While the demolition and rehabilitation of single-family homes gets a lot more attention than multifamily properties do under the Neighborhood Stabilization Program (NSP), Project Rebuild, the next generation of the program offered in President Obama’s jobs bill, provides an opportunity for nonprofit and for-profit apartment owners alike.
The $15 billion Project Rebuild will provide funding to purchase, rehabilitate, and/or redevelop foreclosed, abandoned, demolished, or vacant properties, including apartment buildings. The funding can also be used to establish and operate land banks.
In the last round of NSP allocations, nonprofits and government agencies were the only entities allowed to compete for funds. In this round of allocations, however, for-profit, private companies, which could include apartment developers and owners, can compete for funds that could be used to rehab or demolish blighted apartment buildings. In this round, commercial properties are also covered, which could open the way for rehabilitation of older, mixed-use properties.
The $15 billion would be split into two buckets—$10 billion for formula allocation, to be distributed through states and entitlement communities, and $5 billion to be distributed through competition. Each state will receive a minimum of $20 million of the $10 billion in formula funds with additional money targeted for areas with home foreclosures, homes in default or delinquency, high unemployment, and commercial foreclosures, among other things. Developers can apply to states to receive these funds.
A spokesperson for HUD says the most direct way to obtain funding may be to try to tap into the $5 billion set-aside through competition. Those funds will also be available to states, local governments, and nonprofits. The funds will be used to employ or house low-, moderate-, or middle-income individuals or families. Grantees must spend 100 percent of the money within three years.
The huge hurdle, of course, is getting the jobs bill, which Project Rebuild is a part of, through Congress. If it passes, past success with the previous generation of the program bodes well for stage two: Since 2008, HUD has disbursed nearly $7 billion through NSP in three separate rounds to mitigate the impacts of foreclosure.