Tuesday, September 27, 2011

Proposed Jobs Bill Includes $15 Billion for Project Rebuild, “Next Generation” of NSP

by Sarah Greenberg,
Senior Manager for Community Stabilization
NeighborWorks America

This post originally appeared in Stabilize, the blog of NeighborWorks America's Stable Communities Initiative.

President Obama has proposed the American Jobs Act, containing a variety of incentives and programs aimed at getting more Americans back to work.

One of the components of the bill is Project Rebuild, described as the “next generation” of the Neighborhood Stabilization Program (NSP). The bill proposes a $15 billion budget (more than double the total allocations of NSP Rounds 1, 2 and 3 combined) — two-thirds of which would be allocated directly to participating jurisdictions (as in NSP Rounds 1 and 3), and the other third would be allocated through a competitive process (as in NSP Round 2).

The overall American Jobs Act and Project Rebuild are drawing criticism, and their likelihood of passage is uncertain. Project Rebuild is intended to connect Americans looking for work, with the work needed to repair and repurpose residential and commercial properties. Like NSP, Project Rebuild would be focused on acquiring, rehabilitating and re-occupying foreclosed residential property, but there are several modifications:

  • It broadens eligible uses to allow commercial projects and other job creating activities, capped at 30 percent.
    Many regions with concentrated home foreclosures also have concentrations of vacant commercial structures that weigh on property values and make it less likely that new businesses will come into the community and invest new capital. Project Rebuild will tackle this problem directly by allowing grantees to rebuild and repurpose distressed commercial real estate.
  • Up to 10 percent of formula grants may be used for establishing and operating a jobs program to maintain eligible properties in target neighborhoods.
    Project Rebuild will enable grantees to use funds to establish property maintenance programs to create jobs and mitigate “visible scars” left by vacant/abandoned properties.
  • Each state will receive a minimum of $20 million of the $10 billion in formula funds.
  • Beyond this baseline, funds will be targeted to areas with home foreclosures, homes in default or delinquency, and other factors determined by HUD, such as unemployment, commercial foreclosures, and other economic conditions.
Project Rebuild also seeks to scale up successful land bank models, providing infusions of capital to leverage private sector investment, and to empower and expand collaborations with for-profit developers where appropriate.

Other features of Project Rebuild include:
  • Project Rebuild will provide funding to purchase, rehabilitate, and/or redevelop foreclosed, abandoned, demolished, or vacant properties. Funding can also establish and operate land banks or demolish blighted structures.
  • Project Rebuild will support an estimated 191,000 jobs and treat at least 150,000 properties across all 50 states.
  • HUD will allocate formula funds within 30 days of Congressional enactment of Project Rebuild, complete the competition, and obligate all funds within 150 days of enactment. Grantees will have three years to spend 100 percent of funding. HUD will establish further benchmarks for expenditures at one year and two years.
  • Formula funding will go directly to states and entitlement communities across the country. Competitive funds will be available to states, local governments, for-profit entities, non-profit entities and consortia of these entities.
  • Strict standards of oversight will ensure good stewardship of these funds. HUD will strengthen existing accountability procedures by requiring that grantees have an internal auditor to continually monitor grantee performance to prevent fraud or abuse. Grantees will be required to provide quarterly progress reports and HUD will recapture funds from underperforming or mismanaged grantees to reallocate those funds to areas with greatest need.
The Project Rebuild proposal is an acknowledgement of the importance of neighborhoods to Americans’ quality of life and to the economy, and of the effective work of nonprofits, government and their private sector partners in stabilizing communities.

Project Rebuild would leverage the significant investment in capacity building of grantees and their partners in foreclosed property acquisition, rehab and repurposing. By adding much-needed capital to this capacity, Project Rebuild has the potential to not only create jobs, but to enable communities to scale up their impact and achieve the momentum necessary to tip more neighborhoods back to a trend of improvement.

Here are a Fact Sheet and FAQ on Project Rebuild.