New HUD Policy on REAC Inspections: 14 Days Notice

From an alert sent out by the National Apartment Association:

I’m writing to make you aware of a recent policy change by the U.S. Department of Housing and Urban Development (HUD) that will drastically reduce the time frame required to provide notice of inspection to rental housing providers that operate HUD-assisted housing or subsidized property developments.

According to the new standard, HUD employees and contract inspectors will provide a notice to private property owners and operators who participate in HUD-assisted programs 14 calendar days prior to a property inspection through the Real Estate Assessment Center (REAC). If a property owner or operator refuses the REAC inspection, which is designed specifically for HUD-assisted housing or subsidized properties, a score of zero will be recorded. However, if the property is successfully inspected within 7 calendar days after the initial declined visit, the resulting score will be recorded.

While we understand owners and operators take great care to prepare for REAC inspections on an ongoing basis, HUD says this change will encourage program participants to maintain their properties year-round, instead of short-term fixes to pass a specific inspection. This new policy will take place 30 days after the posted notice.

In addition to the policy change, HUD will be hosting listening sessions across the United States to collect input from public and private HUD partners about a potential pilot program that will bring a new approach to inspections of HUD-assisted properties. NAA highly encourages owners and operators to participate in HUD’s listening sessions to ensure the industry’s voice is heard. 

The first round of listening sessions is scheduled for the following locations:

  • Philadelphia
  • Fort Worth
  • Atlanta
  • Detroit
  • Seattle

HUD Shifts Focus to Liberalization of Land Use Regs

The US Department of Housing and Urban Development recently announced that it is going to reverse some Obama-era policies related to integrating lower-income housing into wealthier neighborhoods and place more focus on promoting more affordable housing development overall.

According to an article in the Wall Street Journal, “HUD will begin holding stakeholder hearings on how to change the way it determines whether communities are enforcing the Fair Housing Act, which requires local governments to institute policies that help break down patterns of housing segregation. HUD stakeholders include nonprofit groups, academic researchers and private businesses.

But local officials in some communities said the process was costly and amounted to the federal government forcing them to put low-cost rental buildings in wealthier areas.”

So, instead of focusing its attention on the integration piece HUD will try to create incentives for local governments to liberalize land use policies and make it easier for developers to build more housing in general. From the WSJ article:

Policy makers have long puzzled over how to create incentives for cities and towns to build more housing. Local officials are often in a difficult political position because the loudest voices among their constituents tend to be those objecting to development. At the same time, federal and state governments have limited control over local zoning.

Mr. Carson (HUD Secretary Ben Carson) said the new rule would tie HUD grants, which many communities use to build roads, sewers, bridges and other infrastructure projects, to less restrictive zoning.

“I would incentivize people who really would like to get a nice juicy government grant” to take a look at their zoning codes, he said.


Report on “Overincome” Families in Public Housing

A nationwide audit by HUD’s Office of the Inspector General revealed that 25,000 overincome families are living in public housing and Fox 8 took a look at it from a local angle:

Local entities with overincome residents in the report included: Greensboro (17 families listed overincome), High Point (6), North Wilkesboro (12), Winston-Salem (3), Madison (3), Mt. Airy (3), Asheboro (2), Troy (2), Mt. Gilead (1), East Spencer (1), New Randleman (1), and Burlington (1).

Many were barely over the income threshold. Those on the higher end included a Greensboro family making $73,097, a High Point family making $66,744, a Madison family making $70,923 a year, and a Wilkesboro family making $65,286 a year.

That summary reflects the OIG data in 2015 and may not represent current situations in individual housing authorities…

Referring to the highest examples on the Greensboro list, Akers Brown explained, “That report would have been a point in time. Because our families are so transient, that is not the case today. So you could have somebody overincome today and they’re not overincome tomorrow because they lost their job or one of their children lost their job, a variety of different reasons. So we do not have anybody that has that income level today.”

As of Wednesday, GHA now has eight overincome families in their portfolio, she said, and six of them have been over the threshold for less than a year.

“Some are overincome by as little as $34. So there’s a wide range of overincome families that are served. When you’re talking about eight families total, that’s not a lot a lot of families when you look at the number we serve.”

Akers Brown emphasized GHA serves more than 12,000 people in the greater Greensboro area.

You can read the full report from HUD’s OIG here.

Time Limits for Public Housing Being Considered

The Wall Street Journal has an article that looks at some of the changes to public housing policies being considered by Congress and the Obama administration:

Momentum is building to let more housing authorities impose time limits or work requirements on tenants who move into public housing or receive the federal rental subsidy known as Section 8.

Competing plans in the Senate, House and Obama administration would broaden a 1996 project called Moving to Work, which allows a small group of housing authorities to set requirements aimed at promoting self-sufficiency among tenants…

Unlike welfare, which has a five-year limit for recipients, federal public-housing benefits generally are open-ended. But housing authorities in the Moving to Work program have waivers from regulations to try a range of strategies, such as requiring recipients to work, get job training or open savings accounts when their income rises. The elderly and disabled are exempt from the program.

With rents generally rising nationwide the competition for subsidized housing is fierce and the waiting lists are long.

Rising rents in the private market have helped fuel demand. The Department of Housing and Urban Development reported in February that 7.7 million low-income households without housing assistance paid more than half their monthly income in rent and/or lived in “severely substandard housing” in 2013. That had dropped from a record of 8.5 million in 2011 but was up 49% from 2003’s figure, HUD said.

Meanwhile, those who get vouchers for rentals in privately owned buildings or spots in public housing often hang on to them. The average length of stay for all households is 9.3 years for public housing and 8.3 years for vouchers, with older adults remaining longest and families with children staying less time, HUD said. The disabled and those 62 or older make up about half of such households.

Numbers like these make it pretty clear why there’s an interest in finding a way to move people out of the subsidy programs.


New HUD Rule Targets Segregation

On July 8, 2015 HUD finalized a new rule that targets segregation in communities that receive federal funds. From the Wall Street Journal:

The Department of Housing and Urban Development on Wednesday laid out a rule designed to ensure communities that receive federal funds strive to buck historical patterns of housing segregation.

Under the new rule, HUD will provide communities with historical data they must use to analyze segregation patterns, areas where race and poverty are concentrated, and access to good schools and jobs. Communities now will be required to submit these analyses to HUD, set goals for reducing segregation and track the results…

Local governments, states and public-housing authorities that receive federal grants are required to ensure that zoning and affordable-housing initiatives and other funding priorities advance the goals of the Fair Housing Act of 1968. The act aims to give everyone equal access to housing regardless of race, color, religion, sex, familial status or national origin.

But communities and housing authorities have received little direction from the federal government about how to create policies or measure their success.

“This is a very thoughtful attempt by HUD to come up with a rule that gives some teeth to a small provision of the Fair Housing Act,” said Amy Glassman, of counsel at Ballard Spahr LLP, which advises public housing authorities and other multifamily housing providers on fair-housing compliance and defends them in enforcement actions.

Judge Tosses HUD “Disparate Impact” Rule

Judge Richard Leon of the D.C. District Court issued a ruling on Monday that will be of particular interest to housing providers. From the article in The Hill:

Judge Richard Leon of the D.C. Circuit Court ruled Monday that the Department of Housing and Urban Development’s “disparate impact” rules were not justified by existing law, and ordered the rules vacated.

The ruling marks the latest in an ongoing debate about the controversial regulatory principle, which is used to build discrimination cases based on statistical models, rather than overt examples of unequal treatment…

Civil rights groups have hailed the initiative, saying it will help expose and punish institutional discrimination that may not be easily observed.

But many industry groups have cried foul at its use, arguing that the law does not permit the government to charge discrimination when there are no clear examples of it, but rather just data that shows some groups may be treated differently.

The judge dismissed the government’s argument that existing laws permitted the government to apply the method to fair housing laws by calling it “wishful thinking on steroids.”

Rather, Leon wrote in his decision that the language of the Fair Housing Act, which provides the legal basis for challenges in housing discrimination, only permits claims based on intentional discrimination.

Three Forsyth County Apartment Communities Qualify for Credits

From the Winston-Salem Journal:

Three Forsyth County apartment complexes have qualified for federal tax credits and other financing, the N.C. Housing Finances Agency said Tuesday.

Abbington Gardens in Winston-Salem will receive the largest amount in Forsyth at $767,200 for 96 new family units by KRP Investments LLC. Friar Woods Apartments in Kernersville will receive $668,400 for 84 new family units by Landmark Asset Services Inc.

University Place in Winston-Salem received approval for a tax-exempt bond valued at $5.23 million and a tax credit of $289,367 for a rehabilitation project of 97 apartments for the elderly by N.C. Housing Foundation Inc.

Government Shutdown Could Disrupt Key Multifamily Programs

From the National Apartment Association’s AIMS Update:

In anticipation of the shutdown, the U.S. Department of Housing and Urban Development (HUD) recently published its Contingency Plan for Possible Lapse in Appropriations, which details the agency’s plan to manage through the crisis.  According to that plan, FHA will continue to endorse loans during the shutdown, it just can’t fund them.  Any impact then will be from a longer shutdown.

HUD’s department-wide strategy also offered guidance on other HUD programs.  The Department says that most housing programs, including the Section 8 program, will continue to make payments through October using past appropriations, although there will be few HUD personnel available to run the operations.  It is also unclear what will happen after October. 

HUD will also use advanced appropriations to make payments for project-based contracts in October.  It will not, however, process any contract renewals or waiver requests during the shutdown. 

Read the full plan here.

Affordable Housing Programs Unnecessarily Complex

From the Washington Post’s Wonkblog comes a piece about how federal housing aid programs are too complicated in many metropolitan areas when they really don’t need to be:

So let’s say I’m living in a chronically disadvantaged neighborhood in D.C., paying rent with the assistance of Section 8, and I find a cheap place in a much better neighborhood in Virginia. The process of moving while keeping my place in the program is extremely complicated. “The process of moving to a different PHA jurisdiction is administratively burdensome for both PHAs and families,” Turner and Katz write. “The receiving PHA may apply different or more rigorous screening criteria or require the family to attend another orientation briefing, duplicating steps for both parties. At the same time, PHAs may use a different application form and calculate subsidy levels differently, all of which makes it more difficult for families to find a unit and negotiate a lease in the limited search time.”

And there are also problems for landlords and property managers. “PHAs sometimes find themselves in competition for area landlords rather than working together to recruit the largest possible pool of participating landlords,” Turner and Katz note. “Moreover, landlords are often confused by the multiplicity of local programs, and may hesitate to participate in the program at all because of uncertainties about who is administering it and how reliably it operates.”

So Turner and Katz want to consolidate things. Instead of having Section 8 run at the local level, they proposed setting up metro area-level housing authorities to run it. So instead of Alexandra, Fairfax, Arlington, Montgomery, P.G., and D.C. all having their own housing authorities administering Section 8, there’d be a D.C. metro authority. Once you got your voucher there, you could move to wherever in the area is most affordable, safe, and has the best schools for you and your family, without regard to municipal or state boundaries.

The main effect would be to make the program better serve its main purpose. “The biggest effect of this is on program outcomes. Letting them make rational choices about how do you get closer to work, to quality schools,” Katz tells me. “I think more families would use them to go to neighborhoods that are safe and where things work already,” Turner says. “We’ve got a growing body of evidence that escaping from  distressed neighborhoods pays off for families in ways that pay off for all of us.”

It’s an interesting read and worth taking a look at the entire thing.

HUD Grant to Fund Lexington Housing Authority Renovations

From News14’s story:

Three public housing communities in Lexington are headed for major renovations in January 2014. The U.S. Department of Housing and Urban Development has awarded the Lexington Housing Authority $27 million to do the work.

The 268 units in the Lexington Housing Authority’s Southside Village, Eastview Terrace and Helen Caple Village will get long overdue renovations…

HUD awarded the funds through its year-old Rental Assistance Demonstration, an initiative that aims to preserve the country’s stock of what it calls “deeply affordable rental housing.” The Lexington Housing Authority is among seven authorities in North Carolina and 68 in the country selected for the funding.

Tenants will live in temporary housing during the work, which will take up to four months for each unit.