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FY2012 Tier 1 Renewal Announcement Adjustments to Funding

On March 13, 2013, HUD announced funding awards to renew existing grants that were listed as “Tier 1” in the FY2012 Continuum of Care (CoC) Program Competition. Since the announcement, the Office of Special Needs Assistance Programs (SNAPs) has received numerous inquiries regarding how adjustments were made to the renewal grants, and why some renewals were not included in the announcement.

FY2012 Continuum of Care Program Competition Tiers and Order of Conditional Awards

As HUD discussed in the FY2012 CoC Program NOFA and related supplementary materials, the national total of the Annual Renewal Demand (ARD) amounts submitted by CoCs in the FY2012 CoC Registration exceeded the $1.61 billion available for the FY2012 CoC Program Competition. In order to provide communities with the opportunity to make choices that would be most strategic, HUD included a ranking process in the FY2012 NOFA that required CoCs to prioritize projects into two tiers—one that was relatively safe (Tier 1) and one that was potentially at risk (Tier 2)—and prepare for the possibility of a 3.5% reduction from their Annual Renewal Demand (ARD). CoCs were required to rank all new and renewal project applications that were not rejected, in e-snaps. Each project application was to be assigned its own unduplicated rank number.

The tiers are financial thresholds. CoCs were notified of the exact amount available through Appendix A of the NOFA/Technical Correction, or in some cases where an error was made in the Registration process, via email directly from HUD Headquarters. 

  • Tier 1 is equal to the CoC’s Annual Renewal Demand (ARD) approved in the Registration process, minus 3.5 percent.  The national total for Tier 1 is $1.61 Billion, the amount available under the NOFA before any available carryover or recaptured funds are added. 
  • Tier 2 is the amount between a CoC’s Tier 1 and the CoC’s Final Pro Rata Need plus any approved amounts for CoC planning and the Permanent Housing Bonus. 
  • If a project fell partly in Tier 1 and partly in Tier 2, the entire project was considered to be in Tier 2. 

Based on the selection priorities stated in Section V.B.1.b. of the NOFA, the Department awarded Tier 1 renewals first. A second award announcement will include the results for the remaining projects submitted by CoCs in the FY2012 CoC Program Competition, including new projects, Tier 2 renewal projects, and CoC planning funds. Again, HUD will follow the selection priorities as stated in the NOFA with the funds that remain available.

Project applicants that have questions about where in the priority ranking their renewal was placed should contact the Collaborative Applicant for the CoC.

Adjustments to Funding

The conditional award amounts included for many renewal projects in the Tier 1 renewal announcement are different than the request that was submitted in the project application. This is because HUD was required, under the new Continuum of Care Program, to make adjustments to funding in accordance with the HEARTH Act and the CoC Program interim rule. These adjustments were carried out after the tiers were established, and as follows:

1. Funds awarded for rental assistance were adjusted by applying the Fair Market Rent (FMR) in effect at the time of award, including in the cases where the FMR for a specific area decreased from the previous year. The FY2013 Fair Market Rent Limits can be found at: http://www.huduser.org/portal/datasets/fmr/fmrs/FY2013_code/select_Geography.odn.

2. Funds awarded for operating and leasing in permanent housing projects were increased based on the average increase in FMR amounts within the CoC’s geographic area, weighted for population density. Because leasing and operating costs do not decrease relative to rent amounts for specific units (e.g., operating costs for 10 units that have rents of $500 are likely the same as for 10 units that have rents that are $450) adjustments to leasing and operating line items did not include decreases if FMRs decrease in the geographic area. In addition to these required adjustments, projects were reviewed to ensure that they were consistent with the approved Grants Inventory Worksheet.

If you have additional questions or require more specific information, please contact your local HUD CPD Field Office.

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