HOMEfires - Vol. 1 No. 1, June 1, 1997

Q: What are the constraints on using HOME funds for housing counseling?

A: Homebuyer or tenant counseling are eligible soft costs under HOME. When such costs are incurred by a PJ, State recipient, subrecipient or third party contractor, they may be characterized either as administrative costs or as project-related soft costs. However, when incurred by a property owner, the costs are considered as project specific and must, therefore, be charged to the project, not to administration. As a project-related soft cost, only if the project is funded and the individual counseled becomes an owner or tenant of the HOME-assisted project can the associated homebuyer or tenant counseling expenses be considered as eligible HOME project costs.

For a CHDO undertaking a CHDO set-aside project as an owner, developer, or sponsor, the costs of associated housing counseling (including intake and assessment) may be characterized either as a CHDO operating expense or as a project-related soft cost. (In response to a specific question in your letter, stand-alone "intake" and "assessment" of potential residents of HOME-assisted housing, as activities separate and unrelated to counseling, would be considered as project-specific soft costs which are eligible under HOME so long as they are reasonable and necessary to the housing project being undertaken.) When considered as a project-related soft cost, as in the case of the property owner cited above, only if the project is funded and the individual counseled becomes an owner or tenant of the HOME-assisted project can the associated homebuyer or tenant counseling expenses be considered as eligible HOME project costs. When considered as a CHDO operating expense (i.e., the salary costs of CHDO staff and supplies) or as an administrative cost for PJs and subrecipients, housing counseling is an eligible cost even if the individuals counseled do not become owners or tenants of HOME-assisted housing so long as the housing counseling program was targeted to the project(s) being undertaken (i.e., either homeowner or rental), and intended to identify and train the potential residents of the project(s).