HUD's Note Regarding Tier 2 Funding

This morning Secretary Castro announced $355 million in Tier 2 awards for the FY 2015 CoC Program Competition.  This round of funding was the most competitive ever, both locally and nationally. This is consistent with HUD’s policy goals as well as Congressional direction to stringently review performance, increase competition for CoCs, and not simply fund renewals in the FY 2015 CoC competition.  There are some communities that scored very high that will see an increase in funding in FY 2015 while other CoCs will see a decrease in overall funding.  There are multiple factors that could have resulted in a lower amount of funding. A CoC may have scored poorly on the CoC Application, projects included on the Priority Listing in Tier 2 may have scored poorly or not met threshold requirements or the FMR for one or more geographic area within the CoC may have declined. 

Many transitional housing were not renewed. There were very clear incentives provided in the FY 2015 CoC Program Competition NOFA for communities to shift resources to create new rapid re-housing and permanent supportive housing programs, and many communities used the opportunity to reallocate resources to new projects. Even when transitional housing projects were included in the Tier 2 portion of applications, they fared poorly. As a result, we awarded $260 million more in permanent housing projects than in FY 2014 but $150 million less to transitional housing. 

Our emphasis on permanent housing is based on evidence from multiple sources that it is both more cost effective and results in better overall outcomes than transitional housing projects. Although we know it will be challenging for CoCs that lost projects, these latest awards will ultimately serve more people and serve them better because of our emphasis on permanent housing.

Another point of interest for you is that small CoCs with few grants generally fared poorly in the competition and many lost funding.  All CoCs that requested CoC Planning funding received it so that will hopefully address some of the capacity problems that we saw in CoCs that lost funding. Statewide and Balance of State CoCs (which generally represent many small cities and rural areas) did as well as average. It is fairly clear from these results that many small CoCs should consider merging with a Balance of State CoC. There were no other major geographic differences in which areas received more or less funding relative to last year. 

Please note that we will provide debriefing information to CoCs in the near future.