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Michigan Neighborhood Stabilization Program. December 3, 2008. First Steps. Action Plan published 11/5/08 Incorporate public comment and finalize: 11/24/08 Submit to HUD: 12/1/08 - PowerPoint PPT Presentation
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OV # - 1
MichiganNeighborhood Stabilization Program
December 3, 2008
OV # - 2
First Steps
– Action Plan published 11/5/08
– Incorporate public comment and finalize:
11/24/08
– Submit to HUD: 12/1/08
– Michigan has 18 months from HUD approval to
get all funds committed to projects (i.e., under
contract to specific address)
OV # - 3
Distribution of Funds
o Data was developed on relative need in various parts of
the state.
o Activities to be funded and production goals were
incorporated into the Action Plan.
o Plan does not set minimums or maximums for any
communities, regions, or specific activities.
o Applicants will still need to address how the project meets
the greatest needs in their part of the state.
OV # - 4
Distribution of Funds
• MSHDA Action Plan
• MSHDA has identified 17 high-need cities for expedited access
to funds
• These cities are CDBG entitlements that would have
received $500,000-$2 million direct from HUD, except for
HUD’s $2 million NSP cut-off (plus two Cities of Promise)
• These cities will have expedited access to up to $21.75
million of MSHDA’s allocation including 10% admin
• Application will basically follow the HUD NSP template.
OV # - 5
Distribution of Funds
• MSHDA has identified factors to document relative need
statewide.
– Foreclosure rates
– Vacancy rates
– Poverty rates
• Developed scores for all areas of the state, and proportioned
another $59 million for competitive funding
• $10 million for projects demonstrating innovation and
addressing greatest needs
• Approximately $7.5 million for admin
OV # - 6
Eligible Activities
A. Establishing financing mechanisms for the purchase and
redevelopment of abandoned and foreclosed upon
homes
B. Purchase and rehabilitation of homes and residential
properties that have been abandoned or foreclosed for
sale or rental
C. Acquisition and disposition of property by land banks
D. Demolition of blighted structures
E. Redevelopment of demolished or vacant property
OV # - 7
NSP Basics
• Income Limits
– 120% AMI
– 25% of funds must provide housing for households at or
below 50% AMI
• Purchase at a discount
– All foreclosed property purchased must be acquired at a
discount
– HUD is looking for an average of 15% discount from
appraised value, given current condition
OV # - 8
• Rehab standard
– Must meet Michigan rehab code
– May include energy efficiency and/or green building
• Sale for owner-occupancy must be for amount at or less than
the total project cost
– But impact of HUD’s program income requirements on future
home equity is still unclear
• Up to 10 percent admin
– MSHDA expects to fund developer/delivery fees where
appropriate
OV # - 9
Ineligible Activities
• Generally, if an activity is ineligible under CDBG, it is
ineligible under NSP
• Not eligible under HERA:
– Foreclosure prevention
– Demolition of non-blighted structures
– Purchase of properties not abandoned or foreclosed upon
OV # - 10
A. Financing Mechanisms
• Provide interest rate write-downs on the
redevelopment of foreclosed, abandoned and vacant
property for rent to persons with incomes <50
percent AMI
• Provide down payment assistance for buyers of
NSP-assisted properties; buyers eligible up to 120
percent AMI
OV # - 11
B. Acquisition and Redevelopment
• Nonprofits and local governments, in target areas
• Redevelopment of SF homes
– May include both homeownership and rental moving to
homeownership, such as lease-purchase models
• Rental management of SF homes under HOME rules
– Rentals would be placed under one management entity in
each market
– Rental tenants selected based on being likely to qualify
for mortgage within three years
OV # - 12
B. Displacement Prevention
• Enable purchase by nonprofits of homes deeded
back in lieu of foreclosure by approved households
– Nonprofits would rent to foreclosed household to avoid
displacement
– NSP-funded counseling to support eventual repurchase
of home by household
– Rent would include a purchase escrow to assist the
eventual purchaser of the unit
OV # - 13
C. Land Banks
• Funding for land banks for acquisition, maintenance,
and disposition of properties acquired under NSP
OV # - 14
D. Demolition
• Michigan Land Bank properties
– Includes projects implemented by workforce
development programs (can include
maintenance)
• Demolition of blighted properties in target
areas by local governments, nonprofits, for-
profits
OV # - 15
E. Redevelopment of Vacant Land
• Multifamily
– Rental development, especially very low-income
(including supportive housing)
• Single family homeownership, based on market
demand
• Mixed-use buildings
• Possible community facilities
– Parks, gardens, community centers
OV # - 16
Next Steps
• MSHDA is addressing implementation issues
– Inventories of REO/Land Bank properties
– Data systems—enhancements based on elements from
OPAL, Cities of Promise, LINKS
– Application forms
– Legal documents (mortgages, use agreements, etc.)
– Workforce development programs
OV # - 17
Application Time Frames
• 17 non-HUD-entitled NSP cities
– Application template available on MSHDA website soon
• Application for local targeted programs
– Developer/counselor/property manager roles
– Regional training expected by mid-January
– Applications due early-mid February for first competitive round
• Multifamily Development division will be working with projects
for direct application
• MSHDA Interdivisional Team will review and approve all
applications and projects
OV # - 18
Commitment of Funds
• Readiness to proceed is extremely important
• For programs involving multiple projects, especially where
addresses are not yet identified or market is uncertain, funds
will be awarded incrementally
– A total “intent to fund” amount, subject to timely commitment
and expenditure
– Commitment and expense will be tracked and increases in the
award up to the “intent to fund” amount will depend on:
• Timely progress
• Satisfactory monitoring
OV # - 19
Michigan is well-positioned
• Michigan is well-positioned to handle this
responsibility and to maximize this opportunity
– Michigan Land Bank is a national model
– Substantial local nonprofit capacity
– Strong local network of supportive housing developers
– Strong collaborative relationships
– Established workforce development programs
– Extensive experience with Single-Family Redevelopment,
homebuyer projects and targeted neighborhood
revitalization
OV # - 20
The Right Approach (we hope!)…
• Allan Meltzer, Carnegie Mellon University, 21/1/08
– “…Throwing all this money into mortgage markets is addressing
the wrong end of the problem….What needs to be done most is
to clean up the excess supply of housing… Until we see an
reduction in the excess supply of housing, we’re not going to
see an end to the drop in housing prices… What I want them to
say is that if you buy a house this year and make a down
payment, we’ll give you a tax credit for the down payment. And
if you don’t pay taxes, we’ll give you the money. That will
stimulate the demand for houses now, and through 2009.”
– http://www.npr.org/templates/story/story.php?storyId=97629355
OV # - 21
The End Result
• Reduction of the number of surplus housing units
• Rebalancing of supply and demand in neighborhood markets
• Creation of Communities of Choice