Among other things, faith-based organizations may use space in their facilities to provide program-funded services, without removing or altering religious art, icons, scriptures, or other religious symbols. Learn more here. It was established in 1990 under the Cranston-Gonzalez National Affordable Housing Act. The project is not required to have low HOME rents in accordance with paragraph (b)(1) or (2) of this section, but must meet the occupancy requirements of paragraph (b) of this section. The participating jurisdiction must conduct an initial property inspection to identify the deficiencies that must be addressed. The rule also proposed to eliminate the provision that permitted a CHDO to meet the capacity requirement based upon the use of a consultant to undertake activities and train CHDO staff. The purpose of the requirement is to ensure that there will be adequate market demand for a project before committing HOME funds. It is important to note that the rule does not prohibit the CHDO from using volunteers, board members, and staff of parent organizations in its operations; however, these individuals cannot be the basis for the determination of development capacity. (a) General rule. In addition, a project that has been committed in the system for 12 months without an initial disbursement of funds may be cancelled by the system. 8. Add, in alphabetical order, the definition of CDBG program; c. Revise paragraphs (1) and (2)(i) of the definition of Commitment; d. Revise paragraphs (3)(ii) and (3)(iii), add paragraph (3)(iv), and revise paragraphs (4), (5), and (9) of the definition of Community housing development organization; e. Add, in alphabetical order, the definition of Consolidated plan; f. Revise the definitions of Homeownership, Housing, and Low-income families; g. Revise paragraph (2) of the definition of Program income; h. Revise the definitions of Project completion, Reconstruction, Subrecipient. (iii) The name and qualifications of each CHDO and amount of HOME CHDO set-aside funds committed. An organization that is created by a governmental entity may qualify as a community housing development organization; however, the governmental entity may not have the right to appoint more than one-third of the membership of the organization's governing body and no more than one- third of the board members may be public officials or employees of governmental entity. Persons with hearing or speech impairments may access this number through TTY by calling the toll-free Federal Relay Service at 800-877-8339. With respect to the development of new public housing, paragraph (a) also makes clear that HOME funds cannot be used for public housing units, whether funded under section 9 or another source. It is a longstanding provision of the HOME regulations that implements a statutory requirement that 30-day written notice be provided in these cases. PDF HOME Investment Partnerships Program - Oregon.gov 12. These commenters requested that HUD define the two terms so that they are identical. This rule was determined to be a significant regulatory action, as defined in section 3(f) of the order (although not an economically significant regulatory action under the order). The adoption of written methods and materials, which are sometimes referred to as specifications and include details such as the grade of lumber to be used, the number of nails per square foot, the type of material that can or cannot be used for doors serving as fire exits, the distribution pattern and material of roofing tiles, will improve the quality of rehabilitation performed with HOME funds. The HOME Investment Partnerships Program (HOME) was created under Title II of the National Affordable Housing Act of 1990. HUD is amending the rule to remove the term program participant and add CHDO to the list of entities covered by this prohibition. The participating jurisdiction must specifically define fair return on investment and affordability to a reasonable range of low-income homebuyers, and specifically address how it will make the housing affordable to a low-income homebuyer in the event that the resale price necessary to provide fair return is not affordable to the subsequent buyer. This approach will reduce administrative burden for participating jurisdictions and project owners by enabling them to better align HOME requirements applicable to individual projects with the requirements of other common funding sources, while still ensuring that all applicants for a specific rental project are treated equally. HUD has determined that the use of an alternate data set that excludes housing that is not in standard physical condition is consistent with the statutory intent and yields 95 percent of area median sales figures that more accurately reflect the market value of newly constructed and standard existing housing. In making the referral, the organization shall comply with applicable privacy laws and regulations. The participating jurisdiction must ensure that the work to be undertaken will meet the participating jurisdiction's rehabilitation standards. In accordance with procedures specified by HUD, participating jurisdictions shall: (i) Ensure that bid and contract documents contain required labor standards provisions and the appropriate Department of Labor wage determinations; (ii) Conduct on-site inspections and employee interviews; (iii) Collect and review certified weekly payroll reports; (iv) Correct all labor standards violations promptly; (v) Maintain documentation of administrative and enforcement activities; and. More than 25 years of experience and extensive knowledge in public financial management, budget and public administration. Other commenters, however, opposed the requirement to establish written standards for new construction when using HOME funds. It is in the public interest to provide this extension because these organizations earn fees for originating non-HOME mortgages to borrowers also receiving HOME funds. All new manufactured housing and all manufactured housing that replaces an existing substandard unit under the definition of reconstruction must, at the time of project completion, be connected to permanent utility hook-ups and be located on land that is owned by the manufactured housing unit owner or land for which the manufactured housing owner has a lease for a period at least equal to the applicable period of affordability. For progress inspections, a participating jurisdiction can either use qualified in-house staff conduct inspections or hire or secure a qualified third party that is independent of the developer to conduct these inspections. downpayment assistance) because lenders already conduct inspections in accordance with local codes. The participating jurisdiction must conduct progress and final inspections to determine that work was done in accordance with work write-ups. Income or asset enhancement derived from the HOME-assisted project shall not be considered in calculating annual income. HUD Response: While HUD acknowledges that contracts for deed, installment contracts, and land sales contracts are common in certain areas of the country, these contracts fail to provide equitable title to the contracting party, who remains vulnerable to forfeiting the property until the final payment is made. Generally, if the HOME funds were disbursed from the participating jurisdiction's HOME Investment Trust Fund Treasury account, they must be repaid to the Treasury account. A commenter objected to the use of HOME funds in connection with self-sufficiency programs because tenants who do not fulfill the responsibilities of the program would lose their rental assistance and potentially experience housing instability. HUD understands commenters' concerns that self-sufficiency program participants may experience housing instability if tenant-based rental assistance is not renewed due to failure to participate in the self-sufficiency program. However, at this final rule stage, HUD extends these provisions to situations in which a primary lender also acts as a subrecipient or contractor qualifying a household or housing unit for HOME assistance. The use of HOME funds in public housing projects, and, in particular, the use of HOME funds in HOPE VI projects is an area that would benefit from further regulatory elaboration, given that HOME funds and public housing funds are each governed by separate statutes and NAHA prohibits the use of HOME funds to provide assistance authorized under section 9 of the United States Housing Act of 1937 (Public Housing Capital and Operating Funds). Paragraph (c) of 92.213 makes clear that HOME funds may be used to develop or rehabilitate affordable housing units that are not public housing units in projects that also contain public housing units funded by Section 9, HOPE VI, or other funds. HUD proposed revising 91.220(l)(i) and (ii) and 91.320(k)(i) and (ii) of the Consolidated Plan regulations, codified at 24 CFR part 91. In accordance with 24 CFR 5.703(f), UPCS also specifically addresses health and safety concerns. Instead, as suggested by many commenters, the final rule states that for rental housing, the participating jurisdiction must estimate the remaining useful life of systems (based on age and current condition) and, to the extent that it is less than the period of affordability, the participating jurisdiction must ensure, through underwriting, that a replacement reserve is established and annual payments to the replacement reserve are adequate to replace or repair major systems as needed. HUD Response: The HOME Program regulation is not the appropriate vehicle for proposing or effectuating changes to the implementing regulations for the National Environmental Policy Act and related statutes. The tenant must have a written lease that complies with 92.253. Program funds may be used for the acquisition, construction, or rehabilitation of structures only to the extent that those structures are used for conducting eligible activities under this part. The proposed changes to 92.251 reorganized the section and established new requirements for HOME-assisted projects involving new construction, rehabilitation, acquisition of standard housing, manufactured housing, as well as ongoing property condition standards for HOME-assisted rental housing. 13. (4) Contractor. Commenters also emphasized that participating jurisdictions should be encouraged to fully and carefully evaluate borrower credit and develop strict anti-predatory lending guidelines. (4) Has a tax exemption ruling from the Internal Revenue Service under section 501(c)(3) or (4) of the Internal Revenue Code of 1986 (26 CFR 1.501(c)(3)-1 or 1.501(c)(4)-1)), is classified as a subordinate of a central organization non-profit under section 905 of the Internal Revenue Code of 1986, or if the private nonprofit organization is an wholly owned entity that is disregarded as an entity separate from its owner for tax purposes (e.g., a single member limited liability company that is wholly owned by an organization that qualifies as tax-exempt), the owner organization has a tax exemption ruling from the Internal Revenue Service under section 501(c)(3) or (4) of the Internal Revenue Code of 1986 and meets the definition of community housing development organization;. HUD proposed revising 92.203(c) to clarify that a participating jurisdiction must designate and implement only one definition of income for each HOME-assisted program (e.g., downpayment assistance program, rental housing program) that it administers. 4. Administrative & Planning. The following information must be included in the annual action plan of the Consolidated Plan submitted to HUD for review and updated in each action plan. Milo Kuzmanovi - Banja Luka, Serb Republic, Bosnia and Herzegovina See http://www.hud.gov/offices/cpd/affordablehousing/programs/home/. Subrecipients can conduct these inspections if it is specified in their written agreement with the participating jurisdiction or it can hire an independent, third-party contractor to do the inspections. In any case where assistance under section 8 of the 1937 Act becomes available, recipients of tenant-based rental assistance under this part will qualify for tenant selection preferences to the same extent as when they received the HOME tenant-based rental assistance under this part. While inspections for appraisal purposes are sometimes performed by lenders (e.g., for FHA-insured mortgages), there is no guarantee that these inspections, when performed, are always shared with homebuyers, or that these inspections contain details about the condition of the housing. However, the HOME regulations do not prohibit other funding from being deposited in escrow accounts for recipients of HOME-funded tenant-based rental assistance. Housing. (d) On-site inspections and financial oversight. Section 601 of the Regulatory Flexibility Act defines the term small entity to include small governmental jurisdictions as governments of cities, counties, towns, townships, villages, school districts, or special districts with a population of less than 50,000. HUD Response: HUD acknowledges that the proposed rule may have caused some confusion by using the term project completion in 92.254(a)(3) when describing the point at which the proposed 6-month timeframe for sale or conversion of homebuyer units is triggered. The participating jurisdiction must establish standards to determine that the housing is decent, safe, sanitary, and in good repair. (xiv) Records (written agreements) demonstrating compliance with the written agreements requirements in 92.504. 38. For many years, HUD's administrative guidance on CHDO qualifications permitted subordinates of a central organization under section 905 of the Internal Revenue Code to qualify as CHDOs. (v) Construction progress inspections. Another commenter recommended that HUD not require an extension of the affordability period for any project receiving additional HOME funds during the period of affordability, irrespective of the amount of HOME funds being invested. The participating jurisdiction's standards must require the housing to meet all applicable State and local code requirements and ordinances. L. 110-161, approved December 26, 2007) increased the maximum exceptions that HUD may grant for the 221(d)(3) mortgage insurance program to up to 315 percent of the base limits. (iv) Records (e.g., inspection reports) demonstrating that each project meets the property standards of 92.251 at project completion. 1. To terminate or refuse to renew tenancy, the owner must serve written notice upon the tenant specifying the grounds for the action at least 30 days before the termination of tenancy. Additionally, HUD understands that because of these changes, in some participating jurisdictions, CHDO set-aside funds may be deobligated due to a lack of qualified CHDOs. Some commenters expressed opposition to inspecting the unit after it is sold to the homebuyer, stating concern over cost and accessibility to the unit once it is sold. A few commenters requested clarification regarding whether all subrecipients and state recipients funded by a participating jurisdiction would be required to adopt the same definition of income. The participating jurisdiction may structure its recapture provisions based on its program design and market conditions. HUD Response: HUD does not agree that PHAs that have 501(c)(3) designations should qualify as CHDOs because PHAs are publicly-established organizations and are not community-based organizations that are accountable to the low-income community. HUD is not adopting the suggestion that it accept a certified IRS 1040 as income documentation. At this final rule stage, HUD is further amending the commitment definition to reinforce that participating jurisdictions must not commit HOME funds to a project until all necessary financing has been secured, a budget and schedule established, and underwriting and subsidy layering completed. HUD has determined that participating jurisdictions need additional tools and flexibility to effectively address troubled projects. HUD proposed revising 92.222(b) so that HUD would take the extent of a disaster's fiscal impact on a participating jurisdiction into account when determining whether to grant the reduction, as well as the amount and duration of any match reduction. However, rental project owners may charge reasonable application fees to prospective tenants may charge parking fees to tenants only if such fees are customary for rental housing projects in the neighborhood; and may charge fees for services such as bus transportation or meals, as long as such services are voluntary. In lieu of the limits provided by HUD, the participating jurisdiction may determine 95 percent of the median area purchase price for single family housing in the jurisdiction annually, as follows. Monitoring fees on LIHTC projects vary widely and, in some states, do not appear to be related to the actual cost of compliance activities performed. The contribution must either reduce the sale price of the housing below fair market value, or if the development cost of a unit exceeds the market value, by enabling the unit to be sold for less than the cost of development. Some commenters suggested that the HOME regulations should allow independent architects under contract with developers to perform construction progress inspections and provide sign-off for payment disbursements to align with the LIHTC program and avoid redundancy. Consequently, participating jurisdictions without such classifications might be prohibited from using HOME funds for SROs or might be required to designate such projects as group homes, resulting in lower HOME subsidy limits and rents. the number of single- family homeowner loans to be made or number of homebuyers to receive downpayment assistance), tasks to be performed, a schedule for completing the tasks (including a schedule for committing funds to projects that meet the deadlines established by this part), a budget for each program, and any requirement for matching contributions. Several commenters urged HUD to define what constitutes a troubled project more broadly to include projects suffering from physical deterioration. The commenter stated that the rule should expressly allow these fees, as long as they are reasonable and the services are properly procured. HUD received comments on the related provision in 92.253(c), which are addressed below. A commenter recommended that the provision should state that all major systems must be in good operational condition rather than specifying time limits. HUD proposed rearranging existing provisions in the definition of homeownership in 92.2 to improve clarity, as well as clarifying that contracts for deed (also known as installment contracts or land sales contracts) and mutual or cooperative housing that receives LIHTC do not constitute homeownership. 8. Due to security measures at the HUD Headquarters building, please schedule an appointment to review the docket file by calling the Regulations Division at 202-708-3055 (this is not a toll-free number). Administration of tenant-based rental assistance is eligible only under general management oversight and coordination at 92.207(a), except that the costs of inspecting the housing and determining the income eligibility of the family are eligible as costs of the tenant-based rental assistance. HUD does not agree that it is appropriate to permit ongoing monitoring fees to be charged to low-income homebuyers and homeowners, and notes that ongoing physical inspections, income determinations, and financial assessments are not required for homeownership projects. Several commenters questioned the use of the term program participants, stating that it was unclear what entities were covered by the term. Executive Order 13132 (entitled Federalism) prohibits an agency from publishing any rule that has federalism implications if the rule either (1) imposes substantial direct compliance costs on state and local governments and is not required by statute, or (2) preempts state law, unless the agency meets the consultation and funding requirements of section 6 of the Order. 1, January 2001, which is posted on HUD's Web site.[5]. HUD proposed adding language to 92.252(c) to establish the applicable rent limits for Single Room Occupancy (SRO) units assisted with HOME. The Regulatory Flexibility Act (5 U.S.C. HUD's review of these reports has identified performance and reporting problems among participating jurisdictions that cannot be addressed effectively under the current regulations. HOME funds cannot be deposited in escrow accounts for self-sufficiency participants because the only eligible costs associated with tenant-based rental assistance are rental payments, security deposits, and utility deposits. A-87 (2 CFR part 225) and OMB Circular No. (c) Religious identity. The participating jurisdiction must have procedures for ensuring that timely corrective and remedial actions are taken by the project owner to address identified deficiencies. Comments: HUD received many comments on the proposed revisions to the definition of housing. Many commenters opposed the provision because of the length of time that it takes to obtain zoning approval, secure necessary financing, or overcome neighborhood opposition to an affordable housing project. A beneficiary deed conveys an interest in real property, including any debt secured by a lien on real property, to a grantee beneficiary designated by the owner and that expressly states that the deed is effective on the death of the owner. HUD declines to include persons in intimate relationships with officers or employees of the owner, developer or sponsor in the prohibition due to the difficulty of establishing the nature and existence of such relationships. Another commenter urged HUD to specify that the maximum per unit subsidy limit that applies to HOME-assisted units receiving additional HOME funds during the period of affordability be the limit in effect at the time of the additional investment rather than the initial commitment of HOME funds. The proposed definitions included the existing requirement that a CHDO must have demonstrated development capacity to undertake development of a project in order to receive CHDO funds, regardless of whether the CHDO would be the owner, developer, or sponsor of the project. HUD proposed a change to paragraph (b)(2) to make clear that participating jurisdictions may designate more than the minimum 20 percent of units in a project as Low HOME rent units, as is common practice in many HOME projects, particularly in projects that also receive project-based rental assistance. The documents posted on this site are XML renditions of published Federal A Rule by the Housing and Urban Development Department on 07/24/2013. Participating jurisdictions or its subrecipients cannot rely on any inspections performed by any party that is not contractually obligated to perform the participating jurisdiction's obligations to determine compliance with HOME property standards requirements. HUD did not receive any comments on this provision and is adopting the proposed rule language without change. One commenter was concerned that a one-size-fits-all approach to affirmative marketing would have limited effectiveness. Under the latter approach, a participating jurisdiction with a troubled HOME project would lack a financial incentive to pursue a financial or physical workout of the project. (2) Financial oversight. Comments: Several commenters stated that 18 months was a reasonable timeframe to expect HOME-assisted units to achieve initial occupancy. A few commenters suggested that the requirement be changed to 120 days, as Federal Housing Administration (FHA) appraisals are valid within 120 days of the loan closing date. Further, UPCS is used to conduct inspections in the LIHTC program, which is frequently a funding source in HOME-assisted rental housing. (a) Lease. During the period of affordability, the participating jurisdiction must perform on-site inspections of HOME-assisted rental housing to determine compliance with the property standards of 92.251 and to verify the information submitted by the owners in accordance with the requirements of 92.252. Section 92.254(a)(3) should have stated that the completion of construction triggers the beginning of this 6-month period. Department of Housing and Urban Development, III. The preamble to the proposed rule describes in detail why continuing to use the 203(b) limit as the sales price or after-rehabilitation value limit for HOME homeownership projects would violate NAHA. The participating jurisdiction must inspect the housing and document this compliance based upon an inspection that is conducted no earlier than 90 days before the commitment of HOME assistance. The agreement must describe the use of HOME funds for operating expenses; e.g., salaries, wages, and other employee compensation and benefits; employee education, training, and travel; rent; utilities; communication costs; taxes; insurance; equipment; and materials and supplies. Consequently, HUD is adopting the proposed rule language without change. Reconstruction is rehabilitation for purposes of this part. (xiii) Records demonstrating that a site and neighborhood standards review was conducted for each project which includes new construction of rental housing assisted under this part to determine that the site meets the requirements of 24 CFR 983.57(e)(2) and (e)(3), in accordance with 92.202. The proposed regulation required the participating jurisdiction's property standards for rehabilitation projects to describe, in detail, the scope of the rehabilitation that may be performed and the participating jurisdiction's written requirements for the design, amenity, and materials, beyond that which is contained in the local code (i.e., written methods and materials).