HOMEfires - Vol. 3 No. 5, April 2001

The definition of "commitment" in the HOME Final Rule states that, when a PJ commits funds to a specific project, there must be a reasonable expectation that construction will begin within twelve months for rehabilitation or, for acquisition only projects, be transferred within six months.

Q: Does this mean that projects that do not meet this requirement are ineligible and must be canceled?

A: The definition of commitment found at 24 CFR 92.2 (http://edocket.access.gpo.gov/cfr_2004/aprqtr/24cfr92.2.htm), when referring to a specific local project, states that rehabilitation or new construction (with or without acquisition) must reasonably be expected to start within twelve months:

  • after the participating jurisdiction (PJ) and owner execute a legally binding written agreement, or

  • after the PJ set-up of the project in IDIS, for projects already owned by the PJ.

For projects consisting of acquisition of standard housing, the property title must be transferred within six months:

  • from the date that the property owner and PJ execute a legally binding contract for sale of a specific property, in cases where the PJ will purchase the property with HOME funds, or

  • from the date the PJ executes a legally binding agreement to provide HOME funds to a family acquiring a single family house or to a purchaser acquiring rental property.

The purpose of the HOME Program is to produce affordable housing. The regulations require that construction or rehabilitation be reasonably expected to start within twelve months, (six months for the acquisition of property). When committing HOME funds to a project, a participating jurisdiction must have immediate plans to produce such housing.

Failure to begin construction within twelve months or transfer title within six months for acquisition does not automatically necessitate the cancellation of the project or render it ineligible. Many circumstances beyond the PJ's control can cause delays, including lawsuits, unforeseen environmental issues, the loss of other financing, labor strikes, natural disasters and zoning issues. The PJ and the Field Office must use their judgment when deciding what course of action to take on a delayed project.

Participating Jurisdictions with projects experiencing significant delays must document their files of the causes for delays, and assess whether there is a likelihood that the project will go forward. A PJ should consider canceling a construction project nearing the end of the twelve month period or an acquisition-only project nearing the end of the six month period, if it does not appear that construction is likely to begin or transfer to occur within the required time frame or within a reasonable period thereafter. The PJ should also keep the Field Office informed of its concerns.

The Field Office will review the circumstances causing project delays and advise the PJ if the project should be canceled. Projects that have been canceled for this reason can be set-up again when they are ready to move forward. The Field Office, however, will make a finding if a PJ has committed HOME funds to a project when there was not a reasonable expectation that construction would start within twelve months for new construction and rehabilitation, or transfer take place within six months for acquisition. In such instances , the Field Office may require cancellation of the project if it remains unlikely.

Content Archived: May 19, 2011