Funding Rural Housing and Economic Development

Prior to 2010, the U.S. Department of Housing and Urban Development (HUD) encouraged residential and commercial improvement in rural areas via its Rural Housing and Economic Development program. In 2010, however, that program was replaced with one called the Rural Innovation Fund. Money for the program was allocated via the Consolidated Appropriations Act of 2010, and grant applications were accepted from rural-based Housing Finance Authorities, non-profits and other organizations.

According to the Notice of Funding Availability (NOFA) released last year, the Rural Innovation Fund was created to “provide support for highly targeted and innovative grants dedicated to addressing the problems of concentrated rural housing distress and community poverty… ” In other words, the grants are intended to encourage affordable housing and mixed-used development in rural communities that don’t qualify for other types of development funding.

Grants are available in three separate categories: Comprehensive; Single Purpose; and Economic Development and Entrepreneurship for Federally Recognized Tribes.

Comprehensive grants are awarded to applicants who submit proposals aimed at addressing a variety of community needs. Successful applications must demonstrate a clear understanding of a community’s current economic, housing, educational and even infrastructure conditions and shortcomings. The application must include proposals that seek to improve all of those aspects of the community through integrated projects and programs.

In contrast, Single Purpose grants are awarded to proposals that seek to address one area of need in a target community. For example, a successful Single Purpose application may propose innovative solutions for boosting employment and other economic opportunities through continuing education partnerships at local colleges and universities.

The Economic Development and Entrepreneurship grants are awarded exclusively to federally recognized Indian tribes, and are awarded for the same activities as the comprehensive and single purpose grants. In addition, Economic Development applications can include requests for technical grants.

A total of $25,750,000 was allocated for the first round of funding – with $20,750,000 designated for Comprehensive and Single purpose grants, and the remaining $5 million reserved for Indian tribes. The maximum awards for each category were set at $ 2 million, $300,000 and $800,000, respectively. Once a grant agreement has been executed between HUD and a grant recipient, the grantee has 36 months to complete the work outlined in its application.

During this program’s inaugural year, over 300 applications were received from across the country, from agencies and organizations focused on improving economic and housing opportunities in rural areas. Requests for funding totaled over $230 million, nearly 10 times what was available. Once the applications were reviewed, scored and ranked, HUD awarded over $28 million to 46 tribal and rural communities.

In the first round of funding, a total of 7 Comprehensive grants were awarded, 31 Single-Purpose and 8 Economic Development, affecting 19 states and over a dozen tribes or tribal affiliates.

The volume of applications and money requested during the first round indicates that the Rural Innovation Fund is a much-needed program. Despite the overwhelming success, HUD has not yet indicated how much funding will be made available for the coming fiscal year.