The Institute's Staff

September 2009  

HOUSING AND COMMUNITY DEVELOPMENT PROGRAMS

Joel Yesley, PhD

Maryland Budget & Tax Policy Institute

Maryland is scheduled to receive $192 million in American Recovery and Reinvestment (ARRA) funds for programs supported by its Department of Housing and Community Development (DHCD).  Of this total, $114 million will be directly administered by the department.  DHCD Secretary Raymond Skinner has estimated that these funds will enable the construction of an additional 3,000 units of affordable housing.  These funds will be used to support 6 existing programs of the Maryland DHCD, as outlined below.

Weatherization Assistance

The largest recipient of funds will be the Weatherization Assistance Program.  This program, which is sponsored by the federal Department of Energy, has been operating for at least 20 years.  Under ARRA, $61.4 million will be funneled to 8 local governments on the state as well as a number of community action agencies based on a formula that emphasizes population and income. The money will ultimately be spent on projects that will reduce the energy bills of households, such as replacing or upgrading hot water systems, lighting retrofits, attic insulation, and the cleaning or repair of furnaces.  Eligibility will be limited to households whose combined income is less than 200 % of the Federal Poverty Level, which would amount to about $29,000 for a family of two and $44,000 for a family of four.  Priority is given to homeowners who are elderly, disabled, and families with children.  The goal of the program over the next 3 years is to weatherize 6,800 homes while creating 150 local jobs.  It has been estimated that low-income families will be able to save an average of $413 annually in energy costs. 

Housing Tax Credit Exchange

The second largest recipient of these funds will be the Section 1602 or Tax Credit Exchange Program, which is designed to assist low-income projects financed with tax credits that have stalled.  Under this program, state housing finance agencies are entitled to exchange unused CY 2007 and 2008 tax credits for cash at the rate of $8.50 per $1 of tax credit.  In addition, states will be eligible for up to 40 % of their housing finance agencies’ 2009 tax credit ceiling in cash.  This program is designed to facilitate projects where there is a total lack of interest in tax credits.  These projects tend to be located in rural counties.  Secretary Skinner noted that Maryland will stand to gain $44 million from this program. 

Another program designed to work in tandem with the Tax Credit Exchange Program is the Tax Credit Assistance Program (TCAP).  This program, which is a reincarnation of the Home Investment Partnership Block Grant Program (HOME), provides gap financing for Low Income Housing Tax Credit projects that have attracted at least some interest from private investors but not enough to close the deal.  Most of these projects are targeted to families at 60% of area median income or below, although some are targeted at 30 % of median income.  Fifteen projects were recently awarded all the available funds in this program ($31.7 million), which should create 2,500 affordable units throughout the state. 

Homelessness Prevention

              The state is set to receive $22.4 million for its Homelessness Prevention and Rapid Re-housing Program (HPRP), of which $5.6 million will be directly administered by DHCD.  This program is designed to provide housing relocation and stabilization services, including housing search and placement, legal services, and credit repair to prevent individuals from becoming homeless.  For example, funds can be used for short- and medium-term (up to 18 months) rental assistance, security and utility-related deposits, utility payments, moving costs, and hotel/motel vouchers.  DHCD is recommending that $2 million of the total allocation be provided to the local administering agencies for the Rental Allowance Program.  Only local governments, certified lead agencies for Continuums of Care, and nonprofits approved by their local jurisdictions are eligible for funds.  Eligible participants must be homeless or at risk of being homeless and at or below 50 % of area median income.

Community Development

The next larges recipient of ARRA funds is the state’s Community Development Block Grant Program (CDBG), which will be receiving a total of $14.6 million, including $2.1 million that DCHD will distribute to the state’s non-metro counties and rural cities and towns.  These grants are designed to enable local governments to undertake a wide range of activities to provide decent affordable housing and create economic opportunities for low- and moderate-income persons.  Grants have already been awarded for four projects in Allegany, Cecil, Garrett and Worcester Counties.

Finally, the Community Services Block Grant Program is set to receive $13.7 million of the $192 million to be made available for DHCD-supported programs from ARRA funds.  These funds will be distributed to 18 community action agencies whose mission is to help families and individuals achieve self-sufficiency through housing assistance, Head Start education, nutrition programs, emergency and/or health services, and employment assistance.  This allocation is about 50 % greater than the state’s regular entitlement to program funds in the current fiscal year.   DCHD will administer all of these funds since only non-entitlement jurisdictions (basically rural) are entitled to them.

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