The Ground Floor

Second Home Buyers Still Looking

This post was written by Trisha Riggs, vice president of communications for ULI.

Despite the recession, high-end second-home buyers are still in the market, willing to purchase homes that meet their needs and desires but do not display conspicuous consumption, according to resort specialists speaking at ULI’s 2009 Fall Meeting in San Francisco.

According to a recent survey of second-home purchasers conducted by American Lives, the affluent are increasingly drawn to smaller units--provided they have the same amenities as larger, luxurious homes--because the downsizing is perceived to be more “politically correct” in the current economic environment of layoffs and budget cuts. 

American Lives President Brook Warrick said second-home buyers are still viewing the purchase as a personal reward, but that many of today’s buyers are purchasing the homes not as places to escape, but as gathering places to reconnect and re-establish bonds with family members and friends.

Life stages, said Warrick, are the best predictors of when purchasers will enter this niche market: 1)immediately upon retirement; 2) just prior to retirement; and 3) empty nesters still working, but who have different housing needs. What they aren’t compromising: any feature related to health and wellness--the one area that has not experienced any decline in consumer demand. These active, upper-income baby boomers are determined to stay fit and healthy, and are not content to age in just one place, but in several places, any of which could serve as a primary residence.

Also appealing: places that include educational components, and those that offer opportunities for altruism. "Being part of the greater community is very important to these buyers," said Toni Alexander, president and creative director of InterCommunications. Rather than presuming to know what the market wants based on pre-recession activity, it’s critical to examine how those buying preferences have changed, she said. "The world has changed, and once we understand that, we can do great things in design (of second-home and resort communities)."

Demographics of the Next Decade Will Transform New Housing and Retail

This post was written for The Ground Floor by Robert Krueger, communications associate with the Urban Land Institute.

SAN FRANCISCO -- There is no doubt that the big question at this year’s ULI Fall Meeting is what the U.S. and international markets will look like once the recession is over. For those in the industry, they realize that this economic downturn is uncharted territory and uncertainty for the future leads to many unanswered questions. A session panel focused specifically on the next decade and the implications that changing demographics will have on commercial real estate and land use patterns. Specifically, the panel answered the question of how people of the next decade will live, play, and shop.

The panel discussed two main demographic groups that will drive the next decade’s housing market: Generation Y and their parents (the aging baby boomers). As one panelist, Deborah L. Brett, president of Deborah L. Brett & Associates, stated that the demand from these two generations will determine the location of housing and heavily influence the success of retail and office space. 

James H. Johnson, director of the Urban Investment Strategies Center at the University of North Carolina, got more specific by addressing what he called 'disruptive demographics."”  With this, Johnson referred to changing demographics that are seriously altering real estate development and needs that have been in place for over a generation.

"The browning and graying America will transform all of our political and economic institutions, but especially real estate," said Johnson. "Increased minorities, immigrants, and seniors make up this package."

Brett pointed to the implications of these two generations as well as other statistics that are changing the market.  These include:

• Little or no growth in purchasing power due to the expectation of continued stagnation of household income over the next decade.

• Changes in the work place, such as delayed retirement, working from home, and computer based virtual meetings instead in-person less business travel.

• Greater diversity in housing since there are more single households, nontraditional households comprised of multiple roommates, and more minority and immigrant groups.

Will commercial real estate be in a position to handle these changes? In a publication released at the Fall Meeting, Five ULI Fellows Present Ideas for the Next Years, ULI senior resident fellow John McIlwain, said that these two groups and other changing demographics "will bring long-term growth to cities and help redevelop town centers. The bad news is that it is unlikely that enough new housing can be built in urban areas to meet this growing demand.  The result is likely to be rising urban housing costs--good for developers and owners and bad for homebuyers and renters with limited funds."

Five Experts Join the National Advisory Board of ULI Terwilliger Center for Workforce Housing

Five widely renowned housing and real estate finance experts have joined the National Advisory Board of the Urban Land Institute (ULI) Terwilliger Center for Workforce Housing, the Center announced today.

The ULI Terwilliger Center, established in 2007 by former ULI Chairman J. Ronald Terwilliger, supports the development of housing affordable to moderate-income workers, including teachers, nurses, firefighters, government workers, and police officers. Terwilliger, chairman of Atlanta-based Trammell Crow Residential, committed $5 million to the creation of the Center.

The National Advisory Board guides the Center’s program of work, which is to identify barriers to workforce housing production and eliminate those barriers by raising awareness of the affordability gap and by advocating changes in public policy. The Board, chaired by Mr. Terwilliger, has 14 members, including the five new Board members: Carin Barth, president of LB Capital, Inc., a private equity investment firm in Houston; Tom Bozzuto, CEO of The Bozzuto Group, a private real estate services organization; Steve Preston, former Secretary of the U.S. Department of Housing and Urban Development (HUD); Jonathan Reckford, CEO of Habitat for Humanity International; and Ronald A. Rosenfeld, former Chairman of the Federal Housing Finance Board.

Other members of the ULI Terwilliger Center’s National Advisory Board include:  former HUD Secretary Henry Cisneros, currently Chairman of City View in Los Angeles;  Bart Harvey, former Chairman of Enterprise Community Partners and the 2008 laureate of the ULI J.C. Nichols Prize for Visionaries in Urban Development; Bruce Katz, Vice President, Brookings Institution; Robert Larson, Chairman, Lazard Real Estate Partners, LLC; former Congressman Rick Lazio, Managing Director, Global Real Estate and Infrastructure, J.P. Morgan Asset Management; Nicolas Retsinas, Director, Joint Center for Housing Studies, Harvard University; Alan Wiener, Managing Director, Wachovia Securities; and Richard Rosan, Chief Executive Officer, ULI Worldwide.  

Audio: Housing Market Still Feeling Effects

Hear ULI's Senior Resident Fellow of ULI/J. Ronald Terwilliger Chair for Housing John McIlwain speak to Minnesota Public Radio yesterday on the real estate bubble and how the housing market is still feeling the effects. 

“Choice Neighborhoods” Program Announced by HUD Secretary

Public announcement by HUD Secretary Shaun Donovan and former HUD Secretary Henry Cisneros on July 14, 2009 at the National Press Club in Washington, D.C.

HUD Secretary Shaun Donovan and Henry Cisneros held a joint address at the National Press Club in order to announce the availability of $113 million in funding for HUD’s new competitive grant program called “Choice Neighborhoods”, which is intended as a replacement for HUD’s HOPE VI program. 

The event also marked the release of Mr. Cisneros’ new book “From Despair to Hope” which chronicles the history of the HOPE VI program and seeks to evaluate its overall success.  Over the course of its existence from 1992 to 2008, HOPE VI invested $6 billion in 240 public housing projects across the country, directly leveraging $11 billion of additional public and private urban investment totaling $17 billion.  The book includes essays from ULI Nichols Prize Winners Peter Calthorpe and Richard D. Baron, whose work has repeatedly been acknowledged as being instrumental to the creation and development of the HOPE VI program.

Sec. Donovan started his address relaying that President Obama has ordered a full review and assessment of all federal programs across all federal agencies with respect to their impact on urban and metropolitan areas.  No small undertaking!  This review is to be conducted by the Office of Management and Budget (OMB), the Domestic Policy Council, the National Economic Council, and the White House Office of Urban Affairs, and is expected to lay the groundwork for revamped urban policy agenda. 

Sec. Donovan went on to frame the backdrop of social and environmental justice issues related to U.S. housing policies, referring to an uneven “geography of opportunity” in U.S. cities.  He stated, “we must not penalize low-income families for the housing markets they live in” referring to the diverse housing markets in cities across the country.

“Choice Neighborhoods” is intended to extend the public-private development frameworks fostered by the Hope VI program beyond the sole objective of transforming public housing, thereby broadening its impact and extending its reach to catalyze community and neighborhood revitalization.  “Reinvesting in public housing, which is surrounded by deteriorated private properties, has little opportunity to succeed,” he said. 

Transforming public housing will remain a central objective of the program, but at $113 million in its first year, it does not measure up to the levels of HOPE VI funding in the late 1990s, which approached $700 million a year or the equivalent of about 15-20 annual project grants of around $35 million each.  The U.S. Department of Education has recently announced a companion grant program called “Promise Neighborhoods”, which is modeled on the Harlem Children’s Zone, which seeks to coordinate a broad range of social and educational activities all within one individual neighborhood.

Donovan echoed Obama’s recent directive to have HUD, US-DOT, EPA and US-DOE work in a more collaborative manner around the six “livability principles” laid out by agency directors at the beginning of June in testimony before the Senate Banking, Housing, and Urban Affairs Committee.  Donovan concluded by stating his belief that housing in the United States remains the “essential source of stability” for all citizens and that “the hopes and dreams of all Americans should not be limited by where one lives.”

HUD’s “Choice Neighborhoods” press release:
http://www.hud.gov/news/release.cfm?content=pr09-119.cfm&CFID=15174762&CFTOKEN=47616137

Sec. Donovan’s “Choice Neighborhoods” remarks:
http://www.hud.gov/news/speeches/2009-07-14.cfm

President Obama’s announcement of the federal policy review: http://www.whitehouse.gov/blog/A-New-Vision-for-Urban-and-Metropolitan-Policy/

HUD’s “Livability Principles” press release: http://www.hud.gov/news/release.cfm?content=pr2009-06-16.cfm

Housing: The Road Ahead

Attendees at ULI’s Spring Council Forum received an update on various efforts by the federal government to aid the housing recovery, including funding in the recently enacted economic stimulus package to support the weatherization of affordable housing, aid communities in neighborhood stabilization through the acquisition of foreclosed housing, and reignite use of the low income housing tax credit (LIHTC) program.

The billions allocated by American Recovery and Reinvestment Act--including more than $6 billion for energy efficiency conservation grants, $5 billion in weatherization assistance, $6 billion for foreclosure acquisition, and more than $2 billion in funding for the LIHTC program--represent opportunities not just for job creation, but to help lay the groundwork for a strategy for communities to grow out of the recession, panelists said. The key: the money must be used efficiently, effectively and in a timely manner to prove it was funding well spent.

An overview of the Washington, D.C.-based National Community Neighborhood Stabilization Trust was provided by trust president Craig Nickerson, who explained that the organization was created to facilitate the transfer of foreclosed and abandoned homes from financial institutions to localities to promote stability and stem neighborhood decline. The trust, based in Washington, D.C., is sponsored by Enterprise Community Partners, Inc.; the Housing Partnership Network; Local Initiatives Support Corporation; NeighborWorks America and the National Urban League.

According to Nickerson, the primary purpose of the organization is to "build a bridge" between lenders and state and local agencies, helping the government organizations learn how to best leverage the federal funding for acquisitions. With 90,000–plus foreclosed homes being added to the nationwide inventory each month, there is an urgent need to act quickly to stem further neighborhood decline, he noted. A focal point of its work: The "First Look" program, which allows localities quick access to foreclosed properties and an opportunity to acquire them before they are placed on the market. By purchasing the most distressed properties, the localities can catalyze turnaround activity by sparking private purchases of foreclosures, thus stretching the impact of the federal assistance, Nickerson explained.

A program for weatherizing and greening subsidized multifamily housing was discussed by Michael Bodaken, president of the National Housing Trust in Washington. "Preserving affordable housing is inherently energy- and resource-efficient," he said. The federal focus on this as part of a larger focus on green retrofitting funding has led to efforts to make more cost effective for multifamily owners to retrofit units and retain their affordability, he said. Bodaker pointed to Galen Terrace in Washington, D.C., as a successful example of greening an affordable housing development. The retrofitting, which has resulted in significant energy and water savings, "changed the nature of how the property looks…the tenants love it," he said. Prospects are promising for more of this activity, given the funding offered through the stimulus package.

Increased federal support for the LIHTC was reviewed by Shekar Narasimhan, managing partner of Beekman Advisors, Inc. in McLean, Va.The tax credit provides funding for the development costs of low-income rental housing by allowing an investor to take a federal tax credit equal to a percentage of the cost incurred for development of the low-income units in a rental housing project. Development capital is raised by syndicating the credit to an investor or, more commonly, a group of investors. The program is administered at the state level with each state getting a fixed allocation of credits based on its population.

The current economic downturn has greatly diminished demand for the credits, as investors such as financial institutions have incurred losses and have less income to shelter. At the core of the federal effort to spur more use of the program is an initiative making it easier for state housing agencies to either exchange existing credits for cash or to redistribute the credits. As yet, as many as eight states have promulgated rules for using the federal funds to ramp up use of the tax credits, Narasimhan said, speculating that the rest of the states "are likely waiting to see what happens" as a result of actions by those few. What is clear, he said, is that "we need proof that this effort is working…If we can’t prove that it works, we won’t get any more funding." 

A Closer Look at the Homeowner Affordability and Stability Plan

This post was submitted by ULI Senior Resident Fellow for Housing John McIlwain, who analyzed guidelines issued by the Obama Administration regarding its plan to mitigate home foreclosures nationwide.

Yesterday, the Treasury Department announced it was publishing the guidelines for the Administration’s "Making Home Affordable" program. This is the second half of the "Homeowner Affordability and Stability Plan" announced several weeks ago. The first part is the program requiring Fannie Mae and Freddie Mac to refinance mortgages they hold or have guaranteed even if the principal amount of the loan is more than 80 percent of the value of the home (but not more than 105 percent). This program is also underway now.

The Making Home Affordable program is far more complex than simply asking Fannie and Freddie to refinance a high loan-to-value mortgages. In this part of the plan, lenders have to voluntarily agree to modify a loan. The first step is for the lender to bring the amount of the borrowers’ monthly payments (including principal, interest, insurance and taxes) down to 38 percent of their income by reducing the interest rate (but not below 2 percent). Then the monthly payments are to be reduced further, down to 31 percent of income, and the government will share the cost of this further reduction including, if need be, a reduction of principal.

Because the program is voluntary, there are incentive payments for lenders, servicers, and borrowers. There is also what are called "Home Price Decline Reserve Payments," which will cover part of the decline in the value of a home if a modified loan has to be foreclosed later on. These are designed to encourage lenders to modify loans even if they fear that home values are declining and so it is better to foreclose now than later.

At this point the program gets quite complex. In fact, these complexities are both necessary, given the wide variety of circumstances borrowers may be in, and may be the downfall of the program. Sevicers of single family mortgages work on very thin margins and are already overwhelmed by the volume of defaults, requests for modifications, and foreclosures. They have little capacity to work through all the various provisions included in the guidelines.

Furthermore, there are a number of business and legal reasons why it is far easier for a servicer to opt to foreclose on a loan than attempt to modify it. The history of loan modifications over the past year also has been mixed to say the least; over half of them by some reports are already back in default (though this is most likely due to the fact that only those modifications done by the FDIC in fact reduce the monthly payments to 31 percent of income--the rest have been short term deferrals of part or all of the amounts due but unpaid due to the default). So one question is whether the incentives for the servicers and lenders will be sufficient to encourage modifications in large numbers.

This is by far the most ambitious plan to stem the increasing flood of foreclosures. Nevertheless, it has its limits. An increasing number of the defaults and foreclosures each month are due to borrowers losing their jobs in the declining economy.  To put it bluntly, it is hard to calculate 31 percent of no income, and so this plan is unlikely to help the unemployed.

Furthermore, there are some 13 million homes "underwater," with loans worth more than the value of the homes. As home values continue to fall, this number is rising. It is all too possible that these borrowers will at some point chose not to opt for a loan modification but simply send in the keys (called "jingle mail" in the business) and walk away from homes in which they have no equity.

So the Administration get an A for effort and thoughtfulness. There may in fact be no better plan possible short of a moratorium on all foreclosures. Many borrowers will likely get modifications they would otherwise not get, which is all to the good. But this plan is unlikely to end the growing number of foreclosures, only slow it somewhat.

• Modification Program Guidelines
• Summary of Guidelines
• Fact Sheet

Rental Housing Preservation Initiative

As two million rental unit have been demolished over the last 10 years. In an effort to help 12 states preserve more than 70,000 affordable rental homes, the Macarthur Foundation's $32.5 million investment--$9.5 million in grants and an additional $23 million in low-interest loans--will leverage more than $147 million in other funding.

The new projects will assist military families in Maryland, seniors in rural Iowa and Vermont, low-wage workers in Florida and Oregon, and people who have been homeless in Los Angeles. They will promote energy efficiency in Pennsylvania, save distressed buildings in Minnesota, improve management of rental housing in Washington State, and ensure that rental homes are available in gentrifying areas near public transit in Denver.

“These grants have spurred state and local innovation and leadership in the preservation of affordable housing,” said U.S. Department of Housing and Urban Development Secretary, Shaun L. Donovan. “At each grantee site, a representative of HUD has participated in developing the strategies and aligning efforts. It is my goal to make HUD a strong partner at the state and local level. The MacArthur Foundation should be commended for supporting partnerships across the government, private and nonprofit sectors.”

State and local governments in 40 states competed for MacArthur’s support, indicating broad, national interest in preserving affordable rental housing. The Foundation’s funding for these 12 projects is a part of MacArthur’s Window of Opportunity initiative, a $150 million, ten-year effort to preserve affordable rental homes across the nation. By investing in public sector initiatives such as these, the Foundation hopes to help create a wave of policy reform in cities and states that will make it possible to preserve one million homes this decade.

“For many years, the goal of home ownership has been emphasized in the U.S. and as a country we lost sight of the value of rental housing in a balanced national housing policy,” said MacArthur President Jonathan Fanton. “The end of the housing bubble and a wave of foreclosures have underscored the importance of affordable rental housing. We now have an opportunity to reset the policy agenda, restore rental housing to its proper place, and reshape the policy environment so that it both encourages rental housing preservation and makes it easier to do. State and local governments are at the forefront of this effort, showcasing innovation and trying fresh approaches.”

Read more about The Preservation Compact, a rental housing strategy for Cook County, guided by ULI Chicago with support from The MacArthur Foundation.

Stimulus Bill: Summary of Housing Provisions

This post was written for The Ground Floor by John McIlwain, ULI Senior Resident Fellow, ULI/J.Ronald Terwilliger Chair for Housing at ULI.

Below is an excellent summary of the housing provisions in the new stimulus bill just signed into law prepared by the Citizens’ Housing and Planning Association of Massachusetts.

2009 Final Stimulus Bill--Housing Provisions
February 13, 2009

The Conference Committee issued its version of the stimulus bill (H.R.1 - The American Recovery and Reinvestment Act of 2009) on February 12. The following pages provide more detail on the bill provisions.

New Appropirations	Conference
Public Housing Capital Fund	Public Housing Capital Fund $4 billion ($3 billion by formula)
CDBG	$1.0 billion - for formula grants
HOME (for LIHTC Gap Filler only	$2.25 billion
Neighborhood Stabilization Program (NSP)	$2.0 billion
Homelessness Prevention	$1.5 billion
Section 8/ 202/ 811 Project-Based contracts (to ensure 12 month funding)	$2.0 billion
Section 8/ 202/ 811 Energy Retrofit Grants/Loans	$250 million
Native American Housing Block Grant	$510 million
Lead Hazard Abatement	$100 million
Self-Help/Assisted Homeownership	0
Total HUD: $13.61 billion
Community Development Financial Institutions	$100 million (new capital)
DOE Weatherization Program	$5 billion*
LIHEAP (Fuel Assistance)	0
Community Services Block Grant	$1 billion**
FEMA Emergency Food & Shelter	$100 million
Rural Housing 502 loan authority	$1 billion for direct loans; $10.472 billion for unsubsidized guaranteed loans; $200 million for loan costs, including costs of modifying ($67million for direct, $133 million for unsubsidized)
New Market Tax Credits	$3 billion ($1.5 billion each in 2008 and 2009)
Total Other: $20.872 billion

* Bill also raises income limit to 200 percent of poverty, allowed investment per household to $6,500 and allowed spending for training and technical assistance to 20 percent. Extends eligibility for re-assistance to homes weatherized prior to 9/30/1994.

** Bill also allows States to raise eligibility limit to 200 percent of poverty for FY2009, FY20100.

Tax and Statutory Changes

Low Income Housing Tax Credit (LIHTC) Grant Exchange	Lets states exchange 2008 and 2009 9 percent credit allocations for upfront one-time grant set at 85¢ for every $1 of credit exchanged times 10. States can exchange up to 100 percent of unused 2008 credits and up to 40 percent of new 2009 credits. Grant can assist non-LIHTC projects that meet LIHTC income limits, etc.  Must spend by 1/1/2011.
LIHTC Accelerator	Not in
Homebuyer Tax Credit Revision	Revises current first-time homebuyer credit for 10 percent of purchase price. For purchases between Jan. 1-November 30, 2009, raises maximum credit to $8,000 and drops repayment requirement if principal residence at least 3 years.
FHA and GSE Loan Limits 2009	Keeps 2008 FHA and GSE limits as a floor and allows HUD or FHFA to set a higher limit for sub-areas if warranted by sub-area median home prices. [§1202]

Appropriation Details

Program	Appropriation Details
Public Housing Capital Fund	Provides $4 billion in new funds, of which: $3 billion is to be distributed using the 2008 formula (can withhold from troubled PHAs and PHAs that decline funds) $1 billion to be awarded competitively Up to 0.5 percent of appropriation can be used for HUD costs
Competitive grants	HUD shall use $1 billion for competitive grants for “priority investments” including investments that leverage private sector funding or financing for renovations and energy conservation retrofit investments.
Mandated Priorities	In using funds, PHAs must give priority to: rehab of vacant apartments projects underway or in their 5 year capital plan projects that can award contracts based on bids within 120 days from date funds are made available to them
Maintenance of effort	Requires HUD to take steps to ensure funds serve to “supplement and not supplant expenditures from other federal, state or local sources independently generated by the grantee”
HUD waiver authority/ limitations	Lets HUD waive or specify alternative requirements “for any provision of any statute or regulation in connection with the obligation by the Secretary or the use of these funds” as needed to “expedite or facilitate the use of such funds” (except fair housing, non-discrimination, labor standards and the environment). Also allows HUD to waive state and local procurement requirements. makes “restriction of funding to replacement housing inapplicable” explicitly bans use for operating or rental assistance activities
Obligation and spending deadlines	HUD must obligate formula funds within 30 days of bill enactment and must obligate competitive grants by 9/30/2009 PHAs must obligate 100 percent of funds within 1 year of date on which funds become available to them for obligation, spend at least 60 percent within 2 years of that same date and 100% within 3 years HUD must recapture, reallocate funds from PHAs that fail any of the three deadlines
Assisted Housing Energy Retrofit Grants/Loans	$250 million for grants or loans for energy retrofits and green investments to property owners with project based rental assistance under S202, S811or S8 owners must extend term of affordability by time set by HUD (at least 15 years) Up to 5 percent of appropriation may be used by HUD for underwriting, loan oversight, and up to 1 percent for staffing, training, technical assistance, evaluation, etc. Grants or loans shall be provided through the “policies, procedures, contracts, and transactional infrastructure” of existing Office of Affordable Housing Preservation programs HUD can set terms and conditions as appropriate, including as needed to facilitate timely expenditure of funds HUD can offer incentives to owners to undertake energy retrofits and green investments as part of these programs, including but not limited to fees for investment oversight and implementation or to encourage job creation for low- or very-low-income individuals HUD may share in a portion of future property utility savings resulting from these grants or loans
Deadlines, Waivers	HUD must take steps to ensure recipients spend funds within 2 years of receipt. HUD may waive or specify alternative requirements (except fair housing, labor standards, environmental and nondiscrimination) as needed to expedite or facilitate use of funds
HOME Gap Filler funds	$2.25 billion to be distributed to state tax credit allocating agencies for capital investments in LIHTC projects Funds to be distributed to States based on the percentage of HOME funds each State (including its participating jurisdictions) received for FY2008 Eligible basis shall not be reduced by the amount of any grant under this Section
Selection process	Allocating agencies must: award funds competitively pursuant to their QAP to owners of projects who have received or receive simultaneously an LIHTC award. Projects that were awarded allocation in FY2007, FY2008 or FY2009 are also eligible for funding. give priority to projects expected to be completed within 3 years of bill enactment give HUD information on projects that receive funding under this program and HUD website must publish list of all projects receiving awards, award amount and link to the QAP used to make award
Deadlines	States must commit at least 75 percent of funds within 1 year of bill enactment Owners must spend 75 percent of funds within 2 years of date of bill enactment and 100 percent within 3 years. If owners fail to meet either deadline, state allocating agencies must “redistribute” these funds Any funds not spent within 3 years of date of bill enactment shall be redistributed by HUD to other states that have used all funds States must establish compliance and recapture procedures
Waivers	Same as for other programs. Projects must follow HOME environmental review requirements
CDBG	$1 billion in new funds for formula grants (using FY2008 formula) to 2008 grantees HUD must establish requirements to expedite use of funds. Can waive or specify alternative program requirements (except with regard to fair housing, etc.) to expedite use of funds as long as consistent with overall purpose of statute Recipients must give priority to projects that can award contracts based on bids within 120 days of date funds are made available to them
Neighborhood Stabilization Program (NSP)	$2 billion in new funds, to be awarded competitively (vs. by formula). HUD can use up to 1 percent for staffing, training, evaluation, etc. HUD can use up to 10 percent of grant funds to provide “capacity building of and support for local communities” receiving NSP funds
Grant selection criteria; eligible entities	All $2 billion must be allocated competitively. HUD can set a minimum grant size. Eligible entities include states, units of local government and nonprofit entities or consortia of nonprofit entities; nonprofits may submit proposals in partnership with for-profit entities HUD must ensure grantees are in areas with the greatest number and percentage of foreclosures and can meet spending deadlines below Criteria for awards must also include grantee capacity, leveraging potential, and concentration of investment to achieve neighborhood stabilization, as well as any other criteria HUD establishes.
NSP Deadlines	HUD must publish criteria for grant competition within 75 days of bill enactment with applications due to HUD within 150 days of bill enactment. HUD must obligate all funds within 1 year of bill enactment. Grantees must spend at least 50 percent of allocated funds within 2 years of date funds become available to them and 100 percent within 3 years.
NSP Repayment Requirements	Revises statute by repealing the requirement that revenues generated by the use of NSP funds had to continue to be used for NSP activities and some returned to the Treasury after five years. Still requires that all revenues generated to States and units of general local government be treated as CDBG funds (silent re: any nonprofit revenues).
Revisions to Eligible Uses of Funds, Demolition Restrictions	Makes minor revisions to statutory language regarding eligible uses: adds operation of land banks for homes and residential properties (as opposed to just establishment of land banks) clarifies that NSP funds for redevelopment of demolished or vacant structures can only be used to redevelop them as housing caps each grantee’s spending on demolition in connection with land bank and redevelopment activities at 10 percent of their grant unless HUD determines such use appropriate to local market conditions.
NSP Renter Protections	Forbids grant and loan recipients from refusing to rent a unit in an NSP assisted dwelling to a household based on their status as a Section 8 voucher holder (applies to old NSP too starting date of bill enactment) Starting on date of bill enactment, successors in interest of foreclosed or other properties acquired with these funds: cannot evict bona fide tenants without giving them at least a 90 day notice to vacate (longer if required by state or local law), subject to any additional protections available to tenants with a subsidized tenancy, and must honor leases of bona fide tenants until end of term (or subject to rights of state law if no lease or tenant at will), except can terminate upon date of sale to another purchaser who will occupy the property as a primary residence or if property is not marketable if tenant remains or if the owner or subsequent purchaser desires units for personal or family use. In any case must give bona fide tenants 90 day notice must comply with terms of lease and HAP contract of any bona fide tenant who is a voucher holder at the time of the acquisition or financing. If public housing agency (PHA) is unable to make payments to the successor in interest due to action or inaction by the successor (e.g. rejection of rent payments, housing quality violations) or inability to make contact with successor, PHA may use funds it would have used to pay rent to (1) pay utility costs that are the responsibility of the owner under the lease or (2) reasonable moving costs for the family including security deposit costs Defines bona fide tenant as tenant, who is not the owner being foreclosed upon, with a lease/tenancy entered before the notice of foreclosure that is the result of an arms-length transaction and that requires “rent not substantially below fair market rent”.
Homelessness Prevention Fund	$1.5 billion for homelessness prevention and “rapid re-housing”. Funds to be distributed using the Emergency Shelter Grant (ESG) formula. Up to 0.5% of appropriation can be used for HUD costs. Funds must be used for: short- or medium-term rental assistance housing relocation and stabilization services including housing search, mediation or outreach to property owners, credit repair, security or utility deposits, utility payments, rental assistance for a final month at a location and moving cost assistance other appropriate activities for homelessness prevention or rapid rehousing of persons who have become homeless allows HUD to set a minimum grant size requires grantees to track use of funds and persons served through HMIS or comparable system lets grantees use up to 5 percent of award for administrative costs allows HUD to waive program requirements (with usual exceptions)
Deadlines	Within 30 days of bill enactment, HUD must publish a notice to establish the requirements needed to carry out this program. The notice will take effect upon issuance. Grantees must spend at least 60 percent of funds within 2 years of date funds become available and 100 percent within 3 years. HUD may recapture unexpended funds in violation of the 2 year deadline and redistribute to other grantees.
Waivers	HUD may waive statutory or regulation requirements as needed to facilitate timely expenditures (with usual exceptions).
Lead Hazard Reduction	$100 million – funds must go first to jurisdictions that applied for funding under the FY2008 NOFA for the Lead Based Paint Hazard Control Grant but did not receive award due to funding limits. Any remaining funds shall be added to the FY2009 NOFA amount. Allows faster environmental review process by treating certain programs – funded now or earlier- as “special projects” including Healthy Homes Initiative, Operation Lead Elimination Action Plan and Lead Technical Studies. Grantees must spend at least 50 percent within 2 years of date funds become available to them and 100 percent within 3 years.

Retrofit Neighborhoods–Not Just Infill

This post was written for The Ground Floor by Rick Abelson, ULI Council Member, and director at Online Land Planning in Redondo Beach, California.

The views expressed are solely those of the author and do not reflect the views of
the Urban Land Institute.

While the Government stimulus package calls for massive upgrades and retrofits to make hundreds of thousands of buildings more energy efficient, we should take time to look out these windows before loosening the frames to add a triple glaze.

Surely, our viewshed needs to clear out. For instance, it’s fortunate that the credit crunch has stopped the proliferation of soulless commercial strip centers. They will continue to ruin the visual quality of our communities for years to come. Poor designs and lack of enforcement have left neighborhoods with inferior building colors and materials, cluttered storefronts, overt signage and lighting, inadequate parking and retail redundancies of coffee, fast food, and drugstores.

The shift towards urban infill allows us to forget our mistakes in the suburbs and the lure of transit-oriented development (TOD) and affordable housing are questionable right now. Los Angeles is a good example. Inexpensive land is a motivator, but there is virtually no environmental mitigation that can be crafted for the cumulative effects on people regarding summer heat, urban glare, wind, shadow, and noise or on social issues with the lack of urban recreation (other than private gyms), availability of healthcare and school choices, concern for personal safety, garden space, and owning a pet. You either accept it or you don’t.

Look out an airplane window and see the quiet solitude of people living throughout the land that are already untethered--but connected. To preserve and enhance this choice, now is the time to retrofit suburban communities that we’ve already built--not abandon them. To start, there needs to be neighborhood based micro-economies for home offices, small businesses, and telecommuters so they can centralize locally, share services and connect through today’s ubiquitous technology. This will immediately reduce transportation demand.

Second, we need to retrofit existing neighborhoods so people are within walking distance from where they live today and can get access to health care and a variety of nearby school choices for all types of learning. We could pay for this by having developers, homebuilders, insurance companies, schools, and our government work together by:

• Building affordable SMART homes and passing the energy savings on to homeowners;
• Using a portion of the first-time home buyer tax credit to purchase health savings accounts;
• Creating a ‘quality of life retail mix’ based on health, business and education;
• Limiting unnecessary earth moving, grading and infrastructure to design with nature; and
• Living within our means for a decade or so and realizing that ‘small is the new big.'

It’s time that planners, developers, home builders, and community agencies peek out of their own business silos to think about how to retrofit neighborhoods so people can incubate, launch innovation, and stay healthy--all with a few steps of their front door.