HOME Final Rule Retains Interim Rule Regarding Compliance with 24-Month Commitment Requirement

HUD’s Office of Affordable Housing Programs (OHAP) issued a final rule on September 22, implementing without change a December 2, 2016, interim rule that altered the method by which OAHP determines a participating jurisdiction’s (PJ) compliance with the statutory requirement to “commit” HOME Investment Partnerships (HOME) program funds within 24 months. Since 2017, every appropriations act has suspended the 24-month requirement, but OAHP issued the final rule to address possible future cases in which an appropriations act does not continue the 24-month suspension.

The HOME regulations have long defined “commit” to mean that, in general, a PJ has a legally binding written agreement with an owner for a specific local project for which construction is scheduled to start within 12 months. The HOME statute also requires a PJ to “reserve” 15% of its annual HOME allocation for Community Housing Development Organizations (CHDOs). A PJ also has 24 months to reserve its 15% CHDO set-aside. A PJ will lose its regular HOME funds and/or CHDO set-aside HOME funds if those funds are not committed or reserved by the 24-month deadline.

Prior to fiscal year (FY) 2015, OAHP measured compliance with the 24-month commitment and reservation requirements using a cumulative methodology. OAHP also used a cumulative method to measure a PJ’s requirement to “expend” HOME funds within five years. The cumulative method entailed a “first-in, first out” approach to a PJ’s use of HOME funds from various years’ HOME allocations. This method did not require a PJ to specify which HOME grant year’s funds it was committing to a specific project.

On December 2, 2016, OAHP published an interim rule to implement a grant-specific method for determining compliance with the 24-month commitment and 24-month CHDO set-aside reservation deadlines. As was the case with the interim rule, the final rule requires a PJ to indicate a specific HOME grant year that will fund a specific project or activity. In addition, the final rule eliminates the five-year expenditure deadline for FY15 and subsequent allocations, as was provided by the interim rule.

The interim rule also established a method of administering “program income” (funds repaid to a PJ – for example, from repayment of homeowner loans) that would prevent a PJ from losing such funds. The final rule, consequently, establishes the deadline for committing program income received during a program year as the date of a PJ’s commitment deadline for the next year’s grant allocation, rather than the grant year allocation from which a HOME project or activity was originally assisted. 

The FY17 appropriations act suspended the 24-month commitment requirement through FY23. The FY19 and subsequent appropriations acts suspended the 24-month reservation requirement for CHDOs through FY24. Consequently, OAHP has not been enforcing the 24-month requirements. However, OAHP is finalizing the unchanged provisions of the 2016 interim rule because appropriations act suspensions might lapse in the future.

Read the final rule at: https://bit.ly/3UuQBRo

Read more about the HOME program on page 5-1 of NLIHC’s 2022 Advocates’ Guide.