On August 25, HUD published  Notice CPD-16-15 which provides clarifying guidance to HOME participating jurisdictions (PJs) on the process of conducting a cost allocation using the Standard Method or the Proration Method, in accordance with HOME regulations. PJs are required to charge the actual costs of the HOME units, which will require allocating costs and identify the number and characteristics of units to be designated as HOME units for multi-unit rental or homebuyer HOME projects in which not all of the units are HOME-assisted (e.g., a mixed-income or a mixed-use project).

Among it’s topics, the Notice

• explains the relationship of cost allocation to underwriting;
• breaks down the cost allocation process, including what information is necessary and step-by-step explanation of the process;
• highlights the requirements for special circumstances, such as owner-occupied projects with rental units, manager’s unit, and projects with HOME and public housing units;
• provides additional guidance on disbursement of funds and documentation; and
• includes process charts and examples for the Standard Method and the Proration Method.