HOME Investment Partnerships Program: Program Updates and Streamlining

<RULE> DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT <CFR>24 CFR Parts 91, 92, 570, and 982</CFR> <DEPDOC>[Docket No. FR-6144-F-03]</DEPDOC> <RIN>RIN 2506-AC50</RIN> <SUBJECT>HOME Investment Partnerships Program: Program Updates and Streamlining</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Office of the Assistant Secretary for Community Planning and Development, Department of Housing and Urban Development, HUD. <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> HUD's HOME Investment Partnerships Program (HOME program or HOME) provides formula grants to States and units of general local government to fund a wide range of activities to produce and maintain affordable rental and homeownership housing and provides tenant-based rental assistance for low-income and very low-income households. This final rule revises the current HOME regulations to update, simplify, or streamline requirements, better align the program with other Federal housing programs, and implement recent amendments to the HOME statute. This final rule also includes minor revisions to the regulations for the Community Development Block Grant and Section 8 Housing Choice Voucher Programs consistent with the implementation of the changes to the HOME program. This final rule follows the publication of a proposed rule on May 29, 2024, and takes into consideration the comments received in response to that proposed rule. </SUM> <DATES> <HD SOURCE="HED">DATES:</HD> Effective February 5, 2025. </DATES> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Virginia Sardone, Director, Office of Affordable Housing Programs, Office of Community Planning and Development, Department of Housing and Urban Development, 451 7th Street SW, Room 7160, Washington, DC 20410; telephone number (202) 708-2684 (this is not a toll-free number). HUD welcomes and is prepared to receive calls from individuals who are deaf or hard of hearing, as well as individuals with speech or communication disabilities. To learn more about how to make an accessible telephone call, please visit <E T="03">https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> The HOME program is authorized by title II of the Cranston-Gonzalez National Affordable Housing Act  <SU>1</SU> <FTREF/> (“NAHA” or the “Act”) and has been in operation since 1992. The HOME program provides grants to States, local jurisdictions, and consortia of local jurisdictions (collectively, participating jurisdictions or PJs) and is used, often in partnership with local nonprofit groups, to fund a wide range of activities to build, buy, or rehabilitate affordable housing for rent or homeownership or to fund direct rental assistance to low-income people. <SU>2</SU> <FTREF/> HOME program funds are awarded annually as formula grants to PJs. After the Department obligates funds to a PJ, the Department establishes a HOME Investment Trust Fund  <SU>3</SU> <FTREF/> for each PJ, providing a line of credit that a PJ may draw upon as needed. <FTNT> <SU>1</SU>  42 U.S.C. 12721 <E T="03">et seq.</E> </FTNT> <FTNT> <SU>2</SU>  See HUD's HOME Investment Partnerships Program web page at <E T="03">https://www.hud.gov/program_offices/comm_planning/home.</E> </FTNT> <FTNT> <SU>3</SU>  HUD's regulations for the HOME Investment Trust Fund can be found at 24 CFR 92.500. </FTNT> The HOME program is the largest Federal block grant to States and local governments designed exclusively to create affordable housing for low-income households. Each year, the HOME program allocates approximately $1.5 billion among States and approximately 600 localities nationwide. In fiscal year 2023, PJs completed 6,848 rental housing units and 4,051 homebuyer units, assisted 2,717 low-income homeowners to repair their homes, and provided tenant-based rental assistance to 13,016 low-income households. HOME funds are most often used as gap financing for rental projects, particularly for projects that have been awarded Low-Income Housing Credits (LIHTC). <SU>4</SU> <FTREF/> As of late 2024, there are 237,767 HOME-assisted rental units operating in their periods of affordability ( <E T="03">i.e.,</E> subject to ongoing HOME income and rent requirements). <FTNT> <SU>4</SU>  See 26 U.S.C. 42. </FTNT> The HOME program is designed to reinforce several important values and principles of community development. First, the HOME program's flexibility empowers people and communities to design and implement strategies tailored to their own needs and priorities. Second, the HOME program's emphasis on consolidated planning expands and strengthens partnerships among all levels of government and the relationship with the private sector in the development of affordable housing. Third, the HOME program's technical assistance activities and set-aside for qualified Community Housing Development Organizations (CHDOs) help to build the capacity of, and partnerships, with these community-based nonprofit organizations. Fourth, the HOME program's requirement that PJs match 25 cents of every dollar in program funds helps mobilize community resources in support of affordable housing. <HD SOURCE="HD1">II. The Proposed Rule</HD> On May 29, 2024, HUD published the “HOME Investment Partnerships Program: Program Updates and Streamlining” proposed rule (the proposed rule) in the <E T="04">Federal Register</E> , available at 89 FR 46618. In the proposed rule, HUD proposed numerous changes to 24 CFR part 92. The proposed changes included significant revisions to the CHDO requirements, a change in the approach to HOME rents, simplified requirements for small-scale rental projects, enhanced flexibility in HOME tenant-based rental assistance (TBRA) programs, and simplified provisions and new flexibilities for community land trusts (CLTs). The proposed rule also proposed to significantly strengthen and expand tenant protections by requiring that a HOME tenancy addendum with a set of uniform tenant protections be appended to the leases of all tenants of HOME-assisted rental housing units. HUD also proposed requiring that a HOME tenancy addendum with a streamlined set of uniform tenant protections be appended to the leases of all tenants receiving TBRA. Additionally, HUD proposed to create incentives for meeting a more advanced property standard that incorporates green building standards, higher levels of energy efficiency, and innovative building techniques in new construction, reconstruction, and rehabilitation of housing. The proposed rule also sought to clarify the resale requirements for homeownership housing and proposed technical amendments and simplifications to conform provisions to certain changes made in the 2013 HOME Final Rule. <SU>5</SU> <FTREF/> <FTNT> <SU>5</SU>  HOME Investment Partnerships Program: Improving Performance and Accountability; Updating Property Standards, (78 FR 44628, July 24, 2013). </FTNT> The proposed rule also included changes made by the Housing Opportunity Through Modernization Act of 2016: Implementation of Sections 102, 103, and 104 final rule, published in the <E T="04">Federal Register</E> on February 14, 2023 (88 FR 9600) (the HOTMA Final Rule) and the Economic Growth Regulatory Relief and Consumer Protection Act: Implementation of National Standards for the Physical Inspection of Real Estate (NSPIRE) final rule, published in the <E T="04">Federal Register</E> on May 11, 2023 (88 FR 30442) (the NSPIRE Final Rule). The proposed rule also proposed further revisions to the changes made to 24 CFR part 92 by the HOTMA and NSPIRE Final Rules. In addition, the proposed rule proposed updates to citations, in paragraphs where other changes are being made, to conform with recent changes to the Office of Management and Budget (OMB) regulations at 2 CFR part 200. See the proposed rule for a full description of all the HOME program proposed regulation changes associated with this rulemaking. <HD SOURCE="HD1">III. This Final Rule</HD> HUD reviewed and considered all public comments submitted in response to the proposed rule, which are summarized and addressed in the next section of this final rule. After considering the public comments received in response to the proposed rule, this final rule incorporates a majority of the proposed regulatory changes described in the proposed rule; however, in response to public comments received, HUD is making certain revisions to the HOME program regulations from those described in the proposed rule at this final rule stage. HUD is also making certain non-substantive revisions to the proposed regulatory text at this final rule stage. In response to comments received during the proposed rule stage of this rulemaking, HUD is making the following revisions to the final rule: <HD SOURCE="HD2">24 CFR Part 91—Technical Revisions</HD> HUD is making certain technical revisions in 24 CFR part 91 to replace the term “affordability period” with “period of affordability.” These revisions are consistent with the technical revision proposed in 24 CFR part 92 to make the same terminology replacement. Further, these revisions are consistent with public comments HUD received noting that these revisions are appropriate. <HD SOURCE="HD2">24 CFR Part 92—Technical Revisions</HD> HUD is making certain technical revisions in 24 CFR part 92 to improve clarity and readability of certain language throughout the part. While HUD is not summarizing each of these technical changes because the changes are minor and non-substantive, a sampling of these revisions are described in the paragraphs that follow. The Department received comments indicating that it had not fully revised all references from “downpayment assistance” to “homeownership assistance.” The Departmen ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 1095k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━