WASHINGTON -- Responding to a request from United States Senator Mary L. Landrieu, D-La., the U.S. Department of Housing and Urban Development (HUD) has announced that the $2 billion in Neighborhood Stabilization Program (NSP) funds included in the American Recovery and Reinvestment Act may be used for properties damaged or destroyed by natural disasters. In a letter to Sen. Landrieu, Peter Kovar, HUD's Assistant Secretary for Congressional and Intergovernmental Affairs, noted that eligible NSP activities now include "the redevelopment of demolished or vacant properties for housing purposes." Prior to Sen. Landrieu's request, NSP funds were not eligible for properties that were not foreclosed or declared blighted.

"Louisiana's communities have not experienced the drastic number of foreclosures seen in other states. But many of our families were 'foreclosed' on by Mother Nature," Sen. Landrieu said. "Stabilization funding would help these neighborhoods in desperate need of assistance during these tough economic times. With federal and state budgets shrinking, allowing NSP funds to be used to rehabilitate disaster-impacted properties is both a commonsense and cost-effective way to help Gulf Coast communities struggling to rebuild. I commend President Obama and HUD for taking this critically important step to advancing Gulf Coast recovery. "

According to the Louisiana Recovery Authority, 8,000 Road Home properties conveyed to local governments in Louisiana will benefit from HUD's increased flexibility with NSP monies: 3,887 in Orleans Parish, 3,790 in St. Bernard Parish, 115 in Jefferson Parish and 15 in Washington Parish. All of these properties have cleared environmental review and are "shovel ready." In addition, Greater New Orleans Community Data Center estimates that there are currently about 65,000 distressed properties in the city.

"Thousands of blighted properties dot neighborhoods all across Louisiana, including many sold to the state through its Road Home program after Katrina and Rita," said Paul Rainwater, Executive Director of the Louisiana Recovery Authority. "These properties are more than just eyesores -- they pose threats to safety and public health and deter economic development and rebuilding in many communities. Having a source of federal funds dedicated to demolishing these blighted homes is necessary to restore our struggling neighborhoods, redevelop returning communities and remove some routinely flooded properties from commerce. We thank Senator Landrieu for recognizing what a drain these properties are on Louisiana."

"The New Orleans Redevelopment Authority (NORA) is grateful for the hard work of Senator Landrieu and her staff in securing clarification from the U.S. Department of Housing and Urban Development about the use of neighborhood stabilization funds," said Richard Monteilh, Executive Director of NORA. "This opens up a new source of sorely-needed federal funding to acquire, rehabilitate and redevelop disaster impacted properties. NORA is committed to applying for these funds and using them to help continue the redevelopment of neighborhoods across New Orleans."

The percentage of homes along the Gulf Coast that were destroyed as a result of Hurricanes Katrina and Rita far exceeds the foreclosure rate in Louisiana. Almost 80 percent of the homes in St. Bernard Parish sustained major or severe damage from the storms. Louisiana received $38 million in NSP funds in last year's foreclosure bill, but none could be used to redevelop Katrina and Rita-destroyed properties. Sen. Landrieu had worked to secure the flexibility in the 2008 Foreclosure Prevention Act but could not overcome objections from other Senators before the bill passed the Senate.

The NSP was created in this foreclosure legislation to allocate money to localities for repurchasing, rehabilitating, renting or reselling foreclosed or blighted properties. During the Senate's consideration of the economic recovery package in February, the Senate unanimously adopted an amendment authored by Sen. Landrieu that would make these dollars available for this purpose, but the provision was not included as part of the House-Senate conference agreement.

After this amendment was not retained in the final version of the Recovery Act, Sens. Landrieu, Kay Bailey Hutchison (R-Texas), Tom Harkin (D-Iowa) and Charles Grassley (R-Iowa) sent a letter to HUD Secretary Shaun Donovan asking for this administration fix for disaster-impacted communities. In the letter, the Senators argued, "The conference report for H.R. 1 notes that (Neighborhood Stabilization) funds should be used to 'create more affordable housing and reduce neighborhood blight.' The lack of affordable housing in the Gulf Coast and Midwest, in addition to the general blight posed by these particular properties, is clearly in keeping with the Congressional intent for the program."

The application deadline for state or local governments to apply for Recovery Act NSP competitive funding is July 17, 2009. Additional information on the program is available at: http://www.hud.gov/offices/cpd/communitydevelopment/programs/neighborhoodspg/.

For a full copy of the letter from Mr. Kover to Sen. Landrieu, please visit: http://landrieu.senate.gov/media/HUD_NSP_Letter.pdf.

For a full copy of the letter sent by Sens. Landrieu, Hutchison, Tom Harkin and Charles Grassley, please visit: http://landrieu.senate.gov/news/09.02.24_NSP_letter.pdf.