In 1990, the Cranston-Gonzalez National Affordable Housing Act included provisions that created a new program for the U.S. Department of Housing and Urban Development (HUD). Called the HOME Investment Partnerships Program – HOME for short – it became, and has remained, HUD’s largest affordable housing Federal block grant program.
HOME provides Federal grants to governments at the state and local levels. Funding is used for a variety of activities aimed at improving affordable housing options for a region’s low- and moderate-income residents. Approximately $2 billion is awarded to government entities across the country every year. The funds are distributed as lines of credit, which are managed by HOME Investment Trust Funds. One Trust Fund is created for each state or local entity that is receives a grant.
A formula is used to determine funding levels for each state and municipality, and takes into account area poverty levels, existing affordable housing stock and its condition, employment opportunities, and the area’s overall financial health and stability. Allocations are no less than $3 million per state and $500,000 per city. Some areas do not meet the criteria required to receive funding, and are allowed to form consortiums with other municipalities so as to be eligible for direct grants. Alternatively, smaller communities can simply apply for funding from a larger municipality that has received a direct grant.
Grant recipients can use the money not only for direct funding of affordable housing-related projects, but also as security for larger loans, and for rental assistance programs. Other eligible activities include relocation assistance, property acquisition and rehabilitation, property demolition, rental and down payment assistance, and site preparation.
HOME regulations require that the majority of funding be used for low-income residents, those at or below 50 to 60 percent of the area median income (AMI). In addition, affordable units must remain so for at least 20 years.
According to HOME regulations, at least 15 percent of a government entity’s allocated funding must be set aside for Community Housing Development Organizations (CHDOs) – these are non-profit organizations whose primary focus is the creation of affordable housing. Additionally, 25 percent of HOME funds must be matched by each state and municipality, and can be provided in the form of donated property, materials or labor, bond issues or other financial proceeds.
The wide range of activities funded by the HOME Investment Partnership Program ensures that each community has the flexibility required to respond appropriately and efficiently to its unique housing and economic needs. Additional information about the HOME program, including a list of participating jurisdictions and their funding allocations, as well as compliance reports and checklists, are available via the Department of Housing and Urban Development’s web site.