The Neighborhood Stabilization Program, authorized under the Housing and Economic Recovery Act of 2008, provides grants to state and local governments, non-profit and for-profit housing organizations to purchase foreclosed or abandoned homes and to rehabilitate, resell or redevelop homes.
The goal of the program, which is operated by U.S. Department of Housing and Urban Development, is to stabilize neighborhoods and stem the decline in value of neighboring homes.
The intent is to use the funds to acquire and rehab foreclosed and blighted property and restore the units to adequate functional housing. The initial phase of Neighborhood Stabilization Program required each organization to purchase property at a 15 percent discount from current appraised value.
But during the second phase of the Neighborhood Stabilization Program that was reduced to just 1 percent below appraised value because the higher rate was further driving down comparable home values. The change came about in part because of public comment.
Nationally, nearly $6 billion was made available for the Neighborhood Stabilization Program, including more than $45 million in South Carolina. In the Charleston area, the Lowcountry Housing Trust was awarded $7.4 million in Phase 1 money to acquire and redevelop about 70 properties with 10 for quick resale, according to CNNMoney.com. The others will be used for rentals.
Funds awarded to S.C. organizations are administered at the state level by the S.C. State Housing Finance and Development Authority.
They are passed through a competitive application process to local municipalities, councils of governments and non-profit housing organizations. These local agencies have partnered, hired or contracted with local developers and general contractors to actually carry-out the rehabilitative processes.
This multi-tiered process of passing funds from one organization to another, to another and to another before the work is actually completed, undoubtedly creates an unnecessary maze of bureaucratic paper work and regulatory processes. Unfortunately, this is nothing new in the federal housing arena.
Erich Chatham is a small business owner who lives in Charleston. He is a member of the Bastiat Society.