Neighborhood Stabilization Program FundsTHE CrrY OF Dubuque
DUB E AN-Amer~aCity
Masterpiece on the Mississippi
2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Application for Neighborhood Stabilization Program Funds
DATE: December 9, 2008
Housing and Community Development Department Director David Harris recommends
City Council approval to submit an application to the Iowa Department of Economic
Development for Neighborhood Stabilization Program funds in the amount of $459,406.
These funds will target acquisition, rehabilitation and resale of foreclosed and
abandoned properties in the interest of promoting reinvestment in downtown
neighborhoods.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Mich el C. Van Milligen
MCVM/jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
David Harris, Housing and Community Development Department Director
THE CITY OF Dubuque
~~
DUB E "ate'
1 1
Masterpiece on the Mississippi
2007
TO: Michael Van gen, City Manager
FROM: David~rris, Housing and Community Development Department
SUBJECT: Application for Neighborhood Stabilization Program funds
DATE: 3 December 08
Introduction
The purpose of this memorandum is to request the City Council's approval of a
resolution authorizing application to the Iowa Department of Economic Development
(IDED) for Neighborhood Stabilization program funds.
Discussion
IDED expects to receive $21 607 907 in funds from the US Department of Housing and
Urban Development (HUD) as Iowa's share of the Neighborhood Stabilization Program
(NSP.) The NSP funds were authorized by the Housing and Economic Recovery Act of
2008.
The purpose of the Neighborhood Stabilization Program is to provide emergency
assistance to state and local governments to purchase foreclosed or abandoned homes
and to rehabilitate, resell or redevelop these homes in order to stabilize neighborhoods
and deter decline in valuation of neighboring housing.
According to IDED data, Dubuque ranks seventh (of 11) major Iowa cities in number of
estimated foreclosures, with 325. This compares with Des Moines, ranked first, at 3157
foreclosures. A formula calculation allocates $459 406 to Dubuque, according to need.
An application must be submitted to IDED for approval of this award.
Eligible activities include: financing, i.e., `soft' second mortgages for homebuyers;
purchase, rehabilitation and resale of properties which have been either abandoned or
foreclosed; establishing `land banks' to hold foreclosed properties until market
conditions are more favorable for resale; demolition of blighted structures;
redevelopment of vacated sites; and housing counseling for home buyers. Purchased
homes may also be rented as an eligible activity; we do not intend to propose rentals in
our application.
Communities are allowed a six percent administrative fee, or approximately $27 000 for
Dubuque.
Additional program requirements include:
1. All beneficiaries must earn less than 120% of area median income. In Dubuque,
a family of four persons would qualify earning about $71 000.
2. At least 25% of the funds must benefit households earning less than 50% of area
median income.
3. Homes purchased for rehab/resale must be purchased at an average of no less
than 15% discount to current market appraised value.
4. Properties must remain affordable to households earning less than 120% income
for 5-25 years, depending on amount of subsidy. Recaptured funds must be
reinvested in eligible activities until 2013.
To be eligible as a foreclosed property, a mortgage or tax foreclosure action must have
been completed. An "abandoned" property is one on which foreclosure proceedings
have been initiated, no mortgage or tax payments have been made for 90 days and the
property has been vacant for 90 days.
We are currently researching the inventory of eligible foreclosed properties and expect
that the majority will be located in the lower-income neighborhoods in the city. IDED
requires that activities should be targeted in no more than 25% of the total number of
Census Tracts, in order to maximize neighborhood impact and stabilization.
Action Step
The action step requested of the City Council is to approve the attached resolution,
authorizing an application to the Iowa Department of Economic Development for
Neighborhood Stabilization Program funds, in the amount of $459 406. With these
funds, we will target acquisition, rehabilitation and resale of foreclosed and abandoned
properties in the interest of promoting reinvestment in downtown neighborhoods.
RESOLUTION NO. 429- 08
RESOLUTION AUTHORIZING SUBMISSION OF AN APPLICATION TO THE
IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT (IDED) FOR
NEIGHBORHOOD STABILIZATION PROGRAM FUNDS
Whereas, the US Department of Housing and Urban Development (HUD) has
made available funding to state and local governments to respond to the increased
number of foreclosures, by passage of the Housing and Economic Recovery Act of
2008; and
Whereas, IDED has allocated $459 406 of these Neighborhood Stabilization
Program funds to Dubuque, to acquire and redevelop foreclosed properties that might
otherwise become sources of abandonment and blight; and
Whereas, IDED requires submission of an application for approval of this
allocation.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. That an application to IDED for these funds is hereby approved.
Section 2. That the City Manager is hereby directed to sign this application and
resulting standard contract.
Passed, approved and adopted this 15th day of December, 2008.
Roy D. Buol, Mayor
Attest:
Jeanne F. Schneider, CMC, City Clerk