U.S. Department of Housing and Urban Development Community Planning and Development NSP Problem Solving Clinic 2013 NSP Closeout for Grantees
When can grantees close out? To close out, grantees must: Draw and spend all of their Line of Credit Complete and meet a National Objective Meet the 25% Low-income Housing Requirement 2
When are you ready for NSP Closeout? Not complete, Not occupied, Does not meet national objective: Not ready for closeout All activities complete, All occupied, All meet national objective: Ready for Closeout 3
When can grantees close out? Closeout Status Update Before Grantees can close out HUD needs to publish the CPD Notice which includes Closeout Instructions to Field Offices for all OBGA programs includes all checklists and other forms needed for the process The Notice is currently in the internal clearance process After clearance, a draft version will be published but closeouts will not commence until after OMB s Paperwork Reduction Act (PRA) process NSP Team anticipates closeouts beginning in late 2013 4
Closeout Package Contents Even if the instructions change through clearance, the following things will need to be submitted at some time during the closeout process: Final QPR Closeout Certification Closeout Checklist SF -425 An Inventory of any Real Property and Equipment NSP Management Plan for Continued Affordability A Landbank Plan (Italics means exclusive to NSP) 5
Some Key Issues for Closeout Program Income after closeout: For States, Entitlements, and Non- Entitlements with an open State CDBG Grant: PI stays the same as current NSP PI 6
Some Key Issues for Closeout Program Income after closeout (cont.): For NSP2 Non-Profits and NSP3 Non Entitlements WITHOUT a Current State CDBG Grant: PI received prior to closeout is treated the same as current PI PI received during the first 5 years after closeout must be used for NSP eligible activities that meet a national objective (crosscutting requirements no longer apply). PI received 5 years+ after closeout is considered miscellaneous revenue. 7
Some Key Issues for Closeout Program Income after closeout (cont.): If you earn less than $25K in a year, then it is not considered PI, but must be spent on NSP admin or CDBG activities The 25% set aside does not apply unless you earn more than $250K in PI during a year. Note: In either case, if you earn $1 more than the limit, these exemptions do not apply. 8
Some Key Issues for Closeout Continued Affordability HUD will develop a reporting mechanism to ensure that Grantees report through the affordability period on all homes. Plans will describe roles and responsibilities for 5 to 20 year periods. 9
Some Key Issues for Closeout Land Banks The date the closeout agreement is signed will start the ten year clock to obligate property in a land bank for a specific use. 10
Some Key Issues for Closeout Land Banks (cont.) Eligible subsequent uses include: Public improvements like parks, drainage Land trust designation for affordable housing Transfer to CDBG program (no longer NSP) Affordable housing under active development Designation in redevelopment plan If not used after 10 years, reverts to CDBG program for immediate use. 11
Pre-Closeout Preparation Perfect QPR in DRGR Ensure every activity will meet a National Objective Begin to design a land bank plan Consider effects of commingling Line of Credit Funds and Program Income (could delay) Consider disposition strategies Review written agreements to ensure clear roles and responsibilities, post-closeout 12
QUESTIONS? Meet National Objective Land Banks Revolving Funds Land trusts Program income 13
DISPOSITION OF REAL PROPERTY IN NSP ACQUISITION & DISPOSITION ARE ELIGIBLE ACTIVITIES, BUT MUST ALSO MEET A NATIONAL OBJECTIVE (N.O.) STEP 1 STEP 2 ACQUISITION DISPOSITION FOR SUBSEQUENT USE MEETS Example: Lots acquired strategically for land bank 1. Subsequent activity is NSP-eligible Allowed in NATIONAL Example: Affordable housing either case OBJECTIVE as long as GO TO STEP 2: DISPOSITION 2. Subsequent activity is NSP-ineligible activity Example: LMMA health clinic meets N.O DOES NOT 3. Subsequent activity eligible but does not meet N.O. MEET Example: Lot acquired for housing but nothing built Example: Housing for upper income people NATIONAL OBJECTIVE 4. Ineligible activity, does not meet N.O. Example:Private golf course REIMBURSE ALL COSTS REIMBURSE INELIGIBLE COSTS Note that Disposition can occur through "Sale, Lease, Donation, or otherwise". 14
DISPOSITION OF REAL PROPERTY IN NSP: Examples NSP Roundtable 2013 Eligible Activities National Objectives Examples Housing LMMH/LH25 Rehabilitate multi-family or single-family housing Eligible Use B Disposition for Special Economic Development 1. LMMJ 2. LMMA 1. Create in-home day care center with new jobs 2. Long term lease of land for corner grocery store in target area Disposition for Ineligible activities 1. LMMA 2. LMMC 1. Donate to non-profit to develop community garden 2. Lease building for neighborhood senior center Housing LMMH/LH25 Rehab multi-family or single-family housing units Eligible Use C Disposition (as an end use) LMMA Side lot in area with comprehensive disposition Disposition for Ineligible activities LMMJ Discounted sale of property to be used for a hair salon that creates new jobs Eligible Use D Disposition (as an end use) LMMA Sell or donate to neighbor as side lot Disposition for Ineligible activities LMMA or LMMJ Donate land for local business development Housing LMMH/LH25 Construct new multi-family or single-family housing Eligible Use E NSP1 Public Facilities LMMC Homeless shelter Disposition for Special Econ Development LMMA or LMMJ Build a parking lot for a grocery store Disposition for Ineligible activities LMMA or LMMJ Lease to a for-profit to develop a shopping center NSP2 & NSP3 Housing Activity only LMMH/LH25 Renovate or build new multi-family housing 15