Using NSP Funds to Serve Persons with Special Needs

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Aldous Jordan
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1 1 Using NSP Funds to Serve Persons with Special Needs

2 2 Part I: NSP Overview

3 What is the Neighborhood Stabilization Program (NSP)? $3.92 billion to help states and hard-hit cities recover from the effects of foreclosures, abandoned properties, and declining property values. Funds are provided as a supplemental appropriation under HUD s Community Development Block Grant (CDBG) program. 3

4 HUD Methodology for Allocating Funds Funds have been made available to existing CDBG grantees (all states and the hardest-hit cities) based on the following factors: The number and percentage of home foreclosures. The number and percentage of homes financed by a subprime mortgage. The number and percent of homes in default or delinquency. 4

5 Requirements for Use of NSP Funds NSP funds must be used for individuals and families whose incomes do not exceed 120% of area median income (AMI). At least 25% of funds must be used to house individuals and families at or below 50% of AMI. 5

6 Eligible Uses Purchase and Rehabilitation In order to sell, rent, or redevelop. Redevelopment New construction of housing, building infrastructure for housing, redevelopment of property to be used as rental housing, construction of/improvements to public facilities. Financing Mechanisms/Homeownership Assistance Including soft seconds, loan loss reserves, and shared-equity loans Land Banks Must operate in a specific, defined geographic area. Administration and Planning (up to 10%) 6

7 Meeting the CDBG National Objective NSP allows for the use of only the low-, moderate-, and middle-income (LMMI) national objective. Activities may not qualify using the prevent or eliminate slums or blight or address urgent community development needs objectives. 7

8 Using Funds to Meet the LMMI Objective - Examples Housing Activities Acquisition, rehabilitation, rental, sale, conversion, and construction of housing units. Homeownership Assistance (provision of down payment and closing costs) Infrastructure for housing as part of redevelopment. All units must be occupied by households meeting the low- and moderate-income requirement. 8

9 Using Funds to Meet the LMMI Objective - Examples Area Benefit Activities Activities benefiting all residents of a primarily residential area in which at least 51% of the residents have incomes at or below 120% of AMI. Examples of activities include demolition, acquisition, and land banks. Grantees must identify the service area of each NSPfunded activity. HUD will provide data on the percentage of low-, moderate-, and middle-income persons by census tracts and block groups. 9

10 Using Funds to Meet the LMMI Objective - Examples Limited Clientele Activities Housing counseling for prospective purchasers/tenants 10

11 Meeting the 50% AMI Requirement Requirement applies to each grant not to the NSP program as a whole, nor to each program, activity, or subrecipient. Compliance based on dollars, not number of units. Principle way to comply will be through rental housing (new construction or conversion, acquisition, rehabilitation). 11

12 Continued Affordability Grantees are obligated to ensure to the maximum extent possible that the sale, rental or redevelopment of abandoned and foreclosed homes and residential properties remain affordable to individuals or families with incomes at or below 120% of AMI. 12

13 Process for Accessing Funds Grantees must submit an action plan substantial amendment to HUD no later than December day public comment period required. If substantial amendment not submitted, HUD will reallocate the funds earmarked for that grantee. Guidance on preparing the substantial amendment provided in the Federal Register (FR-5255-N-01) on September 29,

14 Timeliness in Obligating and Spending Funds Grantees must obligate funds for a specific NSP activity within 18 months. Funds not obligated within 18 months will be recaptured and reallocated. NSP funds must be expended within 4 years. 14

15 Capacity to Administer Funds Because of the aggressive timeline, local jurisdictions should consider their administrative capacity to use the funds within the statutory deadline. If a local jurisdiction applies for less than the full amount, the balance of their grant will pass through to the state NSP administrator. 15

16 Joint Requests Alternately, HUD is providing regulatory waivers to allow joint requests to implement a joint NSP program. Two or more continuous entitlement communities within the same metropolitan area. An entitlement community may also request a joint program with the state. Joint requests result in a single combined grant and a single action plan substantial amendment. 16

17 Subrecipient Agreements A state or local jurisdiction may apply for the grant and enter into subrecipient agreements with third parties, including nonprofit entities, to carry out activities with NSP grant funds. E.g., a state or local jurisdiction could enter into a subrecipient agreement with a provider of HIV/AIDS housing for some NSP activities. 17

18 18 Part II: Using NSP For Special Needs Housing

19 The Impact of the Foreclosure Crisis on Low-Income Renters Bulk of attention regarding foreclosure crisis has focused on homeowners, but it s important to consider the impact on renters. Many of the foreclosure filings are rental units (e.g., more than 35% in Cleveland). Families displaced by a rental foreclosure can face high costs, including lost and new security deposits, increased new rents, moving and storage costs. 19

20 Serving Homeless Families and Individuals Local Continuums of Care (CoC) have the planning capabilities and the capacity to design and administer a program under NSP. There are approximately 672,000 homeless persons in the United States. Housing persons with special needs is more cost effective for communities than allowing them to cycle through public systems (e.g., hospitals, jails, shelters). 20

21 Serving Persons with HIV/AIDS Important to provide assistance to the most vulnerable and at-risk populations. For persons with HIV/AIDS, stable housing is the foundation for managing the disease and maintaining health. Housing status is related to reduced risk behaviors, improved access to health care, higher levels of antiretroviral therapy adherence, and reduced mortality.* Studies also beginning to show the impact of stable housing on reduced rates of HIV/AIDS transmission.** * The National AIDS Housing Coalition. Transforming Fact into Strategy Policy Paper from the Second National Housing and HIV/AIDS Research Summit **Aidala, A., Cross, J.E., Stall, R., Harre, D., Sumartojo, E. (2005). Housing Status and HIV Risk Behaviors: Implications for Prevention and Policy. AIDS and Behavior, 9(3):

22 Serving Veterans with Special Needs Approximately 40% of homeless men are veterans (National Coalition for the Homeless, 2008). Many new vets are now returning home with mental health issues, substance abuse issues, and/or physical injuries. At the same time, they are facing increased housing and living costs and fewer job opportunities. The nature of their disabilities will dictate the special housing needs of returning vets. NSP offer an unique opportunity to assist this group. 22

23 Targeting Persons with Special Needs Targeting this population will help grantees comply with the requirement that at least 25% of NSP funds be used to house individuals and families at or below 50% of AMI. Requirement applies to each grant. Must identify activities that will help fulfill this requirement through the substantial amendment process. 23

24 Using NSP Funds to Address Unmet Needs This one-time infusion of supplemental funds presents an enormous opportunity to address identified unmet needs within your community. 24

25 Using NSP Funds to Address Unmet Needs All HUD grantees are required to conduct needs assessments, housing and service inventories, and other planning as a prerequisite of receiving HUD CPD funds. Review existing HIV/AIDS Housing Plans, Continuum of Care Plans, and Consolidated Plans to identify where the greatest needs are in your community. These plans can help identify the type of housing and the specific subpopulations which represent the greatest unmet needs. 25

26 What types of activities will help fulfill the 50% AMI requirement? Redevelopment of abandoned or foreclosedupon property into permanent supportive housing units for persons with special needs. Purchase and rehabilitation of an abandoned or foreclosed-upon home to be used as a community residence. 26

27 What types of activities will help fulfill the 50% AMI requirement? Acquisition and rehabilitation of a single family home which is gifted ( disposed ) to a nonprofit or special needs individual. Note: Using a home as permanent housing meets the housing standard under CDBG. If the housing has a time-limit (e.g., 24 months), then the project is not considered housing, but rather a public facility. Public facilities are eligible under NSP 27

28 Bringing Special Needs Housing Providers into the Process Despite the expedited application and plan process, grantees are responsible for ensuring that all citizens have equal access to information about the programs. Targeted outreach to special needs housing providers should be considered. Distribute info to housing providers through the HUD grantee agencies in your community. Housing Opportunities for Persons with AIDS (HOPWA) grantee directory: Continuum of Care lead agency directory: 28

29 Assessing the Capacity of Special Needs Housing Providers Ensure that the housing provider has development and property management experience either inhouse or through close coordination with a developer. Past success is the best indicator of future success. Do they have a feasible long-term plan to cover operating expenses? Are they ready to move ahead quickly with the proposed project(s)? 29

30 Key Considerations Making Special Needs Housing Projects Work Because of the relatively high operating and service costs of administering special needs housing, a project will be more likely to succeed if it has no debt to service. Supplemental sources of income help special needs clientele pay rent: SSI, SSDI, VA, TANF. Operating costs are eligible activities under HUD s HOPWA and SHP programs. 30

31 Belmont Apartments San Mateo County, CA In 2003, the Mental Health Association (MHA) of San Mateo County purchased property on which they built a building for homeless individuals with mental illness. The building, which was completed in 2005, contains 25 single occupancy units and the residents receive the support and assistance needed to participate in community activities at the highest level possible. MHA, with the assistance of a realtor, identified an infill site and purchased it, at market value, for $900,000. They obtained 13 separate funding sources. San Mateo CDBG and HOME funds were used for the construction of the building. HUD money was used to leverage other dollars. Since its opening, MHA of San Mateo County maintains the operating costs with McKinney-Vento dollars and provides supportive services and medical care onsite with money from county and local resources. 31

32 Samaritan Inns Washington, DC Founded in 1985, Samaritan Inns provides housing, accountability and support for men and women who are homeless due to addictions in metropolitan Washington, DC. It is entirely privately funded. When purchasing properties, a combination of apartment style buildings and Inns, Samaritan Inns considers the following: the properties proximity to already existing properties, the neighborhood s zoning codes, and affordability. Some, but not all, of the properties purchased were derelict properties. The organization continues to fund the operations of its eight facilities through individual and corporate donors, foundations, and resident rent. Two, full-time staff support Samaritan Inns fundraising responsibilities, which include grant writing and outreach. 32

33 Kenyon House - Seattle 33

34 Case Study - Kenyon House 18 units of permanent supportive housing for chronically homeless persons living with HIV/AIDS, Extremely low-income (less than 30% of Area Median Income) chronically homeless. Combination of funding sources: federal tax credit dollars, federal grant funds, & leveraged funds from area non-profits. Acquisition and construction of the facility accomplished with leveraged funding. 34

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36 Questions?? Continue to visit the NSP page on HUD s website for additional information and guidance. elopment/programs/neighborhoodspg/ Homeless Resource Exchange HUDHRE.info is your link as your one step for information and resources for assisting persons with HIV/AIDS who are homeless or at risk of homelessness. 36

Guidance on Amendment Procedures Updated April 3, 2014

April 3, 2014 Community Planning and Development NSP Policy Alert! Guidance on Amendment Procedures Updated April 3, 2014 Note: The Guidance on Amendment Procedures was revised April 3, 2014 to reflect