Subsidy vs. Leverage
NSP1 encouraged the leveraging of its subsidy dollars. The idea was that NSP would provide critical operating capital at an early point in the process to help us build the kinds of systems that could be used to leverage other resources. The goal was to turn those billions into tens of billions of dollars worth of activity to make a dent in the problem.
But NSP1 never required leverage. Since it wasn’t required, and given the pressures of the short time frame to obligate funds and complete projects, many communities and nonprofits opted to use NSP dollars for 100 percent of their acquisition and construction costs, dramatically shrinking the effect of the funding compared to what it could have leveraged given time and support to do so.
But the opportunity for leverage was there, and Márquez speaks in her interview frequently about using a reframed technical assistance approach to help grantees leverage NSP and other funds. With the right set of support and requirements, we could be seeing more efforts like the Minneapolis Foreclosure Program, which used $30 million of NSP 1 and 2 funds to leverage $18 million from the Home Prosperity Fund formed by the Family Housing Fund in 2007; $30 million from the local land bank, which included $10 million from the Housing Partnership Network and $10 million from the Community Reinvestment Fund; $10 million from Greater Metropolitan Housing Corporation in the form of a revolving line of credit for acquisition and construction costs; and $11 million in strategic acquisition funds from the Family Housing Fund, Minnesota Housing Finance Agency, and the City of Minneapolis.
NSP2 and NSP3 have lessened the time pressure to obligate funds, which should open up the possibility to arrange ways to leverage those dollars; it remains to be seen if those extra steps will be taken. As Judy Jacobson writes, for some, the NSP1 rules made using NSP dollars as shallow subsidy to leverage other funds not worth the effort.
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