HUD published an interim rule changing the method for determining participating jurisdictions’ (PJs’) compliance with the HOME Investment Partnerships program (HOME) statute’s requirement that funds be committed within 24 months. Beginning with FY15 HOME grants, HUD will use a grant-specific method for determining compliance.
The statute creating HOME, the “Cranston-Gonzalez National Affordable Housing Act of 1990” (NAHA), requires PJs to place HOME funds under a binding commitment - by executing a grant agreement - within 24 months after the last day of the month in which HUD made the funds available. NAHA further states that a PJ loses the right to draw funds not placed under binding commitment by that date and that HUD must reduce the PJ’s line of credit by the expiring amount.
Since 1997, HOME regulations used a cumulative method for determining compliance with the 24-month commitment requirement because HUD’s Integrated Disbursement and Information System (IDIS) committed and disbursed funds on a first-in, first-out basis. PJs did not have the ability to designate funds from a specific allocation when committing HOME funds to a project. The cumulative approach assessed whether the total amount committed by the PJ from all HOME grants received was equal to or greater than the PJ’s cumulative commitment requirement for all grants obligated for 24 months or longer.
The interim rule states that beginning with FY15 HOME grants, HUD will use a grant-specific method for determining compliance with the 24-month commitment deadline. That is, a PJ will select the grant year’s funds that will be committed to a specific project or activity. When a PJ requests a draw of grant funds, HUD will disburse the funds committed to the project or activity for which the funds are requested.
The interim rule establishes a new commitment deadline for states. HOME funds committed to a state recipient or subrecipient must be committed to a specific local project within 36 months of HUD notifying a state that it has executed a grant agreement for a specific fiscal year allocation.
The interim rule affects community housing and development organizations (CHDOs) in two ways. First, HUD added language to the CHDO definition that reflects HUD’s longstanding practice that considers CHDOs’ operating expense funds, capacity building funds, and project-specific technical assistance and site control loans to be committed when a PJ executes a legally binding agreement for the use of the funds.
The HOME statute has always required 15% of a PJ’s HOME allocation to be set aside for housing owned, developed, or sponsored by CHDOs. In the past, PJs could commit less than 15% to CHDOs in some years and more than 15% in other years, maintaining compliance by ensuring that 15% of cumulative HOME allocations were used for CHDO projects. With the interim rule, PJs will be required to commit a minimum of 15% of each year’s allocation or HUD will recapture the funds.
For FY15 HOME funds and subsequent years, the interim rule eliminates the 5-year deadline for expending HOME and CHDO set-aside funds because appropriations act provisions render the 5-year deadline duplicative. Beginning with the FY02 HOME appropriation, PJs had three years to obligate funds, which then expired five years after the obligation period. In other words, the funds expired at the end of the eighth year, at which point they were recaptured by the Treasury. HUD’s FY15 and FY16 appropriations extended the obligation period from three to four years. The funds still expire five years after the obligation period (i.e., at the end of the ninth year). HUD’s 2013 amendments to the HOME regulations established a 4-year deadline for completing projects.
The interim rule is at: http://bit.ly/2hlKJrm
HUD’s summary is at: http://bit.ly/2gsXQoZ