NACEDA Applauds New Anti-Foreclosure Legislation,

Funding Levels Should Target Neediest Communities

The National Alliance of Community Economic Development Associations (NACEDA) applauds the Senate’s Foreclosure Prevention Act of 2008, introduced by Majority Leader Harry Reid (D-NV), as “a needed step to help both low-income communities disproportionately affected by foreclosures and neighboring communities that are also affected,” said NACEDA Policy Committee Co-Chair Terry Chelikowsky.

The new bill has many positive initiatives to address the staggering increase in foreclosure rates in low-income communities, which have been unduly affected by this national epidemic. However some tweaks are still needed in this important legislation. S.2636 would provide $4 billion in Community Development Block Grant (CDBG) funds for purchase and rehab of foreclosed properties. Localities with the highest foreclosure rates could access CDBG funds to use toward the purchase of these properties, rehabilitate them if necessary and rent or re-sell them.

While the $4 billion would provide welcome aid, NACEDA believes that language needs to be added to ensure that the areas hardest hit by the foreclosure crisis are targeted by the funding. “The impact of foreclosures in low-income areas often spreads beyond these neighborhoods into surrounding areas, exacerbating the problem,” said NACEDA Executive Director Jane DeMarines. “As this latest legislation notes, foreclosed properties that are sitting unoccupied on the market can sap neighboring homes of their value.”

CDCs Put CDBG to Good Use

An additional investment in CDBG funds is an investment in turning the economic tide on foreclosures. A recent survey of member Community Development Corporations (CDCs) in Florida showed that CDBG funds are a vital source of community economic redevelopment financing. Nearly two million dollars in funds were used for valuable projects including: affordable housing development, lending and counseling services; owner occupied rehabilitation projects; and business development and retention. An additional $5 million was used for affordable housing site acquisition and development and mixed-use hurricane replacement housing. “It’s obvious that CDBG is a large part of many local Florida redevelopment efforts. Continued access to such funds will be critical for our members in addressing the current housing crisis in our state” said Chelikowsky, who is also Executive Director of the Florida Alliance of CDCs.



NACEDA represents 27 state, city and regional associations of community economic development associations, comprised of a network of more than 2,000 community development corporations.