On July 30, 2008, former President Bush signed into law the Housing and Economic Recovery Act of 2008 to address the severe housing crisis. Title III of the Act appropriates $3.92 billion of grant funds under the Neighborhood Stabilization Program (NSP) for states and local governments to purchase and redevelop abandoned or foreclosed properties. The Housing and Economic Recovery Act of 2008 directed the United States Department of Housing and Urban Development to target funding to areas with the greatest needs based on the extent of foreclosures, subprime mortgages and mortgage delinquencies and defaults. The Federal Notice, which was released on September 30th, provides information regarding method of allocation, program requirements, application procedures, and waivers granted.

Submittal of Neighborhood Stabilization Program Substantial Amendment

Program Quarterly Reports

Neighborhood Stabilization Program 1

Neighborhood Stabilization Program 3

United States Department of Housing and Urban Development Links

Other Resources

Income Guidance

The Department of Economic Opportunity (DEO) Program Income guidelines are applicable to all NSP Subgrantees and Subrecipients receiving Program Income. On March 12, 2010, DEO sent a memorandum to all program Subgrantees advising that Program Income can be retained at the local Subgrantee level. This Program Income Guidance provides additional information on the use and reporting of Program Income.

Program Income

Program Income is revenue (i.e., gross income) received by a state, unit of general local government, or subrecipient that is directly generated from the use of NSP funds. The Program Income requirements of the Community Development Block Grant (CDBG) program are applicable to income directly generated from the use of NSP funds and must be used only for NSP activities. To ensure consistency of treatment of Program Income, the definition of Program Income at 24 CFR 570.500(a) shall apply.

Program Income Plan

The Department has requested that Subgrantees create a Program Income Plan to administer their anticipated Program Income. The Program Income Plan should consist of a brief narrative of how your community anticipates generating and expending Program Income. The plan should cover the period of time from date of submission through June 2013. Please note that DEO will not require approval of your Program Income Plan by your chief elected official, unless required by the local government. The Plan can be submitted by your local NSP administrator. DEO understands that your community's needs may change and you may revise your Plan at any time. To revise your Plan, please contact your DEO Grant Manager and include a brief narrative explaining the change.

Citizen Participation

Local governments are encouraged, but not required, to utilize their Citizen's Advisory Task Force in identifying future uses of Program Income.

Eligible Uses of Program Income

Program income shall be used to fund any of the NSP eligible activities currently budgeted in Attachment A of your Grant Agreement. To add an activity, such as land banking or demolition that was not addressed in the original NSP budget, please contact your DEO Grant Manager with a brief narrative explaining the need.

Program Income shall only be used within the NSP-1 target area boundaries. Up to 10 percent of program income earned can be used for general administration and planning activities as those are defined at 24 CFR 570.205 and 206.

25-Percent Set-Aside

The Federal Department of Housing and Urban Development (HUD) does not require a 25 percent set-aside with NSP-1 Program Income, however, Subgrantees are encouraged to dedicate 25 percent of program income funds towards affordable rental housing to households earning not more than 50 percent of the Area Median Income.


The local governments should track Program Income as a separate line item account in their accounting system. A print out of all sources and uses of Program Income should be available to your DEO Grant Manager upon request. There is no minimum threshold for reporting of current Program Income funds. All Program Income should be reported as it is accrued into e-CDBG. If no Program Income has been received to date, or during the reporting period, then a "0" should be entered. The new e-CDBG software will have additional tools to report the source and use of Program Income.


The department will conduct desktop or on-site monitoring visits on a risk-assessment schedule to verify that Program Income is being reported and expended on NSP eligible-uses. The department plans to continue monitoring Program Income until June 2013, and through administrative close-out of the grants.

Request for Funds Disbursements

The NSP regulations state: "Substantially all program income must be disbursed for eligible NSP activities before additional grant cash withdrawals are made from the U.S. Treasury." To meet this federal requirement, we ask that all Program Income generated at the local level be expended in conjunction with the Request for Funds. We require that all reported Program Income be expended prior to requesting an additional draw of grant funding. You can continue to request funds from DEO until your original allocation is depleted.

Grant Extensions

Please note that Grant Agreement will be extended till 2013, even if you may have expended your original grant allocation. DEO will require that you identify Program Income and report continually through June 2013. All Subgrantees must submit a request for extension of their grant expiration date at least 90 days prior to the Grant Agreement end date. As long as satisfactory progress is being made toward meeting planned National Objectives and activities, the grant will be recommended for extension.

Four-Year Expenditure Requirement

By June 2013, each local government must have expended a total amount that is equal to their original NSP-1 grant allocation and must have met a national objective. HUD refers to this as the four-year expenditure requirement. The four-year expenditure requirement is met when the sum of the NSP grant funds drawn down plus the expended program income is equal to the original NSP-1 grant amount.

Grant Close-Out

Subgrantees can continue to operate their NSP programs with Program Income after being administratively closed. Monitoring will continue to ensure compliance with all applicable federal requirements.

Additional Information

Current HUD guidance indicates Program Income must be tracked in perpetuity. Program Income may continue to be used for NSP eligible activities after June 2013. Due to the fluid nature of NSP, this Program Income Guidance may be revised to accommodate comments from Subgrantees and future guidance from HUD.

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