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HUD Update: Priorities, Changes and Compliance Issues

May 01, 2017

Learn more about the latest priorities, changes and compliance issues impacting low income housing owners and agents.

At the latest New England Affordable Housing Management Association (NEAHMA) agency meeting, NEAHMA’s agency partners discussed the latest priorities, changes and compliance issues impacting owners and agents. The following are a few “hot topics” discussed by representatives from the Department of Housing and Urban Development (HUD).

RAD Program – Final Implementation Revision

One significant item on the agenda was the third revision of the RAD program, more technically referred to as Notice H-2017-03, REV-3, PIH-2012-32 (HA), Rental Assistance Demonstration (RAD) – Final Implementation, Revision 3. The RAD program is intended to preserve and improve low income housing by providing public housing agencies (PHAs) and owners the chance to convert to long-term, project-based Section 8 rental assistance contracts. Allowing owners to convert provides the PHA or owner leverage to raise private debt and equity to address the capital needs of the project.

There are two components to RAD:

  1. The first component covers projects funded under the public housing program.
  2. The second component covers projects funded under the Rent Supplement (Rent Supp), Rental Assistance Payment (RAP), and Section 8 Moderate Rehab (Mod Rehab) programs.

Each of these components allows for the conversion of the existing rental assistance to a new Section 8 Housing Assistance Payments (HAP) contract in one of two forms; either project-based vouchers (PBVs) or project-based rental assistance (PBRA).

Some of the changes implemented in the notice revision include:

  • First component - enhanced eligibility for HOPE VI projects developed in phases on a contiguous site.
  • First component - enhanced information that PHAs must provide to residents undergoing a conversion.
  • First component - corrects the phase-in of rents for residents who may experience a rent increase as a result of a conversion to ensure a more even distribution across years.
  • First and second component - eliminates that cap on the number of PBV units at each project (previously 50%).
  • Second component - in certain circumstances where preservation criteria have been met, it generally allows conversions to PBRA to achieve rents between 110% and 120% of FMR, if justified by comparable market rents.

The Notice provides in-depth information of the applicability of the notice, and the responsibilities of the owner and HUD.

Transferring a Housing Assistance Payments Contract

Another topic of discussion on the agenda at the meeting was the Housing Assistance Payments and the potential to transfer budget authority covered in Notice H-2015-3, Transferring Budget Authority of a Project-Based Section 8 Housing Assistance Payments (HAP) Contract under Section 8(bb) of the U.S. Housing Act of 1937. Section 8(bb) was a long-awaited policy that was issued to preserve Section 8 budget authority. This preservation tool allows HUD to transfer all or a portion of the remaining budget authority of an existing project-based Section 8 HAP Contract to another project (or multiple projects, if the existing contract is subdivided), when the contract is administered by the Office of Multifamily Housing Programs and the existing HAP contract is terminated by the mutual agreement of HUD and the existing property owner. While it is the responsibility of the existing project owner to request that the budget authority of the terminating contract be transferred to a specific project, flexibility exists whereby the owners of both the existing project and the project to receive the budget authority may be owned by the same owner. The complete notice contains more information on applicability, the responsibilities of each owner and HUD.

Multifamily Utility Benchmarking Toolkit

HUD continues to encourage the practice of utility benchmarking (tracking, reporting and analyzing the utility consumption and costs associated with a property or portfolio of properties) as a fundamental asset management tool. By keeping a close eye on such metrics, multifamily property owners and managers are able to monitor energy performance, recognize the potential for improvement, and (hopefully) see positive results of investments made to improve energy performance of their properties.

HUD has created a new Multifamily Utility Benchmarking Toolkit to help owners and property managers realize the benefits of their investments. The tool kit includes background on utility benchmarking and how to get started along with a step-by-step guide on how to create your benchmark plan. There’s even a section of the toolkit that reviews the policies and programs of the benchmark including requirements, financial assistance and additional programs that support green retrofits. More information about HUD’s utility benchmarking toolkit can be found on their website.

After wrapping up another busy season, it was energizing to hear representatives from HUD discuss these and other priorities, changes and compliance issues impacting owners and agents. Stay tuned for regular updates regarding affordable housing. To learn more contact us.

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