HUD said local agencies are allowed to change the size of projects and count them as complete when financial or market conditions make it impossible to finish them as intended. As long as HOME dollars aren’t used on unbuilt units, HUD said, the practice is appropriate. Unspent HOME money is supposed to be moved to more viable projects, officials said.
The agency acknowledged that for-sale homes must be sold before they are considered complete. Officials said they were not aware of any projects with unsold units that were counted as finished.
HUD has also said that the potentially delayed projects previously identified by The Post amount to a small fraction of the 28,000 open projects in the program, which officials say has produced 1 million units of housing over two decades.
“HOME is a fundamentally strong and successful program,” the agency said.
The Post study looked at only a subset of about 5,000 projects, those involving major construction or renovation. The lack of systematic monitoring by HUD makes it difficult for the public, Congress or HUD itself to track the pace of construction on a broad scale.
“Not knowing what’s out there is what troubles us,” John McCarty, HUD’s acting deputy inspector general, told Congress last week.
Even as HUD defends the program, the agency is taking significant steps to tighten the rules and better monitor idling projects. HUD is strengthening its underwriting standards for developers who receive HOME funding to make sure that they have the experience and financial capacity to do the work.
The agency also said it has made improvements to its in-house database to better track the progress of projects. On Friday, the agency submitted to Congress an overhaul of HOME regulations — the first major rule change since 1996 — to strengthen standards and require more timely construction or renovation of housing. HUD, for example, will require local housing agencies to improve their oversight of developers and better assess projects before HOME money is awarded. The agency also wants to establish firm deadlines for construction, as well as for the leasing and sale of homes once they are built.
“The HOME program is a success story for housing low-income Americans and creating jobs,” Secretary Donovan said in a statement Friday announcing the rule change. “However, there’s more we can do to boost the program’s performance and accountability. Through these new steps, we want to expand HOME’s impact and ensure that every dollar is used smartly to help families afford their homes.”
At the same time, the Senate is demanding changes. A spending bill passed last week, which calls for a 38 percent cut to the HOME program, would among other things require HUD to reclaim money for projects not completed within four years.