Virginia Department of Housing and Community Development: Programs and Funding

The Virginia Department of Housing and Community Development (DHCD) administers state and federal funding streams directed at housing production, community infrastructure, and economic revitalization across Virginia's 95 counties and 38 independent cities. Its programs operate through a combination of federal block grants, state appropriations, and competitive grant cycles targeting localities, nonprofits, and developers. Understanding DHCD's structure, eligibility parameters, and funding mechanisms is essential for local governments, housing authorities, and community development organizations operating within the Commonwealth.


Definition and scope

DHCD is a cabinet-level agency within the Virginia executive branch, established under Title 36 of the Code of Virginia. Its statutory mandate covers housing development, building and fire safety codes, community development finance, and the administration of federal formula grants allocated to the Commonwealth.

The agency functions as the state's primary pass-through entity for two major U.S. Department of Housing and Urban Development (HUD) block grant programs:

DHCD also administers the Virginia Housing Trust Fund (VHTF), established under Code of Virginia § 36-141 et seq., which directs state appropriations into gap financing for affordable housing construction and preservation. The agency is not a direct lender; it allocates funding to eligible recipients who deploy capital at the project level.

Scope boundaries and limitations: DHCD's authority is limited to Virginia's jurisdictional boundaries. It does not administer federal housing voucher programs (Section 8), which are managed by local public housing authorities and the Virginia Housing Development Authority (VHDA). Programs funded through CDBG and HOME are subject to federal statutory requirements under 42 U.S.C. § 5301 and 42 U.S.C. § 12701 respectively, meaning HUD retains oversight authority alongside state administration. Jurisdictions that receive CDBG directly from HUD as "entitlement communities" (generally those above 50,000 population) fall outside DHCD's pass-through authority for that specific grant. Rural and non-entitlement localities are the primary beneficiaries of DHCD's federal allocations.


How it works

DHCD operates through five principal funding mechanisms:

  1. Formula allocations — Federal CDBG and HOME funds are distributed to the Commonwealth via HUD's annual allocation process. DHCD then sub-allocates to eligible non-entitlement localities based on need criteria and competitive scoring.
  2. Competitive grant cycles — Programs such as the Virginia Vibrant Communities Initiative (VCI) and the Indoor Plumbing Rehabilitation (IPR) program use published Notices of Funding Availability (NOFAs) with defined application windows, scoring rubrics, and award caps per applicant.
  3. Loan pools — The Virginia Housing Trust Fund deploys capital as low-interest loans or forgivable deferred loans. Repaid principal cycles back into the fund for redeployment, functioning as a revolving structure.
  4. Technical assistance — DHCD funds pass-through capacity-building grants to regional planning district commissions and housing organizations, enabling smaller localities without dedicated grant staff to access programs.
  5. Code compliance and Uniform Statewide Building Code (USBC) administration — DHCD establishes and updates Virginia's building and fire codes under Title 36, a function distinct from its financial programs but within the same agency authority.

The federal fiscal year runs October 1 through September 30. DHCD submits a Consolidated Plan to HUD every five years and an Annual Action Plan each year, both of which govern permissible expenditure categories for CDBG and HOME funds. These documents are public records available on the DHCD website at dhcd.virginia.gov.

The Virginia state budget determines annual appropriations to the VHTF and other state-funded DHCD programs. Appropriations are set through the biennial budget process managed by the Governor's office and enacted by the Virginia General Assembly.


Common scenarios

Scenario 1 — Non-entitlement locality applying for CDBG: A rural county with a population below 50,000 applies to DHCD for CDBG funding to rehabilitate water infrastructure serving a low-income census tract. The county must demonstrate that at least 51% of beneficiaries are low- to moderate-income, per HUD's national objective requirement. DHCD reviews the application against published scoring criteria and the current Consolidated Plan priorities.

Scenario 2 — Nonprofit developer accessing VHTF: A community development corporation in Henrico County applies for a deferred loan from the Virginia Housing Trust Fund to finance construction of 40 affordable rental units. The project must meet income-targeting requirements (typically households at or below 60% of Area Median Income) and demonstrate a financing gap that the VHTF funds will fill.

Scenario 3 — Indoor Plumbing Rehabilitation: A jurisdiction in southwestern Virginia identifies households lacking complete plumbing. DHCD's IPR program provides grant funds to local government applicants who contract directly with homeowners for rehabilitation work. Eligible costs include installation of bathrooms, septic systems, and wells.

Scenario 4 — Regional planning district commission serving as sub-recipient: A planning district commission receives a DHCD technical assistance award and deploys it across member localities in Montgomery County, Floyd County, and adjacent jurisdictions, providing housing needs assessments and grant application support.


Decision boundaries

The distinction between DHCD programs and VHDA programs is operationally significant:

Dimension DHCD VHDA
Legal structure State agency (executive branch) Political subdivision / authority
Primary instruments Grants, deferred loans, technical assistance Mortgage bonds, tax credit allocation, direct lending
Federal nexus CDBG, HOME (HUD block grants) Low-Income Housing Tax Credit (IRS Section 42)
Typical recipients Localities, nonprofits, community organizations Developers, lenders, homebuyers

DHCD administers the Low-Income Housing Tax Credit (LIHTC) Qualified Allocation Plan (QAP) in coordination with VHDA, but VHDA is the state's Housing Credit Agency for tax credit allocation purposes.

Program eligibility is not uniform across funding streams. CDBG is restricted to non-entitlement jurisdictions for DHCD's allocation; the VHTF is available statewide to qualifying applicants regardless of entitlement status. The Virginia Department of Social Services administers separate emergency rental assistance and homeless prevention funding streams that do not flow through DHCD. Readers navigating the full scope of Virginia's government services can reference the site index for agency coverage across the Commonwealth.


References

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