CaseStudy:Neighborhood Stabilization Program Grants

On July 30, 2008, the President signed Public Law 110-289, “Emergency Assistance for the Redevelopment of Abandoned and Foreclosed Homes” under Title III of the Housing and Economic Recovery Act of 2008 (HERA), which established the Neighborhood Stabilization Program (NSP). The law directs the Department of Housing and Urban Development (HUD) to distribute $4 billion to states and local communities to assist in the stabilization of neighborhoods most impacted by housing foreclosures.

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With the passage of the American Recovery and Reinvestment Act (ARRA) in February 2009, an additional $1.98 billion has been devoted to a second round of NSP grants. Unlike the first round of grants, which were based on allotments reflecting the relative magnitude of the foreclosure crisis across communities nationwide, round two NSP grants will be competitive. Funding decisions will, according to HUD, be awarded based on “grantee capacity to execute projects, leveraging potential, and concentration of investment to achieve neighborhood stabilization.”

The NSP was established to administer the provisions of the law and provide emergency funding through HUD’s Community Development Block Grant (CDBG) program. With only 60 days from the July 30, 2008, notice to create a formula and program rule, HUDworked closely with the Advisory Council on Historic Preservation (ACHP), the National Conference of State Historic Preservation Officers, and the National Trust for Historic Preservation to disseminate information to State Historic Preservation Officers (SHPOs) and potential recipients, including Tribal Historic Preservation Officers and Indian tribes. HUD posted a Web site dedicated to NSP that provided an explanation of the program to the potential NSP grant recipients, which number approximately 300 nationwide.

Soon after establishment of the NSP, HUD developed training materials and conducted training in a number of venues, including high- impact areas in Ohio,California, and Florida. Amended Action Plans were required of each participant in the NSP. The plans were required to include eligible activities that meet the three main purposes of NSP: financing of housing rehabilitation, land banking, and demolition of foreclosed properties that are vacant and abandoned. Only Action Plans submitted by the December 1, 2008, deadline could be considered, and unrewarded funds were to be reallocated to other eligible recipients. HUD has observed that cities have been focusing on recently acquired new homes and on older and decaying neighborhoods.

Efforts are currently underway in several states to adapt existing CDBG Programmatic Agreements (PAs), at both the community and state levels, to encompass NSP activities. SHPOs, who in some instances are able to build staff capacity through NSP administrative or project delivery funds, are taking creative approaches to the streamlining of Section 106 in anticipation of high volumes of HERA and ARRA project reviews and PAs, including Web-based compliance initiatives currently being developed by the Ohio and Virginia SHPOs.

The ACHP is working with several states and communities to develop a variety of approaches, including PA and Memorandum of Agreement templates and adaptation of existing CDBG PAs to include NSP activities. The ACHP will post on its Web site a list of executed PAs so that preservation partners will have up-to-date information on state and local governments’ compliance with Section 106 for the NSP.

Waivers of environmental review are not applicable to the NSP; therefore, each grantee must comply with Section 106. Grantees must act within the compressed time frames of the program, which requires funds to be spent within 18 months of HUD’s approval of an Action Plan. The additional funding under ARRA will extend the NSP beyond the 18-month period of round one and establishes additional timelines within a three-year period from enactment of ARRA for round two.