Q: What is the Neighborhood Stabilization Program?
A: Congress created the first round of the Neighborhood Stabilization Program (NSP1) as part of the Housing and Economic Redevelopment Act of 2008. The U.S. Department of Housing and Urban Development (HUD) administers the program and considers it to be governed by Community Development Block Grant (CDBG) regulations as amended by each of the subsequent NSP statutes. NSP grant funds may be used to stabilize neighborhoods – chiefly through acquiring and developing already foreclosed upon properties that might otherwise become abandoned or blighted. There have been two additional rounds of NSP funding (NSP2 and NSP3). New Hampshire received an award of $19.6 million under NSP1 in March 2009 and has been asked to submit an Action Plan to qualify for an additional $5 million under NSP3. The Action Plan explains how CDFA will administer the additional award.

Q: What communities can qualify for this money?
A: HUD requires that NSP funds be targeted to communities with high rates of foreclosure, high rates of subprime loans, and the likelihood of future high rates of foreclosure. There are 48 census tracts that meet HUD’s threshold requirements for eligibility in NH. Neighborhoods in those 48 census tracts or other combinations of census tracts achieving a minimum NSP Needs Score of 13 are eligible for NSP3 funding. To determine if your neighborhood is eligible please go to http://www.huduser.org/nsp/nsp3.html and look up your neighborhood. Click here for a map of the 48 eligible tracts in New Hampshire.

Eligible applicants from within eligible communities include municipalities, non-profit affordable housing developers, for-profit affordable housing developers, and other service providers.

Eligible communities under NSP3 are:

Acworth Alexandria Barnstead Berlin Cambridge Charlestown Claremont Colebrook Columbia Concord Derry Dix's Grant Drummer Errol Erving's Location Farmington Franklin Goshen Grafton

Haverhill Hebron Hillsborough Hinsdale Kilkenny Laconia Langdon Lempster Londonderry Manchester Marlborough Middleton Milan Millsfield Milton Nashua New Durham Newport Northfield

Northumberland Odell Township Orange Orford Ossipee Piermont Rochester Second College Somersworth Stark Strafford Success Troy Unity Washington Wentworth Whitefield Winchester Windsor

Under NSP1 eligible communities were broken out into two groups: Tier 1 – Berlin, Derry, Manchester, Nashua, and Rochester. Tier 2 – Barnstead, Claremont, Franklin, Farmington, Hillsborough, Laconia, Newport, Ossipee, Pittsfield, Raymond, Wakefield, and Whitefield.

Q: There’s an NSP1 and NSP3. Was there ever an NSP2?
A: Yes, in 2009, NSP2 was established under the American Recovery and Reinvestment Act (ARRA); however, NSP2’s focus was on urban housing not common to NH cities. Under these new guidelines, it was determined that NH would likely not qualify for a significant award under NSP2.

Q: Are Entitlement Communities eligible to apply for these funds?
A: New Hampshire’s Entitlement Communities (defined by HUD as Dover, Manchester, Nashua, Portsmouth, and Rochester) are eligible to apply for funding through the Neighborhood Stabilization Program.

Q: What is an Action Plan and how is it being formed?
A: For New Hampshire to receive the Neighborhood Stabilization Funds, CDFA must submit an – Action Plan – to HUD by March 1, 2011. The Action Plan provides details of how the program will work in the granite state, e.g. who can apply and how projects will be funded.

The public is invited to offer comments on the draft Action Plan between December 23, 2010 and January 21, 2011. CDFA held a hearing on the draft Action Plan on January 5, 2011.

CDFA will review all public comments and respond to them. The final draft of the plan, incorporating and responding to public comments, will be presented to the CDBG Advisory Committee and the CDFA Board of Directors for approval on February 8, 2011. Then, it will be presented to the Governor for signature and then submitted to HUD.

Q: Where can I get detailed program rules for the Neighborhood Stabilization Program?
A: Detailed and final HUD regulations are complete and can be found on the Neighborhood Stabilization Overview section of the CDFA website at www.nhcdfa.org. See the front page of the NSP section of this web site. New Hampshire level program rules will be established in the Action Plan.

Q: What can the money be used for?
A: HUD requires:

At least 25% of the NSP funds must be used for the purchase and redevelopment of homes and properties that will be affordable to and occupied by individuals and families with incomes of 50% AMI (Area Median Income) or less;

All NSP funds must be used to serve households earning 120% of AMI or less.Grantees may use NSP funds to:

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.

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.

Establish land banks for homes that have been foreclosed upon.

Demolish blighted structures.

Redevelop demolished or vacant properties.

Note: All NSP3 funds must be used to support housing activities.

In 2008 and 2009 when New Hampshire developed the NSP1 Action Plan and conducted an extensive public input process, the public did not express an interest in Use C, Establish Land Banks. Therefore, CDFA did not include this use in the first Action Plan, nor will it include this use in the current Action Plan.

Q: If my community wants to purchase some foreclosed upon homes, does it matter how much we buy them for?
A: Yes. Every building purchased with NSP funds must be purchased for at least 1% less than the appraised value. The plan for meeting this acquisition requirement is addressed in the Action Plan.

Q: Could we use these funds to purchase dilapidated buildings that are not in foreclosure or abandoned?
A: Yes under Uses D (Demolish Blighted Structures) and E (Redevelop Vacant or Demolished Properties) above. Any programs under Uses A (Financing Mechanisms) or B (Purchase and Rehab Residential Properties) must be targeted at buildings that are foreclosed upon or abandoned. The foreclosure can be a funder foreclosure or a tax lien foreclosure.

Q: Could we use the funds to demolish or rehabilitate non-residential property?
A: Yes, under Uses D (Demolish Blighted Structures) and E (Redevelop Vacant or Demolished Properties) above. Uses A (Financing Mechanisms) or B (Purchase and Rehab Residential Properties) require that properties be residential in nature.

Q: Can we tear buildings down with these funds?
A: Yes. Demolition of blighted buildings (is an allowable use of NSP funds under Use D). That said, the focus of NSP funds is to stabilize neighborhoods, not to rescue or raze single buildings per se. Communities should be thinking about neighborhood stability and how any proposed building renovation would contribute to that broader stability.

Q: Could we purchase foreclosed homes and then rent them, rather than re-sell them?
A: Yes.

Q: Does it matter how much we sell or rent any purchased buildings for in the end, as long as they help the neighborhood?
A: Yes. At least 25% of the state’s NSP funds must be used for the purchase and redevelopment of homes and properties that will be affordable for individuals and families with incomes not greater than 50% AMI (Area Median Income). All properties funded with NSP dollars must be affordable to households earning 120% of AMI or less. Rental and for-sale properties will be required to remain affordable for at least 20 years.

Q: I am in jeopardy of losing my home. How can this program help me?
A: The Neighborhood Stabilization Program is not designed for individuals looking for foreclosure assistance. The program is for properties that have already been foreclosed upon. People looking for individual assistance should see our referral call list on our website.

Q: When can we apply for funds?
A: TCDFA requests interested communities send a letter of intent to apply for funds by January 31, 2011 to neighborhood@nhcdfa.org. The letter of intent guidelines are posted on the CDFA documents page. A small number of communities selected from the pool of interested applicants will be invited to submit final applications, which will be due March 14, 2011.

Recycled NSP1 funds will be available to Tier 2 communities in mid 2011 or 2012.
Recycled NSP3 funds are likely to follow in 2013-2014 and will be available to all eligible communities.

Q: Who will be reviewing the applications and deciding who gets Neighborhood Stabilization Program funds?
A: The use of funds, application process, and the allocation process will be determined in the Action Plan.

Q: Why is the Community Development Finance Authority administering the program?
A: The Community Development Finance Authority is the organization that administers the statewide (Small Cities) Community Development Block Grant program. The Neighborhood Stabilization Program is funded through the CDBG program.

Q: Who can I contact for more information?
A: You can call CDFA at (603) 226-2170, extensions 105 or 123. You can also email us at neighborhood@nhcdfa.org.

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Last updated January 18, 2011