Resource Center

Neighborhood Stabilization Program

The Housing and Economic Recovery Act of 2008 allocated $3.92 billion in Neighborhood Stabilization Program (NSP1) funds to states and Community Development Block Grant (CDBG) entitlement jurisdictions. Among other uses, state and local governments may use these funds to purchase or rehabilitate foreclosed or abandoned properties. Communities must allocate at least 25% of these funds to house families whose incomes do not exceed 50% of area median income. Congress treats the NSP1 funds as CDBG funds. Therefore, the funds are subject to the obligation to affirmatively further fair housing, as well as Section 3 employment requirements. In 2008, grantees drafted and submitted plans for using the NSP1 funds. Many local advocates commented on these plans. Grantees must submit quarterly reports and post them on their websites, enabling advocates to continue to monitor the use of NSP1 funds and ensure that they are being used to help preserve and create affordable housing.

The American Recovery and Reinvestment Act of 2009 included an additional $2 billion for the NSP program, referred to as NSP2. Unlike the original NSP program, NSP2 funds will be allocated by competition to states, local governments, nonprofits, and consortia of nonprofits, which may submit proposals in partnership with for-profit entities. HUD published grant criteria in May 2009, and applications were due July 17, 2009. NSP2 grantees were announced on January 14, 2010.

Some of the issues that are of primary concern to housing advocates are whether NSP grantees are meeting their income-targeting requirements; whether NSP funds are being used to preserve and create rental housing; whether NSP grantees are satisfying their obligation to affirmatively further fair housing; and whether NSP grantees are complying with the Section 3 employment requirements. This page contains references to resources that outline permissible uses for NSP funds, as well information on how jurisdictions throughout the country plan to use their NSP funds.

Neighborhood Stabilization Program (NSP)

Articles

HUD Issues Regulations Implementing the Neighborhood Stabilization Program
This NHLP article provides a detailed review of HUD’s regulations governing the NSP1 program.

Obama Signs Stimulus Bill Providing Major Support for Affordable Housing
This NHLP article provides an overview of the NSP2 provisions of the American Recovery and Reinvestment Act of 2009.

HUD Announces Neighborhood Stabilization Program 2 Grants
This NHLP article reviews the jurisdictions that received NSP2 funding and discusses some of the common proposed uses of NSP2 funds.

Materials

Tools for California Advocates
NHLP and Western Center on Law and Poverty have developed documents that can be used to urge California redevelopment agencies to expend their Low and Moderate Income Housing funds and their NSP funds in a timely and thoughtful manner.

Neighborhood Stabilization Program 2 (NSP2) Grantees
This document lists the states, local governments, and nonprofits who were awarded NSP2 grants. It also includes brief descriptions of each grantee’s plan for using the funds.

Neighborhood Stabilization Program (NSP2) Under the Recovery Act
This memo summarizes key provisions of the Neighborhood Stabilization Program (NSP2) under the Recovery Act and discusses NSP2 topics that are of particular interest to housing advocates.

NSP2 Sample Comment Letter
This sample comment letter can be used by advocates in reviewing the sufficiency of their jurisdictions’ NSP2 proposals.

Entities Applying for NSP2 Funds
This document lists entities that published public notices indicating that they will be submitting applications for NSP2 funds.

NSP Advocacy Letter
This sample advocacy letter urges local jurisdictions to improve their efforts in obligating NSP funds toward housing families at or below 50% of area median income. The letter reminds jurisdictions that the September 2010 deadline for obligating their NSP funds is rapidly approaching. To determine whether your jurisdiction is making adequate progress in obligating its funds, view HUD's NSP snapshot reports here.

Advocates' Checklist: NSP1 Quarterly Reports
This document provides guidelines for advocates seeking to review their jurisdictions’ Neighborhood Stabilization Program 1 (NSP1) quarterly performance reports.

HUD Improves Transparency in the Neighborhood Stabilization Program
After repeated requests from advocacy organizations, including the Housing Justice Network, HUD has posted on its website performance reports for the Neighborhood Stabilization Program (NSP). Among other things, these reports will help local advocates identify the communities in which NSP funds are being spent, the number of foreclosed or abandoned properties that have been acquired with the money, and the amount of funds that the jurisdiction has expended so far. Advocates can also see whether and how their jurisdictions are meeting the statutory mandate to use at least 25% of NSP funds to house families at or below 50% of area median income. Click here to view the reports.

Statutes, Regulations and Administrative References

HUD Notice Implementing NSP Funds
In October 2008, HUD published a notice governing the use of the NSP1 funds authorized under the Housing and Economic Recovery Act of 2008.

NSP2 NOFA
The NSP2 NOFA sets forth the program requirements for entities applying for NSP2 funds.

Housing and Economic Recovery Act of 2008 (HERA)
HERA authorized $3.9 billion for the initial NSP program.

American Recovery and Reinvestment Act of 2009 (ARRA)
ARRA authorized $2 billion for the NSP2 program.

HUD NSP Tenant Protections at Foreclosure (September 10, 2009)

HUD PIH Notice 2009-52
This HUD notice implements the tenant protection provisions governing NSP-funded properties.

Links

HUD: NSP Resource Exchange
HUD's NSP Resource Exchange contains a resource library that addresses a variety of topics as well as a Frequently Asked Questions page.

HUD: NSP Grantees Website
HUD’s NSP Grantees website contains several instructive materials, including a guide for eligible uses, an FAQ document, webinars, and an overview of the fair housing and relocation requirements that apply to NSP.

HUD: NSP2 Website
HUD’s NSP2 website contains an FAQ document, webinars, and a foreclosure needs map.

HUD: NSP Program Data Website
HUD’s NSP Program Data Website contains data on the income limits applicable for NSP, data showing which census block groups qualify as areas of low income, and local foreclosure data.

Enterprise: Neighborhood Stabilization Program
Enterprise has collected a variety of documents on NSP requirements, including a summary of the changes to the NSP program in the American Recovery and Reinvestment Act of 2009.

Enterprise: The Challenge of Foreclosed Properties
Enterprise recently published a report on 87 NSP1 plans that describes how grantees are using NSP funds and shares promising practices.

Foreclosure-Response.org
Foreclosure-Response.org contains a collection of NSP1 plans from throughout the country.

NeighborWorks
NeighborWorks’ NSP web page contains guidance on how NSP funds can be used, a collection of NSP1 plans, data on areas of greatest need, and training materials.

HUD: NSP Snapshot Reports
HUD has released a series of snapshot reports that track the status of NSP spending on a national, regional, state, and local grantee level. These reports enable advocates to quickly determine the percentage of funds their jurisdiction has committed to housing families at or below 50% of area median income. The reports also help advocates see the income range of the households that are benefiting from the funds.

Important Recent News