In July 2008, as a response to declining housing values and the growing number of housing foreclosures in the nation, Congress adopted the Housing and Economic Recovery Act of 2008. Part of that new law is the Neighborhood Stabilization Program, which provides nearly $4 billion to address housing issues in neighborhoods and communities that could lead to long-term declines of housing values of neighboring homes.

Public policy to encourage housing development and home ownership is a major element of asset-building policy in the United States (see our July 2005 newsletter). While homeownership rates are generally higher in rural areas, these area have unique issues related to housing, chiefly the age and condition of housing stock and the number of abandoned houses in many rural communities. The Neighborhood Stabilization Program provides an opportunity for communities to address these housing issues.

The primary method to help neighborhoods and communities stabilize housing values is distribution of emergency Community Development Block Grants (CDBG) to each state through the U.S. Department of Housing and Urban Development. Each state will receive at least $19.5 million in emergency CDBG funds, with additional amounts distributed on a formula of the number of foreclosures, subprime mortgages, mortgage defaults and delinquencies in the state. Nebraska, for example, will receive $19.6 million from the fund, and Iowa will receive over $21 million.

These funds will be made available to states, tribes and communities for several activities that will stabilize housing values, while also making housing available for low and moderate-income people. For example, communities would be allowed to acquire property, demolish or rehabilitate abandoned properties, and redevelop vacant or blighted property. Communities and housing organizations could also use funds to provide down payment and closing cost assistance to low and moderate-income homebuyers.

States are required to submit a proposed Action Plan by December 1, 2008, outlining how they intend to use their emergency CDBG allocation, their priorities for the funds, and how communities can access the funds. Public comment is also required by the law.

These state plan requirements provide a potential opportunity for rural communities and asset advocates to participate in the program design and implementation. These emergency funds also provide a potential opportunity for rural communities to develop plans and access resources to address the housing needs in their communities and provide affordable, sustainable housing, both for current residents and as an attractive amenity for future residents.

For more information about the program and what it can do for your community please go to www.saveamericasneighborhoods.org.

Contact: Jon Bailey, jonb@cfra.org or 402.687.2103 x 1013 for more on asset-building strategies.