COSCDA HOME Workshop

June 19-21, 1996

New Orleans, Louisiana

Sponsored by the Council of State Community Development Agencies (COSCDA) with the assistance of the Louisiana Housing Finance Agency funded by the Department of Housing and Urban Development (HUD) through the National Affordable Housing Training Institute (NAHTI)

Prepared July 9, 1996
by Ellen Bowyer, COSCDA
Alice Tousignant Fascitelli, Planning Consultant

This report presents information generated at COSCDA's June 19-21, 1996 HOME workshop in New Orleans, Louisiana. A total of 22 states were represented; a participants list is included as Appendix A of this report. The following describes results from the States roundtable and focus group, and highlights areas where additional information is needed from HUD.

TABLE OF CONTENTS

STATES HOME ROUNDTABLE
    States' Proudest HOME Achievements

FOCUS GROUP
    Role of the HOME Program
    Barriers/Problems in Using HOME to Meeting Affordable Housing Needs
    Solutions to Barriers

HOME QUESTIONS AND ANSWERS
    General HOME Questions
    Fair Housing and Section 3
    Labor/Davis-Bacon

BULLETIN BOARD

TABLE 1: External Federal Barriers/Problems Around State Use of the HOME Program
TABLE 2: Solutions to Federal Barriers
TABLE 3: Internal State Barriers/Problems Around Use of the HOME Program
TABLE 4: Solutions to State Barriers

STATES HOME ROUNDTABLE

States' Proudest HOME Achievements
State staff were asked to identify, in pictogram form, one of their HOME programs, projects or processes of which they are the proudest. These included the following:

• Arizona described development of a computer program tracking HOME match funds provided under the State Housing Trust Fund.
• Arkansas described an SRO housing project that it developed which was identified as a national model. Staff also observed that their HOME program had been audited six times.
• Connecticut described a limited equity cooperative development done in a rural area. A total of 20 units of housing were developed.
• Georgia described its Multifamily Resource Book, which acts as a "one-stop shop" for developers seeking to identify a range of housing resources, from HOME to homelessness assistance.
• Indiana explained how it has linked its HOME funds with MRBs to assist first-time homebuyers with downpayment assistance, and also highlighted its CHDO capacity-building efforts.
• Kentucky permits the whole spectrum of eligible activities under the HOME program and highlighted a project in a rural Kentucky community which utilized CDBG, housing credits, and historic tax credits to develop a 54-unit project for elderly people, which includes an economic development project on the first floor.
• Louisiana highlighted the productive partnerships that have been formed between CHDOs and for-profit developers.
• Maryland has successfully used $2 million in State-funded rental housing assistance to meet its HOME match requirements.
• Michigan described the use of HOME funds for rental rehabilitation, highlighting a project which required historical preservation procedures, and in which HOME funds were linked with housing credits.
• Mississippi has used HOME funds to help stabilize units owned by elderly homeowners. Staff also described a nationally-recognized project in the state which helped single parents on welfare become economically self-sufficient.
• New Hampshire is using its HOME funds for single-family rehabilitation, and has assisted 200 homeowners to date.
• North Dakota detailed two outstanding housing developments, one a 25-bed SRO project for people with serious mental illness, which included a job-training component. State staff noted that 100 percent of their 1996 HOME funds have been committed.
• Oklahoma highlighted work by 21 community action agencies in the state, all of which are CHDOs, to use HOME funds to address housing problems caused by natural disasters.
• Pennsylvania noted that it has 27 CHDOs, and discussed the training sessions that it has provided for those organizations.
• Rhode Island highlighted a recent HOME rental rehabilitation project which assisted people with HIV/AIDS.
• South Carolina has moved from the use of grants to loans under HOME. While there is some concern about dealing with program income, the State wants to ensure the viability of a revolving loan fund for affordable housing.
• Texas explained how it has combined HOME funds with a range of other resources (including MRBs, housing credits, and weatherization funds) to support first-time homebuyers. Texas also is exploring coordinating the use of CDBG funds with HOME to support assistance to the State's colonias.
• Virginia noted that 73 percent of its HOME funds to date have been used to support housing for people earning at or below 50 percent of the area median income.
• West Virginia has used HOME to assist 500 new homeowners, 92 percent of whom have incomes at or below 50 percent of the area media income (West Virginia's median income is 80 percent of the national median income).
• Wisconsin is forming partnerships with a range of different state agencies, and focusing much of its efforts on affordable housing development in rural areas.
• Wyoming described a HOME-funded project that restored an old motel as an independent living center for adults with physical disabilities.

FOCUS GROUP

The focus group was intended to surface issues around the use of the HOME program by States, and problems or issues which were blocking the most effective use of the HOME program. These issues were surfaced both in an effort to highlight key areas of national action in the coming year, as well as to help states think through ways of dealing with obstacles in their own states.

Role of the HOME Program
States were asked to think about all of the affordable housing resources in their states and determine where HOME fits into this picture. They were then asked to respond to the question "What is the most important role of the HOME program in meeting the affordable housing needs of the citizens and communities in your state?" Some states identified more than one role.

The most important role cited by most of the States in attendance was Creative and Flexible Financing (8 states), including the ability to address local needs. Other key roles for the HOME program, listed in order of the number of states identifying them are:

• Gap financing (seven states);
• Production of rental and homeowner housing (two states specifically identified owner-occupied rehabilitation as the most important of the two) (five states);
• Ability to target very low-income households (three states);
• Meeting special needs such as job development, holistic community development and disaster assistance (three states);
• Development of other housing partners and capacity building (two states); and
• Ability to meet rural needs (two states).

Barriers/Problems in Using HOME to Meet Affordable Housing Needs

Keeping in mind the major role that HOME plays in their state, participants were then asked to identify the biggest barriers or problems they are experiencing in using HOME funds to meet their State's affordable housing needs. They identified the following internal, state barriers/problems and external, federal regulatory barriers/problems. (Individual barriers/problems are listed on the attached charts.)

A. State Barriers/Problems

• Lack of Field Capacity of non-profit organizations and CHDOs especially in rural areas and small cities.
• Lack of Staff to deal effectively with complexity of programs and compliance issues.
• Lack of State Coordination/Collaboration, including the difficulty of coordinating with multiple funders and turf problems.
• Lack of Coherent State Management manifested through the lack of strategic planning and self-imposed state restrictions, such as the necessity of complying with the state's Administrative Process Act.
• Lack of Match/State Funds to match HOME and enable projects to be funded.
• State Politics that result in legislative interference or no legislative support.

B. Federal Barriers/Problems

• Onerous Federal Regulations such as Davis Bacon, Environmental Review, and Relocation; and incompatibility of HOME and other regulations, such as the housing credit and Section 8.
• Inconsistent HUD Guidance, information and interpretations of regulations from Field Offices; and HUD and FmHA not working together.
• Lack of HUD Funds including other programs used to leverage HOME funds.
• Regulatory Compliance including long-term monitoring of affordability and the lack of detailed, intensive training on compliance.
• Capacity Building and Training that is not consistently provided by HUD or TA providers to state recipients, subrecipients or CHDOs.
• Match Restrictions preventing states from using such sources as owner equity.

Solutions to Barriers
Participants were divided into two groups: one to deal with state barriers/problems and one to deal with federal barriers/problems. The two groups identified the following actions in response to the question: "What creative and practical actions could COSCDA or the states take during the next year to deal with these barriers/problems?" (All of the ideas that were generated by each group are listed in the attached charts.)

A. Solutions to State Barriers/Problems

• Provide Input at the Federal Level on such issues as match and monitoring requirements.
• Develop, Implement, and Monitor Strategic Plans by using the Consolidated Plan as the tool or hold forums or workshops to develop plans and follow-up procedures.
• Proactively Inform and Enlist Stakeholders such as elected officials and advocacy groups through such means as PR campaigns and state roundtables or focus groups.
• Develop, Expand, Coordinate, Strengthen Capacity at all Levels through seminars, training sessions, individual TA provided by experienced providers, and CHDO operating support; using HOME and other funds, TA contractors, providers and assistance from COSCDA.
• Evaluate Staffing Needs and Use Non-Traditional Sources to include college interns and outsourcing.
• Develop Innovative Match Sources such as State Housing Trust Funds and applicants' share in project costs.
• Develop Collaborative Partnerships through the use of the public comment process of the Consolidated Plan and quarterly meetings with providers.

B. Solutions to Federal Barriers/Problems

• Give States Control of Capacity Building and Training through mentoring programs, CHDO newsletters, and establishing guidelines for partnerships between states and national/regional technical assistance providers working in a given state.
• Create a National States Single Point of Contact through COSCDA and the use of the HOME Page and the Internet.
• Target/Lobby One Regulation Per Year: focus on, for example, Davis-Bacon requirements.
• Join Forces in Lobbying: COSCDA, NCSHA and other national groups would collaborate with states on specific issues of interest to all constituent groups.

HOME QUESTIONS AND ANSWERS

The workshop gave participants the chance to discuss with Gordon McKay, Director of the Office of Affordable Housing Programs in HUD Headquarters, a range of issues around the HOME program. In addition, compliance sessions during the workshop surfaced a range of questions in the areas of fair housing and Section 3 requirements, and labor requirements.

General HOME Questions
States asked questions about what other states were doing in such areas as subgrantee drawdown timeframes; how states are dealing with the permanent foundation requirements for manufactured housing; which states have applications on disk (FA and MD), which states have TBRA (TX, AZ, CT); how other states are handling non-compliance recourse or enforcement; and housing needs assessment samples to give CHDOs. A number of substantive questions were directed to Mr. McKay. These questions will be forwarded to national HUD staff, and COSCDA expects to provide additional guidance/HUD responses at a later date.

• Gordon McKay explained that waivers had to be issued on a case-by-case basis, but the issue of coordinating better with COSCDA and other national organizations on the distribution of waiver information was discussed and will be explored further.
• Consortia: questions in this area focused on the impact that funding consortia has on state HOME allocations. The most recent notice on designation of consortia will be sent to HOME staff in the near future.
• Definition of a state recipient and subrecipient.
• Monitoring fees: States may not charge these for HOME-funded projects. There are broader issues around charging them for joint-funded projects, and around the whole issue of the adequacy of the administrative fee for HOME (10 percent).
• Subsidy layering procedures for HOME.
• Program Income. This will be clarified in the final rule expected to be issued this Summer. States recommended that rather than establishing a dollar amount of program income that could be accrued prior to having to spend it prior to other HUD funds, that the amount be based on a percentage of a State's annual HOME fund allocation.
• Information on the IDIS system and training: (a) who should attend the training; (b) what will be the transition process from CMI to IDIS; (c) will there be a consolidated report generated by IDIS; (d) will the State Consolidated Plan software be available at the time of the IDIS training.

Fair Housing and Section 3
Issues and questions raised in this area included the following:

1. How is "area" defined?
2. How do state agencies apply Section 3; i.e., which income limits do they use? and are states' usual marketing efforts appropriate?
3. How do states monitor compliance with Section 3?
4. Does Section 3 apply to CHDOs who don't have to follow procurement procedures?
5. Are there any incentives attached to Section 3?
6. Are education and training programs available for contractors? (Does HUD offer any?)
7. Are waivers ever given?
8. How do you use HOME money to cover soft costs for fair housing activities?
9. Are Site and Neighborhood requirements part of Fair Housing?

Labor/Davis-Bacon
Issues and questions raised in this area included the following. Appendix B to this report contains copies of the letters HUD staff gave to participants in that session.

1. State staff noted that single family homebuyer projects should be automatically excluded from Davis-Bacon requirements.
2. HUD should promulgate guidance regarding the rationale/justification it will accept for splitting a large project into two or more smaller projects so that they are not required to meet Davis-Bacon requirements.
3. Davis-Bacon requirements should not apply to projects if the only HOME funds the project receives are in the form of predevelopment loan fund assistance.
4. Davis-Bacon requirements often preclude states from developing innovative training programs as part of their HOME affordable housing programs.
5. States need intensive training on application of Davis-Bacon requirements (and Section 3 requirements) to HOME-funded affordable housing projects. Training should include information on sampling procedures, location of wage reports, a list of records expected to be maintained by the State and by the subrecipient/state recipient; recourse for non-compliance, and delegation of monitoring and record-keeping requirements to subrecipients and state recipients.

BULLETIN BOARD

One recommendation in a few of the workshop evaluations was that COSCDA provide at the next HOME workshop a bulletin board for states to raise questions on the HOME program. Two specific questions were raised, seeking information from other states in the following areas. If you want to share ideas on how your state has addressed these issues, please contact Ellen Bowyer at COSCDA at (202) 393-6435.

1. How have states dealt with CHDOs doing first-time homebuyer vis-a-vis the role of sponsor, developer or owner, specifically with regard to the issue of "control of property"?
2. Have any other states put out a notification of funding availability (NOFA) or request for proposals (RFP) for professional services in the areas of housing appraisals or inspections?

Also, Alberta Pate, with Fannie Mae's New Orleans Partnership office, who spoke at the public-private partnerships session on Thursday, wanted to clarify that in 1995, 46 percent of all Fannie Mae purchases were loans to households earning at or below the local median income.

TABLE 1: External Federal Barriers/Problems Around State Use of the HOME Program
TABLE 2: Solutions to Federal Barriers
TABLE 3: Internal State Barriers/Problems Around Use of the HOME Program
TABLE 4: Solutions to State Barriers

Please e-mail Kevin Kissinger at kevink@coscda.org to receive a copy of any of the following documents:

APPENDIX A. List of Workshop Participants
APPENDIX B. HUD Letters on Davis-Bacon Decisions