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Presentation, discussion and possible action regarding a HOME-ARP Allocation Plan Third Amendment to adjust the criteria for nonprofit capacity building/operating cost assistance and align the 2025 Nonprofit Capacity Building and Operating Notice of Funding Availability
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RECOMMENDED ACTION
recommendation
WHEREAS, under Section 3205 of the American Rescue Plan (ARP) Act, the Texas Department of Housing and Community Affairs (TDHCA) was allocated $132,969,147 of HOME-ARP Program funds from the U.S. Department of Housing and Urban Development (HUD) in 2021;
WHEREAS, in 2021 HOME-ARP staff developed its Allocation Plan with funds programmed in rental development, nonprofit capacity building and operating funds, and non-congregate shelter development;
WHEREAS, in 2023 HOME-ARP first amended its allocation plan to adjust the award process for nonprofit capacity building and operating funds and non-congregate shelter development;
WHEREAS, in 2024 HOME-ARP submitted a second amendment to address the $4,317,058 in reallocated funds HUD offered to TDHCA from areas in Texas that had not submitted a plan to use their HOME-ARP funds;
WHEREAS, HOME-ARP received permission to release the 2025 Nonprofit Capacity Building and Operating (NCO) Notice of Funding Availability (NOFA) from the Board on January 16, 2025;
WHEREAS, staff suspended the 2025 NCO NOFA in March 2025 in response to more than one request from areas that did not qualify under the eligibility criteria in the HOME-ARP Allocation Plan, as amended; and
WHEREAS, staff is proposing an adjustment to the eligibility criteria for the nonprofit capacity building and operating funds that will expand the number of geographic areas in which organizations could apply for funds thereby expanding competition;
NOW, therefore, it is hereby
RESOLVED, upon Board approval of the HOME-ARP Plan Third Amendment, the Plan will be submitted to HUD for acceptance;
FURTHER RESOLVED, that should HUD accept the HOME-ARP Plan Third Amendment, the Executive Director and his designees will be authorized to adjust the 2025 NCO NOFA in accordance with the changes in the HOME-ARP Plan Third Amendment for eligibility criteria and scoring criteria as needed to align with the Third Amendment; and
FURTHER RESOLVED, that the Executive Director and his designees be and each of them hereby are authorized, empowered, and directed, for and on behalf of the Department, to post on the Department’s website and to publish a notification in the Texas Register, of the revised NOFA seeking applications for the activities within the HOME-ARP Plan Amendment.
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BACKGROUND
TDHCA was allocated $132,969,147 of funds from HUD under Section 3205 of the American Rescue Plan Act, which HUD has called the HOME-ARP Program. The HOME-ARP Division programmed funds into Non-Congregate Shelter (NCS) Development, Rental Housing Development, Nonprofit Capacity Building and Operating Funds, and Administration/Planning. In April 2023, HOME-ARP submitted an Allocation Plan First amendment adjusting the method of distribution for non-congregate shelter (NCS) development and nonprofit capacity building and operating funds (NCO), which received no comments from HUD. In October 2024, HOME-ARP submitted an Allocation Plan Second amendment to address the HUD reallocation of HOME-ARP funding within Texas, and received no comments from HUD.
In January 2025, HOME-ARP announced the 2025 Nonprofit Capacity Building and Operating (NCO) Notice of Funding Availability. The NCO funds were intended to be competitively awarded to organizations that anticipate submitting an application for a HOME-ARP Non-Congregate Shelter (NCS) project within nine months. However, in March 2025 the NCO NOFA was suspended, so that staff could pursue the proposed plan and NOFA changes to the eligibility criteria considered by TDHCA.
The criteria under the original 2025 NCO NOFA (now suspended) included prioritizing applications in geographic areas in which the fair market rent by county for 1-bedroom units increased by 30% or more between 2021 and 2025; and in which the HUD-published one-bedroom fair market rents by county for FY2025 were $1,000 or more, which equates to the top 10% of rents in the state. Staff now feels that this was too restrictive and has received interest in the program from several communities that did not meet those criteria, and thus were excluded from applying. The proposed change to the Plan and NOFA would keep the first criteria relating to the increase of 30% over time, but for the second criteria would expand the geographic areas by raising the percentage of rents from only the top 10% to the top 20% of counties in the state (counties with approximately a $902 FMR for a one-bedroom). The change in eligibility would open the competition for funding from 45 counties to 64 counties, as listed in Appendix A which will be included in the 2025 NCO NOFA.
If the Third Amendment is accepted by HUD, the 2025 NCO NOFA is anticipated to be revised for eligibility criteria and may adjust scoring criteria as needed to align with the Third Amendment and promote competition. The 2025 NCO NOFA, once amended, is expected to be reinstated in mid-April 2025. It will also have a revised Application Acceptance Period expected to be from approximately May 7, 2025, to June 6, 2025, (possibly subject to change) which will partially overlap with the HUD review period and end after HUD’s review period. Announcement of the reinstatement of the NOFA will be sent via the public email list and published on the TDHCA website.
The attached Plan in Appendix B reflects the original HUD-approved HOME-ARP Allocation Plan, with changes tracked reflecting the proposed language for the third amendment. Upon Board approval of the draft amendment, staff will submit the amendment to HUD. Because the change is not material, it does not require a public comment period. HUD has 45 days for review.