Neighborhood Stabilization Program (NSP)
The Neighborhood Stabilization Program (NSP) was established for the purpose of stabilizing communities that have suffered from foreclosures and abandonment. Through the purchase and redevelopment of foreclosed and abandoned homes and residential properties, the goal of the program is being realized. NSP1, a term that references the NSP funds authorized under Division B, Title III of the Housing and Economic Recovery Act (HERA) of 2008, provides grants to all states and selected local governments on a formula basis. NSP2, a term that references the NSP funds authorized under the American Recovery and Reinvestment Act (the Recovery Act) of 2009, provides grants to states, local governments, nonprofits and a consortium of nonprofit entities on a competitive basis.
Under NSP1, HUD allocated $3.92 billion on a formula basis to 309 grantees including 55 states and territories and 254 selected local governments. The program was designed to stabilize communities across America hardest hit by foreclosures. Grant agreements for these funds have already been signed. Under the allocation formula, the City of Rialto will receive $5,461,574 in NSP funds. The City Council held a public hearing on November 25, 2008 to consider the approval of the substantial amendment to its Consolidated Plan – 2008-09 One-Year Action Plan. The public was invited to provide input as to the proposed use of the NSP funds. In addition, the City made the substantial amendment available for a period of 30-days to allow the public to comment on the plan.
Upon approval by the City Council, the substantial amendment was to HUD for their review and approval. The amendment has been approved by HUD and can be reviewed by following the link below. The projects and activities proposed for funding under the NSP are as follows:
Acquisition/Rehabilitation and Resale (NSP-1):
Proposed Budget: $2,550,023
The City of Rialto will use funds from the NSP to facilitate the acquisition, rehabilitation, & resale of abandoned and foreclosed single-family homes, including condominiums and townhomes. Acquisitions will include individual units and an attempt to negotiate, with lenders and financial institutions, a discounted bulk purchase of foreclosed properties. The City will follow the required NSP purchase discount requirements at a minimum of 1%.
Acquisition/Rehabilitation and Rent Program (NSP-2 ):
Proposed Budget: $1,365,394
The City of Rialto will use a minimum of 25% of allocated NSP funds to facilitate the acquisition, rehabilitation, and rental of multi-family or single-family properties for households earning 50% or less of the area median income as an affordable housing project. The City and/or their Development Partners will negotiate with lenders and financial institutions to purchase vacant and abandoned foreclosed properties at the required NSP discount.
Downpayment Assistance Program (NSP-3 ):
Proposed Budget: $1,000,000
The City will use NSP funds to provide down payment assistance loans to households earning 120% of Area Median Income or below (including those households at 50% AMI or below). The loans will provide up to 10% of the purchase price in the form of a silent second deferred loan. Terms and conditions of these loans will be subject to CALHFA financing in an effort to leverage additional funding and provide below market, 1st mortgage loan financing to the home buyer. Homebuyers will be required to obtain a low-risk mortgage loan for their 1st trust deed financing, preferably at a fixed interest rate.
Administration (NSP-4 ):
Proposed Budget: $546,157
The City will use up to 10% of the NSP funds for administration of the various programs and projects stated in the Rialto NSP Action Plan. Furthermore, if any program income is received, the City may elect to utilize 10% of that amount for future administration if needed.
Related Content: