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Using Your HOME Dollars for Rental Production: A Planning Paper for Local Policy Makers

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HUD's Office of Policy Development and Research is pleased
to announce the release of Using Your HOME Dollars for
Rental Production: A Planning Paper for Local Policy
Makers. The devolution of substantial control over
housing policy to local governments and states has given
the local government administrators of the HOME program
the opportunity to make choices that best meet the
housing needs of the people they serve. This planning
paper is grounded in a thorough review of the research
literature, but is written for practitioners, and thus
provides a framework for local communities to make those
difficult and often complicated choices. The paper is
divided into five sections.

1. The HOME Program: Choices and Strategies

Under the HOME Investment Partnership Program,
Participating Jurisdictions (PJs) receive a block grant
to implement any of four basic eligible activities:
rental housing production, tenant-based rental subsidies,
subsidies for new homebuyers, and subsidies for existing
homeowners. The choice of which activities to fund and
how to balance funds among them is guided by a strategic
planning process, called the Comprehensive Housing
Affordability Strategy (CHAS), which is one component of
the Consolidated Plan required for state and local
government recipients of HUD resources.

Many PJs choose to focus a large portion of their HOME
resources on rental housing, because supporting data
shows that renters with extremely low incomes have the
most serious housing needs within the jurisdiction. Other
jurisdictions choose to focus a major portion of their
HOME resources on new homebuyers, because increasing the
rate of homeownership in the city is seen as important,
either for the overall economic health of the city or for
stabilizing particular neighborhoods.

2. Using HOME as Part of a Rental Housing Strategy

HOME is part of a complex system of rental housing
subsidies that includes federally funded vouchers,
federally funded public and assisted rental developments,
and the state-administered Low Income Housing Tax Credit
(LIHTC). This means that local housing officials making
decisions for the use of HOME funds must consider how
their resources can best form part of an overall strategy
for meeting the needs of low-income renters within the
jurisdiction. The paper presents several possibilities.

o Use HOME for rental assistance that supplements the
Federal Housing Choice Voucher Program.
o Use HOME rental developments to increase the stock of
rental housing affordable for voucher holders.
o Use HOME funds to expand the neighborhoods within the
jurisdiction where low-income renters can live.

3. Using HOME for Types of Households Particularly Well
Served by Dedicated Rental Developments.

The authors point out that vouchers, although little used
in HOME at present, are well suited to areas with high
vacancy rates and responsive housing markets. On the
other hand, some types of families and individuals have
more difficulty using tenant-based vouchers or can
benefit from the special housing features and services
that may be associated with a development specifically
dedicated to serving as affordable rental housing. There
are three types of households for which a PJ might
consider developing HOME rental housing: large families,
frail elderly, and people with disabilities.

The frail elderly, for example, are particularly well
served by developments dedicated to affordable housing.
Such households may have a more difficult time using
vouchers. The elderly in general have lower voucher
success rates than other types of households, and success
rates for elderly individuals who report disabilities are
very low compared with other types of households. In
addition, the physical features, supervision, and
services that can be associated with project-based
subsidized rental developments may be especially
beneficial for the frail elderly.

4. Using HOME for Neighborhood Revitalization

Reviving distressed neighborhoods and stabilizing
neighborhoods in danger of becoming distressed are
important policy goals for affordable housing. However,
neighborhood revitalization initiatives are often
overwhelmed by the imbalance between the challenges of
neighborhood conditions and the resources available to
address them. In addition, there is a growing body of
evidence suggesting that subsidized rental and
homeownership housing have can have either a positive or
a negative effect on neighborhoods. Therefore, the
authors encourage some healthy skepticism when
considering claims that a given development will serve a
neighborhood revitalization purpose and that care should
be exercised during the PJ's selection process for HOME
rental developments.

5. Making HOME Part of a Metropolitan-Wide Housing and
Economic Development Strategy

Many local PJs are parts of larger metropolitan areas.
Thus, there may be several local PJs making decisions
about the use of HOME funds within a metropolitan area.
In addition, the state within which the metro area is
located controls the allocation of the Low Income Housing
Tax Credit to the PJ and to other portions of the
metropolitan area.

Ideally, all of the entities responsible for housing
subsidy resources in a metropolitan area would agree on a
joint approach that serves both the overall economic
health of the region and the well-being of its low-income
households. In particular, the authors argue, housing
planners and administrators should work together to
counteract the pattern through which some metropolitan
areas are becoming segregated by income as well as race.
They should help low-income families achieve economic
self-sufficiency by locating affordable housing near jobs
and transportation nodes.

Using Your HOME Dollars for Rental Production: A Planning
Paper for Local Policy Makers is available as a free
download from HUD USER at
https://www.huduser.gov/portal/publications/polleg/homeDollars.html
or by calling 1-800-245-2691.
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HUD USER
P.O. Box 23268
Washington, DC 20026-3268
1-800-245-2691
1-800-927-7589 (TDD)
202-708-9981 (fax)
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