What Is HOME?

How Are HOME Funds Distributed?

By law, HOME funds are distributed by formula to all states and some cities, counties and consortia that qualify as "participating jurisdictions" (PJs). The factors used in the formula include level of poverty, amount of substandard housing, the cost of producing housing and the fiscal capacity of the PJ to carry out housing activities.

States receive a minimum of $3 million annually although most states receive more. Usually, either the housing finance agency or the state housing, community development or community affairs department administers the HOME program. Local participating jurisdictions must qualify for between $500,000 and $750,000 through the formula and fulfill certain responsibilities. Local governments typically designate a community development or housing department to administer the HOME program. Local Housing Authorities and other nonprofit and for-profit organizations not located in a participating jurisdiction may apply to the state for HOME funds.

What Is A Participating Jurisdiction?

A city, county, or consortium must receive at least $500,000 under the formula in order to qualify as a participating jurisdiction and receive HOME funds. Jurisdictions that receive between $500,000 and $750,000 may participate, provided they can make up the difference--between $500,000 and $750,000--using other local funds or state funds. No federal funds may be used to fill this gap, except that the state may contribute a portion of its HOME allocation or other funds. (The jurisdiction is only required to fill this gap for its first year of eligibility for HOME funds.) Any jurisdiction which has previously received an allocation of HOME funds from HUD is automatically eligible to receive funds in subsequent years.

Participating jurisdictions must have a HUD-approved Consolidated Plan which details how Federal resources will be used to address needs and what forms of investment will be used, as well as certifications regarding compliance with statutory requirements. The jurisdiction must notify HUD of its intent to participate within 30 days of the publication of the HOME NOFA (usually in late January). After a jurisdiction has met these requirements, HUD will designate it a participating jurisdiction (PJ). An existing PJ usually retains its designation from year to year.

Jurisdictions that are not eligible to receive HOME funds directly may still be able to utilize the program by forming a consortium or applying for funds through their respective states.

Forming A Consortium

Contiguous units of local government may form a consortium to qualify for a direct allocation of HOME program funds. In order to be designated a participating jurisdiction and receive an allocation, a consortium must fulfill the following requirements:

comprise (geographically) contiguous units of local government;
provide HUD a notice of intent to form a consortium (different from a notice of intent to participate) by March 1 of the year prior to funding;
submit a written certification from the state that the consortium will direct its activities to alleviate housing problems within the state;
demonstrate sufficient capacity to meet program requirements; and
submit a legally binding consortium cooperation agreement executed by all consortium members.

The cooperation agreement must authorize one member unit of local government to act as a representative for the consortium and assume overall responsibility for ensuring compliance with the HOME program requirements and all planning requirements.

The cooperation agreement must also specify the time period for which it remains in effect. Generally, each local government must make a three-year commitment to participate. Additional local governments may be added during that period, but none can withdraw. The agreement cannot include a veto provision. In order to receive funding, the consortium must submit a single Consolidated Plan for HUD approval.

The States and HOME

States are very important participants in the HOME program, particularly with respect to local housing authorities and other agencies located in non-participating jurisdictions. Each state receives an annual allocation of HOME funds from HUD, ranging from the minimum of $3 million to more than $40 million for the largest states.

The states have considerable flexibility in administering their programs and distributing HOME funds. In most states, funds are awarded competitively and local housing authorities may apply directly for funding. However, it is critical for LHAs and other agencies located in non-participating jurisdictions to learn how the HOME program operates in their state and what entity is responsible for establishing priorities and distributing the funds. States are subject to the same project and program requirements as all other participating jurisdictions and their program goals must be consistent with the priority needs identified in the Consolidated Plan.

What Is A CHDO?

By law, each HOME participating jurisdiction--states, cities, counties and consortia--must set aside at least 15 percent of its HOME allocation for use by Community Housing Development Organizations (CHDOs). The applicable participating jurisdiction is responsible for certifying organizations as CHDOs. A CHDO is a 501 (c) nonprofit organization that meets the following conditions:

1.	It must have among its purposes the provision of "decent housing that is affordable to low-income and moderate-income persons, as evidenced in its charter, articles of incorporation, resolutions or by-laws."
2.	It must have a demonstrated capacity for carrying out eligible HOME-assisted activities. It can satisfy this requirement by hiring experienced staff or consultants and/or having a plan to train key staff.
3.	It must have a history (generally defined as one year) of serving the community within which HOME assisted housing will be located. A newly formed organization may demonstrate that a parent organization has such a history.
4.	Its governing board must be comprised of at least one-third residents of low-income neighborhoods, other low-income community residents or elected representatives of low-income community organizations. It must also provide a formal process for low-income program beneficiaries to advise the organization in its decisions regarding design, siting, development, and management of affordable housing.

A public body cannot be a CHDO. However, a state or locally chartered organization may qualify as long as the state or local government does not have the right to appoint more than one-third of the board members and no more than one-third of the board members are public officials. The publicly appointed board members may not appoint the remaining members. Local housing authorities have been involved in establishing nonprofit organizations that have qualified as CHDOs. LHAs also provide development and management services to CHDOs.

The jurisdiction must provide the set-aside funds to the CHDO within 24 months of the initial allocation to the PJ and they must be invested in eligible housing that is "developed, sponsored or owned" by the CHDO.

Up to 5 percent of the jurisdiction's HOME allocation can be used to pay for CHDO operating expenses. This applies to organizations already receiving set-aside funds and to others that the jurisdiction anticipates will be eligible for funds within the next 24 months.

Copyright 1997 - 1997 - 1999- 2000-2001
Affordable Housing and HOME
National Association of Housing and Redevelopment Officials (NAHRO)
630 Eye Street, NW
Washington, DC 20001-3736
Telephone: (202) 289-3500
Fax: (202) 289-4949