Can NSP funds be used to purchase tax-exempt bonds to fund eligible project acquisition and development costs?

Date Published: October 2012

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NSP funds cannot be used to purchase tax-exempt bonds. NSP funds can be used only as a financing mechanism for the purchase and redevelopment of foreclosed upon homes and residential properties (soft second loans, loan loss reserves, equity sharing, etc.) as explained under Eligible Use A. NSP funding is grant funding and would typically provide a better cost of funds than bond financing for similar purposes. There is no cost of funds for NSP and any proceeds could still be treated as program income. However, NSP funds might be used as a credit enhancement for bond financing. That option would be a special case and details of the structure would need to be provided so its eligibility could be properly evaluated.

Tags: NSP Program Requirements - Eligible Costs