Using the HOME Cost Allocation Tool: Case Studies and Demonstration

HUD has developed a seven-part tutorial on the use of the HOME Cost Allocation Tool. It demonstrates how to use the HOME Cost Allocation Tool, introducing users to the requirement for cost allocation, providing guidance on unit comparability and identifying HOME-eligible and ineligible costs, demonstrating how to select the appropriate method of cost allocation, and showing the use of each method.


Segment 1: Introduction

This segment provides an overview of the requirement for cost allocation. It identifies the key “off sheet” judgements a HOME Participating Jurisdiction (PJ) must make prior to entering project information in the HOME Cost Allocation Tool, and it previews the remaining segments of the overall series of tutorials on Using the HOME Cost Allocation Tool.


Segment 2: Comparability

This tutorial segment instructs PJs and other HOME participants how to determine whether a project’s units are “comparable” or “not comparable.” The determination of unit comparability will impact which method of cost allocation may be used for the project as well as whether the PJ will designate HOME units as fixed or floating.


Segment 3: HOME-Eligible vs. Ineligible Costs

This segment discusses which costs in a project’s budget are HOME-eligible and which may be ineligible for HOME funding. Ineligible costs must be removed as part of the cost allocation review.


Segment 4: General Instructions & Selection of Method

This segment provides a general overview of the Excel workbook that is the HOME Cost Allocation Tool. It provides users with practical tips on navigating the spreadsheets and demonstrates how to use the “Selection of Method” worksheet to identify and choose the appropriate method of cost allocation.


Segment 5: Standard Method

Using a case study introduced in Segment 2, this tutorial segment demonstrates how to use the Standard Method of Cost Allocation. The Standard Method can be used in all HOME projects and can be used to calculate either the number of needed HOME units based on a proposed level of HOME investment or the maximum investment that can be supported by a given set of HOME-assisted units.


Segment 6: Proration Method

This tutorial segment explains the Proration Method of cost allocation. Proration can be used when a project’s units are comparable. This tutorial segment focuses on case study introduced in Segments 2 and 3 and demonstrates how to complete a cost allocation review when starting from a proposed HOME investment.


Segment 7: Hybrid Method

The final tutorial segment demonstrates how to use the Proration Method or Hybrid Method of cost allocation when starting from a proposed number of HOME-assisted units. The segment explains the differences between these approaches, which is based on whether the HOME units are designated in exactly or roughly the same proportion across the different unit types in the project.