As health and housing sectors collaborate more frequently, it is important to understand how funding flows and the various systems and structures in place to implement federal, state, and local priorities. HUD offers a variety of programs to address affordable housing needs within communities. These programs are funneled through a variety of governmental and quasi-governmental entities, including:
- State housing finance agencies;
- State housing departments;
- Housing authorities (statewide, regional, county, or city-based); and
- County/city housing departments.
Health and housing efforts require coordination among federal, state, and local entities and funding mechanisms. Housing sector financing includes funding for development, capital, and operating subsidies. Development is the first stage and includes developing a vision for the project, financing model development, land acquisition, architectural renderings, and development of plans for building and costs for those plans. Box 2 describes financing for supportive housing.
|Box 2: Supportive Housing Financing
||Funds used to build or repurpose housing. Often referred to as “brick and mortar.”
||Costs of operating and/or maintaining housing (e.g., property management, utilities, maintenance, insurance, security, debt services)
||Cost of providing tenants with needed support to sustain housing stability and meet life goals (e.g., tenancy supports, case management, employment services, behavioral health services, eviction prevention)
Source: CSH Supportive Housing Quality Toolkit
While housing programs are administered by HUD with funding to states and localities, states operate Medicaid programs that may fund housing-related services.
The following describes supportive housing stakeholders:
State Housing Finance Agencies. Unlike health care funding, much of housing funding flows directly from the federal government to local communities, with some exceptions. States have agencies that administer grant programs, such as allocations through federal HOME, Community Development Block Grant (CDBG), and National Housing Trust Fund (HTF) programs; administer the LIHTC program; and operate as statewide public housing authorities. Structures at the state level vary but include these functions carried out by state departments of housing and housing finance agencies (HFAs). In some states, these programs are administered separately, and in others these entities are combined under one larger agency. Many state HFAs operate a website that lists affordable housing opportunities throughout the state. HFAs are often independent entities, led by a board appointed by the governor.
Each state is required to develop a Qualified Allocation Plan (QAP) and update it annually. The QAP defines states’ priorities, state requirements, and the process for competing for an LIHTC award. CSH annually analyzes each state’s QAP to rank states on their strategies to encourage supportive housing developments and identify best practices across states.
The programs administered through state HFAs provide capital and operating support and function to increase access to affordable housing units. The following are examples of these programs:
- HOME: The HOME program is a block grant to states and local housing departments to fund a variety of activities to assist low-income renters and homeowners.
- CDBG: The Community Development Block Grant (CDBG) program allocates funds to state and local housing departments to develop urban communities, including housing, business corridors, and other local community needs.
- National HTF: The National Housing Trust Fund is administered as a block grant and supports the creation and preservation of housing units, targeting individuals earning no more than 50% of area median income (AMI). Ninety percent of HTF funds must be used for production, preservation, or operation of affordable rental units, but up to 10% may be spent on homeownership support activities.
- LIHTC: The Low Income Housing Tax Credit program is the primary production program to develop and rehabilitate affordable housing nationwide. Households that are able to access affordable housing options are less likely to be cost-burdened, and the LIHTC program provides a mechanism for projects to receive capital, in the form of equity, by “selling” the tax credits to private investors. The program offers affordable housing developers capital and financing to develop low-income housing options at 60% AMI. LIHTCs are allocated by the states to local housing developers that apply to the state HFA. States have allocations of 9% credits, which subsidize approximately 70% of costs, and 4% credits that subsidize 30% of costs. People who rely on SSI for housing often struggle to afford housing in a LIHTC development without an operating subsidy, which covers the difference between what the household can afford and the cost of operating the property.
- HUD funding also is allocated to PHAs, which manage and operate public housing in local communities and across states. PHAs operate the Housing Choice Voucher (HCV) program, through which households receive a voucher or rental subsidy to use on the open rental market. PHAs also increasingly develop affordable housing using LIHTC and other capital sources and are in an ideal position to address the unaffordability of LIHTC for people with disabilities because the most frequently used operating subsidy is an HCV. States may also have a statewide housing authority, or an HFA and a statewide housing authority may be combined into one agency that administers HCVs.
HUD may offer grants that are open only to PHAs. Like HFAs, PHAs are quasi-governmental agencies led by a board that may be chosen by state or local elected officials. PHA boards also commonly have at least one “resident” on the board. Public housing developments commonly have a resident council that is organized to represent the voice of residents to the PHA.
Continua of Care. In the past 15 years, HUD has required that local grantees develop a Continuum of Care (CoC) program that organizes a community’s response to homelessness systemically. CoCs have a local governing board that is commonly a mix of stakeholders, including local government, service providers, and persons with lived experience of homelessness.
Medicaid. While Medicaid funding cannot be used to directly fund room and board or housing development, Medicaid can pay for a range of services to support case management, eviction prevention, and tenant rights training and education and can facilitate partnerships and cross-sector data sharing.
- 1115 Demonstration Waiver: Section 1115 demonstration waivers allow for “experimental, pilot, or demonstration projects that are found by the Secretary to be likely to assist in promoting the objectives of the Medicaid program.” 1115 waivers give states flexibility to test innovative programs and address the health and social needs of specific populations. The waivers must be budget neutral to the federal government and are approved by CMS for five years with opportunities for renewal. States such as Hawaii, Maryland, Massachusetts, Oregon, Virginia, and Washington offer, or will offer, housing support services via an 1115 Medicaid waiver as part of their efforts to improve health outcomes and increase supportive housing capacity in their states.
- 1915(b) Managed Care Authority: 1915(b) waivers give states the flexibility to waive federal requirements for comparability, statewide access, and freedom of choice and require that Medicaid patients participate in managed care for some of their benefits.
- 1915(c) Home and Community-Based Services (HCBS) Waivers: Section 1915(c) HCBS waivers allow states to provide services in community-based, rather than institutional, settings and define programs for specific populations, such as people with disabilities. HCBS waivers can cover housing, pre-tenancy support services, and tenancy-sustaining services.
- 1915(i) State Plan Home and Community-Based Services: 1915i authorities allow states to provide home- and community-based services through a State Plan Amendment (SPA), rather than a waiver. States such as Connecticut, Minnesota, and North Dakota are offering housing support services as part of their HCBS programs via the 1915(i) State Plan Amendment Medicaid Authority. Connecticut, Illinois, and New Hampshire have developed state plan requests for CMS that are in various stages of discussion. Washington state, with perhaps the longest running program, has data demonstrating that people were successful in transitioning out of homelessness, including promising reductions in emergency department visits and hospitalizations within the first nine months of program implementation.
- 1915(k) Community First Choice (CFC) Option: The 1915(k) CFC Option was created through the Affordable Care Act and gives states a 6% bump in their Federal Medical Assistance Percentage (FMAP) to provide home- and community-based services and supports.
- Health Homes: Finally, states can create Health Home programs by amending their state plan. Health home services may be provided to Medicaid beneficiaries with chronic conditions and include these six core services:
- Comprehensive case management,
- Care coordination,
- Health promotion,
- Comprehensive transitional care and follow-up,
- Individual and family support, and
- Referral to community and social services.
Other Sources of Federal Funding. The federal government, states, and localities have had a number of other programs that were either developed as, or evolved into, cross-sector programs.
- Money Follows the Person: The CMS Money Follows the Person (MFP) program was designed to assist states to transition people from institutions into community-living settings with incentives for states to enhance their HCBS The program was extremely successful, but the availability of affordable housing has limited the program’s reach.
- SAMHSA Grants: SAMHSA’s Grants for the Benefits of Homeless Individuals (GBHI) program prioritized states and local grantees that were able to partner with local housing resources, but those partnerships were challenging to execute.
- Section 811 funding: HUD’s Section 811 Supportive Housing for Persons with Disabilities Program required state-level collaboration between state housing finance agencies and state Medicaid offices but experienced significant delays in creating the required cross-sector referral systems.
HUD also funds Fair Housing Resource Centers, lead abatement programs, and a variety of other programs designed to address the housing and community needs of low-income Americans. Housing assistance for rural communities is offered via several programs administered by the U.S. Department of Agriculture.
Federal COVID-19 Funding. In 2020 and 2021, several programs were either allocated additional funds or were created to address needs that were brought on, or exacerbated, by the COVID-19 pandemic.
- CDGB-CV: CDBG grantees received additional funds as part of the March 2020 CARES Act and the Coronavirus Relief Funds. Those funds are designated as the CDBG-CV
- Emergency Rental Assistance: The federal FY2021 Omnibus bill provides up to $25 billion to offer emergency rental assistance (ERA) to state, local, territories, and tribal governments to assist in keeping people in their homes.
- Emergency Housing Vouchers: Nationwide, PHAs are receiving funds for an additional 70,000 Emergency Housing Vouchers (EHVs) to support collaboration with their local CoCs to address rising homelessness. EHV grantees are required to collaborate with service funders and payers to ensure that those households receiving EHVs have the supportive services necessary to be successful in their communities.
- HOME-ARP: HUD’s HOME program will administer significant additional funds from the American Rescue Plan allocations. New funding creates the potential for new opportunities, with housing partners needing to collaborate with health care and other service partners to address needs in their communities. The take-home message for service funders and providers is to network and collaborate with their state or community housing partners to ensure aligned, coordinated, or integrated systems and build toward success together.
The president’s proposed fiscal year 2022 budget includes requests for housing resources not seen in decades. If funded as written, the HUD budget would include 200,000 additional vouchers for communities, an additional $500 million to address homelessness, and full funding for Housing for the Elderly (Section 202) and Housing for Persons with Disabilities (Section 811). The amount of this funding is more than HUD has seen in a generation, and it opens up the possibility of cross-sector partnerships with health care systems and providers to address the need in a coordinated manner.