Making Effective Use of Program Resources

Making Effective Use of Program Resources

Community development is a broad term that encompasses a wide range of activities, including housing, economic development, health, employment and educational services, infrastructure, and many other activities designed to improve the welfare of neighborhoods and families. In towns, counties, and states across America, community development remains a primary concern for local leaders, the staffs of nonprofit and public agencies, and citizens alike.

Yet, Federal resources for community development are limited and are not sufficient to address all of the needs in most jurisdictions. While HOME and CDBG can play an important part in addressing community development needs, they must be used wisely in order to obtain the maximum benefit from each resource. It is important that jurisdictions use these programs strategically because:

  • Some types of activities are better suited to be undertaken under one program than the other;
  • When combining these resources within projects, it is important that the rules for each program be followed; and
  • Effective leveraging of CDBG and HOME resources can mean a generating a greater “bang for the buck” than when each program is used alone.

Selecting Suitable Activities

When Congress enacted the CDBG and HOME Programs, it had differing objectives in mind. CDBG was created to consolidate a number of previous categorical grant programs that had addressed a range of community needs, including water and sewer, urban renewal, model cities, historic preservation, and neighborhood development. CDBG’s eligible

activities, therefore, are diverse and range from residential rehabilitation to infrastructure to public services. While it has a strong focus on meeting the needs of low-income persons, it is also designed to be flexible in order to address other concerns.

The HOME Program was created nearly two decades later, to address the growing affordable housing crisis in America. Its purpose is to increase the supply of affordable housing for low-and very low-income households. There are four eligible activities under HOME and all relate directly to affordable housing. In addition, HOME has a secondary purpose of supporting the development and sustainability of nonprofit housing providers. To achieve this, it mandates that a percentage of each annual allocation be used by community housing development organizations (CHDOs) to own, develop, or sponsor housing.

Given these differing legislative histories and program purposes, it is no wonder that each program has its relative strengths and limitations. For example, CDBG cannot generally be used to construct new housing. However, it can be used to develop the infrastructure in a low-income neighborhood that might support a new affordable housing development. HOME, on the other hand, can be a very good resource for building new units but cannot be used to create off-site infrastructure. So, making strategic choices about how the HOME and CDBG programs are used can help a jurisdiction address a wide range of needs within its available resources.

In addition to these programmatic constraints, there are also strategic elements in deciding which program to use for which purpose.

Assume, for example, that the goal of a jurisdiction’s program is to improve and preserve its supply of affordable homebuyer units. Both CDBG and HOME can be used to assist with homeownership. However, only HOME mandates that units remain affordable for a specific period of time. HOME might be the preferred resource to use in this situation.

Now assume a different a jurisdiction wishes to spur neighborhood revitalization by rehabilitating rental units. Its objective is not necessarily to create long-term affordability, but rather to address the blight in the area so that other businesses and homeowners will locate in the neighborhood. In this instance, both HOME and CDBG can be used for rental rehabilitation. However, CDBG might be the preferred resource because it does not mandate long-term affordability restrictions and allows for undertaking projects where the focus is not necessarily on addressing the needs of low- and moderate-income households but rather on cleaning up a blighted neighborhood.

Jurisdictions that are familiar with the rules and flexibilities of both HOME and CDBG will be able to make strategic choices about investing their program resources.

Complying with the Rules

In addition to thinking strategically about how and when to use HOME and CDBG, jurisdictions need to ensure that both sets of program rules are met. When the programs are operated separately and are not combined in projects, jurisdictions must make sure that they carefully document compliance for each program according to the rules established by the CDBG and HOME regulations.

However, CDBG and HOME are sometimes combined in a single project. When this is done, the jurisdiction must ensure that both sets of rules are met simultaneously. Since both HOME and CDBG are Federal programs with implementing statutes and regulations, neither program overrules the other. In other words, the most stringent applicable requirement from each program must always be met.

For example, when a PJ invests HOME funds in a multifamily rental project, it can elect to invest its resources in selected HOME units. That is, if the jurisdiction wishes to partially rehabilitate a 10-unit rental building, it can fund two HOME units and leverage other funds to rehabilitate the remaining eight units. However, if CDBG is also invested in that same 10-unit project, the entire structure is considered to be assisted. Therefore, if the housing national objective is used it would mandate that at least 51 percent of the units be occupied by low- and moderate-income households, regardless of the amount of CDBG assistance in the project. Under HOME rules, only the two assisted units would need to be occupied by income-eligible families, but CDBG mandates that low- or moderate-income families occupy at least six units.

So, it is important for the jurisdiction to understand the rules of both programs in order to be sure that all activities are compliant.

Leveraging CDBG and HOME

Jurisdictions need to be familiar with how CDBG and HOME work together so that they can get the greatest impact for their investments. As noted above, there are differing instances when either CDBG or HOME is the most appropriate tool for a particular task at hand. However, sometimes when those tools are used together, the impact is greater than either could achieve alone.

For example, assume that HOME funds are used to support homeownership in a given neighborhood. HOME or CDBG can provide downpayment assistance to help low-income families to finance the purchase of new homes in a targeted neighborhood. However, if the families move into the neighborhood and find that the community lacks community facilities and local retail shops to meet their needs, it might make sense for the jurisdiction to invest its CDBG funds in the non-housing needs of the neighborhood, and its HOME funds in the homeownership program. This way, it can stretch its resources to undertake a broader range of activities to meet the diverse needs of the neighborhood residents. This results in a more vibrant, successful community.

It is important for jurisdictions to consider how CDBG and HOME can work together so that they are able to get the greatest return for their programs.

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