PART III: Coordinating HUD Programs
Coordination of HUD's Competitive and Formula-Based Programs

As the preceding examples demonstrate, the potential for combining competitive grants and collaboration among grant applicants is high. Together these types of coordination provide significant opportunities to create and implement comprehensive strategies for addressing community problems. A third type of coordination is the coordination of HUD's competitive program funding with HUD's formula-based programs. The preceding examples demonstrated that such coordination does not have to occur in isolation. Both HUD programs and their implementation require funding recipients to leverage their competitive grant resources with other financial and nonfinancial resources. HUD's formula-based programs can be one source of financial leverage. In addition, formula-based programs often provide a more reliable source of leverage financing. CDBG and HOME programs are the formula-based programs that are most commonly coordinated with competitive programs. They are often used to fund a portion of acquisition, construction, and service costs associated with physical development projects designed to house or otherwise assist low- and very low-income people.

Example 1: Section 811 Supportive Housing for Persons with Disabilities and the HOME Investment Partnerships Program

A nonprofit community development corporation (CDC) in a mid-size city wanted to create a housing facility that would provide an environment to encourage healthy social and interpersonal assimilation for persons with disabilities. Its plan was to create a facility that would set aside 50 percent of its units for very low-income persons with disabilities and leave the remaining units available to persons without disabilities. After much planning and searching, the CDC found two adjacent buildings that it felt would provide a suitable physical structure and geographic location for the proposed facility. The buildings would enable the CDC to create 30 units, 15 of which would be set aside as permanent housing for persons with disabilities. The CDC had financing available from its internal resources and from foundations that pledged their support for the project. Still, it needed to leverage additional financing to make the project feasible. A mix of HUD competitive and noncompetitive programs provided a great leveraging resource.

The CDC applied for an interest-free capital advance through the Section 811 Supportive Housing for Persons with Disabilities program to cover the acquisition and rehabilitation costs of the 15 apartment units for persons with disabilities. The CDC also arranged for any supportive services needed by the residents. Rental assistance provided through the Section 811 program covered the difference between 30 percent of the tenants' contribution toward rent and the HUD-approved operating costs of the project. To help fund acquisition, rehabilitation, and construction costs of the remaining units the CDC acquired HOME Investment Partnerships program funds through the State's community development agency. Further financing came from the State's Department of Human Services and another community nonprofit.

Example 2: Continuum of Care/Supportive Housing and CDBG

A nonprofit organization whose mission is to help battered women and their children had grown substantially in experience and resources over its 15-year history and was ready to undertake a project it had planned for years. The project was multi-faceted and would enable the organization to serve the long-term and short-term needs of its clients. It entailed the construction and operation of a large facility that included an emergency shelter for battered women and their children, 12 transitional housing units, a childcare facility, and office space.

The nonprofit had strong community support and was able to raise significant funds from private donations for the operating and service costs of the facility. It had also accumulated some development funds through a special fundraising drive that it began a few years earlier. Though the money was not enough to cover all of the acquisition, design, and construction costs, it could be used as matching funds in a variety of grant programs for which the organization could apply. It decided to form a partnership with the local and State governments, the local public housing agency, and HUD. A local nonprofit was able to acquire Continuum of Care Supportive Housing Program funds from HUD, which it used to cover a portion of the costs of acquisition, construction, and operation of the transitional housing portion of the facility. It also paid for some of the supportive services provided, such as child care. One of the reasons the grant was awarded to the nonprofit was because of the extensive amount of additional resources that the funding would leverage, including local funds, foundation money, and State housing agency grants. In addition, because the emergency shelter portion of the building served very low-income persons, the nonprofit received CDBG funds for a portion of the acquisition and construction costs from the city. The city now provides an annual allocation of CDBG funds to cover the operating expenses of the facility.