HUD awards $3.9 billion for community stabilization

$3.92 billion in emergency funds will soon be available to states and localities from the Housing and Economic Recovery Act of 2008 Neighborhood Stabilization Program. The funds, treated as emergency Community Development Block Grant funds, will allow states, tribes and localities to purchase foreclosed properties that might otherwise become abandoned and sources of blight within their communities.

The purchase of these homes can also help stem the decline of house values of neighboring homes. Each state has been given a minimum allocation of $19.5 million, which is 0.5 percent of the total amount, which is the amount Hawaii will receive. States can receive more funding based on a formula of the percent of foreclosures, sub-prime mortgages, mortgage defaults and delinquencies.

This investment is estimated to encourage:

• $10 billion in economic activity nationwide
• The creation of more than 32,000 jobs
• More than $800 million in one-time revenue for all levels of government
• The restoration of nearly $60 million per year in real estate tax collections by local governments

Requirements and eligible uses -- The state must create its own program and funding priorities. Advocates for assets, homeownership and community economic development have the opportunity to help set priorities for the funds in their state. Eligible activities include:

• Acquiring land and property
• Demolishing or rehabilitating abandoned properties
• Redeveloping vacant or blighted property
• Providing down payment and closing cost assistance to low- to moderate-income homebuyers whose incomes are 120 percent of the area median income and below.
• Creating land banks to assemble, temporarily manage and dispose of vacant land for the purpose of stabilizing neighborhoods and encouraging redevelopment.

The state has until Dec. 1 to submit a proposed Action Plan Amendment application to HUD. The proposal must be in the form of an amendment to the CDBG Annual Action Plan outlining how funds will be distributed and used. It must also publish the plan on the official state website for no less than 15 calendar days prior to public comment.