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The purpose of this study is to describe the use of HOME funds in rural areas, with both case studies and analysis of data from the national program database. The study highlights the amount of HOME activity in rural counties, what kinds of rural areas are receiving HOME awards, what kinds of projects are being funded, and how many housing units are supported through HOME in rural areas. The study examines HOME activity between 1992 and 1996, unless otherwise noted. Four states that have used a large portion of their HOME funds in rural areas are profiled in case studies. The case studies focus on the efforts of state agencies and rural affordable housing organizations to improve the use of HOME in meeting rural low-income housing needs.

HOME has provided significant resources that have had a positive impact on rural affordable housing opportunities. While HOME awards do not fully match rural areas’ share of the poverty population and substandard housing units, the program’s flexibility has allowed rural affordable housing sponsors to develop projects serving many of the poorest rural residents.

Census/HOME Data	Urban Counties	Rural Counties	Remote (Rural Subset)
Population	86.0%	14.0%	2.4%
Occupied Housing Units	86.0%	14.0%	2.5%
Percent of Poverty Pop.	80.9%	19.1%	3.7%
Percent of Substd. Units	86.8%	13.3%	2.8%
Total HOME Funds	87.8%	12.2%	2.5%
Total HOME Units	89.4%	10.6%	2.0%

Almost all HOME funding awarded to rural areas is administered by state Participating Jurisdictions (PJs). Local PJs awarded only about one-tenth of one percent of their funds to rural counties, since few localities large enough to qualify as local PJs include rural areas and local PJs cannot provide funding outside of their jurisdictions. Most of these local PJ awards were probably made by consortia that include rural areas within their boundaries. Consortia are contiguous units of local government which join together for purposes of receiving a HOME allocation and administering the HOME program as a single grantee.

The matrix above compares demographic indicators with HOME activity. Urban counties are defined as metropolitan and nonmetropolitan counties with an urban population of 20,000 or more. Rural counties are nonmetropolitan counties with an urban population less than 20,000. Remote rural counties are a subset of rural counties, and have urban populations less than 2,500. For that category, percentages reflect the remote rural percentage of national figures, not the remote percentage of rural counties.

While HOME activity closely parallels the rural-urban distribution of population and occupied housing units, rural counties have a higher percentage of the poverty population and substandard housing units relative to HOME funds received and HOME-sponsored units. Rural areas hold more than 19 percent of the poverty population and more than 13 percent of substandard housing units, but during the years studied they received 12.2 percent of all HOME funds awarded and 10.6 percent of HOME-sponsored housing units.

Moderate rehabilitation is widely supported by the HOME program nationwide, but it is even more prevalent in rural areas. Nationally, 29 percent of HOME funds support moderate rehabilitation, accounting for 33 percent of HOME-assisted units. In rural counties, moderate rehabilitation accounts for 60 percent of HOME units and 40 percent of funds. New construction is also prominent, with about 22 percent of units and 33 percent of funds used for this activity.

A larger proportion of rural HOME units are occupied by homeowners, which reflects the greater homeownership rates in rural and nonmetropolitan areas than in urban areas. Ownership of HOME units in rural areas is overwhelmingly by individuals, as opposed to corporation, nonprofit, partnership or public agency ownership.

Nonprofits play a proportionally larger ownership role in remote rural areas than in the U.S. as a whole, which is the case for both single-family homeownership projects and multifamily rental projects.

Four states that have awarded a large proportion of their HOME funds to rural areas are profiled. Kentucky, Mississippi, South Dakota and Vermont were chosen for case studies. Each state has structured its HOME program differently in response to its affordable housing needs. However, some common patterns emerge suggesting how HOME may be made more accessible for organizations and local governments addressing rural affordable housing needs.

Developing strong relationships between state agencies and local organizations, and nurturing networks of rural housing groups, are two qualities evident among the case study states that have promoted rural HOME program use. The case studies highlight some features in common among states that have awarded a large portion of their HOME funds to rural areas. In each of the states profiled in this report, rural housing organizations have established some form of network through which they express their needs and interests to the state. These networks also provide a forum for sharing ideas, increasing expertise, and developing cooperative partnerships.

Each of the states with large rural HOME awards also has a state PJ that has been attentive to the housing needs of high poverty rural areas. In most cases, this has meant establishing formal mechanisms for local organizations to provide meaningful feedback concerning the application process and program implementation. Generally, these states have also invested significant funds and staff resources in providing technical assistance and outreach services to rural nonprofits. Each of the CHDOs profiled in the case studies had access to capacity building funds or technical assistance services, either from the state or from other sources. Since many rural areas have more limited housing development resources than is the case in urban environments, capacity building investments enable rural affordable housing organizations to more successfully access and use HOME for rural housing initiatives. Additionally, case study states either currently use or are in the process of developing streamlined application processes in order to make applying for HOME simpler, and to increase the program’s ease of use with other state affordable housing development programs.