The Neighborhood Stabilization Program
In July 2008, Congress passed the Housing & Economic Recovery Act of 2008, which included $3.92 billion for the Neighborhood Stabilization Program (NSP). In January 2009, HUD approved the City of Chicago's NSP application and awarded a grant of $55.2 million for local projects.
The goal of the program is to stabilize neighborhoods by getting vacant foreclosed homes up-to-code and occupied as quickly as possible in targeted areas. The city expects to assist up to 2,500 units over the next 3 to 5 years.
HUD Neighborhood Stabilization Program (NSP) Basic Requirements
NSP Eligible Uses for Vacant, Foreclosed Homes
* Establish financing mechanisms for purchase & redevelopment
* Purchase & rehab to sell, rent, or redevelop
* Establish land banks
* Demolish & redevelop, where appropriate
* All funds must be used in "areas of greatest need," as defined by:
* Number of completed foreclosures
* Subprime lending activity
* Likelihood of an increase in completed foreclosures
* Must obligate entire $55.2 million within 18 months of signing grant agreement
* Must use funds to serve households at or below 120% AMI ($90,500 for a family of four), with 25 percent of funds targeted to households at or below 50 percent AMI ($37,700 for a family of four).
City of Chicago's NSP Strategy
* Gain economies of scale with one lead entity to be responsible for:
* Negotiating bulk acquisitions with lending institutions
* Holding and maintaining properties in the short-term
* Overseeing disposition, working with large network of development partners
* Mercy Portfolio Services (MPS), a subsidiary of Mercy Housing Inc., will serve in this role.
* Disposition options include: homeownership, lease-purchase, rental, demolition.
Areas of Greatest Need and Target Blocks
* Foreclosures are threatening investments that have been made over the past two decades. Interventions must be strategic and targeted to make an impact.
* Identified 25 community areas as NSP areas of greatest need, based on HUD criteria
* Areas of greatest need concentrated on South and West sides
* Target blocks within areas of greatest need will be identified based on proximity to recent public and private investments (e.g., schools, police stations, retail development), other community anchors and job centers (universities, hospitals, commercial corridors, etc.), and ability to acquire majority of vacant foreclosed properties on a block to make an impact.
* All hands on deck: Rolling RFQ process to become an approved NSP developer.
* Extent of participation based on criteria such as: previous development experience, readiness, financial feasibility, and property management capacity (for rental)
* Approved developers can submit proposals for acquired NSP properties.
* RFQ released March 31, 2009.
NSP 2 Application
The City of Chicago has submitted an application for Neighborhood Stabilization Program 2 (NSP2) funds. Read it here.
For more information, contact:
Chicago Department of Community Development