Federal Foundation Assistance Monitor

(HOUSING) CT to Use CDBG-R Funds for NSP-style Purchase, Rehab of Houses

\r\nConnecticut Dept. of Economic & Community Development (DECD) officials are proposing to use about 20% of $3.6 million in Community Development Block Grant stimulus (CDBG-R) money, made available through the American Recovery & Reinvestment Act of 2009 (ARRA), to allow some cities to buy and resell foreclosed properties, while most of the remaining funds will be used for infrastructure-related work.

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The approach--still in draft form--is similar to that offered in the second phase of the Neighborhood Stabilization Program (NSP), which provided money directly to many large CDBG entitlement cities. The NSP approach was initiated by Gov. M. Jodi Rell (D), who wanted CDBG entitlement cities that did not receive money during the first NSP phase last fall to use CDBG-R for that purpose.

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Larry Lusardi, executive director in the DECD Office of Municipal Development, tellsus the cities still wanted to use the stimulus money for regular CDBG-oriented items. As such, $2.5 million of the CDBG-R money will be headed for infrastructure development. About $750,000 will be used by cities to rehabilitate and resell homes.

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In preparing the NSP applications for round one last fall, DECD analyzed the foreclosure activity in 169 municipalities. The state's calculations to determine the areas most in need to address foreclosures are based on 2009 foreclosure data and compared it to foreclosure data from the year before.

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DECD officials are offering CDBG-R money for NSP-related task to the 12 communities with the greatest need--Ansonia, Bloomfield, East Haven, Enfield, Killingly, Naugatuck, New Milford, Plainfield, Shelton, Torrington, Wallingford and Windsor. Foreclosures in these areas rose 32% between the first quarter of 2009 and the same quarter in 2008. Filings for potential foreclosures are up 57% in the same time period.

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As CDBG-R requires, 70% of this money will benefit low- and moderate-income persons. The maximum grant amount is $750,000 to any one recipient. Anyone receiving the money must have contracts in place with the state 120 days after signing a grant agreement with HUD. Grantees will have until Sept. 30, 2012 to spend all of the money.

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During the public comment period that ended this week, one questioner asked about the possibility of using ARRA money in combination with funding from existing programs. DECD says it is in the initial stages of drafting a 2010-2014 Consolidated Plan and will consider the new funding and opportunity for additions in that process. "How the new funding can be meshed with the existing programs will be explored, as well as re-examining how all the funding sources can be best used to address the present environment with regard to affordable housing and homelessness," the draft says.

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Info: Larry Lusardi, executive director, DECD Office of Municipal Development, 860/270-8037

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