<Back to Infofax Archive Page>
SELF-HELP HOMEOWNERSHIP OPPORTUNITY PROGRAM (SHOP)
HUD has recently issued applications for its SHOP 2002 funding round, and invites
organizations producing self-help housing to apply for funds.
The U.S. Department of Housing ~Urban Development (HUD) has not yet announced which
national intermediaries will be awarded SHOP funds, so HAC does not know the extent
of funds available. Until HUD issues this announcement, we will also not know when
the funds will be available or when, once re-loaned to local groups, they will be
HAC's SHOP program finances land acquisition and site development associated with
self-help housing for low-income people. Self-help building methods require families
to contribute a significant amount of "sweat equity" toward the construction
of their home. In many cases, this sweat equity replaces the need for a downpayment,
and often lowers unit construction costs, allowing self-help builders to quickly
build equity in their homes. The number of labor hours each household contributes
varies, but must exceed 200 hours to be eligible for SHOP funds.
HAC makes SHOP loans exclusively to nonprofit organizations sponsoring self-help
building projects. Individuals are not eligible for SHOP funds.
SHOP loans may not exceed an average of $10,000 per housing unit produced. No interest
is charged on SHOP loans (although a penalty fee is charged if not paid by the due
date). Seventy-five percent of the loan amount is forgivable if the borrower produces
the required number of units in the time allotted. Groups producing five or more
units will have three years to produce the homes. Groups producing fewer than five
homes will have two years to complete the units.
If an awardee produces ALL of the promised number of housing units within two years,
regardless of how many units are produced, the grant conversion may be increased
to 85% of the loan. These forgiven "grant conversion" funds may be used
to subsidize lot costs (for example, as direct grants or soft second mortgages to
families) or for the borrower to capitalize an internal development fund for future
self-help land acquisition and development.
Eligible Uses of SHOP Funds
SHOP funds may be used to acquire land and conduct infrastructure work for lots
associated with self-help housing projects. Eligible infrastructure costs are: utility
hook-ups and connections, including water, electric, gas, telephone, and sewage
lines; wells and waste disposal systems; impact and building fees; streets, streetlights,
curbs, roads, and sidewalks; surveys; engineering fees; environmental testing; and
site preparation, including grading, razing, de-leading, hazardous waste clean-up
and other environmental cleanup costs.
A HUD environmental review must be completed before SHOP funds can used to acquire
or develop a parcel of land. Land may be acquired prior to an environmental review
when the organization expects to receive later SHOP reimbursement. However, the
risk in doing so is assumed solely by the organization.
Loan Review Process
Applications are due in HAC's office no later than 5:30pm on Friday, August 30,
2002. Absolutely no late applications will be accepted.
The SHOP application and loan review process is similar to that of other HAC loan
funds. Once HAC receives a complete application (prior to the deadline), loan fund
staff verify the eligibility of the project and underwrite its feasibility, scoring
the application's merits against other submissions. Funding decisions will likely
be announced at HAC's National Rural Housing Conference in early December 2002.
Previous SHOP Funding Rounds
In 1996, HAC was awarded $13.5 million in SHOP funds after a national competition
administered by the U.S. Department of Housing and Urban Development. As a result,
HAC made 85 SHOP loans to self-help housing producers nationwide, who have constructed
or will construct more than 1,350 new homeownership units. HAC was awarded an additional
$4.8 million in SHOP funds in late 1998, $6 million in 1999, $8.09 million in 2000,
and $4.7 million in 2001. All of these funds are committed.
For More Information
HAC is currently accepting applications for SHOP loans. If you are a current SHOP
recipient and would like an electronic copy of the application (in WordPerfect only)
please contact Lourdes Antezana at 202-842-8600. If you are new to the SHOP program,
and are interested in applying, please contact Dierdra Pressley at 202-842-8600.