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Thursday, September 4, 2014

Did you forget about the 2013 Final HOME Rule? A focus on monitoring

If you use or advocate for the use of HOME funds, you'd probably like to forget about the 2010-2011 period- the recession, the debt limit wars, the media focus on nonperforming projects, the slashed budgets. That all led to the 2013 Final HOME Rule.

I had conveniently put it out of my memory when I was preparing a scope of work to conduct some rental project monitoring. But then it was brought to my attention- Participating Jurisdictions (PJs) actually don't have to do a complete site inspection every year for projects with more than 25 units anymore. That was the old rule that was still stuck in my head.

The monitoring component of the 2013 Final HOME Rule for rental projects is actually an improvement on the old regulations, from the PJ perspective. It allows for a more flexible and streamlined process that gives the PJ more discretion on where they choose to spend their time. This is a welcome change given that the timeline requirements for completing projects was significantly ratcheted up while administrative funding was cut.

The monitoring requirements are found in Section 92.504 of the 2013 Final HOME Rule. Here is the skinny on what's new:

  • At construction completion, the PJ must inspect the property for completion and compliance with the property standards found in Section 92.251 [92.504(d)(i)].
  • Ongoing site inspections do not have to be conducted every year, but can be done once every three years as long as there is no reason to follow up on non-compliance issues [92.504(d)(ii)].
  • The property owner must annually certify to the PJ that the property is suitable for occupancy and that it is in compliance with code and the HOME property standards found in Section 92.251 [92.504(d)(ii)(C)].
  • The PJ must annually examine the financial condition of HOME-assisted projects with 10 or more units for financial viability [92.504(d)(iii)(2)].
A couple recommendations:
  • Take a look at your old property inspection forms and make necessary revisions to bring them in line with the new HOME Rule Section 92.251 property standards. HUD has made a number of revisions to these standards. 
  • Start your financial condition examination with a review of the property's most recent audited operating statement.