The Supreme Court ruling has compelled cities nationwide to reconsider their approaches to homelessness. While some cities have rushed to implement new policies — sometimes to the further detriment of unhoused individuals — this ruling has also fueled advocacy efforts that call for solutions to end homelessness grounded in evidence, not punitive measures. This shift in the legal landscape underscores the urgent need for compassionate, effective solutions — solutions that HUD’s new NOFO is designed to support.

Key Features of the CoC Builds NOFO

In response to the growing crisis of homelessness, HUD’s CoC Builds NOFO presents a crucial opportunity for communities to create much-needed permanent supportive housing (PSH). Released just weeks after the Supreme Court’s ruling, the NOFO is designed to fund the acquisition, construction, or rehabilitation of PSH units, targeting individuals and families experiencing homelessness, particularly those with disabilities.

The NOFO sets out six primary goals:

1. Increase housing opportunities for people with high levels of need.
2. Expand the supply of PSH units within CoC geographic areas.
3. Enhance coordination between housing providers, healthcare organizations, and social service providers.
4. Prioritize resource access for projects in states with populations under 2.5 million.
5. Ensure PSH units are located near essential services and reliable transportation.
6. Affirmatively further fair housing by addressing segregation and access barriers.

These goals emphasize a holistic approach, grounded in decades of research, showing that permanent supportive housing addresses both the immediate need for shelter and the underlying factors contributing to homelessness. This leads to better outcomes for individuals and communities alike.

The Impact of HUD’s CoC Builds NOFO

HUD’s NOFO offers approximately $175 million in funding, with a significant $65 million reserved for states and territories with populations under 2.5 million. Additionally, up to three awards are specifically earmarked for projects on tribal reservations or trust lands, emphasizing the importance of collaboration between CoCs and native communities. By some estimates, this one-time funding is expected to create thousands of new PSH units nationwide, addressing a critical need.

Leveraging HUD’s CoC Builds NOFO for Sustainable Housing Solutions

The NOFO places a strong emphasis on developer experience and capacity, making it crucial for communities to partner with seasoned developers and other key stakeholders. A diverse and highly skilled team — comprising developers, property managers, healthcare providers, and social service organizations — will significantly improve a project’s chances of success in the competition.

Applicants should consider the entire spectrum of team members involved. A well-rounded team can address various aspects of the project, from initial construction to long-term sustainability and community support. Each role — from the developer overseeing the project, to the management company handling day-to-day operations, to the supportive service partners, is vital to the long-term success of permanent supportive housing.

Financing is another critical component of the NOFO. HUD encourages CoCs to leverage funds provided for the construction, acquisition, or rehabilitation of PSH units under this NOFO with other funding sources to maximize the number of units created for individuals and families experiencing homelessness. In the development world, this blend of financing sources, known as the “capital stack,” is essential for maximizing available resources, and if layered appropriately will increase the number of units that can be created with this one-time funding opportunity. The capital stack may include grants (such as that which will be provided under this NOFO), as well as loans, tax credits, and equity investments that finance the costs of building new or improving existing structures.

HUD also suggests converting existing buildings, such as motels or residential care facilities, into PSH as a cost-effective alternative to new construction. This method has been successfully implemented in states such as California, Vermont, Washington, and Colorado, where hotel conversions in particular have rapidly increased the availability of affordable housing. It’s important to note that if you choose this strategy, having a strong development team becomes even more critical. A highly experienced architect and general contractor are essential: adaptive reuse of structures not previously used as housing, and renovations of existing buildings, often involve unexpected challenges, such as structural issues or compliance with updated building codes. Their expertise ensures the project is completed efficiently, safely, and to a high standard, ultimately contributing to the long-term sustainability of the housing development.

Advancing Equity in Housing

HUD is serious about advancing racial equity in housing, with both threshold and competitive scoring in the NOFO tied to this goal. Applicants must address several key areas:

• The racial composition of those expected to benefit from a project.
• Potential barriers to equitable access for communities of color.
• Steps to mitigate or eliminate these barriers.
• Measures to track progress and evaluate the effectiveness of efforts to advance racial equity.

HUD also expects applicants to demonstrate their experience and resources in addressing the needs of underserved communities, particularly Black and Brown populations. Successful applicants will show how they’ve incorporated input from these overrepresented yet underserved groups and effectively considered their unique voices, experiences, and needs.

Application Process and Strategic Considerations

While the NOFO presents a significant opportunity, applicants should be aware of potential challenges, such as navigating what some might consider a complex application process and aligning funding requirements associated with this NOFO with those of other funding sources included in the capital stack. Planning ahead and consulting with experienced partners can mitigate these issues.

For those interested in applying for HUD’s CoC Builds NOFO, understanding the application process and requirements is also important.

• Application materials, including instructions and packages, are available through Grants.gov.
• CoCs must review proposed applications locally and determine which to submit to HUD by the November 20, 2024, deadline.
• Notably, CoCs can submit a second application if the project is located on tribal reservations or trust lands, underscoring the importance of exploring opportunities to serve native communities.

Given the complexity of the NOFO and the competition for funding, potential applicants should begin assembling their teams and developing project concepts now. It’s critical in this process for applicants to engage with experienced development team members and familiarize themselves with the NOFO’s scoring criteria.

Applicants should reach out to their CoC as soon as possible. CoCs must prioritize which application will be submitted on behalf of the community, typically using a ranking system and process to initially evaluate proposal concepts. This process ensures that projects align with unmet community needs and are given adequate consideration. The CoC will set deadlines for this initial review.

While the CoC handles the initial review, ranking, and submission via Grants.gov, the project applicant is ultimately responsible for completing the CoC Builds application and all required forms. After an award is made, the grant agreement will be established with the project applicant, who is anticipated in most cases to be the sponsor and owner of the proposed development project. This entity may or may not be the same as the collaborative applicant.

A Path Forward in the Fight Against Homelessness

The HUD CoC Builds NOFO represents a pivotal moment in the fight against homelessness. As cities grapple with the implications of the City of Grants Pass, Oregon v. Johnson ruling, the CoCBuilds NOFO offers a path forward — a way to address one of the root causes of homelessness – a lack of affordable homes.

For communities, especially those in rural areas or with tribal lands, this is your opportunity to implement sustainable solutions that make a real, measurable difference in reducing homelessness across the nation. Be courageous in your planning — think bold, think big — because this is a once-in-a-generation opportunity.