Using HOME and HTF Funds within Opportunity Zones

Comparison of HOME and HTF

The HOME and HTF programs are similar in many ways, but also have some distinct differences.

Key Similarities

Key Differences Between HOME and HTF

Since the programs’ goals differ, there are some key differences between HOME and HTF. Unlike HOME, HTF provides for:

• Deeper Income Targeting to VLI and ELI Households. HTF funds are targeted to provide housing for ELI and VLI households. This is a lower income group that are not typically served by HOME and is a common gap in the available housing options in most markets. HTF investments help to reduce the number of homeless and rent burdened families by providing units affordable for ELI and VLI households.
• Emphasis on Rental Housing. Because of the income targeting requirements, HTF is generally focused on creating affordable rental housing. HOME’s targeting allows homebuyer assistance for households up to 80 percent area median income (AMI). Households between 60 percent and 80 percent AMI are more likely to qualify for private mortgages and may be better able to take advantage of sustainable homeownership opportunities than ELI and VLI households. HTF is often used alongside HOME funds to provide the additional funding needed to target rental housing more deeply.  

• Eligibility of Operating Assistance. Operating cost subsidies are permitted for HTF-assisted units when project-based assistance is not available. HTF funds can pay for the operating deficit remaining for HTF-assisted units after the monthly rent payment has been applied. HTF operating funds may be used to ensure the financial stability for projects with units that do not generate rent revenue at the level needed to cover all operating costs. HOME is a housing production program and HOME funds cannot pay operating shortfalls except for Initial operating reserve funds used during lease-up (the first 18 months of a HOME project).

Additional Resource

Comparison of HTF and HOME Program Chart compares key regulatory requirements of the two programs.

Categories	HTF	HOME
Statutory Authority	Title I of the Housing and Economic Recovery Act of 2008	Title II of the Cranston-Gonzalez National Affordable Housing Act of 1990, as amended
Regulatory Authority	24 CFR Part 93	24 CFR Part 92
Grantees	States or State designated entities	40% of funds to States; 60% to local participating jurisdictions
Purpose	State determines priority housing need throughout the State for production or preservation, primarily of rental housing, affordable and available to extremely low-income households	State or local government determines mix of activities to address locally-identified priority housing needs, through development or rehabilitation of housing for rent or homeownership, repair of substandard owner-occupied housing, or provision of tenant-based rental assistance
Allocation	Formula	Formula
Formula Factors	Substandard housing: defined as overcrowding, or incomplete kitchen facilities, or incomplete plumbing, or high rent to income ratio Shortage of standard housing affordable to VLI and ELI (below 50% AMI and 30% AMI) households; weighted toward ELI households High rent to income ratio (≥ 50% of income for rent) Cost of producing housing relative to national average	Substandard rental housing: defined as overcrowding, incomplete kitchen facilities, incomplete plumbing, high rent to income ratio Rental households in poverty Poverty relative to national average Cost of producing housing relative to national average Inadequate housing – low vacancy, poor renters Pre-1950 housing stock occupied by poor households Fiscal incapacity
Minimum Grant Threshold	States: $3 million minimum, or alternative methodology if minimum funding is not available	States: $3 million
Matching Requirement	No match requirement	25% match required. Reductions possible based on fiscal distress reduction or Presidentially-declared major disaster
Minimum Income Targeting	100% for ELI households (≤ 30% AMI) or families with incomes at or below the poverty line (whichever is greater) when HTF funds are less than $1 billion 75% for ELI households (≤30% AMI) or families with incomes at or below the poverty line (whichever is greater) when HTF funds are greater than $1 billion; up to 25% for VLI households (< 50% of AMI)	100% for low-income households (≤ 80% of AMI) 90% (of rental units and TBRA) for households at ≤ 60% AMI 20% of rental units in projects of more than 5 HOME units for households at ≤ 50% AMI
Eligible Activities	New construction of rental and homebuyer* units Acquisition or acquisition/rehabilitation of rental and homebuyer* units Operating costs for rental projects (up to one third of annual grant) *Note: required housing counseling for homebuyers	New construction of rental and homebuyer* units Acquisition or acquisition/rehabilitation of rental and homebuyer* units Rehabilitation of owner-occupied housing Tenant-based rental assistance *Note: required housing counseling for homebuyers
Limits on Eligible Activities	No more than 10% of annual grant can be used for homeownership housing Homeownership housing is restricted to 1st time homebuyers only	Grantee determines mix of activities to be undertaken and tenure types of housing to be assisted, based upon on locally-determined needs and priorities
Use With Public Housing	May be used on public housing units being constructed or rehabilitated in Choice Neighborhoods or mixed finance/LIHTC projects	May not be used for construction, modernization or operating cost assistance for public housing units, except that HOME funds may be used for new construction of public housing units that also receive HOPE VI funding but no Capital Fund assistance
Rents	Rents plus utilities are capped at 30% of the income of a household whose income is 30% AMI	High HOME rents (including utilities) are capped at the lesser of: the Fair Market Rent (FMR) for the area or 30% of the income of a household whose income is 65% of AMI. Low HOME rents (including utilities) are capped at 30% of the income of a household whose income is 50% of AMI, or if there is Federal or State projectbased rental assistance, 30% of the tenant’s adjusted gross income
Administrative Funds	Up to 10% of the sum of annual grant and program income received	Up to 10% of the sum of annual grant and program income received
Allocation Plan/ Action Plan/ Consolidated Plan	State grantee must establish an allocation plan for HTF funds to be included in the Consolidated Plan Annual Action Plan and approved by HUD A subgrantee that is a local government must include an HTF allocation plan that is consistent with the State’s HTF plan in its own Annual Action Plan submission to HUD	Each grantee must establish a Consolidated Plan Annual Action Plan that includes the planned use of HOME funds to be approved by HUD
Maximum Per-Unit Subsidy Limits	Limits are set by grantee based on modest housing units with suitable amenities and local market conditions	Limits are set by 221(d)(3)(ii) of the National Housing Act (12 U.S.C.17151)
Affordability Periods	Rental projects - 30 years Homebuyer projects with resale provisions - 30 years Homebuyer projects with recapture provisions - 10, 20 or 30 years depending upon the amount of the HTF investment	Rental and homebuyer projects - 5,10, 15 years depending upon the amount of the HOME investment Rental - 20 years for new construction
Funds Commitment/ Expenditure Deadlines	24 months/5 years	24 months/5 years

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