By Eugene T. Lowe
May 11, 2009

Department of Housing and Urban Development notices came after several months of anticipation by cities on the Community Development Block Grant (CDBG) and the Neighborhood Stabilization Program (NSP). Two notices for the second round of Neighborhood Stabilization funding, referred to as NSP2, and a notice on CDBG, referred to as CDBG-R, have been posted on the HUD website. The CDBG notice was accompanied by a letter from HUD Secretary Shaun Donovan as part of “an effort to ensure responsible spending on Recovery Act funds.”

Funding was appropriated for both programs by the American Recovery and Reinvestment Act (ARRA) of 2009. With respect for NSP2, local governments, states, and non-profits can compete for $1.93 billion to implement neighborhood stabilization programs to address the effects of mortgage foreclosures. Applications for the NSP funds will be due July 17. Applicants may also compete for technical assistance funds. No more than $50 million will be available to communities receiving NSP2 funds or NSP1 funds for technical assistance which would include the capacity building of local communities to carry out neighborhood stabilization. Applications for NSP technical assistance will be due June 8.

Congress appropriated $1 billion for CDBG. Grantees will have to provide a substantial amendment to their action plan on or before June 5. The public comment period, which is usually 30 days, has been shortened to seven days to expedite the process of application submission. While all regular CDBG program activities are eligible with the exception of those prohibited in the Recovery Act, the notice emphasizes the prudent use of funds.

To further make the point that the CDBG funds should be used wisely, Donovan in a separate letter reminds grantees about Section 1604 of the Recovery Act that “prohibits the use of the funds for certain types of projects including aquariums, casinos, golf courses, swimming pools, and zoos. This prohibition is clear and direct, and HUD’s guidance on the use of CDBG-R funds reflects these prohibitions.” The funds, the Secretary says, provides communities “with a significant opportunity to address critical employment and economic development needs.”

The NSP notices are available on HUD’s recovery website: http//www.hud.gov/recovery/nspg.cfm. The CDBG-R notice is available also on the HUD recovery website: http://www.hud.gov/recovery/cdblock.cfm. A link to the HUD website and both programs can be found on the U.S. Conference of Mayors website: usmayors.org.