U.S. Department of Housing and Urban
Development![](media/image1.emf){width="0.6354166666666666in"
height="0.6451388888888889in"}

Community Development and Planning

Special Attention of:

CPD Division Directors **NOTICE: CPD 01-01**

All HOME Program Coordinators Issued: January 17, 2001

All HOME Participating Jurisdictions Expires: January 17, 2002

All Homeless Assistance Program Recipients

Cross References:

Supersedes CPD 94-11

**Subject:** Guidance on Combining Program Funds of the McKinney Act
Programs and the HOPWA Program with the HOME Program.

TABLE OF CONTENTS

I. PURPOSE AND BACKGROUND 2

II\. THE PROGRAMS AND THEIR REQUIREMENTS 4

The HOME Program Requirements 4

The Homeless Assistance Program Requirements 9

III\. USING HOME AND HOMELESS PROGRAM RESOURCES 18

IV\. HOME AND THE HOMELESS ASSISTANCE PROGRAMS 21

HOME and the Emergency Shelter Grant Program 21

HOME and the Supportive Housing
Program.......................................... 22

HOME and the Shelter Plus Care Program 22

HOME and the Section 8 SRO Moderate Rehabilitation Program 23

HOME and the Title V Federal Properties Program 23

HOME and the Housing Opportunities for Persons with AIDS (HOPWA) Program
24

CGHP: Distribution: W-3-1, W-2

Previous Editions are Obsolete HUD 21 B (3-80)

**I. PURPOSE AND BACKGROUNDI. PURPOSE AND BACKGROUND:**

The purpose of this notice is to guide Participating Jurisdictions (PJs)
and private nonprofit organizations in using HOME funds together with
HUD Continuum of Care homeless assistance funds under the Stewart B.
McKinney Act programs. The Office of Community Planning and Development
also administers the Housing Opportunities for Persons with AIDS (HOPWA)
Program which is designed to provide housing and services to persons
with HIV/AIDS, and can be used to prevent homelessness among persons
with HIV/AIDS, and may assist persons who are homeless. Throughout this
notice the term \"homeless and HIV/AIDS-assistance programs\" will refer
to all of the above programs administered by the Office of Community
Planning and Development.

This notice illustrates the uses of and compatibility between HOME and
the homeless and HIV/AIDS assistance programs and highlights
opportunities that can maximize the effect of combining program funds.
The notice is designed to expand the reader\'s familiarity with the
McKinney Act programs, the HOPWA program, and the HOME Program. It
begins with informing the reader of the various programs\' intents and
their requirements. **Readers with a working knowledge of these programs
may skip the following overview and go directly to Section III entitled
*USING HOME AND HOMELESS AND HIV/AIDS ASSISTANCE PROGRAM RESOURCES* on
page 17.**

Readers are reminded that this Notice serves only as a guide to possible
ways of combining the programs\' funds. In so doing, only a portion of
the applicable rules and regulations are highlighted. Therefore, the
latest edition of each program\'s regulations should be reviewed during
the planning stages. To ensure that you have the latest edition, check
with the local HUD Community Planning and Development Office.

**[The Home Investment Partnerships Program]{.underline}**

Title II of the National Affordable Housing Act (NAHA) established the
HOME Investment Partnerships Program, more commonly known as the HOME
Program. The purpose of this program is to:

-   expand the supply of decent, safe, sanitary, affordable housing for
    very low-income and low-income families,

-   to mobilize and strengthen the abilities of States and units of
    local government to design and implement strategies to achieve
    affordable housing,

-   to promote the development of partnerships among the Federal
    government, States and units of general local government, private
    industry, and nonprofit organizations able to utilize effectively
    all available resources to provide more of such housing, and

-   expand the capacity of nonprofit community housing development
    organizations to develop and manage decent safe, sanitary, and
    affordable housing.

    The HOME Program regulations are contained at 24 CFR Part 92. The
    HOME Final Rule was published on September 16, 1996, and is
    available in a consolidated format from either the appropriate HUD
    Field Office or the Community Connections Clearinghouse
    (1-800-998-9999).

    **[The HUD Homeless and HIV/AIDS Assistance Programs]{.underline}**

    HUD administers 5 individual homeless assistance programs, which are
    authorized by the Stewart B. McKinney Homeless Assistance Act. The
    programs\' purposes are as follows:

    **Emergency Shelter Grants (ESG), 24 CFR Part 576**

-   to help improve the quality of existing emergency shelters for the
    homeless, to open additional shelters,

-   to meet the costs of operating shelters and provide essential social
    services to homeless individuals, and

-   to prevent homelessness.

    **Supportive Housing Program (SHP), 24 CFR Part 583**

-   to promote the development of supportive housing and supportive
    services, including innovative approaches to assist homeless
    individuals in the transition from homelessness to independent
    living and

-   to promote the provision of supportive housing to homeless persons
    to enable them to live as independently as possible.

    **Shelter Plus Care (S+C), 24 CFR Part 582**

-   to provide rental assistance, in connection with supportive services
    funded from other sources, to homeless persons with disabilities
    (primarily persons who are seriously mentally ill, have chronic
    problems with alcohol, drugs, or both, or have AIDS and related
    diseases) and the families of such persons.

    **Section 8 Moderate Rehabilitation Program for Single Room
    Occupancy (SRO) Dwellings for Homeless Individuals, 24 CFR Part
    882**

-   to provide rental assistance on behalf of homeless individuals in
    connection with the moderate rehabilitation of SRO dwellings.

    **Title V Surplus Federal Property for Use to Assist the Homeless**

-   To identify suitable federal properties categorized as unutilized,
    under-utilized, excess, or surplus, and

-   to make the properties available to states, units of local
    government and nonprofit organizations for use to assist homeless
    individuals.

    **Housing Opportunities for Persons with AIDS (HOPWA)**

    HUD administers one program to provide states and localities with
    resources and incentives to devise long-term comprehensive
    strategies for meeting the housing needs of persons with HIV/AIDS
    and their families. It is the HOPWA Program, and is authorized by
    the AIDS Housing Opportunity Act of 1990.

    **II. THE PROGRAMS AND THEIR REQUIREMENTSII. THE PROGRAMS AND THEIR
    REQUIREMENTS:**

    **[The HOME Program RequirementsThe HOME Program
    Requirements]{.underline}**

    The HOME Program relies upon the operation of existing partnerships
    and requires the forging of new ones. These partnerships involve
    Federal, State, and local governments, nonprofit organizations, and
    private lenders.

    A State or local government that administers the HOME Program is
    known as a participating jurisdiction (PJ). PJs are responsible to
    HUD for compliance with all HOME Program rules and requirements, as
    they administer the program directly or provide HOME assistance to
    subrecipients and other entities. Forty percent of HOME funds is
    allocated to States, while the remaining 60% is allocated to local
    governments and consortia of local governments.

    A Community Housing Development Organization (CHDO) is a "special"
    nonprofit organization that will develop, sponsor, or own affordable
    housing within a community. A minimum of 15% of a PJ\'s HOME
    allocation must be reserved for investment in CHDO projects. PJs
    must reserve these funds (known as the CHDO set-aside) to CHDOs
    within 24 months of their obligation by HUD. The rules under which
    CHDOs operate are found under 24 CFR 92, Subpart G.

    **Eligible Participants**

    The HOME Program requires that 100% of the HOME funds be used to
    benefit very low-and low-income families. No HOME funds can be used
    to assist families who do not qualify as low-income (that is, annual
    incomes less than 80% of median income as adjusted by HUD.)

    Specific participant eligibility criteria vary with the type of
    assistance being provided. For example, homeowners and homebuyers
    must have incomes below 80% of median income for the area. When HOME
    funds are used for rental housing and tenant assistance, 90% of the
    HOME families assisted must have incomes at or below 60% of median
    income (§92.216 (a)(1)).

    **Activities**

    HOME funds can be used for housing within three major activity
    groups: 1) homeownership programs, 2) rental housing production,
    and 3) tenant-based rental assistance (TBRA). Within the three
    groups, there are four specific eligible activities. These
    activities are illustrated in Table 1 below, and are described in
    the HOME Final Rule under section 92.205.

    Costs are eligible for HOME funding only when incurred in
    conjunction with one of the four eligible activities. For
    example, 1) land acquisition is an eligible HOME activity only when
    acquired for a specific housing project, 2) site improvements for
    HOME-assisted units must be in keeping with improvements of
    surrounding standard projects, and 3) demolition is an eligible
    activity only when the site is being cleared for a HOME project.
    Eligible HOME-project costs are detailed at section 92.206 and
    include relocation costs, finance-related costs,
    construction-related costs, project audit costs, and costs
    associated with affirmative marketing and fair housing. Section
    92.214 of the HOME final rule details the Program\'s prohibited
    activities.

+-----------------------------------------------------------------------+
| **TABLE 1: HOME ELIGIBLE ACTIVITIES, §92.205**                        |
|                                                                       |
| -   Acquisition of property, including downpayment and closing cost   |
|     assistance                                                        |
|                                                                       |
| -   Rehabilitation, including conversion and reconstruction           |
|                                                                       |
| -   New Construction                                                  |
|                                                                       |
| -   Tenant-based rental assistance, including security deposit        |
|     assistance                                                        |
+-----------------------------------------------------------------------+

+-----------------------------------------------------------------------+
| **TABLE 2: HOME ELIGIBLE COSTS, §92.206**                             |
|                                                                       |
| -   Development hard costs (i.e., new construction, rehabilitation)   |
|                                                                       |
| -   Refinancing costs associated with existing debt                   |
|                                                                       |
| -   Acquisition costs                                                 |
|                                                                       |
| -   Related soft costs (i.e., architectural, engineering, project     |
|     audit, project impact fees)                                       |
|                                                                       |
| -   Relocation costs                                                  |
+-----------------------------------------------------------------------+

**Financial Assistance**

Various forms of financial assistance may be provided with HOME funds,
as long as the HOME funds are expended within 15 days of the requested
disbursement from the U.S. Treasury. Eligible forms of financial
assistance include:

+-----------------------------------------------------------------------+
| -   Interest Bearing loans                                            |
|                                                                       |
| -   Non-interest bearing loans                                        |
|                                                                       |
| -   Deferred loans (both forgivable and repayable)                    |
|                                                                       |
| -   Grants                                                            |
|                                                                       |
| -   Interest subsidies                                                |
|                                                                       |
| -   Equity investments                                                |
|                                                                       |
| -   Loan guarantees                                                   |
+-----------------------------------------------------------------------+

A PJ must request approval from the Department of any alternative form
of assistance it intends to provide.

**Property Standards**

HOME-assisted units are required to meet a minimum property standard at
project completion, which varies by the activity being undertaken (see
24 CFR 92.251). Table 2 summarizes the minimum HOME property standards
by activity type:

**Table 3: HOME\'s Required Property Standards/§ 92.251**

+-----------------------------------+-----------------------------------+
| **Project Type**                  | **Minimum Property Standard**     |
+-----------------------------------+-----------------------------------+
| Acquisition of existing housing   | Applicable State or local housing |
| (no rehabilitation or             | quality standards and code        |
| construction)                     | requirements. If no local         |
|                                   | standards/codes apply, Section 8  |
|                                   | Housing Quality Standards.        |
+-----------------------------------+-----------------------------------+
| Rehabilitation                    | Local written rehabilitation      |
|                                   | standards,                        |
|                                   |                                   |
|                                   | AND                               |
|                                   |                                   |
|                                   | State and local code              |
|                                   | requirements.                     |
|                                   |                                   |
|                                   | If no local codes apply, one of   |
|                                   | the following national model      |
|                                   | codes:                            |
|                                   |                                   |
|                                   | -   Uniform Building Code (ICBO)  |
|                                   |                                   |
|                                   | -   National Building Code (BOCA) |
|                                   |                                   |
|                                   | -   Standard Building Code        |
|                                   |     (SBCCI)                       |
|                                   |                                   |
|                                   |     OR                            |
|                                   |                                   |
|                                   | -   Council of American Building  |
|                                   |     Officials one- or two-family  |
|                                   |     code (CABO), [OR]{.underline} |
|                                   |                                   |
|                                   | -   Minimum Property Standards at |
|                                   |     24CFR 200.925 or 200.926      |
|                                   |     (FHA).                        |
|                                   |                                   |
|                                   |     AND                           |
|                                   |                                   |
|                                   | -   Handicapped accessibility     |
|                                   |     requirements, where           |
|                                   |     applicable (see 24 CFR        |
|                                   |     92.251(a)(3))                 |
+-----------------------------------+-----------------------------------+

**Table 3: HOME\'s Required Property Standards/§ 92.251 (continued)**

+-----------------------------------+-----------------------------------+
| **Project Type**                  | **Minimum Property Standard**     |
+-----------------------------------+-----------------------------------+
| New Construction of housing       | State and local code requirements |
|                                   |                                   |
|                                   | If no State and local codes       |
|                                   | apply, one of the following       |
|                                   | national model codes:             |
|                                   |                                   |
|                                   | -   Uniform Building Code (ICBO)  |
|                                   |                                   |
|                                   | -   National Building Code (BOCA) |
|                                   |                                   |
|                                   | -   Standard Building Code        |
|                                   |     (SBCCI)                       |
|                                   |                                   |
|                                   |     OR                            |
|                                   |                                   |
|                                   | -   Council of American Building  |
|                                   |     Officials one- or two-family  |
|                                   |     code (CABO), [OR]{.underline} |
|                                   |                                   |
|                                   | -   Minimum Property Standards at |
|                                   |     24CFR 200.925 or 200.926      |
|                                   |     (FHA).                        |
|                                   |                                   |
|                                   |     AND                           |
|                                   |                                   |
|                                   | -   Model Energy Code             |
|                                   |                                   |
|                                   |     AND                           |
|                                   |                                   |
|                                   |     Handicapped accessibility     |
|                                   |     requirements, where           |
|                                   |     applicable (see 24 CFR        |
|                                   |     92.251(a)(3)). New            |
|                                   |     construction of               |
|                                   |     [rental]{.underline} housing  |
|                                   |     must meet site and            |
|                                   |     neighborhood standards at 24  |
|                                   |     CFR 983.6(b).                 |
+-----------------------------------+-----------------------------------+

Housing that is newly constructed or substantially rehabilitated with
HOME funds must meet all applicable local codes, rehabilitation
standards, ordinances, and zoning ordinances. PJs are required to
develop written standards for the performance of rehabilitation funded
with HOME. Homebuyer units that are to be rehabilitated after transfer
of ownership interest must be free from health and safety defects before
occupancy and not later than 6 months after transfer. The housing must
meet the relevant code standards not later than 2 years after transfer
of ownership.

**HOME Investment Per Unit**

The minimum amount of HOME funds that can be invested in a project is an
average of \$1,000 per HOME-assisted unit. The average per unit maximum
HOME subsidy varies by PJ and may be obtained from the local HUD Field
Office. Requests by a PJ to increase the subsidy limits under conditions
described in §92.250 will be reviewed by HUD.

**Affordability**

Section 92.252 of the HOME final rule contains the affordability
requirements for rental housing that apply at initial occupancy, and
over the period of affordability as determined by the amount of HOME
assistance. For example, in rental housing projects containing 5 or more
HOME-assisted units, not less than 20% of the HOME-assisted units must
be rented at rents not more than 30% of the annual income of a family
whose income equals 50% of the area\'s median income. The remaining
HOME-assisted unit rents must be the lesser of the Fair Market Rent for
existing housing in the area **or** 30% of the adjusted income of a
family whose income equals 65% of the area\'s median income. The
Department has provided some flexibility on these rent standards for
HOME-assisted SRO projects (see Section IV, page 23) and HOME-assisted
units receiving project-based rental assistance.

For HOME-assisted rental housing, 100% of the HOME-assisted units must
remain affordable for a fixed period of 5 to 20 years, depending on the
amount of HOME investment per unit. Table 3 illustrates the long-term
affordability periods for HOME-assisted rental housing:

**Table 4: Minimum Periods of Affordability for Rental Housing**

  ----------------------------------- -----------------------------------
  **ACTIVITY**                        **Minimum Period of Affordability**

  Rehabilitation or acquisition of    5 years
  existing housing per unit amount of 
  HOME funds: Under \$15,000.         

  \$15,000 to \$40,000                10 years

  Over \$40,000, or rehabilitation    15 Years
  projects in which HOME refinances   
  an existing mortgage                

  New construction or acquisition of  20 years
  newly constructed housing           
  ----------------------------------- -----------------------------------

Section 92.254 of the HOME Final Rule covers the requirements for
HOME-assisted homeownership projects. Homebuyer properties are subject
to the resale or recapture provisions (see §92.254 (a)(4)) throughout
the affordability period. Table 4 summarizes the periods of
affordability for such projects:

**Table 5:** Minimum Periods of Affordability for Homeownership Projects

  ----------------------------------- -----------------------------------
  Amount of HOME Subsidy for any      **Minimum Period of Affordability**
  Eligible Activity                   

  Under \$15,000.                     5 years

  \$15,000 to \$40,000                10 years

  Over \$40,000                       15 Years
  ----------------------------------- -----------------------------------

**Resale and Recapture:**

To ensure that HOME-assisted units remain affordable, PJs must impose
resale or recapture requirements for each homebuyer unit assisted with
HOME funds. Under the *Resale* provisions, should the owner sell the
house during the period of affordability, he or she is required, under
the resale provision, to sell the house to another income-eligible
homebuyer. Under the *Recapture* provisions, should the HOME-assisted
homebuyer sell the unit during the period of affordability, the PJ
recoups all or a portion of the HOME funds used to assist the initial
purchase.

**HOME Match Requirements**

Federal HOME funds must be matched with non-Federal forms of subsidy at
a rate of 25 cents for every HOME dollar expended (see §92.218). The
premise of the match requirement is that the provision of affordable
housing is the responsibility of all levels of government and, as a
result, should require a financial commitment from State and local
governments as well as from the Federal government. The match is the
PJ\'s contribution to the HOME Program. Match obligations, as detailed
at §92.218, are incurred each time a PJ spends HOME funds. The match
obligation must be met within each fiscal year, but need not be invested
on a project-by-project basis.

The eligible forms of match contribution include cash contributions,
including the grant equivalent of a below market interest rate loan; the
value of waived taxes, fees or charges; the value of land or real
property, not acquired with Federal resources, donated or provided at
less than its appraised value; the cost of infrastructure improvements
associated with the HOME project; a percentage of loans made to
qualified affordable housing from single and multifamily bond proceeds;
and the reasonable value of any donated site-preparation and
construction materials; the value of any donated or voluntary labor, or
professional services; sweat equity; the direct cost of social services;
and the direct cost of homebuyer counseling services.

The reader is encouraged to review §§92.218 through 92.222 for detailed
requirements of match obligations, recognition of matching contribution,
forms of match, match credit, and match reduction.

**[The Homeless and HIV/AIDS Assistance Program
Requirements]{.underline}**

Homeless assistance programs improve the condition of the most desperate
of those in need in America. They help provide homeless people with
housing and a full range of services to regain independent living. HUD
has five programs that provide homeless assistance in local communities:
the Supportive Housing Program (SHP), Shelter Plus Care (S+C), Section 8
Moderate Rehabilitation Single Room Occupancy (SRO) program, Emergency
Shelter Grant (ESG) and Title V Federal Surplus Properties.

The homeless assistance programs provide resources that can be used by
communities in establishing a Continuum of Care system, a balanced
inventory of facilities -- emergency shelter, transitional housing and
permanent housing -- all interrelated in a single system. The Continuum
of Care is a community strategy to reduce homelessness. It organizes
housing and services to meet the specific needs of people who are
homeless as they move to stable housing and maximum self-sufficiency. It
includes action steps to end homelessness and prevent a return to
homelessness. The Continuum of Care emphasizes permanent solutions to
homelessness.

The SHP, S+C and SRO grant awards are made on a competitive basis. The
competitions are announced by publication of a Notice of Fund
Availability (NOFA) in the Federal Register. The NOFA sets forth the
process for awarding funds. The application selection process consists
of four basic steps:

> **Step I** Applicants work with their local CoC community to develop
> projects and
>
> submit proposals.

**Step II** HUD reviews the proposals and makes conditional selections.

> **Step III** Selectees submit a Technical Submission containing more
> detailed
>
> technical information not contained in the original application.

**Step IV** Selectees sign a grant agreement with HUD and begin project
activities.

**Eligible Participants**

The homeless assistance programs may help only those persons who are
literally homeless. These programs may assist persons who are living in
emergency shelters; in places not meant for human habitation, such as
cars, parks, sidewalks, or abandoned buildings; or are about to reside
in a shelter or on the street. The limited resources of these homeless
assistance programs are not intended to be used to improve the living
conditions of persons residing in substandard housing or doubled-up
situations. However, families and individuals who are just about to lose
their housing through eviction and lack the resources and support
networks needed to obtain access to housing are eligible to participate
if they would otherwise become literally homeless. Homelessness
prevention activities are eligible in ESG.

In regard to the SRO Program, rental assistance may only be provided to
persons meeting the definition of homeless under the McKinney Act.
Current residents of units proposed for assistance may remain in the
building (without HUD SRO assistance) or may receive relocation payments
and assistance from eligible non-SRO Program sources. Look to the NOFA
for requirements regarding the percentage of units which must be vacant
at time of application. Since relocation requirements are complex,
please contact the Field Office Relocation Specialist or an experienced
government relocation agency during the project planning stage.

**[Emergency Shelter Grant (ESG) Requirements]{.underline}**

ESG funds are awarded to States, metropolitan cities, urban counties,
and territories, according to the formula used for Community Development
Block Grant (CDBG). Nonprofit organizations may apply for ESG funds
directly from States and from units of general local government. Units
of general local government may also apply for funds directly from
States.

+-----------------------------------------------------------------------+
| **Table 6: ESG ELIGIBLE ACTIVITIES**                                  |
|                                                                       |
| -   Renovation, major rehabilitation, or conversion of buildings for  |
|     use as emergency shelter.                                         |
|                                                                       |
| -   Up to 30% on essential services for the homeless (waiver          |
|     possible).                                                        |
|                                                                       |
| -   Up to 30% on homeless prevention efforts.                         |
|                                                                       |
| -   Shelter operating costs, such as maintenance, insurance,          |
|     utilities, rent, and furnishings, etc. No more than 10% for       |
|     operating staff costs.                                            |
+-----------------------------------------------------------------------+

Any building assisted with ESG funds must meet government safety,
sanitation, and habitability standards. Where ESG funds are used for
renovation, the building must be maintained as a shelter for at least
three years. Where ESG funds are used for major rehabilitation or
conversion, the building must be maintained as a shelter for ten years.

If ESG funds are used for a homeless prevention activity that assists
families that have received eviction notices or notices of termination
of utility services, the following conditions must be met:

-   Inability to make payment must result from a sudden reduction in
    income;

-   Assistance is necessary to avoid eviction or termination of
    services;

-   Reasonable prospect that the family will resume paying within a
    reasonable time; and

-   Assistance must not supplant funding from preexisting sources.

    The above summarizes key requirements. The ESG regulations are at 24
    CFR 576.

    **[Supportive Housing Program (SHP) Requirements]{.underline}**

    This program awards grants, on a competitive basis, to governmental
    entities and private nonprofit organizations to provide supportive
    housing and supportive services to homeless persons. The SHP
    requirements are at 24 CFR 583; highlights are described here.

    The SHP program has five components:

-   The [transitional housing]{.underline} component provides homeless
    individuals and families with temporary housing and services to
    enable them to move to permanent housing within a 24-month period
    (or under certain circumstances, for a longer period), which may
    include up to 6 months of follow-up services after residents move to
    permanent housing.

-   The [permanent housing]{.underline} component provides long-term
    housing and supportive services designed to maximize the ability of
    homeless persons with disabilities to live as independently as
    possible.

-   The [supportive services only]{.underline} component provides
    services to homeless individuals and families in the community. The
    supportive services may be provided at a central site or the
    supportive services may be provided at various locations in the
    community.

-   The [safe haven]{.underline} component is a form of supportive
    housing in which a structure, or a clearly identifiable portion of a
    structure, meets the following criteria: (1) serves hard-to-reach
    homeless persons who have severe mental illness, are on the streets,
    and have been unable or unwilling to participate in supportive
    services; (2) provides 24-hour residence

    for an unspecified duration; (3) provides private or semiprivate
    accommodations; and (4) has overnight occupancy limited to 25
    persons. A safe haven may also provide supportive services to
    eligible persons who are not residents on a drop-in basis.

    For many persons with mental illness who have been living on the
    streets, the transition to permanent housing is best made in stages,
    starting with a small, highly supportive environment where an
    individual can feel at ease, out of danger, and subject to no
    immediate service demands. Safe havens do not require participation
    in services and referrals as a condition of occupancy. Rather, it is
    hoped that after a period of stabilization in a safe haven,
    residents will be more willing to participate in services and
    referrals, and will eventually be ready to move to more traditional
    forms of housing. Safe havens can serve as an entry point to the
    service system and provide access to basic services such as food,
    clothing, bathing facilities, telephones, storage space, and mailing
    addresses.

-   The [innovative housing]{.underline} component is housing that is,
    or is a part of a particularly innovative project for, or
    alternative methods of meeting the immediate and long term needs of
    homeless persons. The NOFA usually requires that applications for
    this component be innovative in comparison to other applications and
    projects that have been funded. In particular, an innovative project
    should be able to be used as a model.

+-----------------------------------------------------------------------+
| **Table 7: SHP ELIGIBLE ACTIVITIES**                                  |
|                                                                       |
| -   Acquisition of structures for supportive housing or to provide    |
|     supportive services.                                              |
|                                                                       |
| -   Rehabilitation of structures for supportive housing or to provide |
|     supportive services                                               |
|                                                                       |
| -   New construction of buildings for supportive housing where there  |
|     is a lack of appropriate units that could be rehabilitated or the |
|     new construction costs substantially less than rehabilitation.    |
|                                                                       |
| -   Leasing of structures for supportive housing or to provide        |
|     supportive services.                                              |
|                                                                       |
| -   Operating costs of supportive housing.                            |
|                                                                       |
| -   Supportive services.                                              |
+-----------------------------------------------------------------------+

Any building assisted with SHP funds must meet local government safety
and sanitation standards and federal habitability standards described in
24 CFR 583.300(b). Where SHP funds are used for acquisition,
rehabilitation, or new construction, the project must be operated for 20
years from the date of initial operation.

Each resident of supportive housing may be required to pay an occupancy
charge of the highest of 30% of the family\'s monthly adjusted income,
10% of the family\'s monthly income, or the payment received from a
public agency designated for such purpose.

+-----------------------------------------------------------------------+
| Funding for acquisition and rehabilitation in localities with high    |
| cost percentages are limited as follows:                              |
|                                                                       |
| 100% to 119%, the limit is \$200,000                                  |
|                                                                       |
| 120% to 139%, the limit is \$250,000                                  |
|                                                                       |
| 140% to 159%, the limit is \$300,000                                  |
|                                                                       |
| 160% to 174%, the limit is \$350,000                                  |
|                                                                       |
| 175% and up, the limit is \$400,000                                   |
|                                                                       |
| Funding for new construction is limited to a maximum of \$400,000     |
| regardless of the project\'s location.                                |
|                                                                       |
| Grantees must match SHP funds used for acquisition, rehabilitation,   |
| and new construction with an equal amount of cash.                    |
|                                                                       |
| Grantees must share in the operating costs of the project since SHP   |
| funds for such costs are limited to 75% in the first two years of a   |
| project, and 50% for the following years. The appropriations acts for |
| FY 1999 and 2000 required grantees to share in operating costs.       |
| Applicants should check NOFA requirements.                            |
+-----------------------------------------------------------------------+

**[Shelter Plus Care (S+C) Requirements]{.underline}**

States, local governments, and public housing agencies are eligible to
receive S+C grants. Grants are awarded through a national competition.
The regulations are at 24 CFR 582; highlights follow.

There are four components to this program:

-   [Tenant-based Rental Assistance (TRA)]{.underline} provides grants
    for rental assistance over a five-year period. Participants reside
    in housing of their choice, except that, where necessary to
    facilitate the coordination of supportive services, grant recipients
    may require participants to live in a specific area for their entire
    period of participation or in a specific structure for the first
    year and in a specific area for the remainder of their period of
    participation.

-   [Sponsor-based Rental Assistance (SRA)]{.underline} provides grants
    for rental assistance over a five-year period, through contracts
    between the grant recipient and sponsor organizations. A sponsor may
    be a private, nonprofit organization or a community mental health
    agency established as a public nonprofit organization. Participants
    reside in housing owned or leased by the sponsor.

-   [Project-based Rental Assistance (PRA)]{.underline} provides grants
    for rental assistance, through contracts between the grant recipient
    and owners of existing structures with units that will be leased to
    participants. Rental subsidies are for five years, or for ten years
    where the owner completes at least \$3,000 of rehabilitation per
    unit (including prorated share of common areas) to make the
    structure decent, safe, and sanitary within 12 months of grant
    agreement.

-   [Single Room Occupancy Dwellings (SRO)]{.underline} provides grants
    for rental assistance in connection with the moderate rehabilitation
    of single room occupancy housing units. Resources to fund the cost
    of rehabilitating the dwelling must be from other sources. The
    rental assistance covers operating expenses of the SRO housing
    including debt service for rehabilitation financing, provided the
    monthly rental assistance per unit does not exceed the moderate
    rehabilitation FMR for an SRO unit, as established by HUD.

+-----------------------------------------------------------------------+
| **Table 8: S+C ELIGIBLE ACTIVITY**                                    |
|                                                                       |
| -   Rental Assistance                                                 |
|                                                                       |
| -   Up to 8% of the grant amount may be used for costs of             |
|     administering the rental assistance.                              |
+-----------------------------------------------------------------------+

The program assists homeless individuals with disabilities, primarily
those with serious mental illness, chronic problems with alcohol and/or
drugs, and acquired immunodeficiency syndrome (AIDS) or related
diseases.

The program\'s requirements include:

+-----------------------------------------------------------------------+
| -   Outreach \-- The program is designed to serve the disabled        |
|     hard-to-reach population that lives on the streets, in subways,   |
|     emergency shelters, etc. To ensure that this population is        |
|     served, outreach efforts are required to obtain their             |
|     participation.                                                    |
|                                                                       |
| -   Supportive service match \-- Applicants must match the aggregate  |
|     amount of rental assistance with at least the same amount of      |
|     supportive services.                                              |
|                                                                       |
| -   Eligible structures \-- With the exception of the SRO component,  |
|     assisted units may be of any size, and must meet applicable       |
|     housing quality standards.                                        |
|                                                                       |
| -   Rent reasonableness\--Rents charged must be reasonable in         |
|     relation to rents being charged for comparable unassisted units,  |
|     as well as not in excess of rents currently being charged by the  |
|     same owner of comparable unassisted units.                        |
+-----------------------------------------------------------------------+

**[The Section 8 Moderate Rehabilitation Program for Single Room
Occupancy (SRO) Dwellings for Homeless Individuals
Requirements]{.underline}**

Public housing agencies and private nonprofit organizations are eligible
to apply for SRO assistance. Grants are awarded through a national
competition. The regulations are at 24 CFR 882, subpart H; a summary
follows.

The SRO program provides rental assistance in connection with the
moderate rehabilitation of single room occupancy housing units.
Resources to fund the cost of rehabilitating the dwelling must be from
other sources. The rental assistance covers operating expenses of the
SRO housing including debt service for rehabilitation financing.
However, the monthly rent charged by the owner per unit is limited to
the moderate rehabilitation fair market rent (FMR) for an SRO unit, as
established by HUD. This is generally 90% of the FMR for a zero-bedroom
(efficiency) unit.

+-----------------------------------------------------------------------+
| **Table 9: SRO ELIGIBLE ACTIVITY**                                    |
|                                                                       |
| -   Rental Assistance                                                 |
+-----------------------------------------------------------------------+

The program\'s requirements include:

+-----------------------------------------------------------------------+
| -   The program serves homeless persons living on the streets and in  |
|     emergency shelters. To ensure that this population is served,     |
|     outreach efforts are required to obtain their participation.      |
|                                                                       |
| -   The structure used may be of any type, but when rehabilitation is |
|     completed, the unit must meet the definition of SRO housing,      |
|     i.e., a residential property that includes multiple single room   |
|     dwelling units. Each unit is for occupancy by a single eligible   |
|     individual. The unit need not, but may contain food preparation   |
|     or sanitary facilities, or both.                                  |
|                                                                       |
| -   Each assisted unit in the structure must require a minimum of     |
|     \$3,000 of rehabilitation, including its prorated share of the    |
|     work to be accomplished on common areas or systems, to meet HQS.  |
|                                                                       |
| -   No single project may contain more than 100 units.                |
|                                                                       |
| -   Rents charged must be reasonable in relation to the rents being   |
|     charged for comparable unassisted units, as well as not in excess |
|     of rents currently being charged by the same owner for comparable |
|     unassisted units.                                                 |
|                                                                       |
| -   Tenants must pay as rent the highest of;                          |
|                                                                       |
|     30% of monthly adjusted income                                    |
|                                                                       |
|     10% of monthly income; or                                         |
|                                                                       |
|     The payment received from a public agency designated for rent.    |
|                                                                       |
| -   Private nonprofit organizations which are grantees must contract  |
|     with a Public Housing Authority to administer the assistance.     |
|                                                                       |
| -   Displacement is not allowed                                       |
|                                                                       |
| -   Upon completion of rehabilitation, the owner must rent all        |
|     formerly vacant units to homeless persons.                        |
+-----------------------------------------------------------------------+

**[The Title V Program Requirements]{.underline}**

The Title V Program provides nonprofit organizations, states and local
governments the opportunity to assist the homeless through the use of
unutilized, underutilized, excess, or surplus Federal real properties.
These properties may be used as a facility to assist homeless persons.
HUD publishes a weekly (every Friday) notice in the [Federal
Register]{.underline} listing the real property, whether HUD has found
it suitable to assist the homeless, and whether it is available for such
use. Program regulations are at 24 CFR 581.

Depending on the availability of the property, and subject to HHS
approval, the nonprofit organization may receive a deed or lease of the
property.

[Application process]{.underline}:

The Department of Health and Human Services (HHS) handles the
application portion of the program. Interested providers should notify
HHS of their intention to apply for a property within 60 days of the
Federal Register notice, but they can apply later if the property is
still available.

Applicants have 90 days after an expression of interest is received by
HHS to submit an application. Once an application is complete, HHS acts
on it within 25 days.

The property is subject to a reversion, or in the case of a leasehold
interest, termination, if

the property ceases to be used to assist the homeless.

**[Housing Opportunities for Persons with AIDS (HOPWA)
Requirements]{.underline}**

The HOPWA Program provides resources for comprehensive strategies for
meeting housing and/or services needs of low-income persons with
HIV/AIDS, and their families. Program requirements are contained at 24
CFR 574.

The program authorizes two types of grants:

-   [Formula grants]{.underline} available annually through the
    Consolidated Planning process to eligible States and the largest
    cities in eligible metropolitan areas that have at least 1,500 cases
    of AIDS; and

-   [Competitively awarded grants]{.underline} under HUD's annual Super
    NOFA competition for special projects of national significance and
    for other projects in areas not receiving formula grants. Selection
    criteria and application requirements are established in the Super
    NOFA.

+-----------------------------------------------------------------------+
| **Table 10: HOPWA ELIGIBLE ACTIVITIES**                               |
|                                                                       |
| -   Housing information services which assist eligible individual to  |
|     locate, acquire, finance and maintain housing;                    |
|                                                                       |
| -   Resource identification to establish, coordinate and develop      |
|     housing assistance resources for eligible persons;                |
|                                                                       |
| -   Acquisition, rehabilitation, conversion, lease, and repair of     |
|     facilities to provide housing and services;                       |
|                                                                       |
| -   New construction for SRO and community residences only;           |
|                                                                       |
| -   Project-or tenant-based rental assistance;                        |
|                                                                       |
| -   Short-term, mortgage, and utility payment to prevent homelessness |
|     (up to 21 weeks);                                                 |
|                                                                       |
| -   Supportive services;                                              |
|                                                                       |
| -   Operating costs for housing;                                      |
|                                                                       |
| -   Technical assistance in establishing and operating a community    |
|     residence;                                                        |
|                                                                       |
|     and                                                               |
|                                                                       |
| -   Administrative expenses (not more than 3% of the grant amount may |
|     be used by the grantee; not more than 7% of the grant amount for  |
|     project sponsors).                                                |
|                                                                       |
| -   For competitive grants only, other activities approved by HUD.    |
+-----------------------------------------------------------------------+

The program\'s requirements include:

+-----------------------------------------------------------------------+
| -   Any building assisted with HOPWA funds must meet local government |
|     safety and sanitation standards and Federal habitability          |
|     standards described in 24 CFR 574.310(b). Any building or         |
|     structure assisted with HOPWA funds for acquisition,              |
|     construction, or substantial rehabilitation must be used to       |
|     assist individuals with HIV/AIDS for at least 10 years, or, if    |
|     non-substantial rehabilitation, for at least 3 years.             |
|                                                                       |
| -   Grantees must establish a grace period, not to exceed one year,   |
|     during which surviving family members of a person with HIV/AIDS,  |
|     who lived with the person with HIV/AIDS at the time of his/her    |
|     death, may continue to receive HOPWA housing and supportive       |
|     service assistance. At the end of the grace period, assistance to |
|     survivors terminates.                                             |
|                                                                       |
| -   Funds are expected to be used within 3 years of receipt (i.e.,    |
|     date of the grant agreement).                                     |
|                                                                       |
| -   Tenants benefiting from residency in housing facilities or in     |
|     rental assistance programs must pay as rent the highest of:       |
|                                                                       |
|     30 % of monthly adjusted income;                                  |
|                                                                       |
|     10 % of monthly income; or                                        |
|                                                                       |
|     The payment received from a public agency designated for rent     |
|     (see 24 CFR 5.611 for adjustments to family income)               |
+-----------------------------------------------------------------------+
| -   Rents charged must be reasonable in relation to the rents being   |
|     charged for comparable unassisted units, as well as not in excess |
|     of rents currently being charged by the same owner for comparable |
|     unassisted units.                                                 |
|                                                                       |
| -   In addition to the availability of appropriate supportive service |
|     by qualified service providers, individuals with HIV/AIDS         |
|     requiring more intensive care than can be provided in the housing |
|     assisted with HOPWA funds must have access and reference to an    |
|     appropriate care provider.                                        |
|                                                                       |
| -   Homeless prevention \-- Short term rent, mortgage, or utilities   |
|     payments are allowed to enable eligible individuals to remain in  |
|     their own dwellings (limited to 21 weeks).                        |
+-----------------------------------------------------------------------+

**III. USING HOME, AND HOMELESS and HIV/AIDS ASSISTANCE PROGRAM
RESOURCES:**

The homeless and HIV/AIDS assistance programs and the HOME program
provide significant resources. In FY 2000, \$1.02 billion are available
through the homeless programs, \$240 million are available through
HOPWA, and \$1.61 billion are available through the HOME program. As
shown in this section, those funds may be used in a variety of ways.
States, localities, and homeless assistance providers may want to begin
developing, or further develop, a continuum of care so that these
resources are used in the most effective way.

The continuum of care brings homeless persons into a system, assesses
their needs, and provides them with a full range of services to regain
independent living. It helps ensure transition into permanent housing,
with services when necessary, at any stage of need. It seeks to have a
balanced inventory of facilities: emergency shelter, transitional
housing, and permanent housing \-- all interrelated into a single
system.

**[Summary of Eligible Activities]{.underline}**

Table 8 illustrates the eligible activities for HOME, McKinney homeless
and HOPWA programs. The reader is encouraged to refer to individual
program regulations for more details.

**Table 11: Program Activities At-A-Glance**

<table>
<colgroup>
<col style="width: 12%" />
<col style="width: 0%" />
<col style="width: 8%" />
<col style="width: 7%" />
<col style="width: 11%" />
<col style="width: 10%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 10%" />
<col style="width: 9%" />
<col style="width: 10%" />
</colgroup>
<tbody>
<tr class="odd">
<td><strong>PROGRAM</strong></td>
<td colspan="10">ACTIVITY</td>
</tr>
<tr class="even">
<td colspan="2"></td>
<td>New Con.</td>
<td>Acq</td>
<td>Rehab.</td>
<td>Rental Asst.</td>
<td>Sup-port Ser-vices</td>
<td><p>Make</p>
<p>Prop</p>
<p>Avail.</p></td>
<td>Lease of Prop.</td>
<td>Oper-ating Costs</td>
<td><p>Hmls</p>
<p>Prev.</p></td>
</tr>
<tr class="odd">
<td colspan="2">HOME</td>
<td>,</td>
<td>,</td>
<td>,</td>
<td>,</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>,</td>
</tr>
<tr class="even">
<td colspan="2">ESG</td>
<td></td>
<td></td>
<td>,</td>
<td></td>
<td>,</td>
<td></td>
<td></td>
<td>,</td>
<td>,</td>
</tr>
<tr class="odd">
<td colspan="2">SHP</td>
<td>,</td>
<td>,</td>
<td>,</td>
<td></td>
<td>,</td>
<td></td>
<td>,</td>
<td>,</td>
<td></td>
</tr>
<tr class="even">
<td colspan="2">S+C</td>
<td></td>
<td></td>
<td></td>
<td>,</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="2">SRO</td>
<td></td>
<td></td>
<td></td>
<td>,</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td colspan="2">TITLE V</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>,</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="2">HOPWA</td>
<td>,</td>
<td>,</td>
<td>,</td>
<td>,</td>
<td>,</td>
<td></td>
<td>,</td>
<td>,</td>
<td>,</td>
</tr>
</tbody>
</table>

**TABLE KEY:**

**New Con. = New Construction Acq. = Acquisition Rehab. =
Rehabilitation**

**Hmls Prev. = Homeless Prevention**

**Make Prop Avail. = the program makes properties available for use**

**Lease of Prop. = the program enables properties to be leased for use**

**[Sources for Developing Transitional or Permanent Housing for Homeless
Persons]{.underline}**

The HOME Program is an excellent source of funds to acquire,
rehabilitate or construct transitional or permanent housing. With its
generous subsidy limits, HOME funds may be used to cover all or most
development costs. By using HOME funds in this way, private debt service
can be eliminated or minimized, leaving operating funds obtained through
one of the homeless assistance programs available to cover the ongoing
costs of maintenance, management, and/or supportive sources.

SHP funds may be used for acquisition and rehabilitation of a structure
or units within a structure, however the amount of funds is limited to
\$200,000 (or up to \$400,000 in high cost areas). SHP funds may also be
used for new construction where there is a lack of appropriate units
that could be rehabilitated or new construction costs are substantially
less than rehabilitation. Funding is limited to \$400,000 and in the
case of both rehabilitation and new construction SHP funds must be
matched on a cash basis. HOME funds may provide that necessary match.

Other assistance programs that may be used for development include (1)
ESG funds for rehabilitation of units or structures for transitional
housing use and (2) HOPWA funds for acquisition and rehabilitation of
units or structures for persons with HIV/AIDS. HOPWA funds may be used
for new construction of a community residence.

**[Sources of Rental Assistance]{.underline}**

-   Tenant-based - Tenant-based rental assistance generally allows a
    program participant to choose a rental housing unit anywhere in the
    community, provided the unit meets program standards. HOME, S+C, and
    HOPWA funds may be used to provide tenant-based rental assistance.

    In HOME, the tenant-based rental assistance provided to a program
    participant lasts for two years, but may be renewed, subject to the
    availability of funds. In the SRO, S+C and HOPWA programs,
    assistance is available during the program grant period. S+C
    grantees may limit participants to a particular structure in their
    first year of participation and a particular area during their
    entire participation, if doing so is necessary to facilitate the
    coordination of supportive services.

-   Project-based - In project-based rental assistance, program
    participants must live in a particular site in order to receive the
    assistance. S+C, SRO, and HOPWA funds may be used for project-based
    rental assistance. The assistance is available during the program
    grant period.

    **[Sources of Properties for Transitional Housing]{.underline}**

-   Transitional housing - The Title V program leases or deeds unused or
    underutilized Federal properties at no cost for use as transitional
    housing.

    **[Sources of Operating Costs and Supportive Services]{.underline}**

    SHP and HOPWA funds may be used to pay for the operating expenses of
    transitional or permanent housing. Where SHP funds are used, the
    costs must be shared, with at least 25% of the costs being paid from
    sources other than SHP, in the first two years and 50% coming from
    other sources in the following years. ESG funds may be used to pay
    operating expenses of transitional housing, except that staff costs
    are limited to 10%.

    Moreover, SHP, ESG, and HOPWA program funds may be used for
    supportive services for residents of such housing. These services
    may be provided at the housing facility itself or off-site.

    **[Using HOME for Affordable Housing after Transitional
    Housing]{.underline}**

    HOME funds may provide permanent housing after the more immediate
    needs of homeless persons are addressed through emergency shelter or
    transitional housing. The availability of permanent, affordable
    housing is a key element of the continuum of care.

    **[Homelessness Prevention]{.underline}**

    HOME funds may be used to pay for security deposits for rental units
    if individuals or families lack adequate financial resources. HOME
    funds must be provided in accordance with the participating
    jurisdiction\'s written tenant selection policies for tenant-based
    rental assistance called for under §92.209(c) of the HOME
    regulations. The selection policies must be based upon locally
    established preferences or priorities.

    Among other prevention activities, ESG funds may be used to assist
    persons who have received eviction or utility termination notices
    (see section II for details).

    HOPWA funds may be used to make short-term payments for rent,
    mortgage, and utilities for up to 21 weeks per year. Moreover, HOPWA
    funds may be used to develop services-enriched community facilities
    for persons with low incomes who are infected with HIV but are not
    homeless so that homelessness is prevented.

    **IV. HOME AND THE HOMELESS and HIV/AIDS ASSISTANCE PROGRAMS**

    **IV. HOME AND THE HOMELESS ASSISTANCE PROGRAMS**

    As shown in section III, the HOME, McKinney homeless assistance and
    HOPWA programs provide important resources for addressing
    homelessness. Individually, as shown in Table 8, the programs can
    accomplish a variety of activities. However, these programs can be
    combined, enabling one program to begin where another ends. For
    example, HOME funds could be used to develop transitional housing,
    and SHP funds (which can also be used for development) could be
    reserved for operating costs and supportive services to residents.
    Alternately, HOME funds could be used for housing rehabilitation and
    S+C funds could be used for project-based rental assistance in that
    housing.

    The programs also work together when graduates of transitional
    housing move into HOME-assisted housing. These graduates are a good
    source of income-eligible participants for HOME-assisted housing,
    and they have the supportive services links from transitional
    housing. Moving to permanent housing completes the continuum of care
    for the graduates.

    When planning the combination of programs, keep in mind that the
    rules of both programs must be met.

    Grantees should also be reminded that other HUD programs such as
    CDBG, may be used to assist the homeless.

    [**HOME and the Emergency Shelter Grant Program**HOME and the
    Emergency Shelter Grant Program]{.underline}

-   [For transitional housing development]{.underline} - While HOME
    funds may not be used for emergency shelters, it may be used to pay
    costs of acquisition, rehabilitation, or new construction of
    transitional housing. ESG funds may also be used for rehabilitation
    of transitional housing. After the transitional housing is
    developed, ESG funds may pay some of the operating and essential
    services costs (limits are described in section II).

-   [For permanent, affordable housing]{.underline} - Persons leaving
    ESG-funded facilities can move into permanent, affordable housing
    developed with HOME funds or be given HOME tenant-based rental
    assistance.

-   [For homeless prevention]{.underline} - Under certain circumstances
    (described in Section II of this Notice, page 10, "Eligible
    Participants"), ESG funds may be used to assist persons in
    HOME-assisted housing who have received eviction or utility
    termination notices.

    [**HOME and the Supportive Housing Program**HOME and the Supportive
    Housing Program]{.underline}

-   [For supportive housing development]{.underline} - HOME funds may be
    used to pay costs of developing transitional or permanent housing
    for persons with disabilities. After the housing is developed, SHP
    funds may pay supportive services costs and some of the operating
    costs (up to 75% in first two years and up to 50% in following
    years).

-   [As match]{.underline} - HOME funds may be used for the 50% cash
    match needed when SHP funds are used for acquisition,
    rehabilitation, or new construction of transitional or permanent
    housing.

-   [For permanent, affordable housing]{.underline} - By using HOME
    funds to develop housing or provide tenant-based rental assistance,
    persons leaving SHP-funded transitional housing facilities have an
    opportunity to move into permanent, affordable housing.

    **[HOME and Shelter Plus CareHOME and the Shelter Plus Care
    Program]{.underline}**

-   [For development of S+C units - Sponsored-Based Rental Assistance
    (SRA), Project-Based Rental Assistance (PRA), Single Room Occupancy
    (SRO)]{.underline} - HOME funds may be used to pay costs of
    developing units to be used in SRA, PRA, and SRO components of the
    S+C program; S+C funds may be used to make the rental assistance
    payments. Neither HOME nor S+C funds may be used for supportive
    services, so other funding sources would be needed for them.

    Where HOME funds are used in the project, the HOME rents apply. It
    is important to analyze proforma results using both HOME rents and
    the rents allowable under S+C to determine the feasibility of using
    HOME funds, especially in the SRO component. To more fully
    understand the implications for the SRO component, read the relevant
    text under HOME and the SRO Program below.

-   [For development of S+C units: Tenant-Based Rental Assistance
    (TRA)]{.underline} - HOME funds may also be used to develop units
    for participants in the TRA component. Participants may only be
    restricted to a particular unit in the first year of their
    participation and, thus, may move and take the rental assistance
    with them. However, since HOME funds are used in the project, the
    units will continue to be available to other low-income tenants.

    [**HOME and the Section 8 SRO Moderate Rehabilitation Program**HOME
    and the Section 8 SRO Moderate Rehabilitation Program]{.underline}

-   [For development of SRO units]{.underline}- HOME funds may be used
    for the construction, reconstruction, acquisition or rehabilitation
    of units to be used in the SRO program. There are several program
    requirements to consider:

    ,First, both the HOME and the SRO programs establish a maximum rent
    that may be charged for a unit. Generally, rents under the HOME
    program are more restrictive than the SRO program. However, HOME
    allows the maximum allowable rent under project- based assistance to
    be charged in units occupied by persons below 50% of area median
    income (§92.252(b)(2)). The SRO program allows a maximum rent of
    120% of Fair Market Rent to allow amortization of debt incurred by
    the mandatory rehabilitation.

    ,Second, the HOME program has different rent requirements based on
    the amenities in the SRO unit. If a HOME-assisted SRO unit contains
    neither food preparation nor sanitary facilities, or if the unit
    contains only one of these amenities, the maximum rent may be up to
    75% of the Fair Market Rent for a zero-bedroom (efficiency) unit. If
    a HOME-assisted SRO unit contains both food and sanitary facilities,
    the maximum rents for 80 percent of the units may not exceed the
    High HOME rent amount. The High HOME rent amount is the lesser of
    the FMR for a 0-bedroom unit, or 30 percent of the amount that
    equals 65 percent of the median income for the area. The remaining
    20% of the units must have rents that do not exceed the Low HOME
    rents. In the SRO program, the FMR calculation is the same
    regardless of the number of amenities.

    **[HOME and the Title V Federal Properties Program]{.underline}**

-   [For rehabilitation]{.underline} - HOME funds may be used to
    undertake any needed rehabilitation of a Title V property, provided
    that the nonprofit organization or state or local government holds
    deed to the property in question when the application for HOME
    rehabilitation funding is made. It has been the policy of the
    Department of Health and Human Services to limit homeless housing on
    Title V sites to transitional housing. Before committing HOME funds,
    check for deed restrictions regarding the use of the property.

    Those States, local governments, and private nonprofit organizations
    (including CHDOs) with Section 501(c)(3) status interested in
    participating in the Title V program may contact the Division of
    Community Planning and Development in their local HUD Field Office.
    Field Office staff have lists of properties available and can give
    technical assistance.

    **[HOME and the Housing Opportunities for Persons with AIDS (HOPWA)
    Program]{.underline}**

-   [For supportive housing development]{.underline} - For example, HOME
    funds could be used to pay costs of developing housing or funding
    TBRA for persons with HIV/AIDS. After the housing is developed or
    supported, HOPWA funds may pay supportive services costs and
    operating costs for this housing effort.

-   [For homeless prevention]{.underline} - For example, HOPWA funds
    could be used to make a short-term payments for rent, mortgage, and
    utilities that prevents homelessness as well as ongoing costs for
    supportive services in HOME-assisted housing. Doing so would allow
    those residents to retain their housing. HOME can be used for
    security deposit assistance for eligible households.

This Notice serves to heighten the reader\'s awareness of the
possibilities of combining HOME and homeless assistance program funds.
Persons interested in combining HOME and homeless assistance funds
should consult the applicable program regulations and other guidance to
learn more about individual program requirements. The reader should be
aware that whenever Federal program funds are combined, program
coordinators are required to perform a subsidy layering analysis. This
analysis ensures that the amount of Federal subsidy is appropriate for
the project, and not in excess of what is required. Questions relating
to the subsidy layering review or combining program funds should be
directed to the Division of Community Planning and Development in local
HUD Field Offices.