**U.S. Department of Housing and Urban Development**

> Community Planning and Development

**Special Attention of: Notice:** CPD 01-4

All Secretary\'s Representatives Issued: April 9, 2001

State Coordinators Expires: April 9, 2002

All CPD Division Directors

All HOME Participating jurisdictions Cross Reference: 24 CFR Parts 91
&92

Subject: Notice of procedures for designating consortia: HOME Investment
Partnerships Program

**I. Background**

The HOME Program is authorized by the HOME Investment Partnerships Act
which is Title II of the Cranston-Gonzalez National Affordable Housing
Act, as amended (42 U.S.C. 12701 *et seq.)* (Act). Section 216(2) of the
Act provides that a consortium of geographically contiguous units of
general local government is considered a unit of general local
government for purposes of the HOME Program if the Secretary determines
that the consortium (a) has sufficient authority and administrative
capability to carry out the purposes of the Act on behalf of its member
jurisdictions and (b) will, according to a written certification by the
State, direct its activities to the alleviation of housing problems
within the State.

In accordance with section 217(b)(3) of the Act, HUD will include, as
jurisdictions eligible to receive allocations of HOME funds by formula,
units of general local government that, as of the end of the previous
fiscal year, qualified as metropolitan cities (as defined at section
102(a)(4) of the Housing and Community Development Act of 1974 (42
U.S.C. 5302(a)(4)); urban counties (as defined at section 102(a)(6) of
the Housing and Community Development Act of 1974 (42 U.S.C. 5302(a)(6))
and throughout this notice \"urban county\" has this meaning); and
approved consortia of units of general local government.

The Department plans to complete the designation of new urban counties
and metropolitan cities before September 29, 2001 (the end of FY 2001),
so that they will be designated and eligible to receive a HOME
allocation as well as an allocation of Community Development Block Grant
(CDBG) funds for FY 2002.

CGHF: Distribution: W-3-1

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**II.** **Purpose**

This Notice provides guidance to HUD Field Offices and local governments
on procedures for designation of local governments to participate as
consortia in the HOME Investment Partnerships Program for Fiscal Year
2002. The notice updates CPD Notice 00-05, and provides deadlines by
which existing consortia adding new members, re-qualifying consortia and
potential consortia must submit documentation to HUD.

Special attention should be directed to the deadlines (see Paragraph V).
Delays in designating consortia may result in loss of eligibility to
receive an allocation in FY 2002.

**III. Applicability**

This notice is applicable to (a) local governments that wish to form a
consortium for the first time to participate in the HOME Program for FY
2002, (b) existing consortia already qualified to participate for FY
2002, but which wish to add one or more local governments, and (c)
existing consortia which must execute a new consortium agreement because
their consortium qualification period ends September 30, 2001.

A list of consortia members that are participating in the HOME Program
for FY 2001 is included as Attachment A to this Notice and a list of
consortia which must renew their HOME consortium agreements to
participate as a consortium in the HOME Program for FY 2002 through FY
2004 is included as Attachment B.

**IV. Effect of Consortia Formation on State Funding**

Consortia are contiguous units of local government, which join together
for purposes of receiving a HOME allocation and administering the HOME
program as a single grantee. Each consortium must designate a lead
member, and must receive a certification from the State that it will
direct its activities to alleviation of housing problems within the
State.

In most cases, the formation of consortia causes a reduction in the
amount of HOME funds available to the State for its program, and may
also result in a reduction in the amount of HOME funds available - for
the State as a whole. HOME funds are distributed (after set-asides) by
formula with 40% of the funds going to States and 60% of funds going to
units of local government. The amount each State receives is based on
two calculations: 80% of its funds is based on the demography of the
non-entitled areas of the State, while 20% of its funds is based on the
demography of the whole State. Except for States which receive the
minimum allocation \' of \$3,000,000, the amount available to the state
is reduced when a consortium is formed because the demography of the
consortium is included only in the calculation for 20% of the funds, and
not in the calculation for 80% of the funds, where some or all of the
demography of the consortium had been previously included.

Whether the formation of a consortium also results in a reduction in
funds available for the State as a whole depends on whether the
allocation to the consortium from the local government amount of funds
equals or exceeds the amount of the reduction in the funds going to the
State. Since the amount available

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in the amount of funds available for local governments is divided among
more jurisdictions each year due to new metro cities, new urban
counties, and new consortia, the amount going to the new consortium
depends on its relative share compared to other jurisdictions. Field
offices should take care in listing those Consortia that are receiving
CDBG funds and explain the possible loss of funding to the State as a
whole in discussing the merits of consortia formation with prospective.

Irrespective of the funding levels, the formation of consortia can be a
positive force for affordable housing production, in that it permits an
area that otherwise may not be assured of funding to plan and carry out
an affordable housing program with continuity.

**V. Timing of Submissions**

The HOME Program regulations at 24 CFR 92.101 (a)(1) require that to be
considered as a consortium, the proposed consortium is to provide
written notification to the appropriate HUD Field Office of its intent
to participate as a consortium in the HOME Program for the following
year. The following schedule will govern the procedure for jurisdictions
to qualify as HOME Program consortia for Fiscal Years 2002-2004. Unless
noted otherwise, deadlines may only be extended by prior written
authorization from Headquarters. However, no extension may be granted by
the Field Office if it would have the effect of extending a subsequent
deadline that the Field Office is not authorized to extend.

By **March 1, 2001** (or such later date as agreed to by the applicable
HUD Field Office), to be considered for an allocation of HOME funds in
FY 2002, a proposed consortium, an existing consortium that is adding
members, or a consortium that must sign a new HOME consortium agreement
is to provide to the appropriate HUD Field Office written notification
of its intent to participate as a consortium in the HOME Program for FY
2002. Any changes in participants must be listed within the agreement.

By **June 30, 2001** (or a later date if agreed to by the applicable HUD
Field Office), a proposed consortium, a consortium that must sign a new
agreement, or a consortium that is amending its current agreement to add
members must submit to the appropriate HUD Field Office the documents as
required below in Paragraph VII, entitled \"Procedures Localities Must
Follow for Designation as a Consortium or Renewal of an Expiring
Agreement,\" or Paragraph VIII, \"Procedures for Existing Consortia That
Are Adding Members,\" as appropriate. NOTE: Any delay in receipt of the
consortium documents must not interfere with the Field Office\'s ability
to meet the August 2 deadline below.

By **August 2, 2001,** Field Offices must approve all consortia
agreements and provide Headquarters CPD, Office of Technical Assistance,
Systems Development & Evaluation Division, with evidence from the
consortium agreement for each consortium which must sign a new or
amended agreement which (1) lists the consortium members and (2)
documents the consortium qualification period. The appropriate pages
from the consortium agreement should be forwarded to Jill S. Alexander,
Systems Development & Evaluation Division, Room 7224 or faxed to (202)
708-4275. If you should have any questions regarding the Policy that
govern Consortia, you may contact Alice Gregal, Director, Financial &
Information Services, at (202) 708-3481.

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> **NOTE: THIS DATE MAY NOT BE EXTENDED WITHOUT PRIOR WRITTEN
> AUTHORIZATION FROM HEADQUARTERS.**

During late August or early September, the CPD Systems Development and
Evaluation Division in Headquarters will send worksheets via email to
Field Office CPD Directors to verify data for each consortium that will
be included in the formula allocation for Fiscal Year 2001. CPD
Directors

must verify the worksheets with the consortium lead agency to assure the
accuracy of the information.

By **September 20, 2001,** CPD Directors shall update and complete the
worksheet for each consortium in the Field Office jurisdiction, sign the
worksheet and send a copy of the worksheet to Jill S. Alexander, Systems
Development and Evaluation Division, Room 7224 to allow sufficient time
for data to be assembled so that changes can be reflected in the FY 2002
allocation of HOME funds. Directors are reminded that it is imperative
that the information in the directory be confirmed with the
consortium\'s lead entity prior to transmitting the required
certification to Headquarters. **NOTE: THIS DATE MAY NOT BE EXTENDED
WITHOUT PRIOR WRITTEN AUTHORIZATION FROM HEADQUARTERS.**

**VI. Eligibility for Forming a Consortium**

Local governments that are geographically contiguous may form a
consortium for purposes of receiving an allocation and participating in
the HOME Program. A river or other body of water may separate them, but
if there is transportation access (e.g., bridges), they may be
considered contiguous. The local governments forming a consortium may be
cities or urban counties that would be eligible, individually, to become
participating jurisdictions in the HOME Program, or other local
governments. A unit of local government that is included in an urban
county may be part of a consortium, only if the urban county joins the
consortium. The included local government cannot join the consortium
except through participation in the urban county. (Thus, when local
governments become part of an urban county for the CDBG Program, they
are part of the urban county for the HOME Program, except for
metropolitan cities under joint grant agreements with urban counties as
described in Paragraph IX, of this notice.)

Further, as indicated in Section 91.402 of the Consolidated Plan final
rule and in Paragraph X of this notice, all units of general local
government that are members of the consortium must be on the same
program year for the CDBG, HOME, Emergency Shelter Grants (ESG) and
Housing Opportunities for Persons With AIDS (HOPWA) programs.

**VII. Procedures Localities Must Follow for Designation as a Consortium
or Renewal of an**

> **Expiring Agreement.**

To be considered as a HOME Program consortium for FY 2002, a proposed
consortium, or a consortium that must execute a new HOME consortium
agreement, must provide the following qualification documents **by June
30, 2001 (or such later date as agreed to by the applicable HUD Field
Office),** to the appropriate HUD Field Office:

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1\. A written certification by the State that the consortium will direct
its activities to the alleviation of housing problems within the State.
The State certification may be signed by whomever has the authority to
make the certification; it may be the Governor or his/her designee. If a
designee signs, the signature line must indicate the signer is an
\"Authorized Official.\"

2\. One legally binding consortium cooperation agreement that has been
executed by all consortium members:

> \(a\) Agreeing to cooperate to undertake or to assist in undertaking
> housing assistance activities for the HOME Program;
>
> \(b\) Authorizing one member unit of general local government to act
> in a representative capacity for all member units of general local
> government for the purposes of the HOME Program;
>
> \(c\) Providing that the representative member (also referred to as
> the lead entity) assumes overall responsibility for ensuring that the
> consortium\'s HOME Program is carried out in compliance with the
> requirements of the HOME Program, including requirements concerning a
> Consolidated Plan in accordance with HUD regulations in 24 CFR Parts
> 92 and 91, respectively, and the requirements of 24 CFR 92.350;
>
> **NOTE:** The agreement must not contain a provision for veto or other
> restriction that would allow any member unit of local government to
> obstruct the implementation of the consortium\'s approved Consolidated
> Plan.
>
> \(d\) Accompanied by authorizing resolutions from the governing body
> of each member unit of local government, or other acceptable evidence
> that the chief executive officer is authorize d to sign the agreement;
>
> \(e\) Signed by the chief executive officer of each member unit of
> local government;
>
> **NOTE:** If an urban county is part of the consortium, only the
> county (not all the members of the urban county) signs the consortium
> agreement. However, any unit of local government that is located in
> but is not participating as part of the Urban County, and that wishes
> to be included in the HOME consortium, must sign the cooperation
> agreement. Also, for new consortia and renewal of existing consortia
> which include a non-urban county, the county cannot on its own include
> the whole county in the consortium; any unit of local government in
> the non-urban county that wishes to participate as a member of the
> consortium must sign the HOME consortium agreement.
>
> \(f\) Containing, or accompanied by, a legal opinion from the lead
> entity\'s counsel citing applicable law and concluding that the terms
> and provisions of the agreement are fully authorized under State and
> local law and that the agreement provides full legal authority for the
> consortium to undertake or assist in undertaking housing assistance
> activities for the HOME Program;

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> \(g\) Containing a provision requiring each member unit of local
> government to affirmatively further fair housing;
>
> \(h\) Specifying the qualification period (the three Federal Fiscal
> Years for which the consortium is to qualify to receive HOME funds),
> and the prohibition on withdrawal from the agreement during such time,
> as described in Paragraph XII. At the option of the consortium, the
> agreement may provide that it will automatically be renewed for
> participation in successive three-year qualification periods.
>
> Where automatic renewal provisions are used, the agreement must state
> that, by the date specified in HUD\'s consortia designation notices,
> the consortium lead entity will notify each participating unit of
> general local government in writing of its right not to participate
> for the successive three-year qualification periods. A copy of the
> notification to each jurisdiction must be sent to the HUD Field Office
> by the date specified in the consortia designation notice.
>
> Consortia agreements with automatic renewal provisions must also
> include a stipulation that requires the consortium to adopt any
> amendment to the agreement incorporating changes necessary to meet the
> requirements for cooperation agreements set forth in a Consortia
> Qualification Notice applicable for a subsequent three-year consortia
> qualification period, and to submit the amendment to HUD as specified
> in the Consortia Qualification Notice for that period, and that
> failure to comply will void the automatic renewal of the consortium
> agreement.
>
> \(i\) Stating the program year start date for the consortium and that
> all units of general local government that are members of the
> consortium are on the same program year for the CDBG, HOME, ESG and
> HOPWA programs; and
>
> \(j\) Authorizing the lead entity to amend the consortium agreement on
> behalf of the entire consortium to add new members to the consortium.
>
> **NOTE:** This provision need not be in the agreement if the
> consortium members prefer to have all the members sign and approve
> additions.

**VIII. Procedures for Existing Consortia Which Are Adding Members.**

A consortium agreement can be amended to add new member units of general
local government for\' the remaining fiscal years of the qualification
period. The agreement must be amended in the fiscal year before the
fiscal year(s) for which the new members are added. The consortium must
provide the HUD Field Office a copy of the authorizing resolution from
the new member\'s governing body and an amendment to the consortium
agreement signed by the chief executive officer of the lead entity (if
the consortium agreement authorizes the lead entity to sign on behalf of
all members) and the chief executive officer of the new unit of local
government, adding the new unit of local government as a member of the
consortium. Any change in the make-up of the consortium must be
communicated to Headquarters in accordance with the requirements of
Paragraph V above.

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**IX. Joint Grant Agreements**

The CDBG Program regulations at 24 CFR 570.308 allow for any urban
county, and any metropolitan city located in whole or in part within
that county, to submit a joint request to HUD to approve the inclusion
of the metropolitan city as part of the urban county for purposes of
planning and implementing a joint community development and housing
program. Each metropolitan city and urban county submitting a joint
request must also have executed a cooperation agreement to undertake or
to assist in the undertaking of essential community development and
housing activities. Such agreement is hereafter referred to as a \"joint
grant agreement.\" Upon HUD\'s approval of the joint request and joint
grant agreement, the metropolitan city is considered a part of the urban
county for purposes of -program planning and implementation under the
CDBG Program, and is treated the same as any other unit of general local
government which is part of the urban county.

However, for the HOME Program, if a metropolitan city that has a joint
grant agreement with an urban county for the CDBG Program wishes to be
considered for funding as part of the urban county for the HOME Program,
it must form a HOME consortium with the urban county and must have the
same program years for funding. If such a city and urban county wish to
form a new HOME consortium, the urban county and/or the metropolitan
city must follow the procedures outlined above for new consortia.

**X. Consolidated Program Year**

As required by section 91.402 of the Consolidated Plan final rule, all
units of general local government that are members of a new HOME
consortium approved after February 6, 1995, must be on the same program
year for the CDBG, HOME, ESG and HOPWA programs.

**XI. Consolidated Plan**

To receive FY 2002 HOME funds, a unit of general local government must
submit a Consolidated Plan. A consortium is considered a unit of local
government for purposes of receiving an allocation and participating in
the HOME Program. Therefore, when two or more units of local government
form a consortium for the purpose of receiving a formula allocation
under the HOME Program, the consortium must, as a condition of funding,
submit a single Consolidated Plan that covers the entire geographic area
encompassed by that consortium. Where a consortium includes one or more
CDBG entitlement grantees, any such grantee does not submit an
individual Consolidated Plan (for the CDBG Program) in addition to the
consortium\'s Consolidated Plan.

**NOTE:** A new consortium must submit the complete strategic plan
required by sections 91.215, 91.220 and 91.225. A consortium that has
previously participated in the HOME Program and previously submitted a
complete strategy may submit only the Action Plan and certifications
unless it is required to submit a new five-year complete strategic plan
(See 91.15(b)). If joint grant agreement participants form a consortium
for the HOME Program (see Paragraph IX), the Consolidated Plan submitted
by the urban

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county will also serve as the Consolidated Plan for the HOME consortium
because the local governments in the consortium are the same as the
local governments in the urban county joint, grant agreement.

The Field Office should be aware that the date they notify the
consortium of its formula allocation amount will drive the date that the
consolidated plan is due according to the following timeline:

o Field Office notifies lead entity of consortium of formula allocation
amounts (Section 92.50(a))

o Consortium must submit a written notification of its intention to be a
PJ no later than 30 days after receiving notice of its formula
allocation amount (Section 92.103)

o Consortium must submit a consolidated plan to the Field Office within
90 days after providing notification of its intent to be a PJ (Section
92.104).

Because of the statutory timeline listed above, it is critical that
Field Offices work with new jurisdictions so that formal notification of
formula allocation amounts can be sent at a point that creates the most
flexibility for new jurisdictions as they prepare their consolidated
plans.

**XII. Consortium Agreement: Qualification Period and Duration of
Agreement**

The consortium agreement must specify the fiscal years for which the
consortium is to qualify to receive allocations as a participating
jurisdiction in the HOME Program. The qualification period is the three
Federal fiscal years following the fiscal year in which the agreement is
executed (i.e., FY 2002-2004), except if. one or more urban counties are
members of the consortium, the agreement may specify a lesser number of
Federal fiscal years coinciding with the fiscal years remaining in an
urban county\'s qualification period; or at the option of the
consortium, the agreement may provide that it will automatically be
renewed for participation in successive three-year qualification periods
(See Paragraph VII.2.(h)). Notwithstanding the Federal fiscal years
specified, if an urban county consortium member fails to re-qualify as
an urban county for a fiscal year included in the consortium agreement,
the consortium\'s qualification period terminates with the last fiscal
year for which the urban county qualified. A new consortium agreement
must be executed for the succeeding qualification period.

The consortium agreement must, at a minimum, remain in effect until the
HOME funds from each of the Federal fiscal years of the qualification
period are expended for eligible activities. No consortium member may
withdraw from the agreement while the agreement remains in effect. The
new agreement is governed by the requirements of the then current
Consortium Qualification notice.

**NOTE:** A consortium may be disbanded if the consortium fails to
receive a HOME allocation for the first Federal fiscal year of the
consortium\'s qualification period and does not request to be considered
to receive a HOME allocation in each of the subsequent two years.

**XIII. HUD Action**

For any consortium request whose notification was received by the
deadlines established by the HUD Field Office, the HUD Field Office will
review the documentation to determine whether the consortium is made up
of geographically contiguous units of general local government, whether
the consortium has sufficient legal authority and administrative
capability to carry out the purposes of the HOME program

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the HOME Program on behalf of its member jurisdictions, and that there
is a written certification from the State as provided in Paragraph VII.
Also, the Field Office will assure that all units of general local
government which are to be members of the consortium are on the same
program year for CDBG, HOME, ESG and HOPWA.

**XIV. Legal Authority**

Field Office Counsel should review each consortium\'s request to
determine if the consortium has sufficient legal authority to carry out
the HOME Program.

**XV. Administrative Capacity**

If the consortium includes a metropolitan city or an urban county as the
lead entity, the consortium would be considered to have sufficient
administrative capability to carry out the purposes of the HOME Program.
If the consortium does not include a metropolitan city or an urban
county, but the lead member or an existing public agency has relevant
experience (e.g., successful experience in administering a CDBG or
Rental Rehabilitation Program or has been administering a successful
HOME Program as a State recipient), the consortium could also be
considered to have sufficient administrative capability to carry out the
HOME Program. On the other hand, a newly created public agency
established to administer the HOME Program for a consortium would not be
viewed as having sufficient administrative capability unless it includes
as its administrators a person or persons with relevant experience in
successfully administering programs similar to the HOME Program, such as
the CDBG or Rental Rehabilitation Programs.

If the HUD Field Office is satisfied that the consortium meets the
requirements for the HOME Program and has the necessary legal authority
and administrative capability to carry out the HOME Program, it will
approve the consortium request and notify Headquarters as provided in
Paragraph V no later than

**August 2, 2001.**

**XVI. Appendix**

**Attachment A** Consortium Membership for FY 2001

**Attachment B** Consortium Members DUE to Re-Qualify in FY 2001

**(Please list Who's In, Who\'s Out & whether or not they are receiving
CDBG funds)**

**Paperwork Reduction Act Statement**

The information collection requirements contained in this notice have
been approved by the

Office of Management and Budget in accordance with the Paperwork
Reduction Act of 1995 (44

U.S.C. 3501-3520), and assigned OMB control number 2506-0128.