Home > Affordable Housing, Economic Development > Neighborhood Recovery and NSP1: Implementation in Select Fourth District Communities

Neighborhood Recovery and NSP1: Implementation in Select Fourth District Communities

Half million dollar house in Salinas, Californ...

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Lisa Nelson, Mary Helen Petrus, and Francisca G.-C. Richter

Federal Reserve Bank of Cleveland

The housing crisis in the United States has wrought changes to communities in every corner of the nation. Back in 2008, Congress’s response was to create the Neighborhood Stabilization Program, or NSP, as part of the Housing and Economic Recovery Act (HERA), authorizing $3.92 billion for the program now known as NSP1 for local governments to mitigate negative impacts of foreclosures and vacancies through acquiring, rehabilitating, demolishing or redeveloping vacant and foreclosed homes. Undoubtedly, NSP1 was a small program compared to the enormous task of neighborhood recovery, and the funds allowed for far less demolition and property rehabilitation than needed. But the actual program implementation also led to partnerships and in some cases supported the institutions, training, and tools that communities needed to provide a longer term response to the crisis. Now, several years after its launch and while phase 3 of the program is still underway, we examine how NSP1 was implemented by some communities to understand in what ways this policy intervention and the communities’ response contributed to recovery, and how the NSP experience may shape future policy programs for community development at the state and federal level.

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