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Presentation, discussion and possible action on regarding approval of a HOME-ARP Allocation Plan Second Amendment to add reallocated funds to the nonprofit capacity building/operating cost assistance, non-congregate shelter activities and administration activities to be released for public comment
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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, HUD notified TDHCA in October 2023 that the HOME-ARP Allocation was being reduced by $3,808,153 due to a federal allocation error;
WHEREAS, in 2023 and 2024, the HOME-ARP Division awarded $57,649,564 in rental development and $3,224,229 in nonprofit capacity building and operating funds;
WHEREAS, HUD offered $4,317,058 in reallocated funds to TDHCA in August 2024 from areas in Texas that had not submitted a plan to use their HOME-ARP funds, and the net increase in funds inclusive of the allocation error reduction in 2023 is $508,905;
WHEREAS, HUD requires a HOME-ARP Allocation Plan amendment to accept the reallocated funds;
WHEREAS, staff is proposing that the reallocated funds and funds remaining available from other program activities be programmed into three HOME-ARP activities: non-profit operating/capacity building funds, non-congregate shelter development and administration; and
WHEREAS, upon Board approval of the HOME-ARP Plan Amendment, the Plan will be made available for at least 15 days to accept public comment;
NOW, therefore, it is hereby
RESOLVED, that should the comment received on the HOME-ARP Plan not require significant revisions of the Plan, staff is hereby authorized to make appropriate revisions and proceed with submission of the Plan to HUD without returning to the Board; 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, the 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 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.
There have been several adjustments made to the original HOME-ARP allocation since the funding was programmed. HUD notified TDHCA in October 2023 that the HOME-ARP allocation for the state was reduced by $3,808,153 due to their allocation error. This reduction was offset in two ways: through reducing the amount remaining in NCO, and through reducing some of the Department’s administrative funds.
Throughout 2023 and 2024, the Board awarded approximately $56.5 million for rental development activities and reallocated approximately $1.1 million from NCO into rental development to have sufficient funds to award to a final rental development. Also in 2024, HOME-ARP contracted for approximately $3.2 million to support an organization with NCO Funds to undertake NCS development. Finally, HOME-ARP released an Invitation to Apply in July 2024 for NCS Development with approximately $56.5 million available in funding. This Invitation to Apply has a maximum award of $50 million and has currently been sent to one organization.
In August 2024, HUD reallocated $4,317,058 to TDHCA. The reallocated funds are required to have a geographic preference for Odessa, Bryan or Pasadena, which are the areas from which the reallocation came. The net change from the reduction made by HUD in 2023 and the reallocation in 2024 is $508,905. Funds from the reallocation are being added to NCO, NCS, and administration. The amount for administration is 15% of the $4.3 million, which is the allowed percentage for HOME-ARP, and helps to offset the reduction in administration that was implemented after the federal allocation reduction.
HOME-ARP staff anticipates continuing with the strategy of awarding NCO funds to support one or more nonprofits that plan to undertake NCS development. Capacity building expenses are defined as reasonable and necessary general operating costs that will result in expansion or improvement of an organization’s ability to successfully carry out eligible HOME-ARP activities. The nonprofit capacity building and operating assistance must specifically expand the ability of the organization to develop an NCS. As depicted in the table below, the HOME-ARP budget after the reallocation leaves $750,000 still remaining for NCO. The main changes from the original award for the NCO is that in the plan amendment the NCS could be of a size appropriate for the community as determined in the Application (instead of having the size proscribed to 50 or more units); the Application for an NCS must be submitted within nine months of the organization’s receipt of NCO funds (rather than 16 months); and that the organization would have 48 months to expend the NCO funds (instead of 24 months).
Staff released an NCS Invitation to Apply (ITA) in July 2024, which had approximately $56.5 million available. Per HUD CPD Notice 21-10, NCS is defined as “one or more buildings that provide private units or rooms as temporary shelter to individuals and families and does not require occupants to sign a lease or occupancy agreement” (page 55). The future NCS project must be occupied by qualified populations (QP) for HOME-ARP, including persons experiencing homelessness; persons who were formerly homeless but housed with temporary resources; persons at-risk of homelessness; persons at greatest risk of housing instability; and individuals fleeing or attempting to flee, domestic violence, dating violence, sexual assault, stalking, or human trafficking. The maximum request for NCS in the ITA was $50 million, leaving approximately $6.5 available. An addition of approximately $3 million into the NCS ITA through this Plan Amendment makes the new development or rehabilitation of a second shelter more obtainable. A new minimum application amount for the remaining/reallocated NCS funds would be $2 million, instead of $5 million.
HOME-ARP Budget Changes
|
Activity |
Original budget |
Original % of Grant |
Updated Funding Amount |
Updated % of Grant |
Net Change in $ from original |
|
Non-Congregate Shelters (NCS) |
$56,511,887 |
43% |
$59,531,387 |
45% |
$3,019,500 |
|
Affordable Rental Housing |
$56,511,887 |
43% |
$57,649,564 |
43% |
$1,137,677 |
|
Non-Profit Operating/Non-Profit Capacity Building (NCO) |
$6,648,458 |
5% |
$3,974,229 |
3% |
($2,674,229) |
|
Administration and Planning |
$13,296,915 |
10% |
$12,322,872 |
9% |
($974,043) |
|
Total HOME ARP Allocation |
$132,969,147 |
100% |
$133,478,052 |
100% |
$508,905* |
* This figure of $508,905 accounts for both fund adjustments made by HUD - the reduction of $3,808,153 and the reallocation/increase of $4,317,058.
The NCO funds may be released competitively statewide or awarded in areas that meet criteria demonstrating high need for a noncongregate shelter. As required by HUD, there will be a preference for Odessa, Bryan, and Pasadena in which the Plan amendment confirms need for new or rehabilitated NCS in those areas. This preference would be achieved by including a point incentive in the Notice of Funding Availability or Invitation to Apply for organizations that have in-person office space located in Bryan, Odessa, or Pasadena, or organizations that have an active grant or award for a federally funded shelter, housing, or services for the homeless population in Bryan, Odessa, or Pasadena.
The attached Plan reflects the original HUD-approved HOME-ARP Plan, with changes tracked reflecting the proposed amended language. Upon approval of the draft amendment, staff will publish the amendment for comment from October 14, 2024, to October 28, 2024, which is 15 days. If no changes will be made as a result of public comment, staff requests authority for the Executive Director to proceed with submission of the Plan Amendment to HUD as approved by the Board as presented. HUD has 45 days for review.