Date Published: January 2014
Participating jurisdictions (PJs) are required to undertake a subsidy layering and underwriting analysis of all development projects to which they provide HOME funds, rental and homeownership alike, with some exceptions described below. These specific requirements described below are in the 2013 Rule, and apply to projects with HOME funds committed on or after August 23, 2013. HUD also plans to issue additional guidance in this area.
Subsidy layering and underwriting requirements for rental and homebuyer development projects (§92.250). The PJ must adopt subsidy layering and underwriting guidelines to ensure that it does not invest any more HOME funds (alone or in combination with other funds) than are necessary to the project and to ensure that the owner’s/developer’s profit or return on his/her investment is appropriate and reasonable, given the size, type and complexity of the project.
When selecting projects to receive HOME funds, the PJ must then use these guidelines to evaluate all proposed HOME-assisted projects prior to committing its HOME funds. These guidelines must state how the PJ will:
Exceptions to the above. The subsidy layering and underwriting requirements do not apply as follows:
The PJ must conduct project underwriting before committing HOME funds to a project.