CPD cuts HOME "soft costs" fudge factor
The rules of an accounting game for local housing programs just got clearer, or so one is at least led to believe by Friday's HUDCLIPS news.
Here's the basic game: under existing law, only 10% of an agency's HOME budget can be spent on "administrative" costs, plus 10% of its program income for "administrative planning and planning costs," but there's no limit on spending out of the HOME allocation for "project-related soft costs." [Correction 2/24/06: NLIHC says "There are no specific limits to 'project soft costs,' but there are per-unit subsidy limitations to consider."] Some types of expenses can be counted as either "administrative" or "soft costs." These consist of "project-related or relocation-related staff and overhead costs" and some "costs of complying with other Federal requirements." In other words, the rules would at least appear to present local HOME grant administrators with a temptation to attribute general overhead to individual projects. Readers, please do comment if I've misunderstood the incentives, but that's sure what it looks like.
So we have here a notice from HUD's Office of Community Planning and Development (CPD) explaining quite carefully, with many examples, what does and doesn't have to be counted as an administrative cost -- and, incidentally, what costs can and can't be taken out of CDBG funds or out of the "American Dream Downpayment Initiative" grants within HOME, which have somewhat different spending rules. The definitions of administrative-only costs are so specific as to suggest the authors have individual cases in mind. Wonder who's getting slapped here.
Some clues: office rent and travel are always administrative, never "project-related soft costs." So are insurance, utilities, office supplies, costs of informing the public about the program, costs of writing HUD reports, and "costs of administering tenant-based rental assistance." Also, it says, "program or neighborhood wide environmental reviews" and "administrative services performed under third party agreements, such as legal, accounting and audit services." There are several more of these, so do read the document itself if this is your area.
This item is the first HUDCLIPS-level notice of the new year out of CPD, hence numbered CPD 2006-01.
Here's the basic game: under existing law, only 10% of an agency's HOME budget can be spent on "administrative" costs, plus 10% of its program income for "administrative planning and planning costs," but there's no limit on spending out of the HOME allocation for "project-related soft costs." [Correction 2/24/06: NLIHC says "There are no specific limits to 'project soft costs,' but there are per-unit subsidy limitations to consider."] Some types of expenses can be counted as either "administrative" or "soft costs." These consist of "project-related or relocation-related staff and overhead costs" and some "costs of complying with other Federal requirements." In other words, the rules would at least appear to present local HOME grant administrators with a temptation to attribute general overhead to individual projects. Readers, please do comment if I've misunderstood the incentives, but that's sure what it looks like.
So we have here a notice from HUD's Office of Community Planning and Development (CPD) explaining quite carefully, with many examples, what does and doesn't have to be counted as an administrative cost -- and, incidentally, what costs can and can't be taken out of CDBG funds or out of the "American Dream Downpayment Initiative" grants within HOME, which have somewhat different spending rules. The definitions of administrative-only costs are so specific as to suggest the authors have individual cases in mind. Wonder who's getting slapped here.
Some clues: office rent and travel are always administrative, never "project-related soft costs." So are insurance, utilities, office supplies, costs of informing the public about the program, costs of writing HUD reports, and "costs of administering tenant-based rental assistance." Also, it says, "program or neighborhood wide environmental reviews" and "administrative services performed under third party agreements, such as legal, accounting and audit services." There are several more of these, so do read the document itself if this is your area.
This item is the first HUDCLIPS-level notice of the new year out of CPD, hence numbered CPD 2006-01.
posted by Martha Bridegam at 11:48 AM
<< Home