Planning for CDBG and HOME

Planning for CDBG and HOME

There are numerous ways that CDBG and HOME can be combined. Jurisdictions need to evaluate these options and then make decisions about how to effectively use these programs given the needs of their community. The section below provides a brief summary of how jurisdictions can consider these options as a part of their planning processes. For more detail on the key steps in making strategic decisions regarding CDBG and HOME funding, see Section 6 of this guidebook.

To tackle these complex program decisions, jurisdictions may wish to consider developing:

  • An assessment of community needs;
  • A community-wide plan for addressing needs through an array of different community development projects; and
  • A clearly-defined approach to each individual community development project.

Assessment of Community Needs

Although many American communities share similar challenges, such as a lack of affordable housing, no two communities are exactly alike. A needs assessment helps each community identify and define its individual needs as well as its strengths and assets.

The needs assessment should be conducted by the local or state government and should be the first step in determining how to effectively use HOME and CDBG resources. Often this assessment is done as a part of the Consolidated Planning process and includes:

  • A description of the assets and resources present in the community (such as a community college or existing infrastructure);
  • Current data and projections concerning demographics (e.g., households, income levels, etc.) as well as housing supply and demand;
  • Data on rents and housing prices in specific neighborhoods within the jurisdiction;
  • An analysis of the health of the local economy;
  • An assessment of the state of the jurisdiction’s infrastructure;
  • An analysis of which neighborhoods have the most acute community development needs; and
  • A general review of the feasibility and need for certain types of community development projects (such as infill housing versus multifamily rental housing) in specific neighborhoods.

Community-Wide Plan

After conducting a community needs assessment, community development staff should develop a plan for tackling the challenges faced by the community. Typically, the plan will involve a number of different community development activities in different neighborhoods within the jurisdiction. The plan strives to coordinate different types of housing, economic development, infrastructure, and related activities to maximize the impact of public funds.

States and localities can use the Consolidated Planning process—a requirement for direct grantees receiving HOME or CDBG funds—as an opportunity to undertake community-wide planning. Note that subrecipients and units of general local government who receive funds from a direct HUD grantee do not need to do their own consolidated plan. They are covered by the grantee’s plan. This planning process ensures that there is input from nonprofit partners, local businesses, and most importantly, residents that will be affected by community development projects. Wide community participation in the planning process is invaluable because it ensures that community development projects truly reflect what the community wants and needs.

When preparing the Consolidated Plan and Annual Action Plan, jurisdictions determine the appropriate level and nature of a variety of housing activities, such as the development of local rental, homebuyer, rehabilitation, special needs, or other types of affordable housing programs to address community needs. The process should also address how HOME and CDBG can be used strategically to address the needs identified for the community.

Individual Project Approach

With a consolidated plan in hand, jurisdictions are ready to evaluate the feasibility, implementation and benefits of program resources for each individual project.

Feasibility Research. Often, communities will need additional research to establish the feasibility of a given project. For housing projects, a market study is a focused assessment of whether a specific housing product, on a specific site, will be able to attract residents with the ability to pay—and how quickly. This type of study will explicitly conclude whether the proposed rents or housing prices for the specific project are achievable. For neighborhood revitalization projects, a broader market study that examines both housing and economic data may be necessary to assess the feasibility of a larger, multi-faceted initiative.

Implementation Planning. As early as possible, community development staff should identify the potential costs and existing concerns related to the implementation of the project. Even an apparently straightforward housing development project can involve a diverse array of costs: administrative expenses, infrastructure modifications, services for residents, basic construction costs, and more. As this model will explain in detail, the availability of HOME and CDBG funds (as well as other sources of financial

support) depends on whether the specific use of funds qualifies as an eligible activity under their respective program rules. Strategic use of program funds can maximize the impact of subsidies while meeting the eligibility requirements of all relevant programs.

Costs and Benefits of Funding Sources. Subsidies from HOME and CDBG programs enable communities to undertake projects that may not otherwise be feasible. However, it is important to consider the additional responsibilities and restrictions that come with using these funds for particular projects. Some possible responsibilities and restrictions include, depending on the funding source:

  • Rent limits for subsidized units;
  • Restrictions on the purchase and resale of subsidized homes;
  • Reporting and monitoring responsibilities to ensure ongoing compliance with program rules and regulations; and
  • Rules regarding the targeting of subsidies toward a program’s intended beneficiaries.

Communities should consider carefully how the requirements of different funding sources will impact a given project.

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