HUD issued an NSP Policy Alert reminding NSP1 and NSP3 grantees that an October 19, 2010 Federal Register Notice requires them to budget at least 25% of their NSP allocations plus program income for activities that provide housing for very low income (VLI) households, those with incomes below 50% of the area median (see Memo, 10/22/10). The September 2 NSP Policy Alert notes that some grantees might not have realized that the October 19 Notice amended an October 6, 2008 Notice. The key difference is that the 25% set aside applies to any program income received as a result of NSP activity.
Common sources of NSP program income are:
• Payments of principal and interest on loans made with NSP funds.
• Proceeds from the sale of properties acquired and/or improved with NSP funds.
• Gross income from the use or rental of real property constructed or improved with NSP funds, less the costs incidental to the generation of that income.
Any program income received after October 19, 2010 must be included, along with the NSP1 and NSP3 allocation when calculating the 25% VLI targeting requirement. This requirement does not have to be met every time program income is received, just by the time of the entire NSP1 or NSP3 program closeout. The amount of program income received to date is shown on an attachment. Many local jurisdictions, including large cities, have zero program income so far, but others do have program income, generally less than $1 million.
The Notice explains that the inclusion of program income is meant to conform more closely with Congressional intent, and because very low income households “need more help than ever finding decent, affordable housing.”
The NSP Policy Alert is at http://hudnsphelp.info/media/resources/NSPPolicyAlert_25SetAside.pdf