FRANKFORT, KY – March 02, 2009 – (RealEstateRama) — Gov. Steve Beshear today announced that Kentucky will use $37 million in federal funding to help communities respond to the effects of high home and property foreclosures in the wake of the country’s economic crisis.
Surrounded by Lexington Mayor Jim Newberry and members of concerned community nonprofit groups,, Gov. Beshear said the emergency assistance, made available from the U.S. Department of Housing and Urban Development (HUD), will help the state and communities such as Lexington acquire and re-develop foreclosed properties that might otherwise become sources of abandonment and blight within their communities.
“Many areas across the commonwealth have been hard hit by the effects of foreclosures and declining property values,” Gov. Beshear said. “The intent of the Neighborhood Stabilization Program (NSP) is to put these federal dollars to work cleaning up communities and stabilizing neighborhoods so that they remain a safe place for working families to call home.”
Newberry welcomed the Governor to Lexington’s east-end neighborhoods, which are experiencing a rebirth fueled in part by an investment of public dollars in housing and other facilities, and by the continuing efforts of agencies like the Lexington Fayette County Urban League and the Lexington-Fayette Urban County Housing Authority.
“The school that is hosting our news conference today, William Wells Brown Elementary School, is a prime example of how public dollars can work to stabilize a neighborhood and spur private investment,” Newberry said. “This facility is a joint project of the city and Fayette County Public Schools. In addition to classrooms, it houses a community center, where neighbors can meet, and offers adults opportunities for exercise and continuing education.” The neighborhood is also home to a federal Hope VI grant that has completely reinvented what was once the Bluegrass-Aspendale housing project. Hundreds of new single-family homes, townhouses and apartments now stand on the Bluegrass-Aspendale site.
Local governments and nonprofit partners have applied for neighborhood stabilization grants to acquire abandoned land and property for demolition or rehabilitation, Gov. Beshear said. Applications are being reviewed and funding announcements will be made by the end of this month. For more information on the NSP program, go online to http://dlg.ky.gov/grants/federal/Neighborhood+Stabilization+Program.htm.
A broad range of neighborhood stabilization activities have been proposed for the grants, including:
- The repair and sale of foreclosed homes;
- Creating more affordable rental housing;
- Tearing down abandoned and blighted buildings that lower surrounding property values;
- Creating land banks to temporarily manage and dispose of vacant land for the purpose of stabilizing neighborhoods;
- Encouraging reuse or redevelopment of urban property.
Kentucky families with a household income not exceeding 120 percent of the area median income may buy, or in some cases rent at a reduced rate, the previously foreclosed homes. Families often receive help with down payments and closing costs, too.
The resale of foreclosed homes through NSP will be limited to limited to low-, to moderate-, and middle-income buyers. The NSP plan seeks to protect potential buyers by requiring that they obtain a mortgage loan from a lender who agrees to comply with sound lending practices. Homebuyers must also receive at least eight hours of housing counseling from a HUD-approved housing counseling agency.
Kentucky has set aside $9.5 million of its total allotment to serve the most vulnerable of citizens who have the lowest incomes, Gov. Beshear said. These are families whose income is at 50 percent or below of the area’s median income.
Kentucky’s program also targets assistance to veterans and active members of the military, persons with mental or physical disabilities, and those who are homeless.
NSP grantees must target funds to give priority emphasis and consideration to areas with greatest need, including: those with the greatest percentage of home foreclosures; with the highest percentage of homes financed by a subprime mortgage-related loan; and identified as likely to face a significant rise in the rate of home foreclosures.
Preference is also being given to projects that include green building techniques, promote energy conservation, and that use renewable energy sources. Congress has directed that these grant funds be obligated for specific activities within 18 months.
The funding, which will be administered by the Department for Local Government, is provided through HUD’s Community Development Block Grant Program under the Housing and Economic Recovery Act of 2008.
Fayette County has the fourth-highest need in the state, based on foreclosure rates and other HUD data. Under the program’s guidelines, a family of four with a combined income of up to $76,200 will be eligible.
In Jefferson County, which has the highest need of any county in the state due to its severe housing foreclosure crisis, a family of four with a combined income of up to $71,300 will be eligible.
HUD’s county income limits range from a low of $49,200 in many rural counties to a high of $79,450 in many metropolitan areas.