The 2013 HOME Final Rule and the 2012/2013 Appropriations Acts

Introduction

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Activities funded with HOME FY2012 and 2013 Program Year funds are subject to the requirements of the Consolidated and Further Continuing Appropriations Acts of 2012 and 2013. The Acts impose four requirements that are similar to the new requirements of the 2013 HOME Rule. The Appropriations Acts require these provisions to go into effect “immediately,” and HUD has defined this to mean that they apply to any projects that receive FY2012/2013 HOME funds, including all FY2012/2013 CHDO set-aside funds. This includes any HOME activity set up in IDIS under a FY2012/2013 Consolidated Plan/Annual Action Plan project. Any FY2012/2013 project to which the PJ commits funds after the effective date of the 2013 Rule is subject to the requirements of both the Acts and the Rule. Where these requirements differ, the more restrictive rule applies.

The following Appropriations Acts requirements apply:

  1. Four-year completion deadline. For the purposes of compliance with the 2012/2013 Appropriations Acts, “completed” means that all necessary construction work is completed and a certificate of occupancy is issued (or, in the case of a homeowner rehabilitation project, the project is completed and signed off on by the PJ and homeowner). This definition of “project completion” differs from that in the 2013 Rule. Under the 2013 Rule, a project is not completed until beneficiary data is input into IDIS (in addition to construction completion and final draw of funds).
     
  2. Assessment of project underwriting, developer capacity, and market need. This requirement for FY2012/2013 projects and the requirement of the 2013 Rule are substantially equivalent.
     
  3. Conversion of homebuyer units to rental units. The 2013 Rule and the 2012/2013 Appropriations Acts apply different deadlines to this requirement. The Appropriations Acts require that the homebuyer unit be sold (interpreted by HUD to mean that it is under a ratified sales contract) within six months of construction completion, or it must be converted to a rental unit, or the entire HOME investment must be repaid by the PJ. The 2013 Rule requires that the unit be under a ratified sales contract within nine months of completion.
     
  4. CHDO development capacity. The Appropriations Acts and the 2013 Rule impose the same requirement that PJs determine a nonprofit has demonstrated capacity to undertake CHDO set-aside activities. Under the pre-2013 Rule (to which FY2012/2013 projects are subject), the CHDO must have development capacity, since CHDO set-aside funds always involve some aspect of development. However, the 2013 Rule allows a CHDO to serve as an owner without developing the property. If this is the role the CHDO will serve, under the 2013 Rule, this is the experience that needs to be documented.

Comparison of the 2013 HOME Final Rule and the FY2012 and FY2013 Appropriations Acts Requirements

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Deadlines
 

Requirement

FY2012 & FY2013 Requirements

2013 HOME Final Rule

4-Year Completion Deadline

  • 1 year extension
  • HUD has no authority to grant further extensions
  • “Completion” occurs at construction completion
  • 1 year extension
  • HUD has exception authority
  • “Completion” occurs when definition of completion* is met

Homebuyer Sales Deadline

  • 6 months
  • HUD has no exception authority
  • 9 months
  • HUD has exception authority

*Definition of completion at (§ 92.2): A project is completed when all title transfer requirements are met, all construction work is complete, property standards are met, final drawdown of HOME funds are disbursed for the project, and project completion information is entered into IDIS. For rental projects:  completion occurs upon completion of construction but before occupancy.
 

CHDO Capacity Requirement
 

Requirement

FY2012 & FY2013 Requirements

2013 HOME Final Rule

CHDOs must have paid staff with capacity

Must demonstrate development capacity

This can be done through:

  • Full-time or part-time staff
  • Independent contractors
  • Shared staff
  • Donated staff

Must demonstrate capacity in the proposed role of the CHDO (own, develop, or sponsor housing), as defined in the 2013 Rule

This can be done through:

  • Full-time or part-time staff
  • Independent contractors
  • Consultants, but ONLY during 1st year as CHDO

 

Project Assessment Requirement
 

Requirement

FY2012 & FY2013 Requirements

2013 HOME Final Rule

Before committing HOME funds to a project, a PJ must:

  • Underwrite the project
  • Assess the developer’s capacity and fiscal soundness
  • Assess the market demand

Requirement applies

Requirement applies

 

 

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