HOME-ARP and Supportive Housing: A Great Pairing

The American Rescue Plan (ARP) authorized $5 billion to help communities across the country address homelessness and affordable housing.  New HOME-ARP guidance from the US Department of Housing and Urban Development released September 13th offers new flexibility for communities to prioritize and accelerate supportive housing development through new construction and rehabilitation. Read on to learn about these exciting changes and how you can influence decisions about how your community uses the money.

What is Supportive Housing?

Supportive housing pairs deeply affordable housing with tenancy support services that help people get housed and stay housed. It is an evidence-based intervention for people who experience chronic homelessness, unnecessary institutionalization and/or cycle between institutional settings and the streets. Supportive housing helps communities thrive by providing a foundation for households with complex needs to live with autonomy and dignity.

Why is this so exciting?

HUD’s notice outlines many features that make supportive housing even easier with HOME.  Communities can use HOME-ARP funds to braid together capital, operating, and services to create a supportive housing pipeline and meet their communities’ goals to end homelessness.

Key New Features:

  1. Per Unit Caps Are Gone: HOME previously capped how much funding could be used on any single unit, making it hard to use in high-cost markets. HOME-ARP has no per unit limit.  This means HOME-ARP can pay for up to the full capital costs for a unit, be used more effectively to fill gaps in projects, and cover other expenses such as operating and services to make projects viable.
  • Capitalized Operating Reserves: Project-based rental subsidies are critical to underwriting supportive housing. HUD allows HOME-ARP to be capitalized for up to 15 years to ensure that units can be made affordable for people with little to no income.  HOME-ARP also provides for the pro-rated costs of a resident services coordinator to be capitalized into the operating reserves to provide a baseline of services support in the building throughout the 15-year compliance period.
  • Provide Supportive Services: HOME-ARP can be used to pay for services through 2030. This provision makes it possible to pay for support services consistent with housing first approaches.   While the services will not be available throughout the 15-year compliance period, it offers an opportunity for states and localities to bridge to Medicaid-funded or other funding streams to make providers viable.
  • Designed to Play Well with Others: HOME-ARP can be braided with other capital, operating, and services sources to create affordable and supportive housing.  These potential resource pairings can include, but are not limited to: 9% Low Income Housing Tax Credits; 4% Low Income Housing Tax Credits; project-based Housing Choice Vouchers, state and local rental assistance programs, and State and Local Fiscal Recovery Funds provided through ARP. HOME-ARPs more flexible regulations mean that it can be used to cover expenses that may not be fully addressed by other sources.
  • Build Nonprofit Capacity: Jurisdictions are allowed to use up to 5% percent of their allocation to pay nonprofits for activities related to HOME-ARP funds (not to exceed $50,000 or 50% of the nonprofit’s general operating budget), and an additional 5% to help build nonprofit capacity.  This may include building capacity of developers who may not have traditionally created supportive housing but are interested in expanding into this model, Black, Indigenous, and other People of Color (BIPOC) led and culturally-specific organizations.
  • Eligibility is Flexible, but Focused: HOME-ARP can be used to assist individuals and families who are homeless, at risk of homelessness, fleeing or attempting to flee domestic/dating violence or human trafficking, or when additional supportive services would prevent homelessness or address housing instability. This allows communities to focus supportive housing on people and systems who may not qualify under the chronic homelessness definition, such as people exiting prisons and jails, people in institutional settings, or youth and families that are unstably housed and identified through child welfare or educational system involvement.

What is the process?

HUD has already sent the funding to participating jurisdictions (receivers of HOME funds). To spend HOME-ARP funding, all participating jurisdictions are required to: 1) determine needs and gaps – which should include an analysis of racial and other disparities in need; 2) consult with Continuums of Care Public Housing Authorities and Veteran Serving Organizations – review needs, priorities and potential resources to leverage; 3) develop an allocation plan – a new allocation plan specific to HOME-ARP that states how the fund will be spent by each activity type including supportive housing and the populations served; and 4) post for a minimum 15-day public comment period.

This is a huge opportunity to ensure that your jurisdiction’s allocation plan includes supportive housing, and also a review of people with a high risk of homelessness in other institutional and crisis systems. The CSH National Supportive Housing Needs Assessment can provide valuable data to help you identify needs across your public systems. It is also an opportunity to set goals to address racial and other disparities and equitable allocation plans for populations being served. Communities should also consider strategies that promote access to capital for BIPOC and culturally-specific developers and service providers that represent the demographics from their statement of need. CSH’s Racial Disparities and Disproportionalities Index is a free source of state-level systems data that can support planning.

Do not miss this critical chance to ensure that supportive housing is a central part of your plan to ensure that all people in your community have a home and the support they need to thrive! 

For more information, read HUD’s fact sheets on HOME-ARP.

If you represent a jurisdiction that needs support in leveraging HOME-ARP to develop a supportive housing pipeline, inquire with consulting@csh.org.

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