1. Trends in HOME - 2012 Arizona Housing Forum
October 2012
Trends In HOME
Monte Franke, Franke Consulting Group
Franke Consulting Group

2. What We Will Discuss Recent allocation trends 2012 Appropriations Act
Proposed Rule
Resale/Recapture Notice
2012 Arizona Housing Forum

3. AZ HOME Allocations: 2003 - 2012 ADDI Stimulus Post Article
Mesa Consortium
2010 data
2012 Arizona Housing Forum

4. 2012
38% cut nationally
But new data (2010 Census & ACS) offset some of that loss in AZ; data impact
State: + 0.7%
Maricopa: %
Tucson/Pima: + 1.3%
Mesa: %
Phoenix: %
2012 Arizona Housing Forum

5. 2013 Allocation? Possible increase to $1.2 Billion (+ 20%)?
Impact of sequestration?
HOME projected to lose $84 Million (- 8.4%)
2012 Arizona Housing Forum

6. October 2012
FY 2012 Appropriation Law
Applies to activities that receive FY 2012 funds (set up in IDIS under 2012 Annual Plan)
Requirements:
Four-year project completion deadline
Project underwriting certification
Deadline for sale of homebuyer units
CHDO development capacity
2012 Arizona Housing Forum

7. 4 Year Project Completion Deadline
October 2012
4 Year Project Completion Deadline
Projects must be completed & ready for occupancy within 4 years of written agreement execution
Projects will be ‘involuntarily terminated before completion’ & HOME funds must be repaid
Applies to 2012 Con Plan/ Annual Action Plan projects
HUD may grant a one-year extension
FY 2012 HOME funds used for projects not completed within four years of the commitment date, as determined by a signature of each party to the written agreement, must be repaid to the HOME Investment Trust Fund. HUD may grant a one-year extension if it determines that the circumstances that led to the failure to complete the project by the deadline were beyond the PJ’s control.
The definition of completion in this context mean that all necessary construction work has been completed and the project has received a certificate of occupancy or other local certification indicating that construction or rehabilitation has been completed and the project is ready for occupancy.
Project Completion: This applies to projects and activities identified in the FY2012 Action Plan.
2012 Arizona Housing Forum

8. October 2012
Project Underwriting
Before executing a legally binding written agreement, a PJ must:
conduct an underwriting review
assess developer’s capacity and fiscal soundness
examine neighborhood market conditions to ensure adequate need for project
Before entering into a legally binding written agreement to provide HOME funds, a PJ must
Underwrite the project or evaluate the underwriting of another funder;
Assess the development capacity and fiscal soundness of the developer; and
Examine neighborhood market conditions to ensure that there is adequate need for each project.
This applies to projects and activities identified in the FY2012 Action Plan.
2012 Arizona Housing Forum

9. Deadline for Sale of Homebuyer Units
October 2012
Deadline for Sale of Homebuyer Units
Units not sold (or ratified sales contract) within 6 months of construction completion must be converted to HOME rental unit
HUD has no exception authority
PJs must convert any FY 2012 HOME homeownership unit that has not been sold to an eligible homebuyer within six months of construction completion to a HOME-assisted rental unit.
Once converted to rental units, they must be operated in compliance with all applicable rental rules.
This applies to projects identified in the FY2012 Action Plan
HUD does not have the authority to grant waivers or exception to this rule.
HUD issued guidance through a newsletter called HOMEFact- Vol. 4 No.1 in January The guidance explains how to change the tenure type of HOME Homebuyer activities to HOME Rental activities in IDIS OnLine.
2012 Arizona Housing Forum

10. CHDO Development Capacity
October 2012
CHDO Development Capacity
PJ may not reserve FY 2012 funds to a CHDO unless CHDO has staff with demonstrated development experience
Paid employees responsible for day-to-day operations (volunteers, board members, and consultants are not staff)
Projects of similar size, scope, complexity
Applies to FY 2012 CHDO set-aside funds
For some time, HUD has been concerned about the capacity of CHDOs nationally. This requirement is intended to ensure that CHDOs have the in-house capacity necessary to successfully carry out HOME projects.
HUD recognized that many areas lacked CHDO capacity and permitted the CHDO to rely on consultants (who were also expected to train existing CHDO staff) to meet regulatory requirements that a CHDO have housing development capacity. HUD is aware of numerous situations in which CHDOs continue to rely on the use of consultants and haven’t developed the internal capacity to undertake development activities.
In addition, HUD is aware of many PJs that are entirely staffed by volunteers or by persons whose services are provided by a parent organization. An example of this would be a PHA that spins off a CHDO. The CHDO has no paid staff or internal capacity. PHA employees carry out the functions of the CHDO.
Consequently, PJs may not reserve FY 2012 HOME funds to a CHDO for development activities unless the PJ has determined that the CHDO has staff with demonstrated development experience. The PJ must ensure that the current CHDO staff has experience developing projects of the same size, scope and level of complexity as the activities for which HOME funds are being reserved or committed.
HUD recognizes that there are lots of questions about what constitutes CHDO “staff” and this will be covered in much more detail in the CHDO capacity specific webinars.
This applies to FY 2012 CHDO set-aside funds
2012 Arizona Housing Forum

11. HOME Proposed Rule Published: December 16, 2011
October 2012
HOME Proposed Rule
Published: December 16, 2011
Comments were due 2/14/12
Addressing cumulative list of program concerns:
Enhance PJ accountability and oversight
Improve CHDO capacity and performance
Incorporate ‘best practices’ as requirements
Final Rule expected: Fall 2012
Updates to trainings & certifications will follow
It is very important to note that the FY2012 Appropriations Law requirements are separate from changes published in the HOME Proposed Rule, though there are similarities.
As you probably know, HUD published a significant proposed regulation for the HOME Program in the Federal Register on December 16, There are similarities between the law and the proposed regulatory changes, but the law applies to FY 2012 HOME funded activities only, while the provisions in the proposed rule will not apply until the rule becomes final. At that point, the changes will apply to all HOME project. Difference between statutory and regulatory.
The proposed changes are intended to enhance performance and accountability, and clarify certain existing provisions.
HUD did a series of webinar trainings which covered the significant proposals and can be found on the HOME technical assistance website under the training center tab.
The HOME Final Rule is expected to be published in the Fall 2012.
2012 Arizona Housing Forum

12. Trends in HOME - 2012 Arizona Housing Forum
October 2012
Proposed Rule Changes
Deadlines: completion, sales, rent-up
Underwriting – all projects
Physical standards expanded – energy, useful life, interim inspections,
CHDOs – no reservations, staff, independence
Owner price/value limit change
Rental project monitoring & workouts
2012 Arizona Housing Forum
Franke Consulting Group

13. Resale/Recapture Notice
CPD (January 2012)
HUD FOs must approve R/R plan (ConPlan)
Written agreement separate from loan instruments
Repayment if non-compliance
PJ should have resubordination policy
2012 Arizona Housing Forum

14. Bottom Line No commitment if you’re not ready
No homebuyer units on spec
CHDOs must have staff capacity
If you can’t complete, you must remit
Review your resale/recapture policy & docs
Perform or risk losing more funding for housing
The metric of HOME success is completed & occupied units
2012 Arizona Housing Forum

15. Links HOME: www.hud.gov/homeprogram/ 2012 requirements: Proposed rule:
Proposed rule:
Resale/Recapture Notice:
Mailing list
2012 Arizona Housing Forum