An Overview of the HOME Investment Partnership Program

^Pr^ep^ar^{ed f}^o^r^M^e^m^b^ers^an^d^Com^mⁱ^t^t^ees^of^C^ong^r^e^ss

The HOME Investment Partnerships Program was authorized by the Cranston-Gonzalez National
Affordable Housing Act of 1990 (P.L. 101-625). HOME is a federal block grant program that
provides funding to states and localities to be used exclusively for affordable housing activities to
benefit low-income households.
Funds for HOME are appropriated annually to the Department of Housing and Urban
Development (HUD), which in turn distributes funding to states and certain localities by formula.
Sixty percent of HOME funds are allocated to localities, and 40% of HOME funds are allocated
to states. The formula takes into account six factors, including the number of units in a
jurisdiction that are substandard or unaffordable, the age of a jurisdiction’s housing, and the
number of families living below the poverty line in the jurisdiction. States and localities that
receive HOME funds are known as participating jurisdictions. As part of the process of becoming
a participating jurisdiction, states and localities must submit a Consolidated Plan to HUD that
identifies the community’s housing needs and describes in detail how HOME and other HUD
block grant funds will be used to meet those needs. Participating jurisdictions can undertake
projects themselves, or they can distribute funds to qualified organizations to undertake projects
on their behalf.
HOME funds can be used to finance a wide variety of affordable housing activities that generally
fall into four categories: rehabilitation of owner-occupied housing, assistance to home buyers,
rental housing activities, and tenant-based rental assistance. Projects that use HOME funding
must meet certain income targeting and affordability requirements. Specifically, all HOME funds
must go to projects that benefit households with incomes at or below 80% of area median income,
and 90% of the funds that are used for rental units or tenant-based rental assistance must benefit
households with incomes at or below 60% of area median income. Additionally, all housing that
uses HOME funds must remain affordable for a set period of time that varies according to the
type of activity for which funds are used and the amount of HOME funding contributed to the
project. Participating jurisdictions must also match the HOME funds they receive with their own

25% permanent contribution to affordable housing activities.

Funding for HOME has been between $1.5 and $2 billion for each of the last several years. In
FY2008, all fifty states and 591 localities received HOME formula grants, along with the District
of Columbia, Puerto Rico, and four insular areas. The median state grant amount was about $9.9
million, and the median locality grant amount was about $831,000. Since the program’s
inception, over half of HOME funding has been used for rental housing or tenant-based rental
assistance. Furthermore, a larger percentage of HOME funding has been used for housing
rehabilitation activities than for new construction or acquisition.
This report will be updated as events warrant.

Introduc tion ..................................................................................................................................... 1
Background and Context.................................................................................................................1
Distribution and Uses of HOME Funds..........................................................................................3
The Funding Process.................................................................................................................3
Allocation by HUD to Participating Jurisdictions..............................................................3
The Home Formula.............................................................................................................4
Allocation by Participating Jurisdictions............................................................................5
The Consolidated Plan..............................................................................................................5
Eligible HOME Activities.........................................................................................................6
HOME Requirements................................................................................................................6
Income Targeting................................................................................................................7
Long-Term Affordability and Other Requirements.............................................................7
Matching Requirement........................................................................................................9
Set-Aside for Community Housing Development Organizations.....................................10
HOME Subsidy Limits.....................................................................................................10
Administration and Monitoring.........................................................................................11
Recent Funding, Data, and Trends.................................................................................................11
Annual Appropriations.............................................................................................................11
Formula Grants........................................................................................................................13
HOME Account Set-Asides....................................................................................................13
American Dream Downpayment Initiative.......................................................................13
Housing Counseling..........................................................................................................14
Leve ragi ng..................................................................................................................... .......... 14
Subsidy Layering....................................................................................................................16
How Participating Jurisdictions Use HOME Funds................................................................16
Breakdown of Unit Types.................................................................................................16
Breakdown of Eligible Activities......................................................................................18
Beneficiaries of HOME Funds..........................................................................................20
Figure 1. Funding Sources for HOME-Assisted Units Completed in FY2006.............................16
Figure 2. Percentage of Completed HOME Units by Unit Type
(Through November 30, 2008)...................................................................................................17
Figure 3. Percentage of HOME Funding by Unit Type
(Through November 30, 2008)...................................................................................................18
Figure 4. Percentage of Completed HOME Units by Activity Type
(Through November 30, 2008)...................................................................................................19
Figure 5. Percentage of HOME Funding by Activity Type
(Through November 30, 2008)...................................................................................................20
Figure 6. Percentage of HOME Funds Used to Benefit Different Income Groups,
by Eligible Activity (Through November 30, 2008)..................................................................21

Table 1. Appropriations for the HOME Account, FY1992-FY2008............................................12
Table A-1. Distribution of Participating Jurisdictions and Formula Funding
by State for FY2008...................................................................................................................22
Table A-2. Distribution of Participating Jurisdictions and Formula Funding,
Insular Areas for FY2008...........................................................................................................24
Appendix. Distribution and Funding Table...................................................................................22
Author Contact Information..........................................................................................................24

The HOME Investment Partnerships Program was created by the Cranston-Gonzalez National
Affordable Housing Act of 1990. HOME is a federal block grant program that provides dedicated
funding for affordable housing activities to states and localities through formula grants. States and
localities that receive HOME grants can choose to fund a wide range of affordable rental and
homeownership housing activities that benefit low-income households in order to best meet local
needs. This report provides an introduction to the HOME program, including its history, funding
mechanism, eligible activities, and program requirements. It also provides information on recent
trends in the appropriation and use of HOME funds. This report will be updated as events
warrant.

In the late 1980s, some Members of Congress expressed concern about the state of the nation’s
housing. This concern stemmed from an increasing awareness of a variety of problems related to
housing, including homelessness, families living in sub-standard housing, and decreasing ¹
opportunities for homeownership. The concern over these issues led to a number of efforts to
focus attention on housing policy, including the creation of a National Housing Task Force
comprised of housing policy experts and industry leaders. In March 1988, the Task Force ²
produced a report on its findings. Among the housing issues that the Task Force report identified
was a diminishing supply of rental and homeownership housing that was affordable to low-³
income households.
In a 1988 hearing on the Task Force report, some members of the Senate Committee on Banking,
Housing, and Urban Affairs suggested that the federal funding for housing programs was ⁴
inadequate to meet the affordable housing needs identified in the report. Most federal housing
assistance distributed to states and localities at the time was restricted to specific uses, such as
Section 8 vouchers or Public Housing projects. Furthermore, programs that did give communities
flexibility to choose how to use their funds, such as the Community Development Block Grant ⁵
(CDBG) program, were primarily meant to fund economic development and community
revitalization activities and restricted the ways in which funding could be used for affordable
housing (for example, CDBG funds could be used for some housing rehabilitation but could not
¹
^{U.S. C}^ong^re^{ss, Se}^na^te^Com^m^itte^e^{on Ba}^nkⁱⁿ^g^,^Housiⁿ^g^,^aⁿ^{d Urba}^{n A}^ffa^{irs a}^{nd House}^C^o^m^m^itte^e^{on Ba}^nk^ing^,
^Fina^nc^e^,^aⁿ^{d U}^r^ba^{n A}^f^f^a^ir^s^,^{A N}^e^w^N^a^ti^on^{al H}^o^usⁱⁿ^{g P}^o^lic^y^:^Re^c^o^m^m^e^ndatⁱ^ons^of^O^r^g^aniz^a^ti^ons^an^d^Iⁿ^divⁱ^d^uals^th^st
^C^onc^e^r^ne^d^ab^out^Aff^o^r^d^a^b^le^H^o^u^s^{ing i}ⁿ^Am^e^r^ic^a^,^joiⁿ^{t c}^o^m^m^itte^e^print^,¹⁰⁰^Co^ng^{., 1}^s^e^s^s^{., O}^c^to^b^e^r¹⁹⁸^7,^S.^Pr^t.
¹⁰⁰^-⁵^{8 (}^W^a^s^hing^ton:^G^P^O^,¹⁹⁸⁷⁾^{, p.}^V^.
²^T^h^e^Na^tiona^{l Ho}^using^T^a^sk^Forc^e^,^A^Decen^t^P^l^a^{ce t}^o^Lⁱ^ve^{, Ma}^r^c^{h 198}^8.
³^{U.S. C}^ong^re^{ss, Se}^na^te^Com^m^itte^e^{on Ba}^nkⁱⁿ^g^,^Housiⁿ^g^,^aⁿ^{d Urba}^{n A}^ffa^{irs, Subc}^om^m^itte^e^{on Hous}^ing^a^{nd Ur}^baⁿ
^A^f^f^a^ir^s^,^he^a^r^ing^{on the}^r^e^por^t^of^the^N^a^tiona^{l H}^ousⁱⁿ^g^T^a^s^k^For^c^e^,¹⁰⁰^th^Co^ng^.,²^nd^s^e^s^s^{., A}^p^r^{il 12 a}ⁿ^{d 1}⁴^,¹⁹^88,^S.^H^r^g^.
¹⁰⁰^-⁶^{89 (}^W^a^s^hing^to^{n: G}^P^O^,¹⁹⁸⁸⁾^,^pp.^1-^10.^“^A^f^f^or^da^ble^ho^us^ing^”^c^aⁿ^be^de^fⁱ^ne^{d d}ⁱ^f^f^e^r^eⁿ^tl^y^{in dif}^f^e^r^e^{nt c}^onte^x^ts^{, b}^u^t
^is^g^e^ne^r^a^ll^y^unde^r^s^to^od^{to m}^e^aⁿ^h^ous^ing^t^h^a^t^c^o^s^t^s^30%^o^r^le^s^s^of^a^hous^e^hol^d’^s^inc^o^m^e^{. H}^ous^e^holds^tha^t^pa^y^m^o^r^e
^thaⁿ^30%^of^theⁱ^r^inc^o^m^e^f^o^r^hou^sⁱ^ng^a^r^e^c^ons^ide^r^e^d^c^o^s^t^-^bur^de^ne^d^,^a^nd^ho^us^e^h^o^l^ds^t^h^a^t^pa^y^m^o^r^e^thaⁿ^50%^of^theⁱ^r
^inc^o^m^e^f^o^r^hous^ing^a^r^e^c^onsⁱ^d^e^r^e^d^s^e^v^e^r^e^l^y^c^o^s^t^-^bur^de^ne^d.
⁴^Ibid^{., p. 8.}
⁵^C^D^B^G^w^a^s^e^s^ta^blis^he^{d by}^the^H^ous^ing^aⁿ^{d C}^o^m^m^unity^D^e^v^e^lopm^eⁿ^{t A}^c^{t of}^{1974 (}^P^.L^{. 93-}³⁸³⁾^.

generally be used to construct new housing units).⁶ Concerned that existing programs were not
meeting the nation’s affordable housing needs, members of the Housing Task Force argued to the
Subcommittee that the level of federal funding specifically dedicated to affordable housing
should be increased in order to fully address affordable housing issues. At the same time, Task
Force members argued that local jurisdictions should be allowed more control over the ways in ⁷
which they used any such dedicated federal affordable housing funding.
In 1990, Congress passed a major housing bill that responded to some of the issues raised by the ⁸
Housing Task Force and other experts. The Cranston-Gonzalez National Affordable Housing Act
(P.L. 101-625), or NAHA, stated that the nation’s housing policy was not meeting the goal of
providing “decent, safe, sanitary, and affordable living environments for all Americans” that was ⁹
first set out in the Housing Act of 1949. The law revised and amended several existing housing
programs and authorized a number of new programs, including the HOME Investment ¹⁰
Partnerships Program.
The HOME Investment Partnerships Program is authorized by Title II of NAHA.¹¹ In creating
HOME, the law consolidated several smaller housing programs into the largest federal block
grant program that provides funding dedicated exclusively to increasing adequate, affordable ¹²
housing opportunities for low-and very low-income households. The program places a
particular emphasis on giving states and localities flexibility in how they achieve their affordable
housing goals. HOME is also designed to expand the capacity of states and localities to meet their
long-term affordable housing needs by leveraging federal funding to attract state, local, and
private investment in affordable housing and by strengthening the ability of government and ¹³
nonprofit organizations to meet local housing needs.
⁶
^Elig^ible^a^c^tiv^itie^s^tha^t^c^aⁿ^be^uⁿ^d^e^rta^k^eⁿ^w^{ith CD}^BG^f^unds^a^r^e^c^o^dⁱ^fⁱ^e^d^a^t^{42 U}^.^S.C.⁵³^05.^F^o^{r m}^o^re^inf^o^rm^a^{tion on}
^C^D^B^G^a^{nd f}^e^de^r^a^{l hous}ⁱⁿ^g^a^s^sⁱ^s^t^aⁿ^c^e^pr^og^r^a^m^s^{in g}^e^ne^r^a^{l, s}^e^e^C^R^{S R}^e^por^t^R^L³⁴⁵⁹¹^,^O^v^e^r^vⁱ^e^w^of^Fe^de^r^a^{l H}^o^usⁱⁿ^g
^Assistaⁿ^{ce Prog}^ra^{ms an}^{d Po}^lⁱ^cy^{, by}^Ma^gg^ie^Mc^Ca^rt^y^e^t^a^l^..
⁷^{S. H}^r^g^.¹^00-⁶⁸^9,^he^a^r^ing^be^f^o^r^e^t^h^e^Su^bc^om^m^itte^e^{on B}^a^nk^ing^,^H^o^us^ing^,^aⁿ^{d U}^r^baⁿ^A^f^f^a^ir^s^{on the}^r^e^por^t^of^the
^N^a^tiona^{l H}^o^us^ing^T^a^s^k^For^c^e^,^p.^21.
⁸^{U.S. C}^ong^re^{ss, Se}^na^te^Com^m^itte^e^{on Ba}^nkⁱⁿ^g^,^Housiⁿ^g^,^aⁿ^{d Urba}^{n A}^ffa^irs,^Natio^nal^Aff^o^rda^b^le^Ho^using^Ac^t^{, rep}^o^rt
^t^o^acco^m^p^an^y^S^.⁵⁶⁶^,¹⁰¹^st^Co^ng^.,²^nd^s^e^s^s^{., S.R}^e^pt.¹⁰^1-³¹⁶⁽^W^a^s^hing^ton:^G^P^O^,¹⁹⁹⁰⁾^,^p^p^.1-⁵^.
⁹^{42 U}^.^S.C^.^§¹²⁷²^1.
¹⁰^O^t^he^r^pr^og^r^a^m^s^a^u^thor^iz^e^d^by^NA^HA^inc^l^ude^the^H^o^m^e^ow^ne^r^s^{hip a}ⁿ^d^O^p^por^t^uni^ty^f^o^r^P^e^ople^Ev^e^r^y^w^he^r^e⁽^H^O^P^E)
^prog^ra^m^,^w^h^ic^{h is n}^o^lo^ng^e^r^f^und^e^d^{, a}ⁿ^d^the^H^ousiⁿ^g^Op^p^o^rtuⁿ^itie^{s f}^o^{r P}^e^rsoⁿ^{s w}^{ith A}^I^{DS (HOP}^W^A^{) prog}^ra^m^.^For
^m^o^r^e^inf^o^r^m^a^{tion on}^H^O^P^W^A^{, s}^e^e^C^R^S^R^e^por^t^R^L³⁴³^18,^Ho^using^Opp^o^rtuⁿ^itie^{s for}^Pe^{rsons wit}^h^A^I^{DS (}^HOPW^A⁾^{, by}
^Lⁱ^bby^P^e^r^l^.
¹¹^T^h^e^H^O^M^{E s}^t^a^t^ute^is^c^o^difⁱ^e^d^a^t^{42 U}^.^S.C^.^§¹²⁷²^{2 e}^t^{. s}^e^q.^R^e^g^u^la^tions^c^aⁿ^be^f^o^u^{nd a}^t²⁴^C^F^R^P^a^r^t^92.
¹²^U^.^{S. D}^e^pa^r^t^m^e^{nt of}^H^ous^ing^aⁿ^d^U^r^ba^{n D}^e^v^e^lopm^eⁿ^{t w}^e^{b pa}^g^e^,^{HOME In}^vestmen^{t Pa}^rtn^e^rshⁱ^p^s^Pro^g^r^a^m^,^avai^l^a^b^l^e
^a^t^http^://w^w^w^.hud.g^o^v^/^of^fⁱ^c^e^s^/^c^pd/^aff^o^rda^b^le^ho^us^ing^/^prog^ra^m^s^/^h^o^m^e^/^{. L}^o^w^-^inc^o^m^e^hous^e^hol^ds^a^r^e^g^e^ne^ra^ll^y^defⁱ^ne^d
^a^s^hous^e^h^olds^w^ith^inc^o^m^e^s^a^t^or^be^low^80%^of^a^r^e^a^m^e^diaⁿ^inc^o^m^e⁽^A^MI⁾^,^a^{nd v}^e^r^y^-^l^ow^inc^o^m^e^ho^us^e^hol^ds^a^r^e
^de^fⁱ^ne^{d a}^s^thos^e^ho^us^e^hol^ds^w^ith^inc^o^m^e^s^a^t^or^be^low^50%^of^A^M^I^.
¹³^{42 U}^.^S.C^.^§¹²⁷²^2.

Each fiscal year, Congress appropriates funding to the Department of Housing and Urban
Development (HUD) for the HOME program during the annual appropriations process. HUD
then uses a formula to allocate 40% of the funds to states and the remaining 60% to localities.
(The allocation formula is discussed in detail later in this report.) For the purposes of the HOME
program, the District of Columbia and Puerto Rico are considered to be states.
Before distributing funds to states and localities, HUD sets aside the greater of $750,000 or 0.2%
of total HOME appropriations for insular areas. Insular areas eligible for HOME funds are Guam,
the Northern Mariana Islands, the United States Virgin Islands, and American Samoa.
In order to receive HOME funds from HUD, states and localities must first become participating
jurisdictions (PJs). Participating jurisdictions can be states, localities, or multiple contiguous
localities that join together to form consortia. States are automatically eligible to become PJs and
receive the greater of their formula grant amount or $3 million annually. Localities can only ¹⁴
become PJs if they are metropolitan cities or urban counties, and if they meet two funding
thresholds. First, localities must be eligible for a minimum amount of funding under the formula, ¹⁵
usually $500,000. Once localities meet this threshold, they must also meet a second threshold:
localities must dedicate a total of at least $750,000 to affordable housing activities, either by
having a HOME formula grant of at least $750,000 or by making up the difference between their ¹⁶
grant amount and the $750,000 threshold with their own funds or state HOME funds.
Localities that do not meet the requirements to become participating jurisdictions may join with
other contiguous localities to form consortia in order to reach the minimum funding thresholds.
Localities that are not PJs can also participate in the HOME program by applying to their home
state to receive a portion of the state’s allocation of HOME funds. States in which no locality
receives its own allocation of HOME funding have their grant amounts increased by $500,000.
Once a state or locality is informed of how much funding it is eligible to receive according to the
formula, the entity must 1) notify HUD of its intention to participate in the program, and 2)
¹⁴
^A^m^e^tropolita^{n c}^ity^is^de^fⁱ^ne^{d to}^be^the^c^eⁿ^tra^l^c^ity^of^a^m^e^tropolit^aⁿ^s^t^a^tis^tic^a^l^a^r^e^a^(MSA^{), a}^s^de^fⁱⁿ^e^{d by}^the^O^f^fⁱ^c^e
^of^Ma^na^g^e^m^e^{nt a}^{nd Budg}^e^t^(OM^B^{), or a}ⁿ^y^othe^{r c}^ity^w^ith^{in a}^m^e^t^r^op^olita^{n a}^r^e^a^w^{ith a}^p^o^p^u^la^tioⁿ^o^f^a^t^le^a^s^{t 50,00}⁰
^pe^ople^.^Aⁿ^ur^baⁿ^c^o^uⁿ^ty^is^de^fⁱ^ne^{d to}^be^a^c^o^unty^{in a}^m^e^tr^opoli^t^aⁿ^a^r^e^a^tha^t^is^a^u^t^hor^iz^e^d^by^s^t^a^t^e^law^{to unde}^r^t^a^k^e
^e^sse^ntia^{l c}^o^m^m^unit^y^de^v^e^lopm^eⁿ^{t a}^nd^ho^using^a^ssistaⁿ^c^e^a^c^tiv^itie^{s in its}^uⁿ^inc^o^r^pora^t^e^d^a^r^e^a^s^a^{nd e}ⁱ^the^r¹⁾^ha^{s a}
^pop^ula^tⁱ^on^of^a^t^le^a^s^{t 20}^0,0⁰⁰^pe^o^p^le^{, e}^x^c^l^udi^ng^m^e^tropolita^{n c}ⁱ^tⁱ^e^s^w^{ithin the}^c^o^un^ty^,^w^{ith a}^t^le^a^s^{t 10}^0,0⁰⁰^of^tha^t
^pop^ula^tⁱ^{on r}^e^sⁱ^dingⁱⁿ^uⁿⁱⁿ^c^o^r^p^or^a^t^e^d^a^r^e^a^s^or^inc^l^u^d^e^d^uni^ts^of^g^e^ne^r^a^{l loc}^a^l^g^o^v^e^rⁿ^m^e^{nt, or}²⁾^ha^s^a^pop^ula^tⁱ^on^of^a^t
^le^a^s^{t 100}^,0⁰⁰^pe^op^le^{, a}^p^o^p^u^la^tio^{n de}^nsⁱ^t^y^of^a^t^le^a^s^{t 5,000}^pe^o^p^le^pe^r^s^qua^r^e^m^ile^{, a}^{nd i}ⁿ^c^l^u^d^e^s^noⁱⁿ^c^o^r^p^or^a^t^e^d^pl^aces
⁽^a^s^de^fⁱ^ne^{d by}^the^U^.^{S. C}^e^ns^us^B^u^r^e^a^u⁾^w^{ithin i}^t^s^b^o^r^d^e^r^s^.^T^h^e^s^e^d^e^fⁱ^nitions^c^aⁿ^be^f^oun^{d a}^t⁴²^U^.^S.^C^.^§⁵³⁰²⁽^a⁾⁽⁴⁾^aⁿ^d
⁴²^U^.^S.C^.^{§ 53}⁰²⁽^a⁾⁽⁶⁾^.
¹⁵^T^h^e^mⁱⁿⁱ^m^u^m^dir^e^c^t^a^lloc^a^tion^t^h^r^e^s^hol^{d is}^r^e^d^u^c^e^d^t^o^$³³⁵^,⁰⁰⁰ⁱⁿ^y^e^a^r^s^w^h^eⁿ^C^ong^r^e^s^sⁱ^ona^{l a}^ppr^opr^ia^ti^ons^f^o^r
^{HOME a}^r^e^le^{ss tha}ⁿ^$¹^.⁵^b^illi^on.
¹⁶^T^h^e^mⁱⁿⁱ^m^u^m^c^ontribu^tio^{n t}^o^a^f^forda^b^le^ho^using^a^c^tiv^itie^{s is re}^du^c^e^d^to^$5^00,⁰⁰^{0 i}ⁿ^y^e^a^r^s^w^h^eⁿ^Cong^re^ssiona^l
^a^ppro^p^ria^tio^{ns f}^o^{r HOME a}^r^e^le^{ss tha}ⁿ^$1^.5^billi^on^.

submit a Consolidated Plan for HUD’s approval before it can become a PJ. (The Consolidated
Plan is described later in this report.) Once a state or locality has been designated a PJ, it remains
one unless its designation is revoked by the Secretary of HUD. The Secretary has the authority to
revoke a jurisdiction’s designation if he finds that the jurisdiction is not complying with program
requirements, or if a locality’s formula grant or contribution to affordable housing falls below ¹⁷
certain thresholds over a specified period of time, although he or she is not required to do so.
HUD allocates HOME funds to states and localities based on a formula that takes into account six ¹⁸
factors. Four of these factors are weighted 20%:
• The number of occupied rental units in a jurisdiction that have at least one of four
problems: 1) overcrowding, defined as more than one occupant per room; 2)
incomplete kitchen facilities, defined as the lack of a sink with running water, a
range, or a refrigerator; 3) incomplete plumbing, defined as the lack of hot and
cold piped water, a flush toilet, or a bathtub or shower that is inside the unit and
used solely by the unit’s occupants; or 4) high rent costs, defined as rent that
costs more than 30% of the household’s income.
• The number of rental units in a jurisdiction that were built before 1950 and are
occupied by poor households.
• The number of occupied rental units in a jurisdiction that have at least one of the
four problems discussed above (overcrowding, incomplete kitchen facilities,
incomplete plumbing, or high rent costs) multiplied by the ratio of the cost of
producing housing within the jurisdiction to the cost of producing housing
nationally.
• The number of families at or below the poverty level in a jurisdiction.
The remaining two factors are weighted 10%:
• The number of rental units in a jurisdiction, adjusted for vacancies, where the
head of household’s income is at or below the poverty line. This number is
multiplied by the ratio of the national rental unit vacancy rate over the
jurisdiction’s rental unit vacancy rate.
• The jurisdiction’s population multiplied by its net per capita income.¹⁹
¹⁷
^T^h^e^Se^c^r^e^t^a^r^y^ca^{n c}^hoos^e^t^o^r^e^{voke a l}^o^calⁱ^t^y^’^{s d}^e^si^gn^atⁱ^oⁿ^{as a p}^a^r^tⁱ^cⁱ^p^atⁱⁿ^{g ju}^rⁱ^sdⁱ^c^tⁱ^oⁿⁱ^fⁱ^t^s^coⁿ^t^rⁱ^b^u^t^io^{n t}^o
^a^f^f^o^rda^b^le^ho^us^ing^a^c^tiv^itie^s^f^a^lls^be^low^$75^0,⁰⁰^{0 f}^o^{r thre}^e^c^o^ns^e^c^u^tiv^e^y^e^a^r^s^,^be^low^$625,⁰⁰^{0 f}^o^{r tw}^{o c}^ons^e^c^u^tiv^e
^years,^o^rⁱ^f^t^h^{e j}^u^ri^sdⁱ^c^tⁱ^oⁿ^do^{es no}^t^recei^{ve a f}^o^r^m^u^l^{a al}^l^o^catⁱ^oⁿ^o^f^at^l^east^$⁵⁰⁰^,⁰⁰⁰ⁱⁿ^an^y^siⁿ^g^l^e^y^e^{ar (2}⁴^C^F^{R §}
^92.¹⁰⁷⁾^.
¹⁸^{24 C}^F^R^§⁹²^.5^0.
¹⁹^A^j^u^ri^sdⁱ^c^tⁱ^oⁿ^’^{s n}^e^t^p^e^{r cap}ⁱ^t^aⁱⁿ^co^m^eⁱ^s^co^m^p^u^t^ed^b^y^su^b^t^ractⁱⁿ^{g t}^h^{e p}^e^{r cap}ⁱ^t^aⁱⁿ^co^m^e^o^f^a^f^a^mⁱ^l^y^o^f^t^h^{ree at}^t^h^e
^pov^e^r^ty^thr^e^s^{hold f}^r^om^the^jurⁱ^s^dⁱ^c^tion’^s^pe^r^c^a^p^ita^inc^o^m^e^.^Aⁿ^ind^e^x^is^c^ons^tr^uc^te^d^by^divⁱ^ding^the^na^tio^na^{l ne}^t^pe^r
^c^a^p^ita^inc^o^m^e^by^a^jurⁱ^s^d^ic^tion’^s^ne^{t pe}^r^c^a^p^itaⁱⁿ^c^o^m^e⁽^{24 C}^F^R^§^92.⁵⁰⁾^.

Once a participating jurisdiction receives its formula allocation, it has 24 months to commit
HOME funds to specific projects and five years to expend the funds. If a PJ does not commit its
funds within the time allotted, the funds will revert to HUD and be reallocated to other PJs. A
participating jurisdiction can administer HOME funds itself, or it can designate a public agency
or non-profit organization to administer all or part of the HOME program on its behalf. Such an
organization is referred to as a subrecipient. Participating jurisdictions or their subrecipients can
distribute funds to a variety of organizations to undertake specific projects. These organizations
can include developers, owners, and sponsors of affordable housing, Community Housing ²⁰
Development Organizations (CHDOs), private lenders, faith-based organizations, and third-
party contractors. Participating jurisdictions can also disburse HOME funds in a variety of ways.
Forms of disbursement may include, but are not limited to, grants, various types of loans, or loan
guarantees to lending organizations.
As mentioned earlier, a state or locality must submit a Consolidated Plan to HUD before it can be
designated a participating jurisdiction. The Consolidated Plan serves as a jurisdiction’s ²¹
application for HOME funding and funding from HUD’s three other block grant programs.
While many activities are eligible uses of HOME dollars, participating jurisdictions must specify
which activities they intend to fund in their Consolidated Plans in order to use HOME funds to
finance those activities.
The Consolidated Plan includes a detailed description of the jurisdiction’s housing needs and an
explanation of how it will use HOME and other HUD block grant funds to meet those needs over
a five-year period. The Consolidated Plan also describes how the jurisdiction will leverage
HOME funds to attract local, private, non-profit, or other non-federal sources of funds for
affordable housing, and it prioritizes projects by type and geographic location.
The Consolidated Plan is meant to be the product of “a participatory process among citizens, ²²
organizations, businesses, and other stakeholders” in a community. The HOME regulations
stress community participation, especially by low- and moderate-income persons, in developing
the Consolidated Plan. Although a jurisdiction’s Consolidated Plan covers a five-year period, it
must be updated annually, and each year the jurisdiction must submit to HUD an update on its
progress and a “citizen participation plan” that describes how citizens have been included and
consulted in the process.
²⁰
^C^o^m^m^unity^H^ous^ing^D^e^v^e^lopm^{ent O}^r^g^a^niz^a^tions^a^r^e^pr^iv^a^t^e^,^no^n-^pr^of^{it or}^g^a^niz^a^tio^ns^tha^t^m^e^e^t^ce^r^t^aⁱ^{n le}^g^a^{l a}^nd
^o^r^ganⁱ^zatⁱ^oⁿ^a^l^requⁱ^r^em^en^t^s^,^{as wel}^l^{as req}^uⁱ^rem^eⁿ^t^{s co}ⁿ^cernⁱⁿ^g^t^h^ei^{r cap}^aci^t^y^an^d^exp^e^ri^en^{ce rel}^a^t^e^d^t^o^aff^o^rd^ab^l^e
^housⁱⁿ^g^a^c^tiv^itie^s^.
²¹^T^h^e^othe^r^pr^og^r^a^m^s^a^r^e^C^o^m^m^un^ity^D^e^v^e^lopm^eⁿ^{t B}^l^oc^k^G^r^aⁿ^ts⁽^C^D^B^G^s⁾^,^Em^e^r^g^e^ncy^She^lte^r^G^r^aⁿ^ts⁽^E^SG^s⁾^{, a}^nd
^Housing^Op^por^tu^nitie^{s f}^o^r^P^e^rson^{s w}^{ith A}^I^{DS (HOP}^WA^).^{For m}^o^re^inf^o^rm^a^{tion on t}^h^e^s^e^prog^ra^m^s^{, se}^e^{CRS Re}^port
^R^L³⁴⁵⁹^1,^O^v^e^r^vⁱ^e^w^{of Fe}^de^r^a^l^H^ousⁱⁿ^{g As}^sⁱ^s^t^anc^e^Pr^o^g^r^a^m^s^aⁿ^d^Polic^y^{, by}^Ma^g^gⁱ^e^Mc^Ca^rt^y^e^t^a^l^..^{For m}^o^re
^inf^o^r^m^a^{tion s}^p^e^cⁱ^fⁱ^c^a^l^l^y^{on ESG}^,^s^e^e^C^R^S^R^e^por^{t R}^L³³⁷⁶^4,^T^h^{e H}^{UD Ho}^{meless Assista}ⁿ^ce^G^r^ants^:^Dⁱ^s^t^rⁱ^but^ion^of
^Fun^d^s^{, by}^Lⁱ^bby^P^e^r^l^{, a}ⁿ^{d f}^o^r^m^o^r^e^inf^o^r^m^a^{tion s}^p^e^cⁱ^fⁱ^c^a^l^l^y^{on H}^O^P^W^A^{, s}^e^e^C^R^S^R^e^por^{t R}^L³⁴³¹^8,^H^ousⁱⁿ^g
^O^ppor^t^uni^tie^s^for^Pe^r^s^o^ns^wⁱ^t^h^AI^D^S⁽^H^O^P^W^A⁾^{, by}^Lⁱ^bby^P^e^r^l^.
²²²⁴^C^F^R^P^a^rt⁹¹^.1⁽^b⁾⁽¹^).

In the years leading up to NAHA’s passage, some experts argued that local affordable housing ²³
needs varied, and that localities should be free to develop solutions that fit local conditions.
HUD describes one of the purposes of the HOME program as reinforcing the principle that states
and localities should have flexibility and control over how to best meet their affordable housing ²⁴
needs. Accordingly, a wide range of activities qualifies for HOME funding, including both
homeownership and rental housing activities. The law requires participating jurisdictions to give
rehabilitation of existing rental and owner-occupied units priority. However, a PJ can undertake
other activities if it certifies that rehabilitation is not the most cost-effective way for it to increase
its supply of affordable housing or that rehabilitation is inadequate to meet its affordable housing
needs.
The eligible uses of HOME funds fall into four broad categories:
• Rehabilitation of Owner-Occupied Housing. Funds may be used to help existing
homeowners repair, rehabilitate, or reconstruct owner-occupied housing.
• Assistance to Home Buyers. Funds may be used to help home buyers acquire;
acquire and rehabilitate; or, in certain circumstances, construct new homes.
• Rental Housing Activities. Funds may be used to help developers or other
housing organizations acquire; rehabilitate; or, in certain circumstances, construct
affordable rental housing.
• Tenant-Based Rental Assistance. Funds may be used to help renters with costs
related to renting, such as security deposits; rent; and, under certain
circumstances, utility payments.
There are certain activities which are not eligible for funding under the HOME program.
Ineligible uses of HOME funds include modernizing public housing, providing tenant-based
rental assistance under the Section 8 program, supporting ongoing operational costs of rental
housing, paying back taxes or fees on properties that are or will be assisted with HOME funds,
and providing non-federal matching funds for any other federal program. Other uses not ²⁵
authorized in statute or regulation are also prohibited.
While PJs have much flexibility in choosing which eligible activities they will fund with HOME
dollars, any projects funded through HOME must meet certain requirements in keeping with the
program’s stated objectives. This section describes some of the key requirements with which PJs
must comply.
²³
^{S. H}^r^g^.¹^00-⁶⁸^9,^he^a^r^ing^be^f^o^r^e^t^h^e^Su^bc^om^m^itte^e^{on B}^a^nk^ing^,^H^o^us^ing^,^aⁿ^{d U}^r^baⁿ^A^f^f^a^ir^s^{on the}^r^e^por^t^of^the
^N^a^tiona^{l H}^o^us^ing^T^a^s^k^For^c^e^,^p.^21.
²⁴^U^.^{S. D}^e^pa^r^t^m^e^{nt of}^H^ous^ing^aⁿ^d^U^r^ba^{n D}^e^v^e^lopm^eⁿ^{t w}^e^bpa^g^e^,^H^O^{ME In}^vestmen^{t Pa}^rtn^e^rshⁱ^p^{s Pr}^o^g^r^a^m^,^avai^l^a^b^l^e
^a^t^http^://w^w^w^.hud.g^o^v^/^of^fⁱ^c^e^s^/^c^pd/^aff^o^rda^b^le^ho^us^ing^/⁼^p^rog^r^a^m^s^/^hom^e^/^.
²⁵^A^c^tiv^itie^s^tha^t^a^r^e^prohib^ite^d^us^e^s^of^H^O^M^{E f}^unds^a^r^e^de^s^c^ribe^{d a}^t⁴²^U^.^S.C.^§¹²⁷⁴^2(d⁾^aⁿ^d²⁴^CF^{R § 9}²^.²¹⁴^.

A stated purpose of the HOME program, according to the authorizing statute, is to increase the ²⁶
supply of decent, affordable housing for people with low incomes and very low incomes.
Accordingly, all HOME funds must be used to assist low-income households, which are
households with annual incomes at or below 80% of area median income. Additional income
targeting requirements apply to rental housing and tenant-based rental assistance.
Homeownership Housing. All HOME funds that are used for existing owner-occupied housing or
to assist home buyers must benefit units that are occupied by households with incomes at or
below 80% of area median income.
Rental Housing and Tenant-Based Rental Assistance. Ninety percent of the funds used for rental
housing and tenant-based rental assistance must benefit households whose incomes are at or
below 60% of area median income. The remaining 10% must be used to benefit households with
incomes at or below 80% of area median income.
The income targeting requirements described above ensure that HOME-assisted units benefit
low-income households. Additionally, HOME-assisted units must continue to be occupied by
low-income households and remain affordable to such households over the long term. In order to
achieve this goal, HOME-assisted units must meet a number of requirements. Some of these
requirements govern the value of HOME-assisted units or the amounts that a household can pay
to rent or purchase a unit. HOME-assisted units must also meet additional requirements, separate
from the value of the home, to ensure affordability. As with income targeting, the precise
requirements that must be met depend on whether HOME funding is used for assistance to home
buyers, owner-occupied housing rehabilitation, or rental housing activities.
Assistance to Home Buyers. Housing bought by home buyers with the assistance of HOME funds
must meet the following requirements:
• The home buyer must belong to a low-income family, and the family must use
the home as a principal residence.
• The initial purchase price or value after rehabilitation must be no more than 95%
of the median purchase price of homes in the area, as determined by the
Secretary of HUD and adjusted as the Secretary deems necessary for different ²⁷
types of structures and the age of the housing.
• Home buyer units must continue to meet the definition of affordability described
above for between five and fifteen years, depending on the per-unit amount of
HOME funds expended on a project.
²⁶
^{42 U}^.^S.C^.^§¹²⁷²^2.
²⁷^P^a^rtⁱ^cⁱ^p^atⁱⁿ^{g j}^u^ri^sdi^c^tⁱ^oⁿ^s^can^b^a^{se t}^h^ei^{r cal}^cu^l^a^tⁱ^oⁿ^o^f⁹⁵^{% o}^f^t^h^e^medⁱ^an^p^u^r^c^h^{ase p}^rⁱ^{ce o}^f^h^o^m^{es i}ⁿ^t^h^{e area on}
^e^ithe^r^the^si^ng^le^f^a^mⁱ^l^y^m^o^rt^g^a^ge^lim^{its e}^s^ta^blishe^{d f}^o^r^the^Fe^de^r^a^l^H^ous^ing^A^d^mⁱ^nis^t^r^a^tion’^s^sⁱ^ng^le^-^f^a^mⁱ^l^y^m^o^r^t^g^a^g^e
^ins^u^r^a^nc^e^pr^og^r^a^m^,^f^ound^a^t¹²^U^.^S.C^.^{§ 1}⁷⁰⁹⁽^b⁾⁽^B⁾⁽ⁱ⁾^,^or^{on a}^de^ta^ile^{d m}^a^r^k^e^t^aⁿ^a^l^y^s^is^tha^t^c^onf^or^m^s^{to r}^e^q^u^ir^e^m^eⁿ^ts
^{set o}^u^t^b^y^HUD,^w^h^ich^can^b^e^f^o^uⁿ^d^{at 24}^CF^R^§⁹²^.²⁵⁴^.

• The housing must be single-family housing.²⁸
• If the housing is newly constructed, it must meet energy-efficiency standards.
• Participating jurisdictions must impose resale or recapture restrictions on units in
which they have assisted the home buyer using HOME funds. These restrictions
specify that if a homeowner sells his or her home during the affordability period,
he or she is required to sell it to another qualified low-income buyer (resale) or to
return some of the proceeds of the sale to the PJ in order to cover the HOME
funds that were invested in the home (recapture).
Resale and recapture restrictions are set by the jurisdiction and approved by the Secretary. Resale
restrictions must ensure that, upon resale, 1) the housing remains affordable to low-income home
buyers, and 2) the owner receives a fair return on investment. Recapture restrictions must ensure
that the investment in the housing is recaptured in order to assist other persons who qualify for
HOME-assisted housing.
Owner-Occupied Housing Rehabilitation. Owner-occupied housing that is rehabilitated using
HOME funds must meet the following requirements:
• The owner must belong to a low-income family at the time HOME funds are
committed to the project, and the family must use the housing as a principal
residence.
• The value of the housing after rehabilitation must be no more than 95% of the
median purchase price of homes in the area, as determined by the Secretary of
HUD and adjusted as the Secretary deems necessary for different types of ²⁹
structures and the age of the housing.
• There are no statutory long-term affordability requirements for owner-occupied
units that are rehabilitated using HOME funds. However, the PJ can choose to
impose an affordability period.
Rental Housing. Rental housing that benefits from the use of HOME funds must meet the
following requirements:
• Units must be occupied only by low-income households.
• Rents must not exceed HUD’s published maximum rents for the HOME program.
The maximum rent for a HOME-assisted rental unit is the lesser of 1) the fair ³⁰
market rent for comparable units in the jurisdiction, or 2) 30% of the adjusted ³¹
income of a household whose income is 65% percent of area median income.
²⁸
^{HUD de}^fⁱ^ne^{s sing}^le^-fa^mⁱ^l^y^housing^to^be^“^a^one^{- t}^o^f^our-f^a^m^il^y^r^e^side^nc^e^,^c^oⁿ^dom^inium^unit^,^c^o^op^e^r^a^tiv^e^unit,
^c^o^m^b^ina^tion^of^m^a^nuf^a^c^t^ur^e^d^hou^sⁱ^ng^a^{nd l}^o^t,^or^m^a^nuf^a^c^t^ur^e^d^ho^u^s^ing^lot.”^{24 C}^F^R^§⁹²^.2^.
²⁹^T^h^e^m^e^thods^by^w^h^ic^{h pa}^r^tic^ipa^t^ing^jurⁱ^s^d^ic^tio^ns^c^aⁿ^c^a^l^c^u^la^te⁹⁵^%^of^the^m^e^diaⁿ^pur^c^h^a^s^e^pr^ic^e^o^f^hom^es^{in the}
^a^r^e^a^a^r^e^de^s^c^rⁱ^be^{d in f}^oot^note^27.
³⁰^F^aⁱ^r^m^a^rk^et^ren^t^{s (F}^M^R^{s) are cal}^cu^l^a^t^e^d^an^nu^al^l^y^b^y^HU^{D an}^d^{are m}^e^an^t^t^o^ref^l^ect^t^h^{e co}^st^o^f^m^o^d^e^st^h^o^u^sⁱⁿ^{g i}ⁿ^a
^c^o^m^m^unit^y^{. FMRs c}^aⁿ^be^f^o^u^nd^{on HUD’s w}^e^bpa^g^e^a^t^http://w^ww^.^huduse^r^.org^/^d^a^t^a^s^e^t^s/fm^r.htm^l^.
³¹^P^a^rtⁱ^cⁱ^p^atⁱⁿ^{g j}^u^ri^sdi^c^tⁱ^oⁿ^s^m^u^st^d^e^t^e^r^mⁱⁿ^{e t}^eⁿ^aⁿ^t^{s’ an}^nu^alⁱⁿ^co^m^e^acco^rdⁱⁿ^{g t}^o^t^h^{e gu}ⁱ^d^elⁱⁿ^{es at}²⁴^CF^{R §}⁹²^.²⁰³^.
^HUD’s^m^a^xⁱ^m^u^m^HOM^{E ren}^t^{s will also}^tak^eⁱⁿ^t^o^acco^uⁿ^{t t}^h^{e n}^u^mb^{er o}^f^b^e^d^r^o^o^m^sⁱⁿ^{a u}ⁿ^{it an}^d^av^erag^{e o}^ccu^p^aⁿ^c^y
^pe^r^un^it.

• If a project includes five or more HOME-assisted units, at least 20% of the units
must be occupied by families with incomes at or below 50% of area median
income. Additionally, those families must have rents that meet one of the
following requirements:
^—Reⁿ^{ts ar}^{e n}^o^hⁱ^g^h^e^r^th^aⁿ¹⁾^th^{e f}^a^ir^m^a^r^k^{et r}^eⁿ^t^f^o^{r a com}^p^{arable u}ⁿ^{it in}^t^h^e^ju^rⁱ^s^dⁱ^c^tⁱ^oⁿ^,^o^r
^{2) 30%}^of⁵⁰^%^of^{area m}^e^di^aⁿⁱⁿ^co^m^e^,^w^hⁱ^c^h^e^v^e^{r i}^s^l^o^w^e^r.
^—R^eⁿ^ts^{are n}^o^high^{er th}^aⁿ^{30% of}^th^e^h^ous^eh^old^’^s^adj^u^s^t^edⁱⁿ^co^m^e^.³²
• Rental units must continue to meet these requirements for between five and
twenty years, depending on the per-unit amount of HOME funds expended on a
project and the type of activity for which HOME funds are used.
• If the housing is newly constructed, it must meet energy-efficiency standards.
• The housing must be available to Section 8 voucher holders.
Two stated goals of the HOME program are to leverage federal affordable housing funds by
encouraging state, local, and private investment in affordable housing activities, and to increase ³³
the capacity of states and localities to meet their affordable housing needs. Accordingly, the
HOME statute requires participating jurisdictions to match the HOME funds that they use in a
fiscal year with their own 25% permanent contribution to affordable housing activities.
A PJ’s matching funds can come from a wide variety of non-federal sources, including state or
local governments, charitable organizations, and the private sector. The matching funds must be
devoted to affordable housing activities that are eligible under the HOME guidelines, but they do
not necessarily have to support projects that use HOME funds. The match can also take many
forms, including in-kind contributions such as labor, construction materials, and land for HOME-
eligible projects. Other contributions, such as foregone taxes, other foregone fees, and
infrastructure improvements, may also count toward the matching requirement if they are used
specifically for projects funded by HOME dollars. The matching requirement may not be met ³⁴
using federal funds.
The matching requirement must be met in the same fiscal year that HOME funds are used, but if a
jurisdiction provides more matching funds than are required in a given year, it can carry those
funds forward to meet the matching requirement in subsequent years. The statute directs the
³²
^I^f^r^e^nta^l^units^te^m^por^a^r^ily^f^a^{il to}^m^e^e^t^e^ithe^r^of^the^r^e^quir^e^m^e^nts^g^o^v^e^rⁿ^ing^theⁱⁿ^c^o^m^e^s^of^oc^c^upa^nt^s^of^H^O^M^E-
^assisted^uⁿ^its^b^ecau^{se o}^f^anⁱⁿ^cre^a^{se in}^th^{e cu}^rren^t^ten^aⁿ^t^{s’ in}^c^o^m^e^{, th}^e^uⁿⁱ^t^{is still}^m^eetin^g^th^{e req}^uⁱ^re^m^eⁿ^t^{s o}^f^th^is
^sectⁱ^oⁿ^{as l}^oⁿ^g^{as vacan}^ci^{es ar}^{e f}ⁱ^l^l^e^d^acco^rdⁱⁿ^{g t}^o^t^h^{ese req}^uⁱ^rem^eⁿ^t^s.
³³^{42 U}^.^S.C^.^§¹²⁷²^2.
³⁴^For^t^h^e^p^u^r^p^os^e^s^of^the^m^a^tc^hing^r^e^quir^e^m^e^{nt, e}^quity^de^rⁱ^v^e^{d f}^r^om^L^o^w^-^Iⁿ^c^o^m^e^H^ous^ing^T^a^x^C^r^e^d^it^s⁽^L^I^H^T^C^s⁾^is
^c^ons^ide^r^e^d^f^e^de^r^a^{l f}^undi^ng^{. Se}^e^U^.^{S. D}^e^pa^r^t^m^e^{nt of}^H^ous^ing^aⁿ^{d U}^r^ba^{n D}^e^v^e^lopm^eⁿ^{t C}^P^D^N^o^tic^e⁹⁷^-⁰^{3, Ma}^r^c^h²⁷^,
¹⁹⁹^7,^p.¹⁴^{, a}^v^a^ila^ble^a^t^htt^p^://w^w^w^.hud.g^o^v^/^of^fⁱ^ce^s^/^c^pd/^la^w^s^reg^s^/notic^e^s^/¹⁹⁹^7/^97-^3.p^d^f^.^T^h^e^r^e^is^s^o^m^e^dis^a^g^r^eem^eⁿ^t
^ov^e^r^w^h^e^t^he^r^ta^x^c^r^e^d^its^s^u^c^h^a^s^the^L^I^H^T^C^s^hould^be^c^onsⁱ^d^e^r^e^d^f^e^de^r^a^{l s}^p^e^ndi^ng^{. S}^o^m^e^a^r^g^u^e^tha^t^sⁱ^nc^e^ta^x^c^r^e^d^its
^r^e^pr^e^s^eⁿ^{t f}^o^r^e^g^one^r^e^v^e^nue^s^,^r^a^the^r^thaⁿ^g^o^v^e^rⁿ^m^e^{nt outla}^y^s^{, the}^y^s^houl^d^not^be^c^o^unte^d^a^s^f^e^de^r^a^{l s}^p^e^ndi^ng^{; ot}^he^r^s
^a^r^g^u^e^tha^t^sⁱ^nc^e^ta^x^c^r^e^d^its^r^e^pr^e^s^eⁿ^{t m}^oney^tha^t^ot^he^r^w^is^e^w^{ould h}^a^v^e^a^c^c^r^ue^{d to t}^h^e^f^e^de^r^a^{l g}^o^v^e^rⁿ^m^e^{nt, the}^y^s^houl^d
^be^c^o^uⁿ^te^{d a}^s^f^e^de^r^a^{l s}^p^e^ndi^ng^{. F}^o^r^m^o^r^e^inf^o^r^m^a^tion^{on t}^h^e^L^I^H^T^C^,^s^e^e^C^R^S^R^e^por^t^R^S²²³⁸⁹^,^An^Iⁿ^tr^od^uc^ti^{on t}^o^t^h^e
^D^e^sⁱ^{gn of}^the^Low^-^Iⁿ^c^o^m^e^H^ousⁱ^ng^Tax^C^r^e^d^it^{, by}^Ma^rk^P^.^K^e^ig^htle^y^.

Secretary to reduce or eliminate a participating jurisdiction’s match requirement if the PJ certifies
that it is under a condition of fiscal distress. The Secretary can choose to reduce or eliminate the ³⁵
match requirement if the President declares the jurisdiction to be a major disaster area.
Although nearly all HOME funds are subject to the matching requirement, certain uses of funds
are not required to be matched by the PJ. Funds that do not have to be matched include forgiven
loans to Community Housing Development Organizations (CHDOs), funds used for
administrative purposes (up to an allowable limit), and funds used to fill the threshold gap
between a locality’s formula allocation and its required $750,000 contribution to affordable
housing activities, unless the locality obtains the latter from state HOME funds.
As noted earlier, another stated purpose of the HOME authorizing legislation is to expand the
capacity of non-profit agencies to provide affordable housing for low and very-low income
households. HOME requires each participating jurisdiction to reserve at least 15% of its HOME
funding for Community Housing Development Organizations (CHDOs). CHDOs are private
nonprofit organizations that meet certain legal and organizational requirements and have the
capacity and experience to carry out affordable housing projects. The funds reserved for CHDOs
must be used to develop, manage, or sponsor affordable housing. CHDOs can engage in other
activities using HOME funds, but any funding spent on projects in which the CHDO is not the
developer, manager, or sponsor will not count toward the 15% set-aside requirement for ³⁶
CHDOs.
When using HOME funds for owner-occupied housing rehabilitation, home buyer assistance, or
rental housing activities, participating jurisdictions must follow restrictions on the minimum and
maximum amounts of HOME funds that they can contribute to a given project. When
participating jurisdictions use HOME funds for tenant-based rental assistance, they must establish
both a maximum subsidy amount and a minimum tenant contribution to the tenant’s rent.
Homeownership and Rental Housing. The minimum amount of HOME funds that can be used for
new construction, rehabilitation, or acquisition of homeownership or rental housing is $1,000
multiplied by the number of HOME-assisted units in a project. The maximum per-unit subsidy for
³⁵
^T^h^{e S}^ecret^ar^yⁱ^s^req^uⁱ^red^t^o^re^d^u^{ce a j}^u^ri^sdⁱ^c^tⁱ^oⁿ^’^{s m}^a^t^c^h^re^quire^m^e^{nt by}^50%^if^the^jurisd^ic^tio^{n c}^e^r^tif^ie^{s tha}^t^{it is i}ⁿ
^a^c^onditⁱ^oⁿ^of^fⁱ^s^c^a^l^dis^t^re^s^s^a^nd^by^100%^if^the^juris^d^ic^tio^{n c}^e^r^tif^ie^s^tha^t^{it is}ⁱⁿ^a^c^o^nd^itioⁿ^of^s^e^v^e^r^e^fⁱ^s^c^a^l^dis^t^re^s^s^.^A
^j^u^ri^sdⁱ^c^tⁱ^oⁿ^o^t^h^e^{r t}^h^aⁿ^{a st}^at^{e i}^s^c^oⁿ^sⁱ^d^{ered t}^o^b^e^fⁱ^scal^l^y^dⁱ^st^ressedⁱ^fⁱ^t¹⁾^h^a^{s an}^{average p}^o^v^ert^y^rat^eⁱⁿ^t^h^{e p}^r^ecedⁱⁿ^g
^cal^en^d^a^{r year t}^h^atⁱ^s^eq^u^a^l^t^o^o^r^great^{er t}^h^an¹²⁵^%^o^f^t^h^e^{average n}^a^tⁱ^oⁿ^a^l^p^o^v^ert^y^rat^e^,^o^r²⁾^h^a^{s an}^a^v^era^g^{e p}^e^{r cap}ⁱ^t^a
ⁱⁿ^co^m^eⁱⁿ^t^h^{e preced}ⁱⁿ^{g cal}^en^d^a^r^{year t}^h^atⁱ^s^l^e^{ss t}^h^an⁷⁵^%^o^f^t^h^{e a}^v^era^g^{e n}^a^tⁱ^oⁿ^a^l^p^e^{r cap}ⁱ^t^aⁱⁿ^c^o^m^e^.^A^j^u^ri^sdⁱ^c^tⁱ^oⁿⁱ^s
^c^ons^ide^r^e^d^s^e^v^e^r^e^l^y^fⁱ^sc^a^l^l^y^dis^t^r^e^s^s^e^{d if}^{it m}^e^e^t^s^both^of^the^s^e^c^ond^itions^{. T}^h^e^Se^c^r^e^t^a^r^y^m^a^y^c^hoos^e^{to r}^e^d^u^c^e^a
^jurⁱ^s^d^ic^ti^on’^s^m^a^tc^{h r}^e^quir^e^m^e^{nt by}^{up to}¹⁰^0%^if^the^jurⁱ^s^dⁱ^c^tⁱ^oⁿⁱ^sⁱⁿ^an^{area i}ⁿ^w^hⁱ^c^h^{a d}^ecl^aratⁱ^o^{n o}^f^{a d}ⁱ^sast^er
^unde^r^the^S^t^a^f^f^o^r^d^A^c^{t is}^{in e}^f^f^e^c^t^f^o^r^aⁿ^y^pa^r^t^of^the^fⁱ^s^c^a^l^y^e^a^r^.
³⁶
^U^.^{S. D}^e^pa^r^t^m^e^{nt of}^H^ous^ing^aⁿ^d^U^r^ba^{n D}^e^v^e^lopm^eⁿ^t,^Buil^din^g^H^O^M^E^{: A HOM}^{E Program Prime}^r^{, Fe}^br^ua^r^y^2006,
^pa^g^e^3-^{1, a}^v^a^ila^ble^a^t^h^ttp:/^/w^w^w^.^hud^.g^ov^/of^fⁱ^c^e^s^/^c^pd/^a^f^f^o^r^d^a^b^le^ho^us^ing^/^tr^aⁱ^ning^/m^a^t^e^r^ia^ls^/^buil^d^ing^/^.

a project varies by participating jurisdiction and is based on the Federal Housing Administration’s ³⁷
mortgage limits for moderate income multi-family housing.
Tenant-Based Rental Assistance. The maximum HOME subsidy amount for tenant-based rental
assistance is the difference between 30% of the household’s adjusted monthly income and a
jurisdiction-wide rent limit established by the participating jurisdiction. The rent limit must ³⁸
conform to certain parameters established by HUD. Each participating jurisdiction is also
required to set a minimum tenant contribution for tenant-based rental assistance. The minimum
tenant contribution can either be a flat dollar amount or a percentage of tenant income.
A participating jurisdiction may use up to 10% of the funds it is allocated in a fiscal year for
administrative purposes. Participating jurisdictions must also comply with record-keeping and
monitoring requirements to ensure that they are using funds appropriately, making progress
toward their housing goals, and generally funding activities in line with their Consolidated Plans.

Each year, during the annual appropriations process, Congress appropriates funding to the HOME
account within HUD’s overall appropriation. The HOME account received an appropriation of ³⁹
$1.5 billion in FY1992, the first year in which it was funded. Since FY2000, the annual
appropriation to the HOME account has fluctuated between $1.6 billion and $2 billion.
Appropriations increased between FY2000 and FY2004, from $1.6 billion to just over $2 billion,
but then fell between FY2005 and FY2008. The FY2008 appropriation to the HOME program
was slightly more than $1.7 billion.
While most of the funding appropriated to the HOME account is used for the formula grants to
states and localities discussed earlier in this report, the HOME appropriation also includes
funding that is set aside for certain related affordable housing programs. These set-asides are
discussed in more detail below. Amounts appropriated for set-asides generally increased between
FY2000 and FY2004 along with the increase in appropriations to the entire HOME account,
rising from $47 million to $150 million over that time period, but decreased again in subsequent
years. In FY2008, $79 million was appropriated for HOME account set-asides. Table 1 shows
annual appropriation levels for the HOME program from FY1992 to FY2008, including the ⁴⁰
amounts appropriated for formula grants and for set-asides.
³⁷
^T^h^{ese li}^m^{its are p}^u^b^lis^h^e^d^ann^u^a^lly^an^d^{are availab}^l^e^f^r^o^m^{HUD F}ⁱ^eld^Of^fⁱ^c^e^s.
³⁸^For^r^e^quir^e^m^e^nts^g^o^v^e^rⁿ^ing^r^e^nt^lim^its^{, s}^e^e^{24 C}^.^F.R^.^§⁹²^.2^09.
³⁹^U^.^{S. D}^e^pa^r^t^m^e^{nt of}^H^ous^ing^aⁿ^d^U^r^ba^{n D}^e^v^e^lopm^eⁿ^t,^D^e^taile^{d H}^O^M^E^Pr^ogr^am^A^ppr^oprⁱ^a^tio^{n H}ⁱ^s^t^or^y^for^F^Y
¹⁹⁹^2-²⁰⁰⁵^{, a}^v^a^ila^ble^a^t^http^://w^w^w^.hud.g^o^v^/^of^fⁱ^c^e^s^/^c^pd/a^f^f^o^rda^b^le^housⁱⁿ^g^/^budg^e^t^/ⁱ^nde^x^.^c^f^m^#hom^e^-^a^lloc^s^.
⁴⁰^H^O^M^{E a}^c^c^ount^s^e^t-^a^s^ide^s^a^r^e^dis^c^us^s^e^{d la}^te^r^{in t}^h^is^r^e^p^o^r^t^aⁿ^{d v}^a^r^y^f^r^o^m^y^e^a^r^{to y}^e^a^r^{, but s}^o^m^e^c^o^m^m^{on pr}^og^r^a^m^s
^f^unde^{d t}^h^ro^ug^{h H}^O^M^{E s}^e^t-a^s^ide^s^inc^l^u^d^e^the^A^m^e^rⁱ^c^aⁿ^D^r^e^a^m^D^o^w^npay^m^eⁿ^{t Initia}^tiv^e^,^w^h^ic^{h p}^r^ov^ide^s^f^undi^ng^f^o^r
^dow^npa^y^m^eⁿ^{t a}^s^sⁱ^s^t^aⁿ^c^e^;^housⁱⁿ^g^c^ouns^e^lⁱⁿ^g^;^aⁿ^d^te^c^hnic^a^l^a^s^sⁱ^s^t^aⁿ^c^e^.^For^m^ula^g^r^aⁿ^{t f}^undi^ng^f^o^rⁱⁿ^s^u^la^r^a^r^e^a^s^is^a^l^s^o
ⁱⁿ^cl^ud^ed^{as a set}^-^asi^d^{e i}ⁿ^t^h^{e HO}^M^E^acco^uⁿ^t^,^andⁱⁿ^so^m^e^o^f^t^h^{e earl}ⁱ^e^{r years o}^f^t^h^{e p}^r^o^g^ra^m^,^t^h^{ere w}^a^{s al}^so^{a set}^-^asi^d^e
⁽^c^onti^nue^d.^..)

Table 1. Appropriations for the HOME Account,
FY1992-FY2008
^{($ in mill}^ions)
^HOME^HOME^HOME
^{Fiscal Year}^{Formula Gr}^ants^Set-Asides^Acc^{ount T}^otal^a
¹⁹⁹^{2 1,46}⁰⁴⁰^1,50⁰
¹⁹⁹^{3 988}¹²^1,00⁰
¹⁹⁹^{4 1,21}³⁶²^1,27⁵
¹⁹⁹^{5 1,33}⁶⁶⁴^1,40⁰
¹⁹⁹^{6 1,36}¹³⁹^1,40⁰
¹⁹⁹^{7 1,33}²⁶⁸^1,40⁰
¹⁹⁹^{8 1,43}⁸⁶²^1,50⁰
¹⁹⁹^{9 1,55}⁰⁵⁰^1,60⁰
²⁰⁰^{0 1,55}³⁴⁷^1,60⁰
²⁰⁰^{1 1,73}⁴⁶²^1,79⁶
²⁰⁰^{2 1,74}³⁵³^1,79⁶^b
²⁰⁰^{3 1,85}⁰¹³⁷^1,98⁷
²⁰⁰^{4 1,85}⁵¹⁵⁰^2,00⁶
²⁰⁰^{5 1,78}⁵¹¹⁵^1,90⁰
²⁰⁰^{6 1,67}⁷⁸¹^1,75⁷
²⁰⁰^{7 1,67}⁷⁸¹^1,75⁷
²⁰⁰^{8 1,62}⁵⁷⁹^1,70⁴
^Total^26,1^{77 1,20}²^27,3⁷⁸
^Source:^{Data taken}^{from HUD’s}^FY199^4-FY200^{9 Budget}^Justificat^ions.
^a.^{Totals may not add due to round}^{ing. All appropriations figures ar}^e^{post-rescission and do not inclu}^{de any}
^sup^{plemental emerge}^{ncy or disas}^{ter fu}^nding.
^b.^{The original HOME a}^p^p^{ropriation for FY20}⁰²^{was $}^1,79^{6 million,}^{with $1}⁰³^milli^{on of that amou}ⁿ^t
^{accounting for}^HOM^{E set-asides. This included $50}^{million for a “Downpayment A}^ssistance^{Initiative,” a}
^prec^{ursor to the}^{American Dr}^ea^{m Downpayme}^{nt I}^{nitiative (ADD}^{I). However, the ap}^{propriation fo}^{r the}
^{downpayment a}^ssistance^progra^{m was su}^{bject to the}^program’s^b^{eing authorized by}^Ju^{ne 3}^{0, 20}^02.^This
^{authorization did not occur in time, and a su}^ppleme^{ntal FY200}^{2 a}^pprop^{riations bill (P.L}^{. 107-2}⁰⁶⁾^r^escinded
^{the $}^{50 million approp}^{riation for downpayment}^assistance.

^(...c^on^tin^ue^d)
^fo^r^fo^r^m^u^l^a^g^r^aⁿ^t^s^fo^r^Iⁿ^dⁱ^aⁿ^t^r^ib^es^.

In FY2008, every state received a HOME formula grant. The median state grant amount was ⁴¹
about $9.9 million, and the mean grant was over $24.5 million. The mean is pulled upward by a
few states that received especially large formula grant allocations: for example, California
received the largest state allocation at over $54 million. Five states received the minimum grant
amount of $3 million, and a sixth state, Wyoming, received the minimum grant amount plus the
additional $500,000 awarded to states that have no localities receiving their own HOME formula
grants.
In FY2008, 591 localities or consortia also received their own HOME formula grant allocations.⁴² ⁴³
The median grant to localities was about $840,500, and the mean grant was around $1.6 million.
Again, the mean grant amount is significantly higher than the median because a few localities
received especially large grants. In particular, New York City received a grant of almost $112
million, close to three times the size of the next largest formula grant to a locality and over twice
the next highest formula grant amount awarded (the grant to the state of California). The smallest
formula grant amount to a locality was just above $248,000 and was awarded to Bay City, ⁴⁴
Michigan.
The Appendix at the end of this report shows the number of participating jurisdictions (localities
and consortia) in each state in FY2008. It also shows the total combined formula grant funding
that each state and its participating jurisdictions received that year, and the percentage of total
HOME funding for formula grants that each state’s allocation represents.
In addition to providing funding for formula grants to states and localities, the appropriation to
the HOME account includes funds that are set aside for related housing programs. Two major ⁴⁵
HOME account set-asides are discussed in this section.
One HOME account set-aside provides funding for the American Dream Downpayment Initiative
(ADDI). ADDI was created by the American Dream Downpayment Act (P.L. 108-186), signed ⁴⁶
into law on December 16, 2003. The program aims to increase homeownership, especially
⁴¹
^T^h^e^m^e^diaⁿ^s^t^a^t^e^g^r^aⁿ^{t a}^m^{ount w}^a^s^$9,⁹¹^4,7^{32 a}^nd^the^m^e^aⁿ^s^t^a^t^e^g^r^aⁿ^{t a}^m^{ount w}^a^s^$24,5^62,²¹^{9. A}^v^e^r^ag^e^a^nd
^m^e^diaⁿ^s^t^a^t^e^g^r^aⁿ^{t a}^m^ounts^inc^l^u^d^e^the^fⁱ^f^t^y^s^t^a^t^e^s^{, the}^Dⁱ^s^t^rⁱ^c^t^of^C^o^lum^b^ia^{, a}ⁿ^d^P^u^e^r^t^o^Rⁱ^c^o^{, b}^u^{t e}^x^c^l^ude^g^r^aⁿ^ts^to
ⁱⁿ^su^l^a^{r areas.}
⁴²^Fo^rty^-ⁿⁱⁿ^e^{states an}^d^Pu^ert^o^Rico^h^a^d^{at least}^oⁿ^e^l^o^cality^th^{at w}^a^s^{a p}^a^rticip^atin^g^j^u^risd^icti^oⁿ^an^d^receiv^e^d^{its o}^wⁿ
^H^O^M^{E f}^undi^ng^{. Wy}^o^m^ing^ha^{d n}^o^loc^a^litie^s^t^h^a^t^qua^lif^ie^{d to}^r^ecei^v^e^t^h^ei^{r o}^wⁿ^al^l^o^catⁱ^oⁿ^s^o^f^HOM^E^f^unds^.
⁴³^Spe^cⁱ^fⁱ^c^a^l^l^y^{, the}^m^e^diaⁿ^g^r^aⁿ^{t am}^{ount f}^o^{r loc}^a^litie^s^w^a^s^$840^,5⁰⁸^{, a}^nd^the^m^e^aⁿ^g^r^aⁿ^{t am}^{ount f}^o^{r l}^o^c^a^litie^s^w^a^s
^$1,⁶⁵^6,5⁸⁴^.
⁴⁴^O^v^e^r^{100 l}^o^c^a^litie^s^r^ecei^ved^f^o^rm^u^l^{a gran}^t^s^unde^{r the}^$5⁰⁰^,0⁰⁰^mⁱⁿⁱ^m^u^m^{in FY}²⁰⁰⁸^{. T}^h^e^s^e^loc^a^litie^s^m^e^{t the}
^mⁱⁿⁱ^m^u^m^f^unding^thr^e^s^h^oldⁱⁿ^th^e^fⁱ^r^s^t^y^e^a^r^{in w}^h^ic^{h the}^y^be^c^a^m^e^pa^r^tic^ipa^ting^j^u^rⁱ^s^d^ic^tio^ns^.
⁴⁵^A^c^tiv^itie^s^othe^{r tha}ⁿ^t^hos^e^de^s^c^ribe^{d i}ⁿ^t^h^is^s^e^c^tion^s^o^m^e^ti^m^e^s^rece^iv^e^f^unding^t^h^ro^ug^{h H}^O^M^E^s^e^t-a^s^ide^s^{, or ha}^v^e
^recei^ved^su^ch^f^undingⁱⁿ^t^h^e^pa^st.^T^h^e^s^e^a^c^tiv^itie^{s inc}^l^ude^te^c^hnic^a^l^a^ssistaⁿ^c^e^a^{nd sup}^por^{t f}^o^{r HUD’s inf}^o^rm^a^tion
^s^y^st^e^m^s,^a^m^oⁿ^g^o^t^h^e^rs.^A^l^so^,^{as no}^t^e^d^earlⁱ^e^r,^f^o^rm^u^l^{a gran}^t^s^f^o^{r i}ⁿ^su^l^a^{r areas are al}^so^coⁿ^sⁱ^d^ered^a^HOM^E^set^-^asi^d^e.
⁴⁶^A^D^D^I^is^c^odifⁱ^e^d^a^t^{42 U}^.^S^.^C^.^§¹²⁸²¹^{, a}ⁿ^{d t}^h^e^r^e^g^u^la^tions^g^o^v^e^rⁿ^ing^the^pr^og^r^a^m^c^aⁿ^be^f^ound^be^gⁱⁿⁿⁱ^ng^a^t²⁴
⁽^c^onti^nue^d.^..)

among low-income and minority populations, by providing formula funding to all fifty states⁴⁷
and qualified local jurisdictions for down payment and closing cost assistance for first-time home
buyers. States and localities can use ADDI funds to provide closing cost and down payment
assistance up to $10,000 or 6% of a home’s purchase price, whichever is greater. Additionally, up
to 20% of ADDI funds can be used to assist homeowners with rehabilitation costs, as long as the
rehabilitation is completed within a year of the home’s purchase.
The formula used to award ADDI funds to states is based on the number of low-income
households residing in rental housing in the state relative to the nation as a whole. For localities,
the grant amount is based on the number of low-income households residing in rental housing in
the jurisdiction relative to the entire state. In order for a local jurisdiction to receive its own
allocation of ADDI funds, it must have a population of at least 150,000 or be eligible for a
minimum grant of $50,000 under the ADDI formula.
ADDI was originally authorized to receive $200 million annually through FY2007, but the
program has never received more than $86 million in appropriations. The FY2008 appropriations
law (P.L. 110-161) appropriated $10 million to ADDI and extended the program through the end
of FY2008.
Funding for housing counseling is authorized under section 106 of the Housing and Urban ⁴⁸
Development Act of 1968 (P.L. 90-448). Since FY1997, funding for housing counseling has
been appropriated as a set-aside in the HOME account. HUD competitively awards funding to
HUD-approved agencies that provide counseling on a range of housing issues. In each of the last
several years, the President has requested that housing counseling be funded through its own
account, but to date Congress has continued to fund housing counseling as a set-aside in the
HOME account.
Leveraging refers to a program’s ability to use its own program dollars to attract additional
funding from other sources. Leveraging goals and potential funding sources vary by program, but
leveraging can be an important concept for affordable housing because attracting multiple
funding sources makes projects more feasible. Attracting other types of funding for affordable
housing can also help to build the capacity of organizations that might not be able to undertake
projects without the assistance of HOME funds. While HOME does not have a specific
leveraging requirement, either in statute or in regulation, one of the stated goals of the HOME

^(...c^on^tin^ue^d)
^C^F^R^§^92.⁶⁰^0.
⁴⁷^T^h^e^de^fⁱ^nition^of^“^s^ta^te^”^is^dif^f^e^r^eⁿ^{t u}^nde^r^A^D^D^I^thaⁿ^u^nde^r^H^O^M^{E. Spe}^cⁱ^fⁱ^c^a^l^l^y^{, A}^D^D^I^doe^s^no^{t i}ⁿ^c^l^ude^Pue^r^to
^Rⁱ^c^o^a^s^a^s^t^a^t^e^a^f^te^r^FY^2003.^Iⁿ^s^u^la^r^a^r^e^a^s^a^r^e^{not e}^lig^ible^to^r^ecei^v^e^A^D^{DI f}^unds^{. Se}^e⁴²^U^.^S.C^.^§¹²⁸²¹⁽^a⁾⁽⁴⁾^or^t^h^e
^U^.^{S. D}^e^pa^r^t^m^e^{nt of}^H^ous^ing^aⁿ^d^U^r^ba^{n D}^e^v^e^lopm^eⁿ^t,^A^m^eri^c^aⁿ^D^r^ea^{m Do}^wn^pa^ymen^t^Iⁿⁱ^tⁱ^a^tⁱ^{ve Q&}^A^{, r}^e^vⁱ^se^{d Ma}^y^5,
²⁰⁰^{5, a}^v^a^ila^ble^a^t^http^://w^w^w^.hud.g^o^v^/^offⁱ^c^e^s^/^c^pd/^a^f^f^o^rda^b^le^housⁱⁿ^g^/^prog^ra^m^s^/hom^e^/^a^ddi/^q^a^.^p^d^f^.
⁴⁸^T^h^e^housⁱⁿ^g^c^o^uⁿ^s^e^ling^pr^og^r^a^m^is^c^odifⁱ^e^d^a^t^{12 U}^.^S.C^.^§¹⁷^01x⁽^c⁾^,^a^{nd t}^h^e^r^e^g^u^la^tio^ns^g^o^v^e^rⁿ^ing^the^pr^og^r^a^m^a^r^e
^f^{ound a}^t²⁴^C^F^R^P^a^r^t²^14.

program is to attract state, local, and private funding for affordable housing activities for low-⁴⁹
income households.
HUD reports leveraging statistics for several of its programs, including HOME. According to
HUD, every dollar of HOME funds used for housing units that were completed between FY1992
(the first year in which the program was first funded) and November 30, 2008 attracted $3.70 in ⁵⁰
non-HOME funds. The Government Accountability Office (GAO) has analyzed the leveraging
statistics that HUD and the Department of the Treasury report for various programs, and has
calculated alternatives to the way that HUD reports its leveraging statistics in order to look at the ⁵¹
different types of non-HOME funding that HOME-assisted projects attract.
GAO found that projects that use HOME dollars do attract private funds and state and local
funds. However, HUD’s reported leverage ratio of non-program dollars to program dollars may
overstate HOME’s ability to attract non-federal funding for affordable housing because HOME
projects also make use of other federal funding. Using data on HOME projects completed in
FY2006 only, HUD’s reported leverage ratio for the program in that year is $4 of other funding
for every dollar of HOME funding. Using the same data, GAO found that much of the non-
HOME program funding included in HUD’s reported leveraging measure for the program comes ⁵²
from other federal sources. Specifically, as Figure 1 illustrates, HOME-assisted units that were
completed in FY2006 used $2.36 billion in HOME funding, $4.52 billion in private funding,
$3.14 billion in other federal funding, and $1.79 billion in state or local funding. This works out
to $1.92 of private spending, $1.33 of other federal spending, and $0.76 of state or local spending
for every dollar of HOME funding. A leverage ratio that only took into account other non-federal
sources of funding for HOME-assisted projects completed in 2006 would be $2.68 for every
dollar of HOME funding ($1.92 of private funding and $0.76 of state and local funding). This is
$1.32 less than the reported leverage ratio that includes all non-program funds. One reason for the
relatively large amount of other federal spending on HOME projects is that in GAO’s analysis,
equity from Low Income Housing Tax Credits (LIHTCs) was counted as other federal funding.
Many affordable housing projects use both HOME funding and funds raised by LIHTCs.
Calculating alternative leverage measures for the HOME program, such as those presented by
GAO, may provide a more complete picture of how well HOME is meeting its stated purpose of
leveraging federal funding to attract other types of funding for affordable housing, including
contributions from states, localities, and private entities.
⁴⁹
^{42 U}^.^S.C^.^§¹²⁷²^2.
⁵⁰^U^.^{S. D}^e^pa^r^t^m^e^{nt of}^H^ous^ing^aⁿ^d^U^r^ba^{n D}^e^v^e^lopm^eⁿ^t,^H^O^M^{E Pr}^o^g^r^a^m^N^a^tio^nal^Pr^o^duc^ti^on^Re^por^t^as^of¹¹^/3^0/⁰⁸^,
^D^e^c^e^m^b^e^r^{4, 20}^08,^a^v^a^ila^ble^a^t^ht^tp://w^w^w^.hud.g^o^v^/^of^fⁱ^ce^s^/^c^pd/^a^fforda^b^le^ho^us^ing^/^re^ports^/^p^rod^u^c^tio^n/¹¹³⁰⁰^8.p^d^f^.
⁵¹^U^.^{S. G}^o^v^e^rnm^e^nt^A^c^c^ounta^b^ility^O^f^fⁱ^c^e^,^G^A^O^-^08-136,^Mo^{re In}^f^o^r^m^a^tⁱ^oⁿ^on^L^evera^g^e^Mea^s^u^r^{es’ A}^ccu^ra^{cy a}ⁿ^d
^Link^a^g^e^to^Pr^ogr^am^G^o^als^is^N^e^e^d^e^dⁱⁿ^As^s^e^s^sⁱ^ng^Pe^r^f^or^m^anc^e^{, J}^a^nua^r^y²⁰⁰⁸^{, p}^.⁵⁰^-⁵^{3, a}^v^a^ila^ble^a^t
^http:^//w^w^w^.g^a^o^.g^ov^/ⁿ^e^w^.item^s^/^d⁰⁸¹³^6.^pdf^.
⁵²
^Ib^id^.

Figure 1. Funding Sources for HOME-Assisted Units Completed in FY2006
^HO^M^E^,^S^t^at^e/^Lo^c^a^l^,
^$2.³⁶^$1^.⁷⁹
²⁰^%¹⁵^%
²⁷^%
^Ot^h^e^r^38%
^F^eder^a^l^,
^$3.¹⁴
^Prⁱ^v^a^t^e^,
^$4.⁵²^{$ in}^b^illi^oⁿ^s
^Source:^Figure^prepa^{red by}^{CRS on the}^{basis of data from t}^{he U.S. Government A}^ccounta^{bility Office, GAO-}
^08-1^36,^{More Information on Lever}^{age Measures’ Accuracy and Linkag}^{e to Program Goals i}^s^Ne^{eded in As}^sessing
^Performance^.
HOME funds may be combined with other federal resources to support affordable housing
projects. Using a combination of federal funds from different sources for a single project is
known as subsidy layering. The HOME statute and regulations require a participating jurisdiction
that plans to use both HOME funds and other federal funds for a project to submit a subsidy
layering certification with its consolidated plan. The certification must provide a strategy for
evaluating funding commitments for affordable housing projects, and must ensure that the
aggregate amount of federal funds, including HOME funds, that is invested in a housing project is ⁵³
no more than is necessary to provide affordable housing.
HUD reports a number of HOME program performance statistics. These include statistics on the
types of completed units that have used HOME funding, the eligible activities funded with
HOME dollars, and the income level of households that benefit from HOME funds.
Between the beginning of the HOME program and November 30, 2008, nearly 882,000 physical
units of affordable housing have been constructed, rehabilitated, or acquired using HOME
funding, and an additional 201,000 families have been assisted through tenant-based rental
assistance (TBRA). Together, this amounts to over 1 million physical units and TBRA-assisted
households that have benefitted from HOME funds since the program’s inception. As explained
earlier, units assisted with HOME funds can be homeowner units, home buyer units, or rental
⁵³
^Se^e^{42 U}^.^S.C^.^§¹²⁷⁴²⁽^f⁾^a^nd²⁴^C^F^R^§^92.²⁵⁰⁽^b)^.

units. Rental units and tenant-based rental assistance together represent the largest share of all
completed units that have received HOME funding since the program’s inception, followed by
home buyer units. As shown in Figure 2, 49% of all completed units to date are rental units
(including households receiving TBRA), 34% are home buyer units, and 16% are homeowner
units.
Figure 2. Percentage of Completed HOME Units by Unit Type
(Through November 30, 2008)
^Ho^m^e^O^wⁿ^e^r
¹⁷⁵^,⁷⁸⁴
¹⁶^%
^R^ent^al
⁵³⁵^,²⁹⁰⁴⁹^%
³⁴^%
^Ho^m^e^B^u^y^e^r
³⁷^1,⁸⁵⁸
^Source:^Figure^prepa^{red by}^{CRS on the}^{basis of data from HUD’s}^{HOME Program National Production Report as of}
^11/30/08^{, avai}^{lable at http://www.hud.gov/offices/cpd/affordablehousing/}^reports/^{production/113}⁰⁰^{8.pdf. Num}^bers
^{may not add due to rou}^nding.
In addition to statistics on completed units, HUD also reports how much HOME funding was
used for each unit type. Since the program began, over $16.5 billion of HOME funding has been
spent on units that were completed as of November 30, 2008. As shown in Figure 3, 53% of
HOME funding that contributed to completed units was used for rental units or TBRA, while

28% was used for home buyer units and 19% for homeowner units.

Figure 3. Percentage of HOME Funding by Unit Type
(Through November 30, 2008)
^Ho^m^e^O^wⁿ^e^r
^$3.²
¹⁹^%
⁵³^%
^Reⁿ^t^a^l²⁸^%
^$8^.⁸
^Ho^m^e^B^u^y^e^r
^$4.⁶
$ in billions
^Source:^Figure^prepa^{red by}^{CRS on the}^{basis of data from HUD’s}^{HOME Program National Production Report as of}
^11/30/08^{, avai}^{lable at http://www.hud.gov/offices/cpd/affordablehousing/}^reports/^{production/113}⁰⁰^{8.pdf. Num}^bers
^{may not add due to rou}^nding.
As described earlier in this report, eligible uses of HOME funds generally fall into four
categories: owner-occupied housing rehabilitation activities, assistance to home buyers, rental
housing activities, and tenant-based rental assistance (TBRA). The HOME statute specifies that
rehabilitation of both rental and homeowner units should be given priority over other types of
eligible uses of HOME funds, such as acquiring or constructing affordable housing. As shown in
Figure 4, of the over 1 million physical units and TBRA households that have been assisted using
HOME funding, over 34% were rehabilitated units, 28% were acquired units, and 19% were
newly constructed units. Nineteen percent of “units” were households that received TBRA rather
than physical housing units.

Figure 4. Percentage of Completed HOME Units by Activity Type
(Through November 30, 2008)
^TB^R^A^,^Ne^w
²⁰^1,²⁵³^C^oⁿ^s^tr^u^c^ti^oⁿ^,
²⁰^8,⁴³⁸
¹⁹^%¹⁹^%
³⁴^%²⁸^%
^A^c^q^uⁱ^s^it^ioⁿ^,^R^e^h^a^bⁱ^lⁱ^ta^tⁱ^oⁿ^,
²⁹^9,⁹³⁷³⁷^3,³⁰⁴
^Source:^Figure^prepa^{red by}^{CRS on the}^{basis of data from HUD’s}^{HOME Program National Production Report as of}
^11/30/08^{, avai}^{lable at http://www.hud.gov/offices/cpd/affordablehousing/}^reports/^{production/113}⁰⁰^{8.pdf. Num}^bers
^{may not add due to rou}^nding.
The breakdown of total HOME funding used for each eligible activity looks somewhat different
than the number of units completed for each eligible activity. This is because some activities are
more expensive than others. As Figure 5 illustrates, nearly 45% of HOME funds actually spent
since the program’s inception were used for rehabilitation, 36% of funds were used for new
construction, 16% were used for acquisition, and 3.5% were used for tenant-based rental
assistance.
The difference between the percentage of funding going toward each activity and the percentage
of completed units of each activity type reflects the difference in average costs for each activity:
on average, an acquired unit costs $8,985 in HOME funds, while a rehabilitated unit costs
$19,822 and a newly constructed unit costs $28,238. The average amount of tenant-based rental ⁵⁴
assistance received by a household is $2,855.
⁵⁴
^A^v^erag^{e activit}^y^co^{sts are f}^o^{r co}^m^p^leted^uⁿ^{its as o}^f^No^vem^b^{er 3}⁰^,²⁰⁰⁸^,^an^{d can}^b^e^f^o^un^{d in}^HUD’^s^HOME
^Pr^ogr^am^N^a^ti^on^{al Pr}^od^uc^tio^{n Re}^por^t^as^of¹¹^/3^0/0^{8, a}^v^a^ila^ble^a^t^h^ttp://w^w^w^.hud.g^o^v^/^of^fⁱ^c^e^s^/^c^pd/a^f^f^o^rda^b^le^ho^us^ing^/
^r^e^por^ts^/^p^r^o^d^u^c^tio^n/¹¹³⁰^08.^pdf^.

Figure 5. Percentage of HOME Funding by Activity Type
(Through November 30, 2008)
^TB^R^A
^$0.⁶
^A^c^qui^sⁱ^tⁱ^on^,
^Ne^w^$2^.⁷^4%
^C^o^ns^t^r^uc^tⁱ^on^16%
^$5.⁹
^36%
^45%
^R^eha^bi^lⁱ^t^a^tⁱ^on
^$7^.⁴
$ in
billions
^Source:^Figure^prepa^{red by}^{CRS on the}^{basis of data from HUD’s}^{HOME Program National Production Report as of}
^11/30/08^,avai^{lable at http://www.hud.gov/offices/cpd/affordablehou}^{sing/reports/}^{production/11}³⁰^08.p^{df. Numbe}^rs
^{may not add due to rou}^nding.
As required by statute, all HOME funds benefit families with incomes at or below 80% of area
median income. Not surprisingly, HOME funds that are used for rental activities (including
tenant-based rental assistance and the construction, acquisition, and rehabilitation of rental
housing) benefit a lower-income population than funds that are used for homeowner and home
buyer units. As explained earlier in this report, HOME funds that are used for rental activities ⁵⁵
must target a lower-income population than funds used for homeowner or home buyer activities.
Households at the lowest end of the income spectrum are also more likely to rent than to own
their homes.
Figure 6 shows the percentage of funding for each HOME-assisted activity that has benefitted
households at different income levels. As of November 30, 2008, HUD reported that more than
three-quarters of funds disbursed for tenant-based rental assistance benefitted families with
incomes at or below 30% of area median income, as did 43% of funds used for completed rental
units. In contrast, less than one-third of funds used for completed occupied homeowner units
⁵⁵
^90%^of^f^unds^us^e^d^f^o^{r te}^naⁿ^t^-ba^s^e^d^re^nta^l^a^s^sⁱ^s^t^aⁿ^c^e^{or re}^nta^l^h^ous^ing^a^c^tiv^itie^s^a^r^e^re^quire^{d t}^o^be^ne^f^{it hous}^e^h^olds
^w^{ith inc}^o^m^e^s^a^t^or^be^low^60%^of^a^r^e^a^m^e^diaⁿ^inc^o^m^e^,^w^h^ile^the^r^e^m^a^ining^10%^m^u^s^t^be^ne^f^{it h}^ous^e^hol^ds^w^{ith inc}^o^m^e^s
^a^t^or^be^l^o^w^80%^of^a^r^e^a^m^e^diaⁿ^inc^o^m^e^{. H}^O^M^{E f}^unds^us^e^d^f^o^r^ho^m^e^ow^ne^r^a^{nd hom}^e^buy^e^r^housⁱⁿ^g^a^r^e^only^r^e^quir^e^d
^{to be}^ne^f^{it hous}^e^h^ol^ds^w^{ith inc}^o^m^e^s^a^t^or^be^l^o^w^80%^of^a^r^e^a^m^e^{dian inc}^o^m^e^.

benefitted households with incomes at or below 30% of area median income, and only 6% of
funds used for completed home buyer units benefitted households with incomes in this range.
Figure 6. Percentage of HOME Funds Used to Benefit Different Income Groups, by
Eligible Activity (Through November 30, 2008)
^1.⁴^%^3.²^%¹⁰^0%
^2.^6%
¹⁷^.¹^%⁹⁰^%
¹⁷^.⁷^%¹³^.⁹^%
⁸⁰^%
¹⁴^.¹^%^46.^2%
⁷⁰^%
³⁹^.⁵^%⁶⁰^%
³⁷^.³^%⁵⁰^%
⁷⁸^.³^%^23.^6%⁴⁰^%
³⁰^%
⁴³^.⁴^%^23.^8%²⁰^%
³¹^.⁵^%
¹⁰^%
^6.^4%^0%
^T^B^R^A^R^ent^a^l^Uⁿⁱ^t^s^H^o^m^eo^wⁿ^er^Uⁿⁱ^t^s^H^om^e^B^u^y^e^r^Uⁿⁱ^t^s
^H^o^u^s^e^h^o^l^d^Iⁿ^c^o^m^e^as^a^%^of^A^r^ea^M^e^di^an^Iⁿ^c^o^m^e
^0-³⁰^%^31-⁵⁰^%⁵¹^-6^0%⁶¹^-^80%
^Source:^Figure^prepa^{red by}^{CRS on the}^{basis of data from HUD’s}^{HOME Program National Production Report as of}
^11/30/08^{, avai}^{lable at http://www.hud.gov/offices/cpd/affordablehousing/}^reports/^{production/113}⁰⁰^{8.pdf. Num}^bers
^{may not add due to rou}^nding.

Table A-1. Distribution of Participating Jurisdictions and Formula Funding
by State for FY2008
($ in millions)
^{Formula Gr}^ant^a^{% of T}^{otal Formula G}^rant
^State^{Number of PJs}^{Funding ($}⁾^Funding
^{Alabama 7}^23.1²^1.42
^{Alaska 1}^3.97^0.24
^{Arizona 3}^23.4²^1.44
^{Arkansas 4}^14.7⁹^0.91
^{California 97}^236.³⁹^14.5⁰
^Colorad^{o 11}^19.8²^1.22
^{Connecticut 6}^18.9⁴^1.16
^{Delaware 2}^4.78^0.29
^{Dist. of Co}^lumbia⁰^8.41^0.52
^{Florida 36}^73.3⁵^4.50
^{Georgia 12}^39.0⁹^2.40
^{Hawaii 1}^7.15^0.44
^{Idaho 1}^6.33^0.39
^{Illinois 17}^68.6⁴^4.21
^{Indiana 13}^27.5⁵^1.69
^{Iowa 6}^13.7³^0.84
^{Kansas 5}^12.3⁹^0.76
^{Kentucky 4}^22.8⁷^1.40
^{Louisiana 9}^28.5²^1.75
^{Maine 2}^7.73^0.47
^{Maryland 7}^22.9⁸^1.41
^Massach^{usetts 19}^43.2²^2.65
^{Michigan 22}^46.3⁵^2.84
^{Minnesota 6}^20.6⁰^1.26
^{Mississippi 3}^15.8¹^0.97
^{Missouri 8}^28.0²^1.72
^{Montana 3}^5.65^0.35
^Nebras^{ka 2}^8.24^0.51
^{Nevada 5}^11.0¹^0.68
^{New Ham}^pshire²^5.98^0.37
^{New Jers}^ey²⁷^44.2³^2.71

^{Formula Gr}^ant^{% of T}^{otal Formula G}^rant
^State^{Number of PJs}^{Funding ($}⁾^a^Funding
^{New Me}^xico²^10.0⁴^0.62
^{New York}²⁸^183.³³^11.2⁵
^{North Carolina}¹⁹^37.7⁷^2.32
^{North Dakota}¹^3.51^0.22
^{Ohio 23}^60.4⁸^3.71
^{Oklahoma 5}^18.6²^1.14
^{Oregon 6}^19.8⁰^1.21
^{Pennsylvania 31}^68.8⁹^4.23
^{Puerto Rico}¹¹^30.8⁸^1.89
^{Rhode Island}³^8.64^0.53
^{South Carolina}¹³^18.3⁸^1.13
^{South Dakota}¹^3.91^0.24
^{Tennessee 9}^28.2⁶^1.73
^{Texas 43}^107.⁵³^6.60
^{Utah 4}^8.43^0.52
^{Vermont 1}^3.91^0.24
^{Virginia 20}^32.0⁶^1.97
^{Washington 14}^31.1⁸^1.91
^{West Virginia}⁵^11.9⁷^0.73
^{Wisconsin 11}^25.7⁸^1.58
^{Wyoming 0}^3.50^0.21
^{State Totals}⁵⁹¹^1,62^9.94^100.⁰⁰
^Source:^{U.S. Department of Ho}^{using and Ur}^ban^{Development, C}^{ommunity Planning a}^{nd Development Program}
^{Formula Allocati}^{ons for FY 200}^{8, spreads}^{heet available at htt}^{p://www.hud.gov/offices/cpd/about/}^bu^dget/
^budget0^8/^index.cfm.
^a.^{Formula funding totals include}^{both the}^{state gra}^{nt and g}^{rants to P}^{Js within the}^state.

Table A-2. Distribution of Participating Jurisdictions and Formula Funding,
Insular Areas for FY2008
^{($ in mill}^ions)
^{Number of}^{Formula Gr}^ant
^{Insular A}^rea^a^PJs^{Funding ($}⁾^b^{% of T}^{otal Formula G}^{rant Fu}^nding
^{American Samoa}^—^0.31^9.33
^{Guam —}^1.27^38.5²
^Norther^{n Ma}^rianas^—^0.58^17.7⁴
^{Virgin Islands}^—^1.13^34.4¹
^{Insular A}^{reas Total}^—^3.29^100.⁰⁰
^Source:^{U.S. Department of Ho}^{using and Ur}^ban^{Development, C}^{ommunity Planning a}^{nd Development Program}
^{Formula Allocati}^{ons for FY 200}^{8, spreads}^{heet available at htt}^{p://www.hud.gov/offices/cpd/about/}^bu^dget/
^budget0^8/^index.cfm.
^a.^{The HOM}^{E a}^pprop^{riation for for}^{mula grants o}^{nly includes f}^unding^{for states and localities; insular areas are}
^funded^{by a set-aside eq}^{ual to 0.2}^{% of the a}^p^p^{ropriation for HO}^M^E^{formula gra}^{nts. The}^perce^ntage^{s of}
^{formula grant}^fu^{nding for ins}^ular^{areas reflect t}^{he p}^erce^{ntage of th}^{e set-aside funding t}^{hat eac}^{h insul}^{ar area}
^received.
^b.^{Formula funding totals include}^b^{oth the state g}^{rant a}^{nd gra}^{nts to}^{PJs within the}^state.
^{Katie J}^oⁿ^e^s
^Aⁿ^a^l^ystⁱⁿ^H^o^u^sⁱ^ng
^km^j^oⁿ^e^s@^crs^.^l^o^c.g^o^v^,^7-⁴¹⁶²