The long-awaited proposed changes to the HOME program regulations were published in the Federal Register on December 16 [2011]. Some features of the proposed rule are highlighted below, with an emphasis on multifamily housing and community housing development organizations (CHDOs). Comments on the proposed regulations are due February 14, 2012.

Troubled HOME-Assisted Rental Projects: 

• A new section of the regulations will facilitate preservation of financially troubled HOME-assisted rental projects at risk of failure or foreclosure. If operating costs significantly exceed operating revenue, a project will be considered no longer financially viable.

Rental Housing Provisions 

• The proposed rule requires a jurisdiction to submit marketing information and, if appropriate, a marketing plan if multifamily housing is not occupied by eligible tenants within a time period specified by HUD following the date of project completion.
  
• HUD will require repayment of HOME funds for any unit that is not rented to eligible tenants 18 months after project completion.
  
• The proposed rule would be revised to specifically state that HOME rent limits include both rent and utilities or utility allowance.\\
• Jurisdictions may designate more than 20% of units in a project as low HOME rent units regardless of project size. Low HOME rent is either a fixed rent that does not exceed 30% of the annual income of a hypothetical household whose income does not exceed 50% of the area median income, or a rent that is less than 30% of a household’s income.

Tenant-Based Rental Assistance (TBRA)

• New language would expressly state that HOME mat be used to pay utility deposits in conjunction with HOME TBRA or security deposit assistance. However, stand-alone utility deposit assistance is not eligible.
• The proposed rule adds that participation may be limited to persons with a specific disability if doing so is necessary to provide housing, aid, benefit or services that are as effective as those provided to others.
• The proposed rule allows use of HOME TBRA to be tied to a self-sufficiency program in which a family is required to participate as a condition of selection for TBRA.
• HUD proposes to allow TBRA for a lease-purchase homebuyer program for a period of up to 36 months.

Tenant Protections;  A number of tenant protection features would be added, including:

• There must be a written lease for all HOME-assisted rental units and units rented by recipients of HOME TBRA.
• Supportive services related to a disability cannot be mandatory.
• An increase in a tenant’s income does not constitute good cause for termination or refusal to renew.
• A tenant’s failure to follow a transitional housing services plan is a permissible basis for terminating a tenancy or refusing to renew a lease.
• If an owner converts rental units to homeownership units, a tenant’s refusal to purchase their unit does not constitute grounds for eviction or for failure to renew the lease.

HOME Funds and Public Housing

• A new section of the rule would allow HOME to be used to develop HOPE VI units, as long as federal capital funds received by a public housing agency (PHA) are not also used to develop the HOPE VI units. These units could, however, receive operating assistance from the PHA’s federal public housing operating fund, and they could also subsequently receive capital funds for modernization and rehabilitation. The HOME statute prohibits using HOME for public housing.

http://www.gpo.gov/fdsys/pkg/FR-2011-12-16/pdf/2011-31778.pdf