Under proposal, HUD’s HOME program to face tighter rules


An empty HUD property in Newark, N.J. (Tracy A. Woodward/The Washington Post)
December 16, 2011

Thousands of housing-
construction projects for the poor would face rigorous new checks — including site inspections, completion deadlines and financial reviews — under a proposed rule released Friday that is aimed at improving accountability in the Department of Housing and Urban Development’s $32 billion HOME program.

The changes, detailed for the first time in the Federal Registry, would call on local housing agencies that receive HOME funding to take unprecedented steps to monitor developers and the projects they propose.

HUD wants to require housing agencies to conduct risk assessments of potential deals, study developers’ finances and experience levels, and conduct regular site inspections both during construction and after the work is completed.

Developers would have four years to finish construction or a project could be terminated.

HUD’s proposed new rule — the first significant change to the HOME regulation since 1996 — is subject to public comment until February.

Several of the requirements are already set to go into effect because they have been approved by Congress.

“The HOME program is a good program but it can certainly be a better program,” HUD Secretary Shaun Donovan said Friday in a written statement. “These proposed rules will go a long way toward making certain taxpayers get what they pay for.”

For months, the HOME program has been probed by Congress, with some lawmakers criticizing HUD’s oversight.

Last month, Congress cut the program’s budget by $600 million — nearly 38 percent — citing mismanagement.

A Washington Post investigation in May found that HUD had routinely failed to track the progress of its construction projects and that hundreds of HOME-funded deals nationwide appeared to be delayed or in limbo.

In recent weeks, The Post identified an additional 75 projects that had drawn and spent $40 million with little or nothing built, leaving behind empty lots from Newark to West Palm Beach, Fla., to Turlock, Calif.

HUD repeatedly defended the program, and housing groups across the country praised HOME for creating 1 million units of housing since its inception two decades ago.

Early last month, however, HUD provided a series of proposed changes to Congress for review before publication in the Federal Registry on Friday.

The new rule would require local housing agencies to ensure that developers have financing commitments from other lenders.

Small nonprofit developers who receive HOME money would be required to have employees with housing-development experience.

Local housing agencies would have to develop underwriting standards and assess the long-term viability of proposed projects.

For its part, HUD’s improved tracking system will automatically flag projects that have stopped drawing money, as well as projects that have drawn all of their HOME funding but are still listed as open and incomplete.

The tracking system will also identify projects that are nearing the new, four-year completion deadline.

“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,” Donovan said.

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