slide 1 home program basics kathleen m. bialas ogc/hhq/hud

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HOME PROGRAM BASICS

www.hud.gov/homeprogram/Kathleen M. Bialas

OGC/HHQ/HUD

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HISTORY AND GOALS

Housing block grant program created by the Cranston-Gonzalez National Affordable Housing Act of 1990

FY 2007 appropriation -- $1.73 billion

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ALLOCATION OF FUNDS

HOME funds allocated by formula 40% to states/60% to local governments

(participating jurisdictions – PJs)Allocations for each PJ posted on HUD website

Minimum qualification thresholds PJs must have a Consolidated Plan

that describes needs and sets forth a 5 year strategy & annual action plan describing the use of funds --citizen participation in the development of the Con plan

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ALLOCATION OF FUNDS

Planning and admin limited to 10% 15% set-aside for housing that is

owned, developed, or sponsored by community housing development organizations (CHDOs)

Additional 5% may be used for CHDO operations

Timeframe 24 months to commit funds 5 years to expend funds

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ELIGIBLE ACTIVITIES

Homeowner Rehabilitation Homebuyer Programs Rental Housing TBRA

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HOME FUNDING FY ‘92- ‘05

TBRA4%

Rental47%

Owner Rehab22%

Homebuyer27%

Rental

Homebuyer

Owner Rehab

TBRA

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PROGRAM TARGETING

100% of HOME funds must go to assist families <80% Median Family Income

TBRA and rental -- 90% of each grant to <60% MFI

Additional targeting for rental project with five or more units: 20% of units rented to families <50% MFI

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LONG-TERM AFFORDABILITY

HOME Investmentper Unit

Length ofAffordability

less than $15,000 5 yrs

$15,000 - $40,000 10 yrs

more than $40,000 15 yrs

new constructionof rental housing

20 yrs

refinancing of rentalhousing

15 yrs

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APPLICANT ELIGIBILITY

Must use one of three income definitions: Section 8 annual income [also used

for LIHTC] IRS Adjusted gross income Census long form annual income

INCOMEDEFINE

D

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LONG-TERM OCCUPANCY

Rental: vacated units must be rented to income-eligible households

Homebuyer: resale/recapture provisions

Homeowner rehab: no requirements

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THE SUBSIDY

Flexibility/PJ choice Can provide funds as:

Interest bearing or non-interest bearing loans or advances

Deferred loans Grants Interest subsidies Equity investments Loan guarantees

24 CFR 92.250slide 12

SUBSIDY LIMITS

Minimum HOME investment = $1,000 per unit

Maximum HOME subsidy amount = 221(d)(3) limit, which varies by PJ

Limits do not apply to TBRA

24 CFR 92.206slide 13

ELIGIBLE COSTS

Hard costs Soft costs Acquisition costs Relocation costs Refinancing costs

24 CFR 92.251slide 14

PROPERTY STANDARDS

Apply to all HOME-assisted units Vary by activity PJ choice

Activity Minimum Property Standards

TBRA Section 8 HQS.

ACQUISITION ONLY State or local housing standards and codes. If no local standards/code applies, Section 8 HQS.

REHAB Local written rehabilitation standards. AND

State and local code requirements. If no state/local code applies: International Building Code OR Council of American Building Officials 1 or 2

family code OR FHA Minimum Property Standards

NEW CONSTRUCTION

State and local code requirements. If no state/local code applies: SAME AS ABOVE

Model Energy Code.

24 CFR 92.219 - 92.221; CPD Notice 97-03 slide 16

MATCH BASICS

PJs must provide 25% match of HOME funds Match must be a permanent

contribution to the HOME Program Based on expenditure of funds Measured on a Federal fiscal year

basis – program match, not project

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SOURCES OF MATCH

Cash or “cash equivalents” Value of waived taxes, fees or

charges Value of donated land/real property Cost of infrastructure improvements Percentage of proceeds of housing

bonds

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SOURCES OF MATCH

Value of donated materials and labor

Sweat equity Direct costs of supportive services

to residents of HOME projects Direct costs of counseling to

HOME-assisted households

24 CFR 92.222slide 19

MATCH REDUCTION

Fiscal distress/Severe fiscal distress HQ publishes notice annually

Presidentially-declared disaster areas

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RENTAL HOUSING: ELIGIBLE PROPERTIES

No requirements on type or style of property

Eligible types include: Single family and multifamily Transitional and permanent housing SROs and group homes

24 CFR 92.216slide 21

RENTAL HOUSING: THE PROGRAM RULE

90% Of households assisted with HOME rental and TBRA must have incomes at/below 60% of MFI Applies when funds are spent -- initial

occupancy

24 CFR 92.252(a)slide 22

RENTAL HOUSING: THE PROJECT RULE

Projects with 5 or more units must have at least 20% of units occupied by families at/below 50% of MFI Rents must be at Low HOME rent

level Balance of units may be at/below 80%

of median [but limited by overall program targeting for rental housing]

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HOME RENTS

For projects with 5 or more units, there are two rent levels: High HOME rent (80% of units) Low HOME rent (20% of units)

HUD annually calculates and distributes HOME rents

PJ must disseminate maximum rents and utility allowances annually to project owners

24 CFR 92.205(d); CPD Notice 98-02 slide 24

DETERMINING HOME-ASSISTED UNITS

Assist all or some of the units Method : Actual Costs Proration

If units are comparable in terms of BR size, sq. ft. and amenities, the number of HOME-assisted units determined by:

HOME investment : total HOME-eligible

project costs

24 CFR 92.254(b)slide 25

HOMEOWNER REHAB: ELIGIBLE ACTIVITIES

Assist low-income owner-occupants with Rehabilitation Reconstruction

24 CFR 92.254(a)slide 26

HOMEBUYERS: THE APPLICANT

The applicant must: be low-income occupy the property as principal

residence

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ELIGIBLE ACTIVITIES

HOME can be used for a number of homeownership activities Acquisition Acquisition/rehabilitation New construction

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ELIGIBLE PROPERTIES

Eligible property types: Single-family home Two-to-four unit property Condominium unit Coop or mutual housing unit (if

recognized as ownership by state) Manufactured home

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FINANCIAL ASSISTANCE

Assistance can be used To assist the homebuyer to buy the

housing--downpayment/closing costs To assist the developer to construct

or acquire & rehab housing to be sold to homebuyer

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RECAPTURE/RESALE

PJs have two options for ensuring affordability of the housing during the affordability period: Recapture the HOME subsidy Resale restrictions – resale to another

low-income homebuyer

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OTHER REQUIREMENTS

Labor standards [Davis-Bacon wages] Environmental review Nondiscrimination/affirmative marketing Relocation benefits and replacement of

housing converted or demolished Lead-based paint

24 CFR 92.600slide 32

ADDI

American Dream Downpayment Initiative Initially funded in 2003 “Piggy-backed” on HOME PJs that have population of 150,000 or

qualify for $50,000 under the formula are eligible to receive ADDI

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ADDI

Similar to homebuyer assistance under HOME

Assistance is limited to first-time homebuyers Individual and his/her spouse who has

not owned a home during the most recent 3-year period

Exceptions for: Displaced homemakers Single parents

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ADDI

Forms of Assistance Downpayment assistance Rehabilitation financing for units

purchased with ADDI funds Costs

Acquisition costs Rehabilitation costs (20% cap) Related soft costs

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INELIGIBLE COSTS

Administrative costs Development hard and soft costs

for new construction Costs related to rental housing Rental assistance

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ADDI Rules

Maximum ADDI assistance per unit: Greater of 6% of sales price or

$10,000 HOME funds can be used in ADDI

units

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ADDI Rules

HOME rules apply to ADDI Income requirements Principal residence requirements Resale/Recapture Property standards Minimum/Maximum per unit subsidy Cross-cutting Federal requirements

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HOME Resources

www.hud.gov/homeprogram/ Final Rule (24 CFR Part 92) CPD Notices HOMEfires Model Guides