The Rural Housing and Economic Development Office was authorized by the Department of Veteran's Affairs, Housing and Urban Development and Independent Agencies Appropriations Act of 1999. The Act appropriated $27 Million in grants for three (3) categories of assistance to rural areas of America. It also provided $1 million to set up a Rural Clearinghouse to receive and disseminate information on rural issues.
The Office of Rural Housing and Economic Development was established within HUD's Office of Community Planning and Development to administer the FY 1999 competition which funded 91 grants in response to 749 applications. An additional $24 million has been appropriated in FY 2000 funding for a second competition in accordance with the requirements of Section 102 of the HUD Reform Act for the same three rural initiatives. The funds will be awarded through a selection process conducted by HUD after consultation with the United States Department of Agriculture (USDA). An additional $1 million has been allocated for the Rural Clearinghouse.
Funding Initiatives
There is a great need for expanding the supply of housing - particularly affordable housing for low income families and individuals - and economic opportunities in rural areas that have been passed over by business and industry, intensifying the magnitude of deterioration and abandonment. Because of out-migration and other factors causing economic dislocation, many rural communities suffer from economic distress that can only be alleviated and eradicated by building the capacity of the local populations and their leaders.
A number of resources are available from the Federal government to address these problems, including programs of the USDA, Economic Development Administration (EDA), Appalachian Regional Commission (ARC) the Department of the Interior (for Indian Tribes) and HUD. The Rural Housing and Economic Development (RHED) program has been created to supplement these resources and to focus specifically on capacity development and innovative approaches to both housing and economic development in rural communities. In administering these funds, HUD will encourage coordination between all Federal agencies in support of the program objectives.
RHED will again target funding to the three supportive initiatives.
Capacity Building for Existing and New Organizations
This initiative is aimed at developing the capacity at the local and tribal level to assist existing community organizations to carry out new functions and/or perform more effectively existing functions; and the creation of new organizations or institutions to carry out specific functions. Activities in connection with existing organizations include a broad range of assistance aimed at building administrative, program and management capabilities of local rural non-profits, Community Development Corporations (CDC's) Indian tribes and local affiliates of National non-profits engaged in housing and economic development.
Building capacity of new organizations is intended to encompass the various aspects of assistance needed to develop access to new or existing funding resources; and/or create (but not capitalize) financing mechanisms such as private community development financial institutions (CDFIs) using lines of credit, revolving loan funds and Federal or State funding not currently available to the area.
Innovative Housing and Economic Development Funding
The Innovative initiative is intended to support, but not be limited to, "hard costs" for both housing and economic development in specified local areas. Eligible activities include all aspects of land acquisition, housing and business development; capitalizing financing vehicles such as CDFI's, lines of credit, revolving loan funds, etc; providing direct assistance to homeowners/businesses/developers through loans, grants or securitization mechanisms. Eligible applicants include Indian tribes, state housing finance agencies, local rural non-profits and CDCs presently engaged in housing and economic development activities in rural areas.
Seed Support
Seed support funding is intended to provide assistance for start up costs, either for new organizations/institutions, or for specific projects new to the eligible area or new to the organizations that will support innovative housing and economic development activities. For organizations, this could include "up-front" money for acquiring space and support facilities as well as start up administrative costs. For both housing and economic development projects, eligible activities would include up-front hard and administrative costs. Eligible applicants are Indian tribes, local rural non-profits and CDC's that are located in areas that have limited capacity for development.
Application Review Process
RHED applications are reviewed and scored for their response to the five factors stipulated in HUD's Super Notice of Funding (NOFA) and expanded to meet the requirements of the RHED program. A brief summary of those requirements are as follows:
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Rating Factor 1 - Capacity of the Applicant and Relevant Organizational Experience (up to 25 points)
This factor addresses the qualifications and experience of the applicant and participating parties to carry out the objectives of the proposed activities within a reasonable period of time. The applicant must submit evidence of their experience and their partners (if any) in leveraging other Federal, local, State and private sector funds. For the Capacity initiative the major consideration is the competencies of "core staff," of the organization or its parent, to effectively utilize the funds being proposed. For Innovative Activities the focus is on demonstrated experience and competencies of the organization or its partners in carrying out the type of housing or economic development project or activity for which funding is being sought. Seed Support emphasizes experience of "core staff," partners or parent organizations and competencies to undertake a start-up project or activity.
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Rating Factor 2 - Need and Extent of the Problem (up to 25 points)
The RHED program is designed to address the problems of rural poverty, inadequate housing and lack of economic opportunity. Need will be considered in two ways - (1) documentation of the demographics of economic distress, i.e., poverty rates, unemployment data, out-migration information, crime rates, percentages of persons on public assistance, vacancy rates and incidence of homelessness; (2) demonstrated need for the specific project or activity. Because of distances between population centers considerable latitude is given to establishing the most appropriate area for the statistics. However, such statistics must be compared with those of the county or state in which the project or activity is located. A special need factor weighting up to 5 points is given for certain projects or activities that are targeting underserved populations: Areas with populations under 2,500; migrant and seasonal farmworkers; Indian tribes; colonias, communities in Appalachia and in the Mississippi Delta.
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Rating Factor 3 - Soundness of Approach (up to 30 points)
Soundness of approach addresses the quality and anticipated effectiveness of the applicant's Statement of Work in meeting the needs identified in Rating Factor 2. HUD will evaluate the Statement of Work for the proposed activities, reasonableness of costs, and management plan for assuring timely completion. The strength of the Statement of Work will be determined by how well the management plan meets the intent of the NOFA, is logical, feasible and provides a schedule for completion of all tasks.
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Rating Factor 4 - Leveraging Resources (up to 10 points)
HUD will evaluate the extent to which applicants for any of the three initiatives have obtained firm commitments of resources from other Federal, State, local and private sources. In awarding up to 5 points for this criterion, resources in the form of cash or in-kind services outside the applicant's organization or affiliation that support the activities will be considered.
Innovative projects or activities that specifically propose to expand lending opportunities by developing diversified financial leveraging linkages to mitigate the risk of lending through the pooling of much larger funds from other funding sources, e.g., private institutions and foundations will be awarded (up to 5 additional points).
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Rating Factor 5 - Comprehensiveness and coordination (10 points)
The extent to which an applicant's proposed program is coordinated with other ongoing and related activities, agencies and organizations within the area is evaluated to ascertain that the applicant is not operating in isolation. In this evaluation HUD will consider the organization's participation in the State's Consolidating Planning process and/or the extent to which the application's management plan supports such strategies.
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Special Points for Rural Empowerment Zones and Communities (2)
Applicants that evidence that their project or activity is located in a USDA designated Rural Empowerment Zone or Enterprise Community, and their management plan supports the Zone's or Community's strategic plan will be eligible for the special 2 points.
