
program, and for metropolitan cities that have joint agreements with
urban counties. HUD will consider any existing cooperation agreements
between a local government and an urban county governing FY2010 CDBG
funding (for purposes of either an urban county or a joint program) to
automatically cover NSP funding as well. These cooperation agreements
will continue to apply to the use of NSP funds for the duration of the
NSP grant, just as cooperation agreements covering regular CDBG
Entitlement program funds continue to apply to any use of the funds
appropriated during the 3-year period covered by the agreements. For
example, a local government presently has a cooperation agreement
covering a joint program or participation in an urban county for
Federal FYs 2009, 2010 and 2011. The local government may choose to
discontinue its participation with the county at the end of the
applicable qualification period for purposes of regular CDBG
entitlement funding. However, the county will still be responsible for
any NSP3 projects funded in that community, and for any NSP3 funding
the local government receives from the county, until those funds are
expended and the funded activities are completed.
A third method of cooperating is also available. A jurisdiction may
choose to apply for its entire grant, and then enter into a
subrecipient agreement with another jurisdiction or nonprofit entity to
administer the grant. In this manner, for example, all of the grantees
operating in a single metropolitan area could designate the same land-
bank entity (or the state housing finance agency) as a subrecipient for
some or all of their NSP activities.
Each NSP3 grantee will have until March 1, 2011, to complete and
submit a substantial amendment to its annual action plan or an
abbreviated plan. A grantee that wishes to submit its action plan
amendment to HUD electronically in the DRGR system rather than by paper
may do so by contacting its local field office for the DRGR submission
directions. Paper submissions to HUD also will be allowed, although
each grantee must set up its action plan in DRGR prior to the deadline
for the first required performance report after receiving a grant.
HUD encourages grantees, during development of their action plan
amendments or abbreviated plans, to contact HUD field offices for
guidance in complying with these requirements, or if they have any
questions regarding meeting grant requirements.
Normally, in the CDBG program, a grantee takes at least 30 days
soliciting comment from its citizens before it submits an annual action
plan to HUD, which then has 45 days to accept or reject the plan. To
expedite the process and to ensure that the NSP grants are
[[Page 64327]]
awarded in a timely manner, while preserving reasonable citizen
participation, HUD is waiving the requirement that the grantee follow
its citizen participation plan for this substantial amendment. HUD is
shortening the minimum time for citizen comments and requiring the
substantial amendment or abbreviated plan to be posted on the grantee's
official Web site as the materials are developed, published, and
submitted to HUD.
A grantee will be deemed by HUD to have received its NSP grant at
the time HUD signs its NSP grant agreement (or amendment thereof, in
the case of a state that later receives reallocated grant funds).
Grantees are cautioned that, despite the expedited application and
plan process, they are still responsible for ensuring that all citizens
have equal access to information about the programs. Among other
things, this means that each grantee must ensure that program
information is available in the appropriate languages for the
geographic area served by the jurisdiction. This will be a particular
issue for states that make grants covering regular CDBG entitlement
areas (or to entitlement grantees). Because regular State CDBG funds
are not used in entitlement areas, State CDBG staffs may not be aware
of limited English proficient (LEP) speaking populations in those
metropolitan jurisdictions.
HUD will review each grantee submission for completeness and
consistency with the requirements of this notice and will disapprove
incomplete and inconsistent action plan amendments or abbreviated
plans. HUD will allow revision and resubmission of a disapproved
amendment or abbreviated plan in accordance with 24 CFR 91.500(d) so
long as any such resubmission is received by HUD 45 days or less
following the date of first disapproval.
In combination, the notice alternative requirements provide the
following expedited steps for NSP grants:
Proposed action plan amendment or abbreviated plan
published via the usual methods and on the Internet for no less than 15
calendar days of public comment;
Final action plan amendment or abbreviated plan posted on
the Internet and submitted to HUD by March 1, 2011 (grant application
includes Standard Form 424 (SF-424) and certifications);
HUD expedites review;
HUD accepts the plan and prepares a cover letter, grant
agreement, and grant conditions;
Grant agreement signed by HUD and immediately transmitted
to the grantee;
Grantee signs and returns the grant agreements;
HUD establishes the line of credit and the grantee
requests and receives DRGR access (if it does not already have access);
After completing the environmental review(s) pursuant to
24 CFR part 58 and, as applicable, receiving from HUD or the state an
approved Request for Release of Funds and certification, the grantee
may draw down funds from the line of credit.
In consideration of the shortened comment period, it is essential
that grantees ensure that affected parties have sufficient notice of
the opportunity to comment. The action plan substantial amendment or
abbreviated plan and citizen participation alternative requirement will
permit an expedited grant-making process, but one that still provides
for public notice, appraisal, examination, and comment on the
activities proposed for the use of NSP3 grant funds.
Note: HUD believes an adequate and acceptable substantial
amendment or abbreviated plan should be no longer than 25 pages. A
plan should provide sufficient detail for citizens and HUD
reviewers. Internet address links can be provided to longer elements
that may change, such as detailed rehabilitation standards.
Requirement
1. General. Except as described in this notice, statutory and
regulatory provisions governing the CDBG program for states and
entitlement communities, as applicable, shall apply to the use of these
funds. Except as described in this notice, non-entitlement local
government grantees receiving a grant directly from HUD shall follow
statutory and regulatory provisions governing the CDBG program for
entitlement communities.
2. Contents of an NSP Action Plan substantial amendment or
abbreviated plan. The elements in the NSP substantial amendment to the
Annual Action Plan or an abbreviated plan required for the CDBG program
under part 91 are:
a. General information about needs, distribution, use of funds, and
definitions:
i. Each grantee must use the HUD Foreclosure Need Web site as
linked to from https://www.hud.gov/nsp to submit to HUD the locations of
its NSP3 areas of greatest need. On this site, HUD provides estimates
of foreclosure need and a foreclosure related needs scores at the
Census Tract level. The score rank need from 1 to 20, with 20 being
census tracts with the HUD-estimated greatest need.
ii. The neighborhood or neighborhoods identified by the NSP3
grantee as being the areas of greatest need must have an individual or
average combined index score for the grantee's identified target
geography that is not less than the lesser of 17 or the twentieth
percentile most needy score in an individual state. For example, if a
state's twentieth percentile most needy census tract is 18, the
requirement will be a minimum need of 17. If, however, a state's
twentieth percentile most needy census tract is 15, the requirement
will be a minimum need of 15. HUD will provide the minimum threshold
for each state at its Web site https://www.hud.gov/nsp. If more than one
neighborhood is identified in the Action Plan, HUD will average the
neighborhood NSP3 scores, weighting the scores by the estimated number
of housing units in each identified neighborhood.
iii. A narrative describing how the distribution and uses of the
grantee's NSP funds will meet the requirements of Section 2301(c)(2) of
HERA, as amended by the Recovery Act and the Dodd-Frank Act;
iv. For the purposes of the NSP3, the narratives will include:
(A) A definition of ``blighted structure'' in the context of state
or local law;
(B) A definition of ``affordable rents;''
(C) A description of how the grantee will ensure continued
affordability for NSP-assisted housing; and
(D) A description of housing rehabilitation standards that will
apply to NSP-assisted activities.
b. Information by activity describing how the grantee will use the
funds, identifying:
i. The eligible use of funds under NSP3;
ii. The eligible CDBG activity or activities;
iii. The areas of greatest need addressed by the activity or
activities;
vi. The expected benefit to income-qualified persons or households
or areas;
v. Appropriate performance measures for the activity (e.g., units
of housing to be acquired, rehabilitated, or demolished for the income
levels represented in DRGR, which are currently 50 percent of area
median income and below, 51 to 80 percent, and 81 to 120 percent);
vi. Amount of funds budgeted for the activity;
[[Page 64328]]
vii. The name and location of the entity that will carry out the
activity; and
viii. The expected start and end dates of the activity.
c. A brief description of the general terms under which assistance
will be provided, including:
i. Range of interest rates (if any);
ii. Duration or term of assistance;
iii. Tenure of beneficiaries (e.g., renters or homeowners); and
vi. If the activity produces housing, how the design of the
activity will ensure continued affordability;
v. How the grantee shall, to the maximum extent feasible, provide
for the hiring of employees who reside in the vicinity of NSP3 projects
or contract with small businesses that are owned and operated by
persons residing in the vicinity of such project, including information
on existing local ordinances that address these requirements;
vi. The procedures used to create preferences for the development
of affordable rental housing developed with NSP3 funds; and
vii. Whether the funds used for the activity are to count toward
the requirement to provide benefit to low-income persons (earning 50
percent or less of area median income).
d. The action plan narrative should specifically address how the
grantee's program design will address the local housing market
conditions.
e. Information on how to contact grantee program administrators, so
that citizens and other interested parties know whom to contact for
additional information.
3. Continued affordability. Grantees shall ensure, to the maximum
extent practicable and for the longest feasible term, that the sale,
rental, or redevelopment of abandoned and foreclosed-upon homes and
residential properties under this section remain affordable to
individuals or families whose incomes do not exceed 120 percent of area
median income or, for units originally assisted with funds under the
requirements of section 2301(f)(3)(A)(ii) of HERA, as amended, remain
affordable to individuals and families whose incomes do not exceed 50
percent of area median income.
a. In its NSP action plan substantial amendment, a grantee will
define ``affordable rents'' and the continued affordability standards
and enforcement mechanisms that it will apply for each (or all) of its
NSP activities. HUD will consider any grantee adopting the HOME program
standards at 24 CFR 92.252(a), (c), (e), and (f), and 92.254, to be in
minimal compliance with this standard and expects any other standards
proposed and applied by a grantee to be enforceable and longer in
duration. (Note that HERA's continued affordability standard is longer
than that required of subrecipients and participating units of general
local government under 24 CFR 570.503 and 570.501(b).)
b. The grantee must require each NSP-assisted homebuyer to receive
and complete at least 8 hours of homebuyer counseling from a HUD-
approved housing counseling agency before obtaining a mortgage loan. If
the grantee is unable to meet this requirement for a good cause (e.g.,
there are no HUD-approved housing counseling agencies within the
grantee's jurisdiction, or there are no HUD-approved housing counseling
agencies within the grantee's jurisdiction that engage in homebuyer
counseling), the grantee may submit a request for an exception to this
requirement to the responsible HUD field office, and the HUD field
office has the authority to grant an exception for good cause. The
grantee must ensure that the homebuyer obtains a mortgage loan from a
lender who agrees to comply with the bank regulators' guidance for non-
traditional mortgages (see, Statement on Subprime Mortgage Lending
issued by the Office of the Comptroller of the Currency, Board of
Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Department of the Treasury, and National Credit Union
Administration, available at https://www.fdic.gov/regulations/laws/rules/5000-5160.html). Grantees must design NSP programs to comply with
this requirement and must document compliance in the records, for each
homebuyer. Grantees are cautioned against providing or permitting
homebuyers to obtain subprime mortgages for whom such mortgages are
inappropriate, including homebuyers who qualify for traditional
mortgage loans.
4. Citizen participation alternative requirement. HUD is providing
an alternative requirement to 42 U.S.C. 5304(a)(2) and (3), to expedite
distribution of grant funds and to provide for expedited citizen
participation for the NSP substantial amendment. Provisions of 24 CFR
91.105(k), 91.115(i), 570.302 and 570.486, with respect to following
the citizen participation plan, are waived to the extent necessary to
allow implementation of the requirements below.
a. Initial Allocation. To receive its grant allocation, a grantee
must submit to HUD for approval an NSP3 application by March 1, 2011.
This submission will include a signed SF-424, signed certifications,
and a substantial action plan amendment or abbreviated plan meeting the
requirements of paragraph b below. (24 CFR 91.505 is waived to the
extent necessary to require submission of the substantial amendment to
HUD for approval in accordance with this notice.)
Reallocation. To receive an NSP reallocation, a grantee must submit
to HUD for approval an NSP application by the deadline indicated in a
reallocation announcement. This submission will include a signed
standard Federal form SF-424, signed certifications, and a substantial
action plan amendment or abbreviated plan meeting the requirements of
paragraph B.3.b below. (24 CFR 91.505 is waived to the extent necessary
to require submission of the substantial amendment to HUD for approval
in accordance with this notice.)
b. Each grantee must prepare and submit its annual Action Plan
amendment or abbreviated plan to HUD in accordance with the
consolidated plan procedures under the CDBG program as modified by this
notice, or HUD will reallocate the funds allocated for that grantee.
HUD is providing alternative requirements to 42 U.S.C. 5304(a)(2) and
waiving 24 CFR 91.105(c)(2), 91.105(k), 91.115(c)(2), and 91.115(i) to
the extent necessary to allow the grantee to provide no fewer than 15
calendar days for citizen comment (rather than 30 days) for its initial
NSP submission and any subsequent substantial NSP action plan
amendment, and to require that, at the time of submission to HUD, each
grantee post its approved action plan amendment and any subsequent NSP
amendments on its official Web site along with a summary of citizen
comments received within the 15-day comment period. After HUD processes
and approves the plan amendment and both HUD and the grantee have
signed the grant agreement, HUD will establish the grantee's line of
credit in the amount of funds included in the Action Plan amendment, up
to the allocation amount.
5. Joint requests. To expedite the use of funds, HUD is providing
an alternative requirement to 42 U.S.C. 5304(i) and is waiving 24 CFR
570.308 to the extent necessary to allow for additional joint programs
described below.
a. Unit of General Local Government Joint Agreements. Two or more
contiguous jurisdictions that are eligible to receive a NSP allocation
and are located in the same metropolitan area
[[Page 64329]]
may enter into joint agreements. All members to the joint agreement
must be eligible to receive NSP1 or NSP3 funds, and one unit of general
local government must be designated as the lead entity. The lead entity
must execute the NSP grant agreement with HUD. Consistent with 24 CFR
570.308, the lead entity must assume responsibility for administering
the NSP grant on behalf of all members, in compliance with applicable
program requirements. The lead entity's substantial amendment to the
action plan or abbreviated plan will include all participating
communities.
b. Joint agreements with a state. Any jurisdiction that is eligible
to receive an NSP allocation may enter into a joint agreement with its
state. The state shall be the lead entity and must assume
responsibility for administering the NSP grant on behalf of the local
government, in compliance with applicable program requirements. The
substantial amendment to the state's action plan will include any
participating unit of general local government.
c. Local jurisdictions receiving reallocation funds may enter into
joint agreements in accordance with paragraph B.5.a. or b., regardless
of whether the local jurisdiction had a joint agreement for the
original NSP allocation.
6. Effect of existing cooperation agreements governing joint
programs and urban counties for NSP3 (see NSP1 Notice for parallel
language for NSP1 grantees). Any cooperation agreement between a unit
of general local government and a county, concerning either a joint
program or participation in an urban county under 24 CFR 570.307 or
570.308, and governing CDBG funds appropriated for Federal FY 2010,
will be considered to incorporate and apply to NSP3 funding. Any such
cooperation agreements will continue to apply to the use of NSP3 funds
until the NSP3 funds are expended and the NSP3 grant is closed out.
Grantees should note that certain provisions in existing cooperation
agreements that govern CDBG funding may be inconsistent with parts of
HERA, the Recovery Act, the Dodd-Frank Act or this notice. For
instance, set minimum and/or maximum allocation amounts may conflict
with priority distributions to areas of greatest need identified in the
grantee's action plan substantial amendment. Conforming amendments
should be made to existing cooperation agreements, as necessary, to
comply with NSP statutory requirements and this notice.
C. Reimbursement for Pre-Award Costs
Background
NSP grantees will need to move forward rapidly to prepare the NSP
substantial amendment or abbreviated plan and to undertake other
administrative actions, including environmental reviews, as soon as
allocations are known. Therefore, HUD is granting permission to states
and jurisdictions receiving a direct allocation of NSP funds to incur
pre-award costs as if each was a new grantee preparing to receive its
first allocation of CDBG funds.
Requirement
HUD is waiving 24 CFR 570.200(h) to the extent necessary to grant
permission to jurisdictions receiving a direct NSP allocation under
this notice to incur pre-award costs as if each was a new grantee
preparing to receive its first allocation of CDBG funds. Similarly, in
accordance with OMB Circular A-87, Attachment B, paragraph 31, HUD is
allowing states to incur pre-award costs as if each was a new grantee
preparing to receive its first allocation of CDBG funds. NSP grantees
will be allowed to incur costs necessary to develop the NSP substantial
action plan amendment and undertake other administrative actions
necessary to receive its first grant, prior to the costs being included
in the final plan, provided that the other conditions of 24 CFR
570.200(h) are met. (For units of general local government applying to
the state (including entitlements not receiving a direct NSP allocation
under this notice), 24 CFR 570.489(b) applies unmodified. Units of
general local government receiving direct NSP allocations may incur
pre-award costs as would an entitlement community.)
D. Grantee Capacity and Grant Conditions
Background
In the October 6, 2008 Notice, HUD encouraged each local
jurisdiction receiving an allocation to carefully consider its
administrative capacity to use the funds within the statutory deadline.
To support this consideration, HUD will provide each grantee a self-
assessment tool that grantees may find useful in better understanding
their capacity to undertake and manage NSP activities. This is
essentially the same self-assessment tool that is used for NSP
Technical Assistance purposes and it will allow HUD to more rapidly
identify capacity gaps and technical assistance needs and to provide
appropriate technical assistance. Although HUD suggests that every NSP
grantee complete and submit the self-assessment with its substantial
amendment or abbreviated plan, HUD will require some grantees to
complete and submit such a self-assessment as a special condition of
receiving funding.
Requirement
For NSP grantees that HUD determines are high risk in accordance
with 24 CFR 85.12(a), HUD will apply additional grant conditions in
accordance with 24 CFR 85.12(b).
E. Income Eligibility Requirement Changes
Background
The NSP program includes two low- and moderate-income requirements
at HERA section 2301(f)(3)(A) that supersede existing CDBG income
qualification requirements. Under the heading ``Low and Moderate Income
Requirement,'' HERA states that:
all of the funds appropriated or otherwise made available under this
section shall be used with respect to individuals and families whose
income does not exceed 120 percent of area median income.
This provision does two main things. First, for the purposes of
NSP, it effectively supersedes the overall benefit provisions of the
HCD Act and the CDBG regulations, which allow up to 30 percent of a
grant to be used for activities that meet a national objective other
than low- and moderate-income benefit. Thus, NSP allows the use of only
the low- and moderate-income benefit national objective. Activities may
not qualify under NSP using the ``prevent or eliminate slums and
blight'' or ``address urgent community development needs'' objectives.
Second, this provision also redefines and supersedes the definition
of ``low- and moderate-income,'' effectively allowing households whose
incomes exceed 80 percent of area median income but do not exceed 120
percent of area median income to qualify as if their incomes did not
exceed the published low- and moderate-income levels of the regular
CDBG program. To prevent confusion, HUD will refer to this new income
group as ``middle income,'' and keep the regular CDBG definitions of
``low-income'' and ``moderate income'' in use. Further, HUD will
characterize aggregated households whose incomes do not exceed 120
percent of median income as ``low-, moderate-, and middle-income
households,'' abbreviated as LMMH. For the purposes of NSP only, an
activity may meet the HERA low- and moderate-income national objective
if the assisted activity:
[[Page 64330]]
Provides or improves permanent residential structures that
will be occupied by a household whose income is at or below 120 percent
of area median income (abbreviated as LMMH);
Serves an area in which at least 51 percent of the
residents have incomes at or below 120 percent of area median income
(LMMA); or
Serves a limited clientele whose incomes are at or below
120 percent of area median income (LMMC).
HUD will use the parenthetical terms above to refer to NSP national
objectives in program implementation, to avoid confusion with the
regular HCD Act definitions.
Land banks are not allowed in the regular CDBG program because of
the very high risk that the delay between acquiring property and
meeting a national objective can be excessively long, attenuating the
intended CDBG program benefits by delaying benefit far beyond the
annual or even the 5-year consolidated plan cycles. In the regular CDBG
program (and in NSP other than in an eligible land-bank use), a
property acquisition activity is dependent on the subsequent re-use of
the property meeting a national objective in order to demonstrate
program compliance. Given this, the HERA direction that assistance to
land banks is an eligible use of NSP funds requires an alternative
requirement and policy clarification.
For grantees choosing to assist land banks or demolition of
structures with NSP funds, the change to the income qualification level
for low-, moderate- and middle-income areas will likely include most of
the neighborhoods where property stabilization is required. If an
assisted land bank is not merely acquiring properties, but is also
working in an area in which other activities are being carried out that
are intended to arrest neighborhood decline, such as maintenance,
demolition, and facilitating redevelopment of the properties, HUD will,
for NSP-assisted activities only, accept that the acquisition and
management activities of the land bank may provide sufficient benefit
to an area generally (as described in 24 CFR 570.208(a)(1) and
570.483(b)(1)) to meet a national objective (LMMA) prior to final
disposition of the banked property. HUD notes that the grantee must
determine the actual service area benefiting from a land bank's
activities, in accordance with the regulations.
However, HUD does not believe the benefits of just holding property
are sufficient to stabilize most neighborhoods or that this is the best
use of limited NSP funds absent a re-use plan. Therefore, HUD requires
that a land bank may not hold a property for more than 10 years without
obligating the property for a specific, eligible redevelopment of that
property in accordance with NSP requirements.
Note that if a state provides funds to an entitlement community,
the entitlement community must apply the area median income levels
applicable to its regular CDBG program geography and not the ``balance
of state'' levels.
Other than the change in the applicable low- and moderate-income
qualification level from 80 percent to 120 percent and this notice's
change to the calculation at 570.483(b)(3), the area benefit, housing,
and limited clientele benefit requirements at 24 CFR 570.208(a) and
570.483(b) remain unchanged, as does the required documentation.
The other NSP low- and moderate-income related provision, as
modified by the Dodd-Frank Act, states that:
``not less than 25 percent of the funds appropriated or otherwise
made available under this section shall be used to house individuals
or families whose incomes do not exceed 50 percent of area median
income.''
The Dodd-Frank Act struck language in HERA that specified that
funds meeting the 25 percent requirement must be used specifically for
the purchase and redevelopment of abandoned and foreclosed homes or
residential properties. This means that, as of the effective date of
the Dodd-Frank Act, any NSP eligible activity used to house individuals
or families at or below 50 percent area medium income may be used to
satisfy this requirement (i.e., vacant properties that are not
abandoned or foreclosed may be used to meet the requirement as well as
eligible commercial properties that are reused to house individuals and
families at or below 50% AMI). However, NSP1 and NSP2 funds already
obligated or expended prior July 21, 2010, do not retroactively satisfy
this requirement.
HUD advises grantees to take note of this threshold as they design
NSP activities. This provision does not have a parallel in the regular
CDBG program. Grantees must document that an amount equal to at least
25 percent of a grantee's NSP grant (initial allocation plus any
program income) has been budgeted in the initial approved action plan
substantial amendment or abbreviated plan for activities that will
provide housing for income-qualified individuals or families. Prior to
and at grant closeout, HUD will review grantees for compliance with
this provision by determining whether at least 25 percent of grant
funds have been expended for housing for individual households whose
incomes do not exceed 50 percent of area median income.
HUD is providing a waiver and alternative requirement to allow
grantees to determine low- and moderate income benefit on a unit basis
to allow greater support of mixed income housing than the structure
basis required by 24 CFR 570.483(b)(3). (Under the cited regulation,
the general rule is that at least 51 percent of the residents of an
assisted structure must be income eligible.) Under the unit approach,
one or more of the units in a structure must house income-eligible
families, but the remainder of the units may be market rate, so long as
the proportion of assistance provided compared to the overall project
budget is no more than the proportion of units that will be occupied by
income-eligible households compared to the number of units in the
overall project. Under the unit approach, the number of income-eligible
units is proportional to the amount of assistance provided. Note that
this approach may only be used if the units are generally comparable in
size and finishes. Based on HUD experience, this approach is generally
more compatible with large-scale development of mixed-income housing
than the structure approach under which a dollar of CDBG assistance to
a structure means that 51 percent of the units must meet income
requirements.
For the purposes of NSP, adopting the unit basis continues to
benefit individuals and families whose income does not exceed 120
percent of area median income by limiting the proportion of the funding
to the proportion of units that are being assisted with NSP funds. This
approach also helps to avoid displacing existing over-income tenants in
a building being treated with NSP. Finally, it promotes the type of
mixed-income developments that experience shows to be more successful
both economically and socially. Therefore, the waiver and alternative
requirements allow the grantee a choice. The grantee may measure
benefit within a housing development project (1) according to the
existing CDBG requirements, (2) according to the HOME program
requirements at 24 CFR 92.205(d) or (3) according to the modified CDBG
alternative requirements specified in this notice, which extend the
CDBG exception noted above. The grantee must select and use just one
method for each project.
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Requirements
1. Overall benefit supersession and alternative requirement. The
requirements at 42 U.S.C. 5301(c), 42 U.S.C. 5304(b)(3)(A), 24 CFR
570.484 (for states), and 24 CFR 570.200(a)(3) that 70 percent of funds
are for activities that benefit low- and moderate-income persons are
superseded and replaced by section 2301(f)(3)(A) of HERA. One hundred
percent of NSP funds must be used to benefit individuals and households
whose income does not exceed 120 percent of area median income. NSP
shall refer to such households as ``low-, moderate-, and middle-
income.''