Our goal is to ensure that HOME funds are used in a timely, effective way to increase the supply of standard, affordable housing available to lower income families in America. HOME funds can help families realize the dream of owning their homes through assistance with downpayments and closing costs, as well as development subsidies for major rehabilitation and new construction.

-- Andrew Cuomo
Secretary of Housing
and Urban Development

"HOME has made a substantial contribution to State and local housing efforts," conclude researchers from the Urban Institute in Expanding the Nation's Supply of Affordable Housing: An Evaluation of the Home Investment Partnerships Program. The evaluation, sponsored by HUD, is the culmination of 4 years of research. It analyzes numerous trends and characteristics of the Nation's first block grant for housing.

The researchers found that HOME's flexibility enables participating jurisdictions to devise and implement housing programs that respond to locally defined needs. In contrast to some predictions, the more complex of the program's provisions have not deterred local officials and developers from using HOME. Program officials clearly understand the HOME requirements and are using the funds productively, often in combination with other Federal, State, and local funds. Although a majority of HOME funds continues to support construction and rehabilitation of rental housing, funding has slowly shifted from rental to homeowner housing.

Researchers further found that HOME has provided substantial new funding for nonprofit developers and helped participating governments improve their capacity to deliver housing programs. Community Housing Development Organizations accounted for 26 percent of HOME funds committed through 1996, and nonprofit agencies of all kinds accounted for nearly one-half of all funds committed. Public agencies accounted for another 13 percent, and profit-motivated developers accounted for less than half of the funding.

According to the researchers, the program's reliance on nonprofit organizations makes it likely that large numbers of HOME units will remain affordable even after the end of the statutory affordability period, since 84 percent of nonprofit developers and 67 percent of for-profit developers have had previous experience with subsidized housing. They theorize that this helps explain why developers are willing to work with complex HOME regulations.

Researchers discovered that HOME-assisted rental units were less likely than public housing units to be located in high-poverty neighborhoods, but more likely than units funded through Section 8. Twenty-two percent of HOME units were located in high-poverty tracts (with 1990 poverty rates of 40 percent or more) compared with 43 percent of public housing units and less than 9 percent of units occupied by Section 8 certificate and voucher holders (who are free to seek out any qualifying rental unit in any neighborhood). HOME rental units in cities tended to be in low-income neighborhoods, while those in urban counties were distributed more evenly.

HOME also exceeds the income limits established by Congress by a substantial amount, according to the researchers. Almost 90 percent of HOME rental project residents in projects with three or more units have incomes below 50 percent of the area median, although the statute requires only 20 percent of residents to have incomes below this level.

Researchers also found that State HOME program activities generally resemble local programs. As with localities, States have, over time, shifted funds from owner-occupied rehabilitation to homebuyer assistance. States have taken advantage of the program's flexibility to adopt very different methods for funding and administering programs than they did under the Community Development Block Grant (CDBG) program, which in some States was the largest source of subsidy for affordable housing prior to HOME.

State and local officials expressed concern about their ability to monitor compliance with HOME program requirements, particularly for rental housing projects developed and owned by relatively inexperienced entities. Additionally, HOME's income-targeting requirements allow States to assist people with lower incomes than were typically assisted under CDBG. HOME program funding has helped States increase the number and capacity of community-based housing organizations.