File: 
NSP Vacant property issue sign-on letter FINAL.pdf

Summary

  • National Foreclosure Prevention and Neighborhood Stabilization Task Force
     
    November 18, 2009
     
    The Honorable Christopher J. Dodd, Chairman
    The Honorable Richard C. Shelby, Ranking Member
    Committee on Banking, Housing & Urban Affairs
    United States Senate
    Washington, DC 20510
     
    Dear Chairman Dodd and Ranking Member Shelby:
     
    The undersigned organizations and localities strongly support a legislative fix that would permit redevelopment or rehabilitation of vacant properties to qualify for the 25% low-income set-aside requirement of the Neighborhood Stabilization Program (NSP).
     
    Although NSP funds may be used for the purchase and redevelopment of vacant properties, the statute precludes the renting or selling these homes to very low-income households from counting toward the requirement that 25% of funds be spent on families with incomes below 50% of Area Median Income. Therefore, only abandoned or foreclosed homes count toward satisfying the 25% requirement.
     
    Such a limitation is proving difficult for localities implementing NSP for several reasons:
     
    First, this frustrates attempts to leverage NSP funds with other programs, such as the Low-Income Tax Credit (LIHTC) or the Community Development Block Grant (CDBG). Localities around the country have identified eligible vacant properties and secured LIHTC investment, but the deals have stalled because the NSP funding on such projects cannot meet the 25% low-income set-aside requirement. The problem is particularly acute in communities with large inventories of vacant tax lien foreclosures, which, under current municipal ownership, no longer qualify as foreclosed under NSP.
     
    Second, this increases the per-unit cost to rehabilitate and sell low-income homes because localities must add deeper subsidies to scattered-site properties than would be required if NSP were leveraged to produce or rehabilitate multi-family rental developments.
     
    Third, this prevents vacant properties from becoming productive neighborhood assets. The vacant property category is the most versatile for the purposes of holistic neighborhood stabilization. Disallowing vacant properties to count toward the set-aside requirement means that localities are often unable to rehabilitate vacant properties that have not gone through formal foreclosure proceedings. This means these properties remain blights on the neighborhood, off setting any positive impacts from NSP investments in adjacent or nearby properties.
     
    Therefore, we ask that you fix this statutory inconsistency and permit rehabilitation or redevelopment of vacant properties, already an eligible use under NSP, to count toward the 25% low-income set-aside requirement. We support the legislative language from Amendment number 2409 to H.R. 3288 that was proposed by Chairman Dodd on September 16, 2009.
     
    Sincerely,
     
    The undersigned organizations and localities