HUD recently provided guidance on components of the HOME program that have raised questions. Following are the clarifications that apply to the use of HOME funds with multifamily housing.
- HOME funds cannot be used in public housing units that receive Public Housing Capital and Operating funds under Section 9 of the Housing Act of 1937. The HOME authorizing statute specifies that HOME cannot be used to provide assistance to units that receive public housing operating funds. For example, a PJ cannot provide HOME funds to a local public housing agency (PHA) to rehabilitate a public housing project that it owns and operates with HUD Operating Funds.
- While HOME funds cannot be used for public housing units that receive HUD Operating Funds, HOME funds can be used in an affordable housing project that also contains public housing units, provided that the units are separately designated and HOME funds are not used in the public housing units. In these cases, all development funds must be allocated to maintain the separation of units. In these cases, the project must have fixed (not floating) HOME units and must have separate waiting lists and rent structures for the HOME units and public housing units.
- The prohibition against using HOME funds for Section 9 public housing units should not be confused with the use of HOME funds for units assisted under the HOPE VI (Section 24) program. HOME funds may be used for HOPE VI-funded public housing units, provided there is no Capital Fund assistance used. Units developed with both HOME and HOPE VI funds are eligible to receive Operating Funds until Section 9. These units may receive Capital Funds for rehabilitation or modernization only if the 20-year period of affordability required by the HOME program has expired.
- HUD provided clarification of the two specific deadlines for the initial lease-up/occupancy of HOME rental units:
>Within six months of the date of project completion, income eligible tenants must occupy every HOME-assisted rental housing unit. If a unit is not leased up, the PJ must submit marketing information to HUD and. if appropriate, submit a new marketing plan; and
>Within 18 months of the date of project completion, if any housing unit is not yet rented to an income-eligible tenant, the PJ must repay HOME funds invested in the unoccupied HOME unit(s).
Project completion means that the title transfer requirements and construction work have been performed, the project complies with all HOME requirements, and the final drawdown of the HOME funds has been disbursed.
These occupancy deadline and marketing requirements apply to projects to which HOME funds are committed on or after August 23, 2013.
- HUD has made a technical correction to the 2013 Final HOME Rule with regard to the determination of a project’s utility allowance. This corrected delayed the effective date of the utility allowance requirement until January 24, 2015. Effective on that date, any project with HOME funds committed on or after January 24, 2015 will have to use a PJ provided utility allowance that was developed through the use of the HUD Utility Schedule Model or based upon actual utilities used at the project. This requirement does not apply to the PJ’s entire rental portfolio; only those projects with funds committed after this date.
- PJ’s have three options in setting the imputed rate to be used in the calculation of income from assets when the total cash value of a household’s assets exceed $5,000. The PJ may use (1) the passbook rate used by the local PHA; (2) the passbook rate published by HUD’s Office of Multifamily Housing as described in Notice H 2014-15; or (3) a rate established by the PJ. Once the method is established, it must be used for all HOME participants.