The HOME Formula

HUD distributes the funds appropriated to the HOME program to participating jurisdictions using a formula. By law, 40% of the funds are allocated to states and the remaining 60% are allocated to localities. For the purposes of the HOME program, the District of Columbia and Puerto Rico are considered to be states.

Before distributing funds to states and localities, HUD sets aside the greater of $750,000 or 0.2% of the total HOME appropriation for insular areas. In FY2014, the amount set aside for the insular areas was $2 million. Insular areas eligible for HOME funds are Guam, the Northern Mariana Islands, the United States Virgin Islands, and American Samoa.

The HOME formula takes into account six factors. Four of these factors are weighted 20%:

  • The number of occupied rental units in a jurisdiction that have at least one of four problems: (1) overcrowding, defined as more than one occupant per room; (2) incomplete kitchen facilities, defined as the lack of a sink with running water, a range, or a refrigerator; (3) incomplete plumbing, defined as the lack of hot and cold piped water, a flush toilet, or a bathtub or shower that is inside the unit and used solely by the unit’s occupants; or (4) high rent costs, defined as rent that costs more than 30% of the household’s income.
  • The number of rental units in a jurisdiction that were built before 1950 and are occupied by poor households.
  • The number of occupied rental units in a jurisdiction that have at least one of the four problems discussed above (overcrowding, incomplete kitchen facilities, incomplete plumbing, or high rent costs) multiplied by the ratio of the cost of producing housing within the jurisdiction to the cost of producing housing nationally.
  • The number of families at or below the poverty level in a jurisdiction.

The remaining two factors are weighted 10%:

  • The number of rental units in a jurisdiction, adjusted for vacancies, where the head of household’s income is at or below the poverty line. This number is multiplied by the ratio of the national rental unit vacancy rate over the jurisdiction’s rental unit vacancy rate.
  • The jurisdiction’s population multiplied by its net per capita income.

Once a participating jurisdiction receives its formula allocation, it has to meet several deadlines. The PJ has 24 months to commit HOME funds to specific projects (such as by signing a written agreement with a developer), and five years to expend the funds. If a PJ does not commit its funds within the time allotted, the funds will revert to HUD and be reallocated to other PJs. Furthermore, the 2013 final rule that made changes to the HOME program regulations specified that the PJ must repay any HOME funds provided to projects that are not completed within four years of the date that the funds are committed.

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