Congressional Justifications for 1998 Budget Estimates

Community Planning and Development
Home Investment Partnerships Program

Program Highlights

NA = Not Applicable.

Notes: Amounts in 1997 include $15 million for Housing Counseling.

Amounts shown in this justification include funds for the Native American HOME program in 1996 and 1997. Beginning in 1998, funding for affordable housing activities will be requested under the Native American Block Grant, and Native American tribes will not be eligible to receive HOME funds, pursuant to P.L. 104-330.

Summary of Budget Estimate

1. Summary of Budget Request

The Budget proposes $1.3 billion for the HOME program in 1998. The 1998 request excludes funds ($21 million) for the Native American HOME program, which is included in the new Native American Block Grant (see separate justification). The total amount available for formula distribution in 1998 will be $1,277 million, $55 million less than that available in 1997.

2. Changes from 1996 Estimates Included in 1997 Budget

The 1997 Budget assumed that the full amount available in 1996, including the proposed Challenge Grant funds ($150 million), would be obligated in that year. Actual 1996 obligations in the HOME program of $1,367 million were 88 percent of the total funds available for obligation, including carryover of prior year funds. This level was also 97 percent of the obligations estimated for HOME in the 1997 Budget. Carryover reflects the fact that some HOME Participating Jurisdictions begin their programs years on October 1, which would result in an obligation of one program year's grant funds in the subsequent fiscal year.

Actual outlays of $1,206 million for HOME in 1996 were 97 percent of the estimate of $1,240 million. This is a slight increase in outlays over 1995, but significantly higher than outlays in prior years, reflecting the higher funding levels beginning in 1995 and increased capacity of participating jurisdictions to utilize funds.

Home Investment Partnerships Program

3. Changes from Original 1997 Budget Estimates

The following are the changes from the original 1997 Budget estimates:

• A Budget amendment reduced the HOME Fund Challenge Grant from $135 million to $110 million to offset a $25 million increase for the HOPWA program.

• Congress appropriated $1.4 billion for the HOME program in 1997, including $15 million for Housing Counseling, but did not authorize or provide funding for the HOME Challenge Grant.

• Slightly higher outlays reflect higher spend out of prior year balances in 1997 than originally estimated.

Explanation of Increases and Decreases

The 1998 proposal of $1.3 billion represents a 5 percent decrease from the enacted 1997 level adjusted for funds now included in the new Native American Block Grant. The slight decrease in outlays from the 1997 Current Estimate reflects, in part, the lower funding requested, as well as the recalculation of spend-out of prior year obligated balances that more accurately reflects grantees' actual use of HOME funds.

Program Description and Activity

1. Legislative Authority. The HOME Investment Partnerships Program is authorized under Title II of the Cranston-Gonzalez National Affordable Housing Act (NAHA) (P.L. 101-625), as amended.

2. Program Area Organization. The purpose of the HOME program is to make funds available to Participating Jurisdictions (PJs) to increase the supply and affordability of housing and homeownership for low-income families. The ongoing emphasis on performance with measurable results, as required by the Government Performance and Results Act, will increase grantee effectiveness and strengthen their ability to increase the impact of Federal housing dollars. States and localities have the flexibility to use HOME funds for a wide range of affordable housing activities for low- and very low-income families, including rehabilitation, new construction, acquisition for homeownership and rental housing, and tenant-based rental assistance.

a.Eligible Recipients. Eligible recipients include States, metropolitan cities and urban counties, and the Insular areas of the Virgin Islands, American Samoa, Guam and the Northern Marianas. Under certain circumstances, a consortium of geographically contiguous units of general local government may also be eligible for funding. In order to apply for HOME funds, State and local governments must develop a Consolidated Plan covering assisted housing activities. The Plan must be approved by the Department before HOME funds can be received. Insular areas are not required to submit a Consolidated Plan to apply for HOME funding.

b.Allocation of Funds. HOME funds are allocated to PJs on a formula basis: 60 percent to participating local governments and 40 percent to States, after certain amounts are identified for program requirements, as described below. Up until 1997, funds for the Native American HOME program were requested as part of this appropriation; beginning in 1998, however, this funding will be requested under the Native American Block Grant. In 1998, set-asides for Insular Areas (0.2 percent), Management Information System support ($7 million) and Technical Assistance ($22 million) total $31.6 million, as shown below, leaving $1.277 billion available for the regular program.

The following table shows the actual 1996 and estimated 1997 and 1998 allocations for the HOME program:

	Actual 1996	Estimate 1997	Estimate 1998
	(Dollars in Thousands)
Indian Tribes	14,000	21,000	... a/
Insular Areas	2,800	2,800	2,618
Housing Counseling	...	15,000	...
MIS Support & Tech. Assistance	22,000	29,000	29,000
Total	1,400,000	1,400,000	1,309,000

a/ Funding for the Native American HOME program is requested in the Native American Housing Block Grants program in 1998.

c. Eligible Activities. Funds can be used for tenant-based rental assistance, assistance to new homebuyers, acquisition, and rehabilitation of affordable rental and ownership housing, as well as for construction of housing. By statute, funds may not be used to: provide tenant-based rental assistance for the special purposes of the existing Section 8 program, provide non-Federal matching requirements for other programs, finance public housing operating subsidies or modernization, or provide assistance for preservation of federally subsidized housing under 1987 or 1990 preservation laws, except for priority purchasers (community-based nonprofit organizations).

d. Matching Requirements. Effective with the 1993 appropriation, PJs must provide matching contributions of at least 25 percent of HOME funds spent for tenant-based rental assistance, rehabilitation, acquisition and new construction. The HCD Act of 1992, however, provides that the matching requirement shall be reduced by 50 percent for jurisdictions that are in fiscal distress and by 100 percent for jurisdictions that are in severe fiscal distress. The Secretary may also reduce the matching requirement for jurisdictions which are Presidentially declared disaster areas.

e. Program Accomplishments. Commitments of funds and disbursements have been rapidly increasing. As of September 30, 1996, according to the HOME Program Cash and Management Information System, 555 PJs had committed $3,637.6 million in HOME funds to 102,600 projects having 215,200 housing units and had provided tenant-based rental assistance to 28,300 families. Of the projects/units to which funds had been committed, 73,600 of the projects having 111,000 units had been completed and $3,054.6 million had been disbursed.

The 1998 appropriation request of $1.3 billion for the HOME program is expected to provide tenant-based rental assistance to some 8,800 families. Additionally, an estimated 68,400 units are projected to be acquired, rehabilitated or constructed with the 1998 funding. Of those units, it is projected that approximately 58 percent will involve rehabilitation, about 22 percent will be new construction units, and 20 percent will involve acquisition of standard units.

f. Reallocation of Funds. The HOME statute provides that HOME funds will be available to PJs for affordable housing projects for 24 months. Thus, the Department must deobligate HOME funds that have been available to PJs for 24 months that have not been committed to affordable housing and/or that are required to be reserved (15 percent of a Participating Jurisdiction's allocation) that have not been reserved for CHDOs at the end of the last day of the month following the 24-month period. The Department estimates that no more than $2 million will be deobligated in either 1997 or 1998. The first formula reallocation occurred in fiscal year 1996 and totaled $636,000.

3. Performance Indicators.

a. Mission. To expand decent and affordable housing; and to make homeownership a reality for more Americans.

b. Objective and Benchmarks. The overall objective of the HOME program is to provide decent, safe, and affordable housing. Benchmarks are estimates of expected activity. Actual units of housing produced depends on local decisions on the use of HOME funds, as well as the use of funds from other sources. Benchmarks which may be used to measure performance include the number of households assisted with rental housing, tenant-based rental assistance and new homeownership opportunities; the number of existing homeowners assisted; the number of rental units produced; the number of families receiving tenant-based rental assistance; the number of units produced for new homeowners; and the number of existing homeowner units assisted.

Status of Funds

1. Balances Available

a. Unobligated Balances. The following table compares the program obligations with funds available by year:

b. Obligated Balances. The status of obligated balances is as follows:

Distribution of Funds by State

The following table shows HOME Investment Partnerships program allocations for 1996 and 1997, and estimated allocations for 1998 by State.

Note: Columns may not add due to rounding.

a/ Funding for the Native American HOME program is requested under the Native American Housing Block Grant program in 1998.