Neighborhood Stabilization Program (NSP)

The Neighborhood Stabilization Program (NSP), administered by the Pennsylvania Department of Community & Economic Development (DCED), provides competitive grant funding to address the housing foreclosure crisis in Pennsylvania. This initiative was established under the federal Community Development Block Grant (CDBG) Program and authorized by the Housing and Economic Recovery Act of 2008 (HERA). Its primary objective is to mitigate the negative impacts of subprime and high-risk mortgage lending, which led to widespread residential foreclosures and neighborhood decline. The NSP program supports communities in stabilizing neighborhoods through targeted investment in abandoned and foreclosed residential properties. Funding from NSP may be used for a range of eligible activities including property acquisition, rehabilitation, demolition, redevelopment, financing mechanisms such as soft-seconds or loan loss reserves, the creation of land banks, and housing counseling. All proposed activities must directly respond to the issues of foreclosure and blight in areas with high foreclosure risk or a significant concentration of subprime loans. The program mandates that all expenditures benefit individuals or households with incomes at or below 120% of Area Median Income (AMI), with at least 25% of funds reserved for low-income beneficiaries earning no more than 50% of AMI. Projects must be completed within 18 months of contract award and demonstrate how they support long-term stabilization and affordability. Eligible applicants include existing NSP grantees that are units of local government. To qualify, these entities must have successfully implemented their original NSP grant and achieved the projected outcomes. Applications must include key documentation such as a Fair Housing Plan, Section 3 Plan, MBE/WBE Plan, environmental review responsibilities, and certification of consistency with relevant local or regional development plans. Priority is given to applications targeting areas of greatest need, particularly those with a HUD foreclosure risk score of eight or higher or counties with more than 23.99% subprime mortgage rates. Multi-municipal applications and projects incorporating green building practices or land banking strategies also receive additional consideration. The submission process involves completing an online application through the DCED Enterprise eGrants System within 60 days of notification of eligibility. Required materials include a completed Single Application form, general application description, project narrative, budget summary, and various supporting documents like maps, cost estimates, and photos. The application must articulate how proposed activities will benefit the target population, support neighborhood revitalization, and be implemented efficiently. All grantees must adhere to federal guidelines regarding affordability, environmental review, non-discrimination, and financial accountability. Evaluation criteria used by DCED in the competitive selection process include alignment with stabilization goals, applicant capacity and past performance, service to low-income households, impact on priority need areas, regional coordination, and incorporation of green building standards. Applications that address the root causes of foreclosure, demonstrate leverage of other funding sources, and provide a replicable model for neighborhood stabilization are viewed favorably. Award amounts are not capped, but DCED prioritizes proposals requesting at least $1 million and involving at least 15 housing units. Contact for application questions is Melissa Williams, NSP Grant Manager, reachable at 717-720-1424. Additional regional support is available through DCED's field offices across Pennsylvania. The official NSP guidelines and application kit are hosted on the department’s website at dced.pa.gov/nsp. DCED also provides technical assistance to applicants throughout the process. The program does not require matching funds, but applicants are encouraged to leverage other sources to increase the impact of the NSP investment.

Priority consideration is given to applications targeting areas with HUD foreclosure risk scores of 8 or higher, involving 15+ units, and leveraging additional funding sources. Applicants should also emphasize green building practices and timely completion.