Each fiscal year, Congress appropriates funding to HUD for the HOME program during the annual appropriations process. HUD then uses a formula to allocate 40% of the funds to states and the remaining 60% to eligible localities. (This is discussed in more detail in the “HOME Program Funding” section of this report.) States and localities that meet certain requirements to receive their own allocations of HOME funds are referred to as “participating jurisdictions” (PJs).
States are automatically eligible to become PJs and receive the greater of their formula grant amount or $3 million annually. Localities can only become PJs if they are metropolitan cities or urban counties, and if they meet two funding thresholds. First, localities must be eligible for a minimum amount of funding under the formula, usually $500,000. Once localities meet this threshold, they must also meet a second threshold: localities must dedicate a total of at least $750,000 to affordable housing activities, either by having a HOME formula grant of at least $750,000 or by making up the difference between their grant amount and the $750,000 threshold with their own funds or HOME funds provided by the state from the state’s formula allocation.
Localities that do not meet the requirements to become participating jurisdictions may join with other contiguous localities to form consortia in order to reach the minimum funding thresholds.
Localities that are not PJs can also participate in the HOME program by applying to their home state to receive a portion of the state’s allocation of HOME funds. States in which no locality receives its own allocation of HOME funding have their grant amounts increased by $500,000.
A state or locality that is otherwise eligible to receive HOME funds must submit a document describing how it plans to use HOME funds to meet its affordable housing needs for HUD’s approval before it can become a PJ. (This document, called a Consolidated Plan, is described in more detail in the following subsection.) Once a state or locality has been designated a PJ, it remains one – and therefore continues to be eligible to receive its own allocation of HOME funds – unless its designation is revoked by the Secretary of HUD. The Secretary has the authority to revoke a jurisdiction’s designation if he finds that the jurisdiction is not complying with program requirements, or if a locality’s formula grant amount falls below certain thresholds over a specified period of time, although he is not required to do so.
A participating jurisdiction can administer HOME funds itself, or it can designate a public agency or nonprofit organization to administer all or part of the HOME program on its behalf. Such an organization is referred to as a subrecipient. Participating jurisdictions or their subrecipients can distribute funds to a variety of organizations to undertake specific projects. These organizations can include developers, owners, and sponsors of affordable housing, Community Housing Development Organizations (CHDOs), private lenders, faith-based organizations, and third-party contractors.
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