Federal Foundation Assistance Monitor

(COMMUNITY DEVELOPMENT) NSP-2 Applicants Looking to Score with July Application Submissions

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Those applying for round two of Neighborhood Stabilization Program (NSP) funding will have the number 115 foremost on their minds for the next two months or so. Without scoring that high on applications due July 17, their chances for receiving a share of the $2 billion in HUD money designed to aid neighborhoods struggling with foreclosures are likely to vanish.

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The second round of NSP is entirely competitive, a rule put in the American Recovery & Reinvestment Act of 2009 (ARRA). The ARRA rules are in sharp contrast to the formula-dominated first round, approved in the Housing & Economic Recovery Act of 2008 (HERA). And, the competition goes entirely through HUD, as opposed to states determining local project funding after HUD’s entitlement and base formula funding reached those levels in round one.

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In order to be regarded as fundable, applications graded by HUD must score 115 or higher. Applicants are expected to either seek funding of at least $5 million, or to have an impact on at least 100 homes in the geographic area in which they hope to stabilize. Any local consortia receiving NSP money must submit their overall funding agreements no later than Dec. 1, at which time HUD can rate and rank consortiums in the fundable range.

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HUD officials in the Office of Community Planning & Development offer suggestions about what they would be looking for in applications during a recent Webinar broadcast. The information applications will be graded upon is divided into five categories that total 150 points. Portions demonstrating overall need for NSP funds and the capacity of the applicant to perform the work cover 40 points each. The soundness of the project’s approach is another 45 points, while leveraging and sustainable development are worth 10 points each.

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The Need Threshold

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When considering need, applicants must have their plans tested against statistical analysis to determine how well it stacks up against competitors. HUD is using a census tract (CT) score to determine which projects meet the minimum threshold for need in a given neighborhood. Risky loans, falling home values and foreclosures are all included in the CT score. If a local government or state is looking for CT activity for a neighborhood they can get a foreclosure score and home vacancy score for each CT. But HUD is even offering a mapping program that allows applicants to target neighborhoods and get CT scores by simply typing in the name of the community, state and neighborhood of interest. In cases in which a city seeks to gain funding for multiple neighborhoods, those neighborhoods do not have to border one another and the final score for both can be taken as an average that must have at least 18 points.

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Other Categories

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When considering applicant’s capacity and organization needed to do the job it is looking to perform, HUD is considering past experience to be worth 30 of the 40 possible points in this category, with management ability representing the final 10.

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Leveraging is worth 10 points out of the possible 115. HUD is defining leveraging as a summation of all firm financial commitments to a project -- sweat equity does not count, although cash, in-kind donations and donated land do -- as well as how well a project removes substantial negative effect. The latter is calculated by determining the number of units purchased and rehabilitated plus the number of units razed, divided by the total of vacant units in the target areas. In the cases for leverage and negative effect, the top one-third in each category can receive the most points.

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Energy efficiency and sustainable development efforts can get projects up to 10 points. Within this category, projects that are accessible to transit can get four points; those that exceed the minimum green-building standards set by industry can get three points; reuse of NSP sites before the three-year grant sunset is worth one point and the use of deconstruction as a demolition method is also worth one point.

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Info: HUD Office of Block Grant Assistance, 202/708-3587

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