Reports + Articles


HUD Announces Upcoming Preservation Policy Changes

On November 22, following the passage of the FY12 “minibus” appropriations bill, HUD announced three additional policy changes designed to help mitigate annual appropriations increases needed to fund all its project-based rental assistance commitments. HUD intends to use residual receipt account balances to offset assistance payments (only applicable to "New Regulation" contracts); require that rent comparability studies substantiate the need for proposed rents that exceed 110% of Small Area Fair Mark Rents; and limit annual rent adjustments under Option 4 renewals to OCAF increases if proposed rents exceed the market rents. The later was already outlined in recent drafts of the soon-to-be-released revised Section 8 Renewal Guide, but the former are yet to be described in detail. Check back for updates as HUD will release guidance in the coming months. Click here to read HUD’s memo to multifamily owners.

— Posted on 11/23/2011

Preservation Policy Provisions in FY12 Spending Bill

The “minibus” appropriations bill, H.R. 2112, that set program funding levels for both HUD and the Department of Agriculture Rural Development also contains legislative language to create or update policy provisions relating to preservation. The biggest news was the last-minute inclusion of an amendment, co-sponsored and championed by Oregon Senator Jeff Merkley, that allows for the project-basing of tenant protection vouchers issued after project-based rental assistance contract expirations or opt-outs at properties with Rent Supplement (Rent Supp), Rental Assistance Payment (RAP), or Section 8 moderate rehab (Mod Rehab) contracts. Owners with expiring Rent Supp and RAP contracts do not have the ability to renew and those with Section 8 moderate rehab contracts can only renew for one-year terms, greatly limiting long-term preservation possibilities. Project-basing of tenant-based vouchers can ensure the affordability of the units involved, both for the current residents and in the long term, while also increasing the ability to recapitalize the property if rehabilitation is needed. Eligibility is limited to properties with one of the three contract types noted above and at which HUD has issued tenant protection vouchers since FY07. The authority will last through FY13. HUD will issue guidelines for owners to obtain resident input and secure agreement from the PHA administering the vouchers before the project-basing can occur. The provision also waives the project- and PHA-level caps on the percentage of tenant-based vouchers allowed to be project-based.

H.R. 2112 incorporates some of HUD’s Rental Assistance Demonstration (RAD) program proposal. While RAD was not funded, the language included allows owners of Mod Rehab properties to apply to convert their rental assistance to project-based Section 8 or project-based voucher contracts, thus opening up the possibility of renewals longer than one year. This ability is subject to a 60,000 unit national limit, for which public housing also qualifies, and expires at the end of FY15.

Other preservation-related provisions in the bill allow HUD to transfer the project-based Section 8 contracts of physically or financially distressed properties; continue and expand the requirement to preserve project-based rental assistance contracts before and during the foreclosure process; and extend, through FY15, the Mark to Market program, which allows owners to restructure HUD-assisted mortgages when the rents are marked down to market levels during contract renewals.

Click here for the full text of H.R. 2112.

— Posted on 11/21/2011

Big Cuts in FY12 HUD and Rural Development Funding

On November 18, the President signed into law H.R. 2112, the “minibus” FY12 appropriations bill, which provides funding for various federal agencies, including HUD and the Department of Agriculture (USDA). Though the conference committee agreed on the FY12 bill with fewer delays than experienced with the FY11 version, which didn’t pass Congress until more than six months after the start of the fiscal year, the cuts to housing programs overall are severe.

For HUD, the Project-Based Section 8 program received $9.34 billion for FY12 contract renewals. While that figure is a 1% increase from FY11, it is slightly below the amounts requested and included in the House and Senate versions of the bill. H.R. 2112 also rescinds $200 million for the Housing Certificate Fund, which HUD uses to supplement the amount appropriated should it not meet the need for all new and existing contract renewals. HUD says the funding received will allow it to renew contracts for the full 12 months, but advocates did learn that HUD intends to pursue use of residual receipt accounts in funding shortfall situations.

The Tenant-Based Rental Assistance program received $18.91 billion. While that is a 3% increase from FY11, advocates believe the total does not allow for renewal of all authorized vouchers, possibly resulting in the loss of as many as 24,000 nationwide. The 7% cut in the amount reserved for public housing agencies’ administrative fees, on top of the 8% cut seen in FY11, will likely mean, at the very least, slower processing times for use of vouchers that are funded. The set-aside for Tenant Protection Vouchers and Enhanced Vouchers, which provide tenant-based rental assistance to qualified residents should the owner of their building prepay some HUD mortgages or opt out of a project-based assistance contract, decreased by 32% from FY11 to $75 million. Included in that total is $10 million specifically residents at properties with unassisted maturing mortgages who would otherwise not receive any protection and face eviction. Policy provisions enacted in H.R. 2112 also include the ability to project-base such vouchers at certain properties (see additional posting).

The bill cut HOME program funding down to $1 billion, 38% below FY 11 and following a 12% decrease last year. The Community Development Block Grant program received a 12% reduction. The Section 202 (Housing for the Elderly) program saw an additional 6% cut after it was slashed by 52% in FY11. The only HUD production program with an increase for FY12 was Section 811 (Housing for Persons with Disabilities), which received 10% more funding, providing some relief from its 50% cut in FY11. Both the Rural Innovation Fund and the Energy Innovation Fund, HUD programs with eligible uses related to preservation of multifamily rental housing, received no funding for FY12.

For USDA Rural Development (RD), H.R. 2112 set funding for the Section 515 Rental Housing Direct program at $64.5 million and for the Section 514/516 Farm Labor Housing programs at $27.9 million, which represent 7% and 21% cuts, respectively. As expected, the Preservation Revolving Loan Fund received no funding. However, the Multifamily Housing Revitalization Demonstration program did receive $2 million, an 87% cut from FY11, after not being included at all in the President’s budget or in the House version of the bill.

The bill funds the Section 521 Rental Assistance program at $904.7 million, which is a 5% decrease and on the heels of sa 2.5% cut in FY11 as well. The program provides project-based rental assistance in many RD properties and cuts ultimately lead to fewer units affordable to people with the lowest incomes. Just as in FY11, there will be no specific set-aside for rental assistance in RD preservation projects.

Click here for further information on the HUD appropriations totals. Click here for further information on the USDA RD appropriations totals.

— Posted on 11/21/2011

Salem Accepting Applications for HOME & CDBG Funds

The City of Salem announced the beginning of its application period for 2012 HOME and CDBG funding. Though the final figures will not be available until after the passage of the FY12 HUD appropriations bill, the city estimates it will see a 20% reduction from the funding available in 2011, which would result in approximately $1,740,000 available from the two programs. Both HOME and CDBG funds can be used for the rehabilitation of existing affordable multifamily rental housing.

The application period closes on December 30. The City of Salem will offer two workshops on the application process: November 17 and 28. Click here for more information.

— Posted on 11/15/2011

Portland Announces $11 Million in Housing Funds

On November 4, the Portland Housing Bureau issued a Notice of Funding Availability (NOFA) for up to $11 million in federal and local housing funds, with as much as $5 million set aside for properties within the Interstate Corridor Urban Renewal Area. The NOFA specifically sites preservation of properties with federal rent assistance contracts as one of the three primary targets and states that projects serving households with incomes of no more than 30% of the area median family income (MFI) will receive funding preference. Applicants can also propose to use the funds for new development or acquisition and/or rehab of currently affordable housing that has no long-term use restrictions. All proposed projects must have a minimum of 10 rental units and all funding must go to rental housing affordable to households with incomes of no more than 60% MFI. Developments requiring 9% Low Income Housing Tax Credits are eligible. Click here for further details.

A mandatory info session for all potential applicants will occur on November 16. Applications are due by 3pm on December 19. The total funds available, subject to future appropriations and approved city budgets, includes $3 million in FY11 and FY12 HOME funds, $3 million in FY11 and FY12 CDBG funds, and $5 million in FY11, FY12, and FY13 Tax Increment Financing (TIF) for the Interstate Corridor Urban Renewal Area.

— Posted on 11/07/2011