Introduction

This guidebook attempts to answer the following questions. How can states use their HOME allocation to assist the homeless? How do HOME regulations allow for this? How are some states funding such efforts?

Homelessness is an issue that has received great public attention in recent years. It is an issue that touches virtually every segment of our society. No socioeconomic stratus is left untouched by this issue. State involvement in this area increased in the 1980's with the passage of the Stewart B. McKinney Homeless Assistance Act of 1987. The Act provided the first federal assistance to states and local governments to reduce and prevent homelessness. Homelessness is an issue that must be addressed at the local, state and federal levels, not only because of its seriousness, but also because federal assistance in the area of homelessness has been sparse and funds that have been made available to assist states have been decreased by Congress, with some programs being eliminated or not appropriated funding in recent years. In order to provide resources to assist the homeless, states must rely on making both state and federal resources more effective to fill the gaps and to build partnerships in order to create and sustain a climate of active, effective cooperation in addressing the problem of homelessness. The HOME program is an ideal tool for states to achieve these results.

Created in 1990, the HOME program is reasonably flexible. The philosophy of the HOME program is to empower states and local governments to design and tailor affordable housing strategies to address local needs and housing conditions. It is because of this philosophy and the flexibility of its regulations that the HOME program can provide resources to address homelessness.

Using HOME funds to assist the homeless within a "continuum of care" concept can provide great benefit to a community for several reasons. First and most important, it allows people who were formerly homeless to have housing, usually in the form of transitional and permanent housing assistance, which along with supportive services from other sources, that will hopefully lead to their becoming more self-sufficient and ultimately independent. Second, using HOME TBRA to assist the homeless can free emergency shelter space and provide stabilization to homeless families until permanent housing is located. Third, it can provide great public benefit in the form of savings. For example, using HOME TBRA to house the homeless in transitional housing versus welfare motels and hotels can save an incredible amount of money over time.

This guidebook focuses on how to use HOME funds to assist the homeless within a "continuum of care" system. Over the past few years, HUD has supported a "continuum of care" approach to assisting the homeless. This approach recognizes that homelessness is a complex issue, with many avenues for alleviation. The states profiled in this guidebook C New Jersey, Utah and Colorado C have focused on developing an approach to assisting the homeless that not only provides housing assistance but ensures that necessary supportive services are in place. New Jersey utilizes a comprehensive "continuum of care" approach to assisting the homeless, while Utah and Colorado provide important resources to meeting certain aspects to a "continuum of care."

This guidebook is divided into four chapters. Chapter One provides the reader with a brief overview of homelessness, including its characteristics and trends. Chapter Two looks at characteristics of the HOME program that make it a suitable program for providing housing assistance to the homeless. Chapter Three provides the reader with a greater understanding of the "continuum of care" approach to assisting the homeless. Chapter Four features efforts underway in New Jersey, Utah and Colorado to use HOME funds to assist the homeless.

The purpose of the guidebook is to provide information to states interested in using their HOME funds to assist the homeless. State HOME program administrators and state homeless administrators are the primary audience for this guidebook; although others in the human service and housing field may find it useful.

Funding for this guidebook is provided by the U.S. Department of Housing and Urban Development, through the National Affordable Housing Training Institute. The views and opinions in this guidebook do not necessarily represent those of the U.S. Department of Housing and Urban Development.

To most people, a homeless person is someone who does not have shelter. The U.S. Department of Housing and Urban Development defines someone who is homeless as "...lacking a fixed, regular, and adequate nighttime residence." HUD includes in its definition of homeless, persons who are living in temporary living situations, such as emergency shelters and transitional housing. In a report released last year by the U.S. Department of Agriculture's Rural Economic and Community Development Division, homelessness in rural areas is more likely to mean "people without a place to call a home." This definition can include persons living doubled or tripled up with friends or relatives in substandard or overcrowded housing or living in a car, camper or in a tent, or living in housing that would not ordinarily be considered housing (i.e., shacks without any heating or plumbing).

Varied Faces of Homelessness

Homelessness has many faces. It includes runaway youth, families who have lost their jobs or who do not make adequate wages to afford housing, veterans, migrant workers, women fleeing abusive relationships, persons released from mental institutions, and persons who have lost everything due to a substance abuse problem, among others. Two broad classes of problems are identified as to the root cause of homelessness: (1) crisis poverty which refers to homelessness that can be traced chiefly to ongoing poverty; and (2) chronic disability which refers to homelessness accompanied by one or more chronic, disabling conditions. These root causes must be addressed with policies that take into account the complicated factors of both.

Single, unattached adults, unaccompanied by children, make up about three quarters of homeless persons. The average age of unattached homeless adults is late 30s; that of mothers with children is in the early 30s. Studies have repeatedly shown that minorities are disproportionately represented among the homeless populations in urban areas. At least half of the adult homeless population has a current or past alcohol or drug use problem. Three out of four homeless men have a history of institutional stay, whether hospitalization, incarceration, or stay at a inpatient chemical dependency treatment center. Up to one-third of the adult homeless population have severe mental illness. Approximately 30 to 45 percent of the entire adult male homeless population have served their country in the armed services.

Rural vs. Urban Homelessness

Rural homelessness and urban homelessness share key characteristics such as mental illness, alcoholism, drug abuse and other disabling conditions, and domestic violence. In rural areas, however, these kinds of problems are much less to be identified and addressed, partly because homeless people tend to be less visible and partly because support services either are spread thin or simply do not exist. They also share the same need for affordable housing. Both urban and rural areas of the country are in short supply of decent, affordable, housing and much of the existing stock is substandard, severely overcrowded, or both. At the same time, other characteristics of the urban and rural homeless appear quite different. Homeless people in rural areas appear to include more intact families, as well as people with recent work experience. There are also rural homeless subgroups such as migrant workers and Native Americans, who for the most part have no urban counterparts. The rural homeless also tend to include more females, more caucasions, and tend to be homeless for shorter periods of time than their urban counterparts.

Estimates of the Number of Homeless

Estimates of the number of homeless vary widely. According to The Federal Plan to Break the Cycle of Homelessness, researchers have found that about seven million Americans have experienced homelessness -- some for brief periods and some for years C at some point in the latter half of the 1980s and that as many as 600,000 people are homeless on any given night. This figure does not include people at risk of becoming homeless, such as people who are doubled up with friends and relatives and those paying more than 50 percent of their income for rent.

Increasing Emergency Shelter Usage

Emergency shelter usage in some states is increasing, indicating that homelessness is on the upswing, not declining despite a growing economy. In the state of Wisconsin, the number of persons receiving shelter in state-subsidized programs more than doubled between 1987 and 1997, increasing from 11,000 to 24,600. Besides many states, several large cities, such as Los Angeles and Boston, have documented increases in emergency shelter in recent years. Undoubtedly, all parties concerned with eradicating homelessness realize that more resources are needed to assist the seemingly surging number of the homeless C and one important solution to the problem is the development of more permanent affordable housing, which is desperately in short supply in most areas of this nation. Again, HOME funds can be an important resource for developing permanent affordable housing, whether alone or combined with Low Income Housing Tax Credits, CDBG funds, foundation support, private financing, etc.

Lack of Increased Federal Support

Federal support for the homeless is dwindling. HUD's McKinney Act programs were reduced from $1.12 billion in FY95 to $823 million in FY96, FY97, and FY98 and several other federal homeless programs within some federal departments have been eliminated altogether. Besides homelessness funding, funding for other HUD programs have been cut or left dormant. For example, funding to provide new Section 8 incremental vouchers has not been appropriated in several years, public housing operating and capital funds have decreased, Section 202 and 811 funding appears to be slowly decreasing each year, and large set-asides have been carved out of the CDBG program, leaving less for states and localities to potentially target towards housing. Although HOME program funds have remained stable (a testament to the support and success of the program), large increases in funding for the program have not been made. At a time when Congress should be appropriating more funds to housing, grantees must struggle with less. Now, more than ever, resources from a multitude of areas (government, private sector, nonprofit organizations) must be collaboratively harvested to tackle the issue of homelessness. Resources, such as the HOME program, can be used in conjunction with other federal, state and local funds as a means to do so.

Another set-back to the homeless in obtaining permanent affordable housing is the repeal of the federal preferences. No longer are PHAs required to give preference to the homeless (they may at their discretion) in public housing and assisted housing.

Homelessness is a complex phenomenon. Responsible policy must seek to address this issue comprehensively, through a coordinated "continuum of care" strategy. This strategy not only strives to provide affordable housing by moving the homeless from emergency shelter to permanent housing, but also strives to provide solutions to other causes of homelessness such as low wages, lack of employment, domestic violence, mental illness and alcohol and drug abuse.

Created in 1990, the federal HOME program has provided the means to assist thousands of low-income people with their affordable housing needs.

The program is successful because of several inherent key characteristics.

First, the HOME program regulations require that HOME funds assist persons at or below 80 percent of the area median income. Second, deeper targeting requirements require that at least 90 percent of HOME funding for rental housing or rental assistance be used to assist households at or below 60 percent of the area median income. In addition, twenty percent of the units in each rental housing containing five or more units must be occupied by families with incomes at or below 50 percent of area median income. In essence, the program ensures that the very-low income are a priority.

Most assistance provided to the homeless at the local level is administered through local nonprofit organizations. Besides housing assistance, these organizations provide necessary and important supportive services to the homeless, such as job training, counseling, case management, GED assistance, food, clothing, transportation, medical assistance and other services. Without these services, it is difficult, if not impossible for the homeless to reach some level of independence.

The HOME regulations recognize the importance of the role of the nonprofit. The program requires a minimum 15 percent set aside from a participating jurisdiction's HOME allocation to private, nonprofit organizations, known as Community Housing Development Organizations (CHDOs), to carry out eligible HOME activities. In addition, the states outlined in this guidebook have chosen to distribute sizable portions of their HOME funding to various nonprofit organizations as subrecipients as a means of assisting the homeless.

One of the key characteristics of the HOME Program is its flexibility. The design of the program allows states to set their own criteria for awarding HOME funds, design their own flexible program administration of the funds and decide which of the eligible activities are to be a priority for the state. The program also allows states the flexibility to fund a variety of recipients, from nonprofit organizations to private developers to public housing authorities and local governments. States may use HOME funds anywhere within the state, including within the boundaries of local participating jurisdictions. States can also jointly fund projects with local participating jurisdictions. Many states, in setting their priorities for funding, have listed assisting the homeless as top priorities for funding, including the three states profiled in this guidebook

HOME funds can be used for a variety of eligible activities including new construction of both rental and homeownership housing, rehabilitation, reconstruction (rebuilding a structure on the same lot where housing is standing at the time of project commitment), site improvements, acquisition of property or vacant land (if construction will begin within 12 months), demolition of an existing structure (if construction will begin within 12 months), relocation costs, refinancing of existing debt on single-family, owner-occupied properties in connection with HOME-funded rehabilitation and refinancing of existing debt on multi-family projects being rehabilitated with HOME funds, to fund an initial operating deficit reserve for new construction and rehabilitation projects for the initial rent-up period (the reserve may be used to pay for project operating expenses, scheduled payments to a replacement reserve and debt service for a period of up to 18 months), and project-related soft costs (such as finance-related costs, architectural and engineering fees, tenant and homebuyer counseling, affirmative marketing and fair housing services to prospective tenants or owners of an assisted project).

Tenant-based rental assistance

Perhaps the least used of the HOME Program's eligible activities, tenant-based rental assistance (TBRA) could be considered one of the most useful tools for providing housing assistance to the homeless. The HOME regulations allow participating jurisdictions the flexibility to develop their own TBRA program or to model their program on the existing Section 8 program. TBRA is offered for a 24-month period, but can be renewed, subject to the availability of funds. It provides a direct housing subsidy, either in the form of a payment to the tenant who then pays the rent or directly to the landlord. TBRA can be used for rental payments, security deposits and utility deposits (assistance for utility deposits may only be provided in conjunction with a TBRA security deposit or monthly rental assistance program).

TBRA is an effective tool for providing transitional housing for the homeless either through providing direct assistance to the "on the street" homeless or by providing transitional housing opportunities to families or individuals currently living in emergency shelters. The states outlined in this guidebook have effectively used TBRA to provide safe, decent and affordable housing to the homeless, particularly New Jersey. TBRA provides an effective answer to families waiting to obtain permanent housing. New Jersey has used TBRA to transition the homeless into its Section 8 voucher/certificate program. TBRA provides flexibility and choice to a family in deciding the location in which to reside, which can be an important basis for continued stability and self-sufficiency.

In terms of tenant selection criteria for TBRA, states can establish their own criteria. For example, the state of Utah has established homeless families with special needs as one of two acceptable tenant selection criteria for TBRA. Program design issues for a TBRA program are extensively discussed in a recent HOME Model Guide. Tenant-Based Rental Assistance, a single copy of which may be obtained by calling 1-800-998-9999.

Rental Housing

States may use HOME funds to support acquisition, rehabilitation or construction of affordable rental housing which can be used as permanent housing for the homeless, including single-room occupancy units (SROs). SROs consist of single-room dwelling units that contain food preparation and/or sanitary facilities (sanitary facilities may be shared by all tenants). Some permanent housing facilities where residents are paying rent or a portion thereof would generate some income and could possibly support a HOME loan.

Since 1992, the HOME program has provided over one billion dollars annually to participating jurisdictions for rental housing, homebuyer programs, homeowner rehabilitation and tenant-based rental assistance.

In addition to a continued commitment of funding by Congress, the HOME program requires each participating jurisdiction to provide a 25 percent match from non-federal resources, which assists in leveraging additional resources for the program.

FLEXIBLE FORMS OF SUBSIDY

The HOME program allows various forms of flexible subsidy such as interest bearing loans or advances, non-interest bearing loans or advances, deferred loans (forgivable or repayable), grants, interest subsidies, equity investments, loan guarantees and loan guarantee accounts.

• Interest bearing loans or advances are amortizing loans with repayment expected on a regular basis. Most have interest rates at or below the prevailing market rate.

• Non-interest bearing loans require the payment of principle, but no interest.

• Deferred loans defer the principal and interest payments. Such loans are used to leverage private first mortgage financing in homeownership.

• Grants are provided with no requirement or expectation of repayment and are most commonly used in the HOME program for downpayment and closing assistance to homebuyers.

• An interest subsidy is usually an up-front discounted payment to a private lender in exchange for a lower interest rate on a loan.

• An equity investment is an investment made in return for a share of ownership.

• A loan guarantee account is a loan loss reserve held by the lender in an amount equal to some percentage of the outstanding principal.

• Other forms of assistance can be approved by HUD.

Over the last few years, the U.S. Department of Housing and Urban Development has supported a "continuum of care" approach to assisting the homeless which contends that homelessness requires a comprehensive system of housing and services that moves the homeless from emergency shelter to permanent housing and also provides outreach, homelessness prevention and transitional housing as other necessary components of the system. It enables local communities to shape comprehensive, flexible, coordinated systems for homeless assistance.

• Prevention -- targeted activities to prevent homelessness;

• Outreach -- to inform the homeless and near-homeless about available services;

• Intake and Outreach -- to evaluate the needs of the homeless;

• Emergency Shelter, Transitional Housing, Permanent Housing -- placements in these housing areas depending upon individual need;

• Supportive Services -- combining the housing options with services such as medical care, substance abuse and mental health treatment, job training, child care and transportation to ensure housing stability and self-sufficiency.

The continuum of care approach is predicated on the understanding that homelessness is not caused merely by a lack of shelter but involves a variety of underlying, unmet needs -- physical, economic and social. Dealing effectively with the problems of homelessness requires a comprehensive system of housing and necessary services for each stage, from emergency shelter to permanent housing, as well as a strong prevention strategy. The continuum of care system strives to fulfill these requirements so that communities can develop seamless homeless systems that assist individuals and families in achieving independent living.

The continuum of care is not linear; rather, it provides multi-point access and linkages among settings and service providers. Not all homeless individuals and families in a community will need access to all four components. However, unless all four components are coordinated within a community, none will be successful. A strong homeless prevention strategy is also key to the success of the continuum of care.

Over the past few years, HUD has combined its competitive homeless programs C Supportive Housing Program, Shelter Plus Care, and Section 8 Moderate Rehabilitation for SROs C into a single application process which requires applicants seeking funding to develop a single continuum of care strategy to assist the homeless in a comprehensive manner. Several states have applied and received funding through this process.

Colorado Homeless Families (CHF), a nonprofit organization which provides housing and supportive services to the homeless has been awarded funds from the state to acquire eight single-family units and to assist in the new construction of 12 townhouses to provide transitional housing for the homeless. The HOME funds have been combined with local CDBG funds and foundation grants to subsidize the construction costs of the project. The project addresses a critical need for transitional housing in the Denver metro area. In the past year, over 160 families have been turned away from emergency and transitional shelters.

CHF requires its transitional housing residents to demonstrate initiative in helping themselves become independent. Residents are required to work a minimum of 32 hours per week or attend college or trade school for a minimum of 12 hours per semester. Part of the role of CHF is to help the residents become self-reliant and develop good financial management skills. The homeless families are required to be self-sufficient within two years. The first year encompasses the setting of goals, concentrating on education and employment, counseling and budgeting. Counseling is continued in year two, including credit counseling, along with the continuation of education and employment goals. CHF has a successful track record in assisting the homeless reach self-sufficiency. In the past six years, it has expanded from 6 houses to 33 houses. In the past three years, 21 homeless families have graduated from CHF's transitional housing to independence. Twelve families have purchased their first home and five families have graduated from college.

Colorado state staff identified three critical elements than can help support program success in using HOME funds to assist the homeless.

All three states profiled for this guidebook agree that the HOME program can be a vital source in the continuum of care system for the homeless. It offers a relatively flexible funding mechanism that enables states to devise individual strategies to resolving homeless issues. The three states agree that their use of HOME funds has provided housing opportunity, stability and independence to the homeless and all agree that they will continue to assist the homeless utilizing state HOME funds. However, they do offer the following advice to other states interested in using HOME funds to assist the homeless.

1. Be knowledgeable about the homeless need within your state. This will involve establishing collaborative relationships with homeless nonprofit organizations, local governments and other interested parties. It may also involve establishing a state homeless committee composed of your agency and state and local agencies and nonprofit organizations active in homeless issues.

2. Make sure the goal of assisting the homeless is also a goal of the state as a whole.

3. Capacity and expertise in assisting the homeless is essential. In awarding funds, ensure that the non-profit organizations to which you are allocating funding have an experienced track record of working with the homeless in providing housing assistance and supportive services to the homeless. Most of the time you will know this from the reputation of the nonprofit; however, it is essential at the time of application to have some documentation provided to verify the organization's background such as past audits and performance reports.

4. Be sure to require that residents of projects funded with HOME funds are provided supportive services. Supportive services are essential to the ultimate goal of assisting the homeless to become independent and are integral to any continuum of care process that is established.

Homelessness is an ever increasing phenomenon in our society. Although the total number of homeless people are unknown, HUD estimates that at least seven million Americans have been homeless at some point in their life. The causes of homelessness are many, but can be compiled into two broad categories: (1) crisis poverty; and (2) chronic disability.

With federal homelessness funding shrinking, states may be called upon to provide greater assistance to the homeless. One means of assisting the homeless is through the use of the HOME program. The Home program provides states with the flexibility to set their own criteria, based on the needs of their states.

In recent years, HUD has encouraged a "continuum of care" approach to assisting the homeless. This approach requires grantees to move the homeless from emergency shelter to permanent housing, providing supportive services along the way. The approach also focuses on undertaking prevention efforts and extensive outreach efforts to engage the homeless into the "continuum of care."

In some states, homelessness is recognized as an especially important need. State agencies administering the HOME program have collaborated and allocated HOME funds to local nonprofit organizations providing assistance to the homeless. This guidebook provides an overview of three states, New Jersey, Utah and Colorado, and their allocation of HOME funds to provide assistance to the homeless. In New Jersey, HOME funds have been targeted towards families receiving Emergency Assistance benefits and to graduates of transitional housing. In Utah, HOME funds have been targeted towards special needs populations, such as the chronically mentally ill. In Colorado, HOME funds have been targeted towards the general homeless population. Each of these three states have funneled HOME funds to local nonprofit organizations, community action agencies or PHAs to provide housing assistance to the homeless. The housing assistance has been in the form of tenant-based rental assistance, acquisition funds, rehabilitation funds and funds for new construction activities. Thought not an eligible activity under the HOME program, each of these states has required the state HOME recipient to provide supportive services to the homeless population being served. These services range from case management to alcohol and substance abuse counseling to day care support to job training. The housing combined with the services has enabled the homeless in these areas to move from shear poverty and dependence to increased independence. It has enabled the chronically mentally ill homeless to move into permanent housing with the needed everyday medical care and counseling to maintain their lives.

As evidenced in this guidebook, the HOME program is a flexible means for states to provide assistance to the homeless within a continuum of care system.

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