Neighborhood Stabilization Program 3 SUBSTANTIAL AMENDMENT

Neighborhood Stabilization Program 3 SUBSTANTIAL AMENDMENT 1. NSP3 GRANTEE INFORMATION Jurisdiction: State of North Carolina Department of Commerce Web Address for NSP Amendment: http://www.nccommerce.com/nsp Web Address for Additional Materials: http://www.nccommerce.com/nsp NSP Contact Person: Iris C. Payne, NSP Coordinator Address: Community Investment and Assistance (CI) 4313 Mail Service Center 100 E. Six Forks Road Raleigh, North Carolina 27699-4313 Telephone: (919) 571-4900 Fax: (919) 571-4951 Email: ipayne@nccommerce.com This Action Plan is an update to the State of North Carolina s Consolidated Plan for 2005 through 2010. This amendment outlines the expected distribution and use of $5,000,000 through the newly-authorized third round of the Neighborhood Stabilization Program (NSP3), which the U.S. Department of Housing and Urban Development (HUD) is providing to North Carolina. NSP funds were originally authorized under Section 2301(b) of the Housing and Economic Recovery Act of 2008 (HERA), as amended, and an additional allocation of funds for NSP3 provided under Section 1497 of the Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act). The Department of Commerce s Division of Community Investment and Assistance (CI; formerly Division of Community Assistance) will implement the state s NSP3 program and will work expeditiously to deliver and effectively administer these funds. As authorized through the Dodd-Frank Act, the purpose of NSP funding is to stabilize neighborhoods whose viability has been, and continues to be, damaged by the economic effects of properties that have been foreclosed upon and abandoned. These targeted funds will be used to purchase foreclosed homes at a discount and to rehabilitate or redevelop them in order to respond to rising foreclosures and falling home values. The State of North Carolina has strict predatory lending laws and the foreclosure rate is lower than many other areas of the country. However, according to data from the North Carolina Administrative Office of the Courts, North Carolina had more than 67,000 homes go into foreclosure in 2010, up from nearly 21,000 in 2000 and 50,000 in 2007, just 3 years prior. 1 While the foreclosure problems may not rival levels experienced in other states, North Carolina still has significant needs and housing problems due to the housing crisis. 1 NC Foreclosure Data (1998 2010). Available at http://www.ncforeclosurehelp.org/research.aspx. 1 P a g e

Further, the level of foreclosures resulting from these problematic mortgages has placed an increased burden on families, housing agencies and programs and local governments. As a result, the state will use the NSP3 funds for the purposes intended to promote neighborhood stabilization where foreclosure, subprime lending, and housing vacancies have negatively affected the housing market and will give priority to those applicants that can effectively target NSP3 resources to neighborhood stabilization projects that will address these problems in areas with the greatest needs. As such, North Carolina has defined geographic areas using data supplied by HUD. 2. AREAS OF GREATEST NEED North Carolina used data provided on the HUD Foreclosure Need website (www.hud.gov/nsp) to determine the areas of greatest need at the Census Tract level. As prescribed by the website, the minimum average foreclosure needs score for North Carolina where NSP3 funds can be allocated is 14. 2 Map of Project Areas The Areas of Greatest Need map is given at the conclusion of this Action Plan. A summary of the project areas is given in the following chart: Census Tract(s) County HUD Foreclosure Need Score 37063001202 Durham 18.00 37071031500 Gaston 14.38 37071033000 37119004302 Mecklenburg 14.00 37065020400 Nash/Edgecombe 17.00 37127010200 37183050800 Wake 15.00 Average Need Score: 15.89 Information for States The specific needs of each project area, whether they are entitlement communities or not, are given in the NSP Information by Activity section below. Distribution and Use of Funds North Carolina has established a $1 million threshold for allocating NSP3 funds to ensure that adequate resources are provided to projects that will generate the most effective, positive impact within targeted census tracts. HUD has assessed that fewer grants will allow HUD staff to more effectively monitor grantees to ensure proper implementation of the program and reduce the risk for fraud, waste, and abuse. In distributing NSP3 funds in North Carolina, a similar approach is being taken. Distribution Process 2 The score ranks need from 1 to 20, with 20 being census tracts with HUD-estimated greatest need. 2 P a g e

North Carolina will distribute NSP3 funds to areas of greatest need as described above. NSP3 funds will be allocated using the following three-step application process: 1. Submission of a Letter of Interest (LOI) from potential applicants; 2. Invite Eligible Organizations to submit an application; and 3. Evaluate Applications and include the highest ranking projects in application STEP 1: Submit a Letter of Interest to CI. All NSP3 applicants interested in submitting an application submitted a Letter of Interest to CI by December 22, 2010 at 5:00 p.m. NO FAXES OR COPIES WERE ACCEPTED. To be accepted, the letters of interest must be on the lead organization s letterhead and signed by the chief elected official or chief executive officer along with the following information: Amount requested (NOTE: most grants will range from $500,000 to $1 million) Total amount of project funds and status of non-nsp funds Detail description of project, including: o number of homeownership and rental units (NOTE: Preference will be given for the development of affordable rental housing); o address and census tract where the project is located (NOTE: Project must be located in a census tract with a HUD Foreclosure NEED score of 14 or above.); o amount of project (e.g., units, dollars, etc.) that will be dedicated to beneficiaries that have incomes of 50% of AMI or below (NOTE: Must be a minimum of 30%); o a proposed project development timeline; o a listing of project partners and a brief statement as to their experience with projects involving NSP/CDBG funds as well as their overall project development/management experience (NOTE: Non-profit applicants must have at least five years of project development experience); o a statement by the applicant certifying that they are familiar with the requirements of NSP3; and o a brief explanation as to how the applicant shall, to the maximum extent feasible, provide for the hiring of employees who reside in the vicinity of the project or contract with small businesses that are owned and operated by persons residing in the vicinity of the project. STEP 2: Issue an Invitation to Apply and Distribute Application. CI responded to all letters of interest on or before January 5, 2011. Responses were either an invitation to apply or not to apply. CI reviewed the submitted letters to determine whether or not the projects meet threshold, address each issue above, and project reasonableness. CI issued the program application to organizations invited to apply. The deadline for submitting completed applications to CI was 5:00 p.m. on February 2, 2011. STEP 3: Evaluate applications and projects receiving top rankings were included. The evaluation criteria are given in the Selection Criteria below and details on the projects chosen are provided in NSP Information by Activity section below. 3 P a g e

The applications have been reviewed according to the process outlined in this Action Plan, and the State anticipates making awards by June 1, 2011. The target award date is subject to change based upon HUD s approval of this Action Plan, and/or changes issued to the NSP3 Notice or interpretation of the Notice as clarified on the HUD website for this program: http://www.hud.gov/nsp. The State urges applicants to be on alert for such changes, which will be posted on the State website (http://www.nccommerce.com/nsp) with other relevant NSP publications and materials. Administrative Funds North Carolina will share the 10 percent of the NSP3 funds available for administrative uses as follows: up to five (5) percent shall be retained by the state for administrative and monitoring requirements of the program and up to five (5) percent shall be available to applicants receiving the funds. Selection Criteria The following selection criteria is designed to assure that the state complies with the Dodd-Frank Act, the HUD Notice, meets applicable CDBG regulations, and effectively spends the funds: Severity of Need (30 Points available): Priority is given to applicants within a designated area of need as defined by HUD (i.e., the HUD Need Score for the census tract(s) where the project(s) is/are located is greater than or equal to 14). The state will, also, give priority to those proposals that can demonstrate a strong connection to existing neighborhood stabilization activities. The state will draw a distinction in awarding priority points to give greater points to those applicants that can connect their NSP3-funded activities to housing foreclosure, subprime and abandonment problems emblematic of the housing crisis. Project Budget (25 Points available): Priority is given to applicants with projects that demonstrate higher amounts of leverage (e.g., other funds are used in addition to NSP3 funds). Treatment of Need (20 Points available): The state will give priority to those proposals that can demonstrate a strong connection between the need as identified, particularly the need for affordable rental housing, and to the proposed activities needed to stabilize neighborhoods. Capacity of Applicant and Partners (20 Points available): Priority is given to applicants that exhibit strong capacity to administer NSP funds in the following ways: o Knowledge, implementation, and compliance of activities funded through the NSP and/or CDBG Program. CI, also, assessed any significant monitoring findings or program weaknesses that are not addressed, as well as performance on State or other contract closeout requirements. o Experience administering and delivering the specific activities for which the NSP3 funds would be used. If significant administrative responsibilities will be assigned to another entity through a subcontract, the experience of that entity will be considered as well. 4 P a g e

o NOTE: Five (5) bonus points were awarded if applicant/partner is a NSP1 grantee. Additional Considerations (5 Points available): HUD and CI have identified additional criteria it sees as important for NSP3 projects and programs, including the following: o Vicinity hiring strategy o Certification statement re: NSP3 program familiarity o Applicant included information regarding the use of Green Building components and techniques, including transit accessibility, re-use of cleared sites, deconstruction, renewable energy, water conservation, and healthy homes. 3. DEFINITIONS AND DESCRIPTIONS The following section describes the state s definitions of significant terms and program requirements for which HUD is mandating a response. Affordability Rates and Periods All homebuyer and rental units assisted must include provisions for long-term affordability restrictions meeting at least the following requirements: HOMEBUYER Subsidy Amount (the amount of NSP assistance provided to a homebuyer) Minimum Affordability Period Minimum Restriction < $12,000 5 years Subsidy recapture, 20 percent forgiveness each year $12,001 $25,000 8 years Subsidy recapture, 12.5 percent forgiveness each year $25,001 - $40,000 12 years Subsidy recapture, 8.33 percent forgiveness each year $40,001 $60,000 15 years Subsidy recapture, 6.66 percent forgiveness each year $60,001 and greater 20 years Subsidy recapture, 5 percent forgiveness each year RENTAL Average Per Unit NSP Affordability Period Minimum Restriction Assistance < $12,000 5 years Subsidy recapture, 20 percent forgiveness each 5 P a g e

year $12,001 $25,000 8 years Subsidy recapture, 12.5 percent forgiveness each year $25,001 - $40,000 12 years Subsidy recapture, 8.33 percent forgiveness each year $40,001 $60,000 15 years Subsidy recapture, 6.66 percent forgiveness each year $60,001 and greater 20 years Subsidy recapture, 5 percent forgiveness each year Rent, occupancy, and affordability requirements for homebuyer and rental units will be enforced with covenants, mortgages, or deed restrictions running with the property. Ensuring Continued Affordability To ensure continued affordability of its NSP3 projects, CI has adopted a definition of continued affordability that requires that, at a minimum, sub-recipients use affordability standards at are at least as strict as the HOME program standards at 24 CFR 92.252(a), (c), (e), and (f), and 92.254. The definition of Continued Affordability in this Action Plan for NSP3 funds is subject to change based upon HUD s approval of this Action Plan, and/or changes issued to the NSP3 Notice or interpretation of the Notice as clarified on the HUD website (http://www.hud.gov/nsp) for this program. Blighted Structure In accordance with Federal regulations, the State has established a definition for slum or blighted area which is based upon the state s Urban Redevelopment Law per G.S. 160A- 503 and as outlined in CDBG Bulletin 86-10. Abandoned Per the NSP3 Register, a home or residential property is abandoned if either a) mortgage, tribal leasehold, or tax payments are at least 90 days delinquent, or b) a code enforcement inspection has determined that the property is not habitable and the owner has taken no corrective actions within 90 days of notification of the deficiencies, or c) the property is subject to a court-ordered receivership or nuisance abatement related to abandonment pursuant to state or local law or otherwise meets a state definition of an abandoned home or residential property. Foreclosed Per the NSP3 Register, a home or residential property has been foreclosed upon if any of the following conditions apply: (a) the property s current delinquency status is at least 60 days delinquent under the Mortgage Bankers of America delinquency calculation and the owner has been notified; (b) the property owner is 90 days or more delinquent on tax payments; (c) under state, local, or tribal law, foreclosure proceedings have been initiated 6 P a g e

or completed; or (d) foreclosure proceedings have been completed and title has been transferred to an intermediary aggregator or servicer that is not an NSP3 grantee, contractor, sub-recipient, developer or end user. Under North Carolina law, a foreclosure is a procedure whereby the lender may realize on his security by having the property sold and the proceeds applied to pay off the indebtedness owed to him. There are two types of foreclosure available in North Carolina: (a) judicial foreclosure pursuant to an action in court, and (b) foreclosure under power of sale when expressly provided in the mortgage or deed of trust. Housing Rehabilitation Per the NSP3 Register, all gut rehabilitation or new construction of residential buildings up to three stories must be designed to meet the standard for Energy Start Qualified New Homes. More information on these standards can be found on the web at http://www.energystar.gov/index.cfm?c=new_homes.nh_verification_process. All gut rehabilitation or new construction of mid- or high-rise multifamily housing must be designed to meet American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) Standard 90,1-2044, Appendix G plus 20 percent (which is the Energy Star standard for multifamily buildings piloted by the Environmental Protection Agency and the Department of Energy). Other rehabilitation must meet those standards to the extent applicable to the rehabilitation work being done (e.g., replace older obsolete products and appliances) with Energy Star-labeled products. Water efficient toilets, showers, and faucets, such as those with the WaterSense label, must be installed. Where relevant, the housing should be improved to mitigate the impact of disasters (e.g., earthquake, hurricane, flooding, etc.). Housing rehabilitation standards not directly addressed above are defined in 4 NCAC 19 L.1009. 4. LOW-INCOME TARGETING CI requires that a minimum of 30% of NSP3 project funds are used toward meeting the needs of beneficiaries who earn less than 50% of the area s median income. Anticipated targets are provided for each activity in the NSP Information by Activity section. 5. ACQUISITION AND RELOCATION CI requires that when sub-recipients acquire a property that it follows applicable tenant protection requirements provided under the Tenant Projection Act of 2099 as well as applicable relocation requirements under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970. For more information on these requirements, please refer to the following documents: NSP Tenant Protections at Foreclosure Under the Recovery Act - http://www.hud.gov/offices/cpd/library/relocation/nsp/pdf/nsp-tenant-protection- 8122010.pdf 7 P a g e

Real Estate Acquisition and Relocation Policy and Guidance - http://www.hud.gov/offices/cpd/library/relocation/policyandguidance/handbook1 378.cfm Anticipated acquisition and relocation activity is provided in the NSP Information by Activity section. 6. PUBLIC COMMENT This section provides a summary of public comments received concerning the state s draft NSP Substantial Amendment. The state has placed the draft of this action plan (in English and Spanish) on the organization s website on February 11, 2011 for public viewing. Public comments are to be sent to the attention of Vickie Miller, Department of Commerce, Division of Community Investment and Assistance, 4313 Mail Service Center, Raleigh, NC 27699-4313 or vmiller@nccommerce.com. Translations for populations with limited English proficiency are available upon request. Comments must be received by 9 am on February 26, 2011. Summary of Comments Received Comment #1: Thank you for the opportunity to apply for NSP3 funding. I have reviewed the five activities that are proposed for funding and would like to note the following: Activity #2: NSP3 funds account for only 4.6% of total project budget. Activity #3: NSP3 funds account for only 6.7% of total project budget. Activity #4: NSP3 funds account for only 11.8% of total project budget. Because NSP3 funds are such a tiny fraction of these projects, it is difficult to see the merit of applying NSP3 dollars to projects where the relative funding impact is so insignificant. Undoubtedly, these projects can move forward without NSP3 dollars, whereas, projects like ours that would benefit heavily by this money are left with no means to proceed. Here in Johnston County, our entire proposed project would require only $643,690 and would enable us to provide subsidized housing to five eligible senior citizen and/or disability impacted families. Additionally, because none of our proposed properties are co-located multi-family, we would be adding stability to more than one neighborhood. If an opportunity arises to review our project as an alternative, we would sincerely appreciate it. Thank you again, Neal Davis Executive Director, Interim 8 P a g e

Council on Aging of Johnston County RESPONSE: Mr. Davis, Thank you for your comment regarding our NSP3 Substantial Amendment. Among HUD s priorities as expressed in its NSP3 Notice were leverage and impact. Our application scoring methodology reflected an emphasis on leverage by providing additional points for greater amounts of leverage. In addition, HUD placed an emphasis on project compactness when evaluating the project s potential impact (which is also reflected in the NSP3 Planning Data reports). Projects that were more compact in its location and scope fared more favorably than projects that were less compact. As you know, the task of selecting potential projects with a limited amount of resources was difficult. It was affirmed that there are many needs throughout the state and that more resources are needed to more broadly address the negative effects of foreclosures and blight. Thank you, once again, for your organization s application and we wish you the best in your community revitalization efforts. Comment #2: Please accept this public comment on the substantial amendment prepared for submission to US Department of Housing and Urban Development with recommendations for funding NC NSP3 projects. As you are aware the City of Wilmington submitted an application for NSP3 funding and was not selected for recommendation to HUD for funding. While we are aware that resources are limited, we would like to express our concern that the distribution of NSP funds, both NSP1 and the NSP3, does not equitably address need across the state. Small jurisdictions like Wilmington are at a disadvantage when competing with larger metropolitan areas selected for NSP 1 and NSP3 funding. Wilmington has demonstrated need as indicated by the HUD need score and identified in the City of Wilmington Consolidated Plan for CDBG and HOME Funds 2007-2012. Furthermore, recent research substantiates the data and conclusions drawn in the Consolidated Plan. A 2009 Low Income Housing Coalition report Out of Reach determined that 53 percent of renter households in New Hanover County were unable to afford a two bedroom unit at Fair Market Rent. The report goes on to point out that in New Hanover County, including Wilmington, households must expend 55 percent of the area median income to afford a two-bedroom apartment. An article in the August 18, 2010, edition of the Wilmington Star News reports that Moody s Economy.com identified Wilmington, NC as one of 22 metro areas listed as being at risk of falling back into recession. An adversity index compiled by Moody s looked at unemployment, housing starts, housing prices and industrial production. According to the report, Wilmington s weaknesses were lack of affordable housing, low paying service jobs and high economic volatility. This new information coupled with the existing income and housing data confirms what many affordable housing practitioners and government and public agency officials, among others, have observed; the region is experiencing greater disparity in equitable access to affordable housing based upon income. That said, the City seeks equitable consideration for the allocation of new resources, such as the NSP funds, in order to better address our housing problems. We hope that NC 9 P a g e

Department of Commerce, Community Development will explore ways to equalize the playing field when evaluating proposals from across the State to ensure that small, isolated jurisdictions, such as Wilmington, are not excluded from the process. These jurisdictions should not be eliminated from competition because of size, scale of community development activities and lack of access to financing and leverage that larger metropolitan areas have. Thank you for accepting this comment. We look forward to exploring opportunities to work with the NC Commerce Department -- Community Services/Community Development Division in the future to bring much needed resources to the citizens of Wilmington. Suzanne E. Rogers, MPA, NCCDA Community Development and Housing Planner City of Wilmington Community Services, Community Development RESPONSE: Ms. Rogers, Thank you for your comment regarding our NSP3 Substantial Amendment. Regarding your feedback that [s]mall jurisdictions like Wilmington are at a disadvantage when competing with larger metropolitan areas selected for NSP 1 and NSP3 funding, of the five projects that were selected, two of them are located in cities that are smaller in population than Wilmington (Gastonia and Rocky Mount), primarily because of their ability to leverage NSP3 funds with additional funding from other sources. Nevertheless, if any of the suggested projects are unable to secure the necessary funding to complete the project within HUD regulations, Community Investment and Assistance (CI; formerly DCA) has the flexibility to reallocate those funds to other NSP3-eligible projects. As you mentioned in your letter, the task of selecting potential projects with a limited amount of resources was difficult. It was affirmed that there are many needs throughout the state and that more resources are needed to more broadly address the negative effects of foreclosures and blight. Thank you, once again, for your organization s application and we wish you the best in your community revitalization efforts. Comment #3: This comment was submitted by Paul Woollard, Executive Director of The Affordable Housing Group (an NSP3 applicant). Because their comment was scanned and sent via email, it will not be recreated and presented in its entirety. However, the key points made in the letter are as follows: [T]he draft Substantial Amendment does not require the applicant for the NSP3 funds to demonstrate that the other funding required to begin construction is in place. Nor does it require the applicant to demonstrate through an operating proforma that the property will be economically viable as affordable housing for the long term. Given the extremely competitive nature of much of the funding anticipated by the selected applicants, along with the very tight credit markets for bank loans or mortgages, it is likely that many of the selected projects will be unable to be fully 10 P a g e

funded. So the NSP3 funds will languish until that determination is made (up to 6 months from now or more), instead of being spent and immediately improving the neighborhoods and communities of projects with funding in place. RESPONSE: Mr. Woollard, Thank you for your comments regarding our NSP3 Substantial Amendment. The following provides a response to the main points of your letter: It is anticipated that NSP3 funds will not be available for use by sub-recipients until around June 2011, after the grant agreement between CI and HUD has been executed. With that in mind, the timing gap from NSP3 funding access to decisions by NCHFA on Low-Income Housing Tax Credit allocations will be around one month, as opposed to the six-month gap as suggested in your letter. It is recognized that a number of the suggested projects may not come to fruition because of funding decisions and/or project timing. Nevertheless, if any of the suggested projects are unable to secure the necessary funding to complete the project within HUD regulations, Community Investment and Assistance (CI; formerly DCA) has the flexibility to reallocate those funds to other NSP3-eligible projects. The criteria used to evaluate NSP3 applications were developed based on HUD requirements as given by the NSP3 Notice. The evaluation criteria was provided in the application for each applicant to review, with applicants having the opportunity to provide feedback and ask questions for clarification. The task of selecting potential projects with a limited amount of resources was difficult. It was affirmed that there are many needs throughout the state and that more resources are needed to more broadly address the negative effects of foreclosures and blight. Thank you, once again, for your organization s application and we wish you the best in your community revitalization efforts. A number of support comments and letters were submitted from the following individuals and organizations on behalf of the projects located in Gastonia: W. Ted Alexander Mayor City of Shelby Ted Alexander SW Regional Director Preservation North Carolina Joe Curry City of Gastonia Fire Department (retired) Jennifer P. Davis William Joles President Gastonia Downtown Development Corp. David R Kirlin Gastonia City Council, Ward 2 Willie King, Jr. Conover, NC Bill McCarter President Historic Shelby Foundation, Inc. 11 P a g e

Brenda Sadler Friday William Gross, MPH Special Projects Manager Gaston County Health Department Walker Reid Mayor Pro-Tem/City Councilman Ward IV Elizabeth Sido David L. Williams 12 P a g e

7. NSP INFORMATION BY ACTIVITY Activity Number 1 Activity Name Bradford Apartments Revitalization Eligible Use A: Financing Mechanism Eligible Use B: Acquisition and Rehabilitation Uses Eligible Use C: Land Banking Eligible Use D: Demolition Eligible Use E: Redevelopment 24 CFR 570.201(a) Acquisition CDBG Activity or Activities 24 CFR 570.202 Eligible rehabilitation and preservation activities for homes and other residential properties. 24 CFR 570.206 Program administrative costs National Objective Benefiting LMMI persons Builders of Hope, in partnership with the City of Charlotte, will acquire a foreclosed, 44 multi-family complex and Activity Description rehabilitate these for affordable rental housing using their Extreme Green Rehabilitation model. The units will be reserved for those earning <50% AMI. County Mecklenburg Location Description Census Tract 37119004302 HUD Foreclosure Need Score 14 Source of Funding Dollar Amount Budget NSP3 $950,000 RBC bank loan $1,500,000 (Other funding sources) $222,574 Total Budget for Activity $2,672,574 Rental Homeownership # of units assisted with 0 financing mechanism Performance Measures # of units 44 acquired/rehabbed # of units demolished 0 # of units redeveloped 0 Low-Income Targeting ($) $1,000,000 $ Low-Income Targeting (%) 100% Projected Start Date June, 2011 Projected End Date December, 2012 Name of Organization Builders of Hope, Inc. Responsible Location (address, city, state, zip) 310 N. Harrington St. Raleigh, NC 27603 Organization Administrator Contact Info Dennis Boothe 919-830-6666 dennis@buildersofhope.org Outstanding Issues Securing RBC bank loan 13 P a g e

Activity Number 2 Activity Name Southside Revitalization Phase I Eligible Use A: Financing Mechanism Eligible Use B: Acquisition and Rehabilitation Uses Eligible Use C: Land Banking Eligible Use D: Demolition Eligible Use E: Redevelopment 24 CFR 570.202 Eligible rehabilitation and preservation CDBG Activity or activities for demolished or vacant properties. Activities 24 CFR 570.206 Program administrative costs National Objective Benefiting LMMI persons The City of Durham will use NSP3 funding to provide a Activity Description portion of subordinate financing required for the rental portion of Phase 1 of this revitalization project, consisting of 80 LIHTC units and 39 market rate units. County Durham Location Description Census Tract 37063001202 HUD Foreclosure Need Score 18 Source of Funding Dollar Amount NSP3 $950,000 Budget NCHFA various funds $11,960,484 City of Durham $4,536,468 Private First Mortgage $3,075,000 Total Budget for Activity $20,521,952 Rental Homeownership # of units assisted with 80 financing mechanism Performance Measures # of units 0 acquired/rehabbed # of units demolished 0 # of units redeveloped 0 Low-Income Targeting ($) $400,000 $ Low-Income Targeting (%) 40% Projected Start Date June, 2011 Projected End Date October, 2013 Name of Organization City of Durham Responsible Location (address, city, state, zip) 807 E. Main Street Durham, NC 27701 Organization Administrator Contact Info Larry Jarvis 919-560-4570 larry.jarvis@durhamnc.gov Outstanding Issues Securing NCHFA funding Securing private first mortgage 14 P a g e

Activity Number 3 Activity Name Highland Hospital & Armstrong/Marietta Apartment Redevelopment Projects Eligible Use A: Financing Mechanism Eligible Use B: Acquisition and Rehabilitation Uses Eligible Use C: Land Banking Eligible Use D: Demolition Eligible Use E: Redevelopment 24 CFR 570.202 Eligible rehabilitation and preservation CDBG Activity or activities for demolished or vacant properties. Activities 24 CFR 570.206 Program administrative costs National Objective Benefiting LMMI persons The City of Gastonia has partnered with The Landmark Group (Winston-Salem), Preservation North Carolina, and Activity Description Gaston County to develop a high-priority project that will result in two separate, yet integrally-linked, renovations of vacant, dilapidated historic structures into 93 new units of affordable rental housing (including 75 senior units). County Gaston Location Description Census Tract(s) 37071031500 37071033000 HUD Foreclosure Need Score 15.1 Source of Funding Dollar Amount NSP3 $950,000 Budget LIHTC equity $6,555,894 Historic TC equity $3,160,014 Others (loans, NSP1 program income) $3,420,741 Total Budget for Activity $14,086,649 Rental Homeownership # of units assisted with 0 financing mechanism Performance Measures # of units 0 acquired/rehabbed # of units demolished 0 # of units redeveloped 93 Low-Income Targeting ($) $300,000 $ Low-Income Targeting (%) 30% Projected Start Date June, 2011 Projected End Date August, 2013 Name of Organization City of Gastonia Responsible Location (address, city, state, zip) 181 S. South St., Ste 200 Gastonia, NC 28052 Organization Administrator Contact Info Jack Kiser 704-854-6632 jackk@cityofgastonia.com Outstanding Issues Securing LIHTCs and HTCs Securing loans 15 P a g e

Activity Number 4 Activity Name Rocky Mount NSP3 Program Eligible Use A: Financing Mechanism Eligible Use B: Acquisition and Rehabilitation Uses Eligible Use C: Land Banking Eligible Use D: Demolition Eligible Use E: Redevelopment 24 CFR 570.201(d) Clearance for blighted structures only CDBG Activity or Activities 24 CFR 570.202 Eligible rehabilitation and preservation activities for demolished or vacant properties. 24 CFR 570.206 Program administrative costs National Objective Benefiting LMMI persons The City of Rocky Mount will use its NSP3 funds in the following ways: In partnership with RMECDC, will construct 10 Energy Efficient/green affordable single-family rental units in Activity Description continuation of the revitalization of the Holly Street community; and In partnership with Atlantic Development LLC, purchase, demolish and redevelop the Clairmont Apartment site into 60 affordable rental units. County Nash & Edgecombe Census Tract(s) 37065020400 Location Description 37127010200 HUD Foreclosure Need 17 Score Source of Funding Dollar Amount NSP3 $950,000 Budget LIHTC equity $6,800,000 HOME $350,000 Others $0 Total Budget for Activity $8,050,000 Rental Homeownership # of units assisted with 0 financing mechanism Performance # of units 0 Measures acquired/rehabbed # of units demolished 0 # of units redeveloped 70 Low-Income Targeting ($) $400,000 $ Low-Income Targeting (%) 40% Projected Start Date June, 2011 Projected End Date September, 2012 Responsible Organization Name of Organization City of Rocky Mount Location 331 S. Franklin St. (address, city, state, zip) Rocky Mount, NC 27802 Administrator Contact Info Ann Wall 16 P a g e

Outstanding Issues Securing LIHTCs 252-972-1102 ann.wall@rockymountnc.gov Activity Number 5 Activity Name 1002 Coleman Redevelopment Eligible Use A: Financing Mechanism Eligible Use B: Acquisition and Rehabilitation Uses Eligible Use C: Land Banking Eligible Use D: Demolition Eligible Use E: Redevelopment 24 CFR 570.201(d) Clearance for blighted structures only CDBG Activity or Activities 24 CFR 570.202 Eligible rehabilitation and preservation activities for demolished or vacant properties. 24 CFR 570.206 Program administrative costs National Objective Benefiting LMMI persons The City of Raleigh will demolish and redevelop a 13-unit Activity Description multi-family building for rental housing for LMI beneficiaries on a parcel owned by the City. County Wake Location Description Census Tract 37183050800 HUD Foreclosure Need Score 15 Source of Funding Dollar Amount NSP3 $950,000 Budget NSP1 $500,000 CDGB $370,000 Private equity $315,500 Total Budget for Activity $2,135,500 Rental Homeownership # of units assisted with 0 financing mechanism Performance Measures # of units 0 acquired/rehabbed # of units demolished 13 # of units redeveloped 13 Low-Income Targeting ($) $380,000 $ Low-Income Targeting (%) 38% Projected Start Date June, 2011 Projected End Date December, 2012 Name of Organization City of Raleigh Responsible Location (address, city, state, zip) 310 W. Martin Street Raleigh, NC 27601 Organization Administrator Contact Info George Adler 919-996-6963 george.adler@raleighnc.gov Outstanding Issues None 17 P a g e

Summary of Project Activities Number of Activities 5 Average HUD Foreclosure Need Score 15.89 Source of Funding Dollar Amount NSP3 (includes administration $5,000,000 Budget costs) Other Funding Sources $42,466,675 TOTAL BUDGET $47,466,675 Rental # of units assisted with 80 financing mechanism Performance Measures # of units 44 acquired/rehabbed # of units demolished 13 # of units redeveloped 176 Low-Income Targeting ($) $2,480,000 Low-Income Targeting (%) 49.6% Homeownership CI reserves the right to re-evaluate and/or re-assign funds to selected activities or other applicants for the following reasons (not an exhaustive list): Actual timelines of project will not meet HUD regulations; or Activity unsuccessful in securing other necessary funding (e.g., LIHTCs). 18 P a g e

CERTIFICATIONS (1) Affirmatively furthering fair housing. The jurisdiction certifies that it will affirmatively further fair housing, which means that it will conduct an analysis to identify impediments to fair housing choice within the jurisdiction, take appropriate actions to overcome the effects of any impediments identified through that analysis, and maintain records reflecting the analysis and actions in this regard. (2) Anti-displacement and relocation plan. The applicant certifies that it has in effect and is following a residential anti-displacement and relocation assistance plan. (3) Anti-lobbying. The jurisdiction must submit a certification with regard to compliance with restrictions on lobbying required by 24 CFR part 87, together with disclosure forms, if required by that part. (4) Authority of jurisdiction. The jurisdiction certifies that the consolidated plan or abbreviated plan, as applicable, is authorized under state and local law (as applicable) and that the jurisdiction possesses the legal authority to carry out the programs for which it is seeking funding, in accordance with applicable HUD regulations and other program requirements. (5) Consistency with plan. The jurisdiction certifies that the housing activities to be undertaken with NSP funds are consistent with its consolidated plan or abbreviated plan, as applicable. (6) Acquisition and relocation. The jurisdiction certifies that it will comply with the acquisition and relocation requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (42 U.S.C. 4601), and implementing regulations at 49 CFR part 24, except as those provisions are modified by the notice for the NSP program published by HUD. (7) Section 3. The jurisdiction certifies that it will comply with section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u), and implementing regulations at 24 CFR part 135. (8) Citizen participation. The jurisdiction certifies that it is in full compliance and following a detailed citizen participation plan that satisfies the requirements of Sections 24 CFR 91.105 or 91.115, as modified by NSP requirements. (9) Following a plan. The jurisdiction certifies it is following a current consolidated plan (or Comprehensive Housing Affordability Strategy) that has been approved by HUD. (10) Use of funds. The jurisdiction certifies that it will comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act and Title XII of Division A of the American Recovery and Reinvestment Act of 2009 by spending 50 percent of its grant funds within 2 years, and spending 100 percent within 3 years, of receipt of the grant. (11) The jurisdiction certifies: a. that all of the NSP funds made available to it will be used with respect to individuals and families whose incomes do not exceed 120 percent of area median income; and 19 P a g e

b. The jurisdiction will not attempt to recover any capital costs of public improvements assisted with CDBG funds, including Section 108 loan guaranteed funds, by assessing any amount against properties owned and occupied by persons of low- and moderate-income, including any fee charged or assessment made as a condition of obtaining access to such public improvements. However, if NSP funds are used to pay the proportion of a fee or assessment attributable to the capital costs of public improvements (assisted in part with NSP funds) financed from other revenue sources, an assessment or charge may be made against the property with respect to the public improvements financed by a source other than CDBG funds. In addition, with respect to properties owned and occupied by moderate-income (but not low-income) families, an assessment or charge may be made against the property with respect to the public improvements financed by a source other than NSP funds if the jurisdiction certifies that it lacks NSP or CDBG funds to cover the assessment. (12) Excessive force. The jurisdiction certifies that it has adopted and is enforcing: a. A policy prohibiting the use of excessive force by law enforcement agencies within its jurisdiction against any individuals engaged in nonviolent civil rights demonstrations; and b. A policy of enforcing applicable state and local laws against physically barring entrance to, or exit from, a facility or location that is the subject of such nonviolent civil rights demonstrations within its jurisdiction. (13) Compliance with anti-discrimination laws. The jurisdiction certifies that the NSP grant will be conducted and administered in conformity with Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d), the Fair Housing Act (42 U.S.C. 3601-3619), and implementing regulations. (14) Compliance with lead-based paint procedures. The jurisdiction certifies that its activities concerning lead-based paint will comply with the requirements of part 35, subparts A, B, J, K, and R of this title. (15) Compliance with laws. The jurisdiction certifies that it will comply with applicable laws. (16) Vicinity hiring. The jurisdiction certifies that it will, to the maximum extent feasible, provide for hiring of employees that reside in the vicinity of NSP3 funded projects or contract with small businesses that are owned and operated by persons residing in the vicinity of NSP3 projects. (17) Development of affordable rental housing. The jurisdiction certifies that it will be abide by the procedures described in its NSP3 Abbreviated Plan to create preferences for the development of affordable rental housing for properties assisted with NSP3 funds. Signature/Authorized Official Title Date 20 P a g e

Attachment 1: Counties with Eligible Census Tracts NSP3 21 P a g e

Attachment 2: HUD Foreclosure Need Score Information Project Summary for NSP3 Project Name Total Housing Units NSP3Need Score Builders of Hope 2,184 14 City of Durham 351 18 City of Gastonia - Armstrong/Marietta St 284 10.02 City of Gastonia - Highland 1,654 15.96 City of Rocky Mount - Holly St 2,672 17 City of Rocky Mount - Clairmont 2,809 17 City of Raleigh 1,325 15 BUILDERS OF HOPE Neighborhood ID: 7710449 NSP3 Planning Data Total Housing Units for All Shapes: 11,279 Total NSP3 Need Score: 15.89 Grantee ID: 3799990N Grantee State: NC Grantee Name: NC NONENTITLEMENT Grantee Address: 100 E. Six Forks Rd. Raleigh NC 27609 Grantee Email: rfuqua@nccommerce.com Neighborhood Name: Builders of Hope Date:2011-02-08 00:00:00 NSP3 Score The neighborhoods identified by the NSP3 grantee as being the areas of greatest need must have an individual or average combined index score for the grantee's identified target geography that is not less than the lesser of 17 or the twentieth percentile most needy score in an individual state. For example, if a state's twentieth percentile most needy census tract is 18, the requirement will be a minimum need of 17. If, however, a state's twentieth percentile most needy census tract is 15, the requirement will be a minimum need of 15. If more than one neighborhood is identified in the Action Plan, HUD will average the Neighborhood Scores, weighting the scores by the estimated number of housing units in each identified neighborhood. Neighborhood NSP3 Score: 14 State Minimum Threshold NSP3 Score: 14 22 P a g e

Total Housing Units in Neighborhood: 2184 Area Benefit Eligibility Percent Persons Less than 120% AMI: 90.43 Percent Persons Less than 80% AMI: 75.05 Neighborhood Attributes (Estimates) Vacancy Estimate USPS data on addresses not receiving mail in the last 90 days or "NoStat" can be a useful measure of whether or not a target area has a serious vacancy problem. For urban neighborhoods, HUD has found that neighborhoods with a very high number vacant addresses relative to the total addresses in an area to be a very good indicator of a current for potentially serious blight problem. The USPS "NoStat" indicator can mean different things. In rural areas, it is an indicator of vacancy. However, it can also be an address that has been issued but not ever used, it can indicate units under development, and it can be a very distressed property (most of the still flood damaged properties in New Orleans are NoStat). When using this variable, users need to understand the target area identified. In addition, the housing unit counts HUD gets from the US Census indicated above are usually close to the residential address counts from the USPS below. However, if the Census and USPS counts are substantially different for your identified target area, users are advised to use the information below with caution. For example if there are many NoStats in an area for units never built, the USPS residential address count may be larger than the Census number; if the area is a rural area largely served by PO boxes it may have fewer addresses than housing units. USPS Residential Addresses in Neighborhood: 2160 Residential Addresses Vacant 90 or more days (USPS, March 2010): 291 Residential Addresses NoStat (USPS, March 2010): 63 Foreclosure Estimates HUD has developed a model for predicting where foreclosures are likely. That model estimates serious delinquency rates using data on the leading causes of foreclosures - subprime loans (HMDA Census Tract data on high cost and highly leveraged loans), increasing unemployment (BLS data on unemployment rate change), and fall in home values (FHFA data on house price change). The predicted serious delinquency rate is then used to apportion the state total counts of foreclosure starts (from the Mortgage Bankers Association) and REOs (from RealtyTrac) to individual block groups. Total Housing Units to receive a mortgage between 2004 and 2007: 413 Percent of Housing Units with a high cost mortgage between 2004 and 2007: 45.79 Percent of Housing Units 90 or more days delinquent or in foreclosure: 9.9 Number of Foreclosure Starts in past year: 28 Number of Housing Units Real Estate Owned July 2009 to June 2010: 12 HUD is encouraging grantees to have small enough target areas for NSP 3 such that their dollars will have a visible impact on the neighborhood. Nationwide there have been over 23 P a g e

1.9 million foreclosure completions in the past two years. NSP 1, 2, and 3 combined are estimated to only be able to address 100,000 to 120,000 foreclosures. To stabilize a neighborhood requires focused investment. Estimated number of properties needed to make an impact in identified target area (20% of REO in past year): 5 Supporting Data Metropolitan Area (or non-metropolitan area balance) percent fall in home value since peak value (Federal Housing Finance Agency Home Price Index through June 2010): -7.9 Place (if place over 20,000) or county unemployment rate June 2005*: 4.9 Place (if place over 20,000) or county unemployment rate June 2010*: 9.2 *Bureau of Labor Statistics Local Area Unemployment Statistics Market Analysis: HUD is providing the data above as a tool for both neighborhood targeting and to help inform the strategy development. Some things to consider: 1. Persistent Unemployment. Is this an area with persistently high unemployment? Serious consideration should be given to a rental strategy rather than a homeownership strategy. 2. Home Value Change and Vacancy. Is this an area where foreclosures are largely due to a combination of falling home values, a recent spike in unemployment, and a relatively low vacancy rate? A down payment assistance program may be an effective strategy. 3. Persistently High Vacancy. Are there a high number of substandard vacant addresses in the target area of a community with persistently high unemployment? A demolition/land bank strategy with selected acquisition rehab for rental or lease-purchase might be considered. 4. Historically low vacancy that is now rising. A targeted strategy of acquisition for homeownership and rental to retain or regain neighborhood stability might be considered. 5. Historically high cost rental market. Does this market historically have very high rents with low vacancies? A strategy of acquiring properties and developing them as long-term affordable rental might be considered. Latitude and Longitude of corner points -80.898085 35.272462-80.898256 35.264823-80.897741 35.263702-80.900660 35.262090-80.904608 35.258165-80.904951 35.254030-80.896196 35.248072-80.893965 35.251437-80.888042 35.254941-80.885210 35.257605-80.880232 35.260899-80.887527 35.269168 Blocks Comprising Target Neighborhood 371190043011021, 371190043021000, 371190043021006, 371190043021008, 371190043021007, 371190043021005, 371190043021002, 371190043021003, 371190043021004, 371190043021001, 371190043022000, 371190043022007, 24 P a g e

371190043022009, 371190043022018, 371190043022017, 371190043022016, 371190043022015, 371190043022014, 371190043022013, 371190043022012, 371190043022011, 371190043022010, 371190043022033, 371190043022032, 371190043022031, 371190043022030, 371190043022029, 371190043022028, 371190043022027, 371190043022026, 371190043022025, 371190043022024, 371190043022023, 371190043022022, 371190043022021, 371190043022020, 371190043022019, 371190043022008, 371190043022006, 371190043022002, 371190043022003, 371190043022005, 371190043022004, 371190043022001, 371190043023000, 371190043023015, 371190043023014, 371190043023013, 371190043023012, 371190043023011, 371190043023010, 371190043023009, 371190043023008, 371190043023003, 371190043023004, 371190043023005, 371190043023007, 371190043023006, 371190043023002, 371190043023001, CITY OF DURHAM Neighborhood ID: 1703948 NSP3 Planning Data Grantee ID: 3799990N Grantee State: NC Grantee Name: NC NONENTITLEMENT Grantee Address: 100 E. Six Forks Rd. Raleigh NC 27609 Grantee Email: rfuqua@nccommerce.com Neighborhood Name: City of Durham Date:2011-02-08 00:00:00 NSP3 Score The neighborhoods identified by the NSP3 grantee as being the areas of greatest need must have an individual or average combined index score for the grantee's identified target geography that is not less than the lesser of 17 or the twentieth percentile most needy score in an individual state. For example, if a state's twentieth percentile most needy census tract is 18, the requirement will be a minimum need of 17. If, however, a state's twentieth percentile most needy census tract is 15, the requirement will be a minimum need of 15. If more than one neighborhood is identified in the Action Plan, HUD will average the Neighborhood Scores, weighting the scores by the estimated number of housing units in each identified neighborhood. Neighborhood NSP3 Score: 18 State Minimum Threshold NSP3 Score: 14 Total Housing Units in Neighborhood: 351 Area Benefit Eligibility Percent Persons Less than 120% AMI: 94.1 Percent Persons Less than 80% AMI: 91.2 Neighborhood Attributes (Estimates) 25 P a g e