This page provides information about HUD's Homeownership Zone initiative. Lessons learned from this demonstration program can help other cities use the Homeownership Zone approach to transform their blighted areas into stable, mixed-income, homeownership communities.
Summary:
The Homeownership Zone Initiative (HOZ) is a HUD demonstration program that was launched in 1996 as part of a national strategy to expand homeownership. The goal of the HOZ initiative is to test the idea that cities can transform their blighted areas into vibrant communities by creating entire new neighborhoods of mixed-income single-family homes, called Homeownership Zones. Homeownership Zones usually consist of several hundred new homes in a concentrated target area near major employment centers. The Homeownership Zone demonstration is nearing completion. Lessons learned from this initiative can help other cities use homeownership housing to revitalize their severely distressed areas.
Purpose:
The Homeownership Zone initiative awarded grants to selected cities as seed money to stimulate investment in their target areas. Homeownership Zone cities were encouraged to apply New Urbanist design principles in developing their HOZ plans by providing for a pedestrian-friendly environment, a mix of incomes and compatible uses, defined neighborhood boundaries and access to jobs and mass transit.
Type of Assistance:
There have been two competitive funding rounds, one in federal fiscal year 1996 (FY 96) and one in federal fiscal year 1997 (FY 97). The first HOZ competition (FY 96) awarded Economic Development Initiative (EDI) grant funds and companion Section 108 loan guarantees to six winning applicants. The second HOZ competition (FY 97) awarded recaptured Nehemiah grant funds to an additional six winners, of which five are still active. No additional grant funds are currently available.
Eligible Customers:
At least 51 percent of the homebuyers assisted with HOZ funds must have incomes that do not exceed 80 percent of the HUD-determined area median income, adjusted by family size.
Eligible Activities:
FY 96 HOZ grantees must use their HOZ/EDI grant to enhance the security of their companion Section 108 guaranteed loan or strengthen the economic feasibility of projects financed with loan funds. Eligible activities include property acquisition, housing rehabilitation, site preparation and special economic development activities, including new housing construction under limited circumstances through Community-Based Development Organizations (CBDOs). FY 97 HOZ grantees must use their HOZ grant to acquire property, build or rehabilitate housing, finance site preparation, provide direct financial assistance to homebuyers, provide homeownership counseling, and/or construct public improvements. FY 97 grantees may also use up to 5 percent of their grant funds for administrative costs.
Technical Guidance:
HOZ proposals funded in FY 96 are governed by the regulations of the EDI program and the Section 108 loan guarantee program at 24 CRF 570, and the Notice of Funding Availability (NOFA) published in the Federal Register on July 16, 1996. HOZ proposals funded in FY 97 are governed by the Notice of Funding Availability published in the Federal Register on July 28, 1997. The Office of Affordable Housing Programs at the HUD Office of Community Planning and Development (CPD) administers the HOZ demonstration program. For more information, contact Ginger Macomber, Homeownership Zone Coordinator, 451 7th Street, SW, Washington, DC, 20410, or call (202) 708-2684, TTY 1-800-877-8339. For program notices, go to HUDCLIPS.
Outcomes:
Most of the eleven cities that are participating in the HOZ demonstration program are nearing completion or have completed their HOZ projects. In March 2007, HUD issued the results of an interim evaluation of the HOZ demonstration. The purpose of this evaluation was to assess how well each HOZ city had implemented its approved HOZ proposal, identify best practices or guidelines that other cities could use, and collect baseline data for a final evaluation at the end of the demonstration program. The evaluation concluded that transforming a severely distressed neighborhood into a stable, vibrant, homeownership community takes time, but it can be done with sufficient patience, commitment, vision, and concentration of resources. Other cities can learn valuable lessons from the experiences of the HOZ demonstration cities. More...
