Develop ”activity (program) delivery cost” standards for the HOME and CDBG housing rehabilitation programs and implement the standards in the program regulations.
Currently, there is no regulatory standard regarding the amount of activity (program) delivery costs that entitlement communities or non-profits can charge into their programs. HUD (office of Community Planning and Development) has only provided guidance in the form of the “HOME Program Rehabilitation Tune-up Kit” manual. The manual defines activity delivery costs as “direct staff and overhead costs are the costs that are directly related to operating the rehabilitation program and/or to the provision of relocation services, and may also include certain information services and environmental costs. These costs include staff costs related to processing applications, conducting cost estimates, preparing work write-ups or work specifications, inspecting and monitoring construction, and providing housing information and relocation services to homeowners and tenants.” (HOME Program Rehabilitation Tune-up Kit, p.26) There is significant variation in the amount of activity delivery costs that housing rehabilitation programs charge into the program. For example, one community’s housing rehabilitation program charges $0.80 in program service delivery costs for every $1 provided to the client for rehabilitation construction. Another community’s housing rehabilitation program only charges $0.20 in program service delivery costs for every $1 provided to the client for rehabilitation construction.
This standard would be a critical component of measuring the efficiency of an organization’s rehabilitation program and the enforcement of the standard in the regulations would provide millions of dollars to HUD clients. For example, developing a standard at the $0.20 of project delivery costs per $1 of rehabilitation costs would require the inefficient community ($.80 per $1 of rehabilitation costs) to produce additional units. For a $10,000,000 program, the inefficient community would provide an additional $2,750,000 to HUD clients or (at $25,000 per unit) produce an additional 110 units. That would be an efficiency gain of approximately 50% (from 222 units to 332 units). The cost savings or efficiency gains would be substantial given the significant resources spent on these activities. In addition, it would provide communities and organizations with a method to evaluate the efficiency of their programs.