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HOME PROGRAM BASICS

HOME PROGRAM BASICS. www.hud.gov/homeprogram/ Kathleen M. Bialas OGC/HHQ/HUD . HISTORY AND GOALS. Housing block grant program created by the Cranston-Gonzalez National Affordable Housing Act of 1990 FY 2007 appropriation -- $1.73 billion. ALLOCATION OF FUNDS.

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HOME PROGRAM BASICS

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  1. HOME PROGRAM BASICS www.hud.gov/homeprogram/ Kathleen M. Bialas OGC/HHQ/HUD

  2. HISTORY AND GOALS • Housing block grant program created by the Cranston-Gonzalez National Affordable Housing Act of 1990 • FY 2007 appropriation -- $1.73 billion

  3. 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

  4. 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

  5. ELIGIBLE ACTIVITIES • Homeowner Rehabilitation • Homebuyer Programs • Rental Housing • TBRA

  6. HOME FUNDING FY ‘92- ‘05

  7. 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

  8. LONG-TERM AFFORDABILITY

  9. INCOME DEFINED 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

  10. LONG-TERM OCCUPANCY • Rental: vacated units must be rented to income-eligible households • Homebuyer: resale/recapture provisions • Homeowner rehab: no requirements

  11. 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

  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 92.250

  13. ELIGIBLE COSTS • Hard costs • Soft costs • Acquisition costs • Relocation costs • Refinancing costs 24 CFR 92.206

  14. PROPERTY STANDARDS • Apply to all HOME-assisted units • Vary by activity • PJ choice 24 CFR 92.251

  15. 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 24 CFR 92.219 - 92.221; CPD Notice 97-03

  16. 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

  17. 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

  18. MATCH REDUCTION • Fiscal distress/Severe fiscal distress • HQ publishes notice annually • Presidentially-declared disaster areas 24 CFR 92.222

  19. 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

  20. 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 92.216

  21. 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] 24 CFR 92.252(a)

  22. 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

  23. 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 92.205(d); CPD Notice 98-02

  24. HOMEOWNER REHAB: ELIGIBLE ACTIVITIES • Assist low-income owner-occupants with • Rehabilitation • Reconstruction 24 CFR 92.254(b)

  25. HOMEBUYERS: THE APPLICANT • The applicant must: • be low-income • occupy the property as principal residence 24 CFR 92.254(a)

  26. ELIGIBLE ACTIVITIES • HOME can be used for a number of homeownership activities • Acquisition • Acquisition/rehabilitation • New construction

  27. 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

  28. 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

  29. 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

  30. OTHER REQUIREMENTS • Labor standards [Davis-Bacon wages] • Environmental review • Nondiscrimination/affirmative marketing • Relocation benefits and replacement of housing converted or demolished • Lead-based paint

  31. 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 24 CFR 92.600

  32. 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

  33. ADDI • Forms of Assistance • Downpayment assistance • Rehabilitation financing for units purchased with ADDI funds • Costs • Acquisition costs • Rehabilitation costs (20% cap) • Related soft costs

  34. INELIGIBLE COSTS • Administrative costs • Development hard and soft costs for new construction • Costs related to rental housing • Rental assistance

  35. ADDI Rules • Maximum ADDI assistance per unit: • Greater of 6% of sales price or $10,000 • HOME funds can be used in ADDI units

  36. 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

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

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