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HUD Issues Guidance on SAFMR Final Rule

Posted by NMA on Jan 25, 2018 5:00:00 AM

HUD’s Office of Public and Indian Housing (PIH) recently issued Notice PIH 2018-01 providing guidance on recent changes in fair market rent (FMR), payment standard, and rent reasonable requirements set forth in the Small Area FMR (SAFMR) final rule. As you know, in August of last year HUD exercised its authority to suspend SAFMRs for 23 out of the 24 designated areas that would have gone into effect on October 1, 2017. However, in late December, the U.S. District Court for the District of Colombia entered a preliminary injunction voiding that suspension, meaning that the mandatory use of SAFMRs is now in effect for all 24 areas (listed in Appendix A of the notice). PHAs must now complete the SAFMR implementation as quickly as possible—no later than April 1, 2018. The notice is meant to help with that task, allowing PHAs to better understand their options under the final rule.

  • The notice primarily summarizes the changes and requirements specified in the final rule, with some examples and additional guidance provided for implementation purposes. Highlights include, but are not limited to, the following:
  • he notice provides scenarios that may apply when a new payment standard schedule goes into effect, i.e., specifically when to use the old vs. the new payment standard schedule.
  • HUD recommends that PHAs provide both the old and new payment standard schedules to families issued a voucher whose search term extends beyond the effective date of the new schedule.
  • PHAs adopting an exception payment standard area must revise their briefing materials to make families aware of the exception payment standard and the area it covers.
  • The notice provides policy possibilities that may be adopted if there is a decrease in the payment standard schedule during the term of a family’s HAP contract.
  • Where the PHA chooses to reduce the payment standard for a family under HAP contract, the initial reduction cannot take place before the effective date of the family’s second regular reexam following the effective date of the decrease—meaning PHAs must conduct a reexamination of family income and composition at least annually. This is the case even if the PHAs had implemented a streamlined income determination for fixed-income families.
  • Notice to families is required for any reduction in payment standard, even if choosing to do so gradually. Appendix B of the notice provides tips for strengthening written notices to such families.
  • HUD recommends that any agency required to adopt SAFMRs review the SAFMRs for the fiscal year prior to mandatory adoption to estimate the effect of moving from metropolitan area FMRs (MAFMRs) to SAFMRs, and to use this to inform its policy.
  • The notice provides various considerations PHAs can use to evaluate whether to “opt in” to using SAFMRs. Of course, such agencies must request approval from HUD to voluntary adopt SAFMRs.
  • The notice provides examples of “grouping” by ZIP code areas for agencies adopting SAFMRs, since the percent of the SAFMR that the payment standard equals may vary between different unit sizes and from ZIP code area to ZIP code area, and PHAs have the flexibility to do so.
  • The notice also offers various considerations and recommendations for whether an agency should adopt SAFMRs for its Project-Based Voucher (PBV) program, including examples.
  • The vouchers of families who port will be administered according to the policies of the receiving PHA (RHA)—if the RHA is operating under SAFMRs, the family’s voucher will be administered using SAFMRs. If the RHA is not, the family’s voucher will not.
  • If the use of SAFMRs has been designated for a metropolitan area or the PHA has voluntarily chosen to use SAFMRs, the SAFMRs would apply to all tenant-based vouchers, including special housing vouchers such as single room occupancy (SRO) and the homeownership option.
  • MTW PHAs are exempt from the requirement to use SAFMRs if that agency has an alternative payment standards policy in its HUD-approved Annual MTW plan.
  • With regard to the transition out 50th percentile rents over a three-year period, if the PHA scored the maximum number of points on the SEMAP deconcentration bonus indicator in the prior year or in two of the last three years, then upon expiration of the three-year period, the PHA may request HUD approval of payment standard amounts based on the 50th percentile rent. The request must be made to the local HUD field office during the period between the release of the revised FMRs and the effective date of those FMRs.
  • For PHAs requesting a suspension of the SAFMR designation for the metro area due to an adverse housing market condition, the PHA must administer more than 50 percent of the vouchers leased in that metro area. The notice also defines what constitutes an adverse housing market condition.

In addition to developing this guidance, HUD has also established a set of FAQs specific to SAFMRs, available here. Questions may be sent to SAFMRs@hud.gov.

Does SAFMR implementation sound like a headache for your time-crunched, budget-burdened agency? Let us take on that project for you. We’ll conduct rent burden analyses, analyze vacancy rates, and conduct other required actions to ensure you’re in full compliance with all HUD rules and regulations. Click here to learn more

Topics: FMR, PIH Alert, Program News and Notices, Industry News, SAFMR

HUD suspends mandatory SAFMRs

Posted by NMA on Aug 15, 2017 9:00:12 AM

govt-columns.jpgIn a letter to PHAs dated August 11, HUD announced that it has suspended the mandatory use of small area fair market rents (SAFMRs) for a period of two years. The suspension applies to 23 of the 24 metropolitan areas which had been selected to use SAFMRs beginning on October 1, 2017. The requirement has been suspended for two years, until October 1, 2019.

According to the letter, HUD decided to suspend the requirement for three reasons:

  • Interim findings of the SAFMR demonstration, in operation since 2012, indicate the need for further analysis of benefits and costs
  • Responses to HUD’s request for comments on regulatory reform recommended a suspension of the requirement
  • HUD has not yet provided guidance and technical assistance

The letter further states that PHAs may request permission from HUD to implement SAFMRs on a voluntary basis. Some PHAs may have already prepared for implementation and may wish to proceed. HUD will expedite the approval process for PHAs impacted by the suspension of mandatory SAFMRs.

PHAs designated to use 50th-percentile FMRs, for which the three-year authorization period did not expire before January 17, 2017, will continue to use them until October 1, 2019. These PHAs will then transition to the use of SAFMRs.

HUD plans to provide implementation guidance and training on all aspects of the rule, including voluntary use of SAFMRs and options for PHAs operating in 50th-percentile FMR jurisdictions. Questions may be directed to HUD field offices or to SAFMR_Rule@hud.gov.

To receive more updates and analysis like this on the latest HUD news, subscribe to NMA’s PIH Alert and receive a daily email with breaking stories and other important information for PHAs and housing professionals.

Topics: flat rent, FMR, PIH Alert, Program News and Notices

HUD issues revised RAD notice

Posted by NMA on Jan 19, 2017 12:43:18 PM

RAD conversions

Last week via email, the Department of Housing and Urban Development (HUD) announced to the public the online publication of revised program instructions for the Rental Assistance Demonstration (RAD) in Notice PIH 2012-32/Notice H 2017-03, REV-3. The revised notice, which fills 242 pages, includes the following key revisions for the first component (from the email):

  • Allowing PHAs to increase RAD rents by relinquishing existing balances of replacement housing factor (RHF) funds or demolition and disposition transition funding (DDTF)
  • Eliminating the cap on the number of project-based voucher units at a project
  • Revising the requirements regarding information provided to residents and PHA responses to resident comments at properties undergoing conversion
  • Extending the prohibition on re-screening to current public housing households that will reside in non-RAD PBV or non-RAD PBRA units in projects that contain RAD PBV or RAD PBRA units to facilitate the right to return to the assisted property
  • Consolidating the selection priority categories for new applications into “high investment applications” and “all other applications” (subject to public comment)
  • Allowing PHAs to submit a simple letter of interest rather than an application when a waiting list has formed, where the letter of interest would serve to reserve a project or portfolio’s position on the waiting list subject to future submission of a RAD application (subject to public comment)
  • Making an entire contiguous HOPE VI project that was developed in phases eligible, as long as the earliest phase is greater than ten years old (subject to public comment)
  • Correcting rent phase-ins for residents who may experience a rent increase as a result of conversion
  • Clarifying that a PHA is permitted to receive cash acquisition proceeds in excess of any seller take-back financing and that such proceeds must be used for affordable housing purposes, which is a newly defined term
  • Allowing flexibility for requirements related to capital needs assessments, i.e., permitting certain exemptions when the assisted units are a small percentage of the total project
  • Requiring title reports to be submitted with the Financing Plan
  • Modifying the maximum allowable developer fee by excluding from the formula for larger transactions any acquisition payments made to the PHA, developer fee, and reserves
  • Establishing greater flexibility to underwrite to new loan products
  • Providing greater detail on the acceptable forms in which a public or non-profit can demonstrate ownership or control
  • Providing guidance on owners’ responsibilities to treat lead-based paint hazards in the context of a RAD conversion
  • Encouraging PHAs and their partners to grant current workers whose employment positions may be eliminated during conversion the right of first refusal for new employment openings for which they are qualified

Changes for the second component include:

  • Likewise eliminating the cap on the number of PBV units at a project
  • Permitting Mod Rehab conversions to PBRA to convert at comparable market rents, up to 110 percent of fair market rent (FMR)
  • For Mod Rehab SRO conversions, authorizing the use of the efficiency FMR for SRO units, rather than 75 percent of the efficiency FMR, which is the existing SRO standard
  • Allowing all conversions to PBRA to achieve rents between 110 percent and 120 percent of FMR, if justified by comparable market rents and only in certain circumstances where preservation criteria have been met
  • For conversions to PBRA, permitting the use of small area FMRs (SAFMRs) in the calculation of the contract rent cap, with HUD approval

To help navigate through these numerous changes, HUD has kindly provided two versions of the notice: one showing all of the changes in a redlined format, and a clean version of the document. Both are available here, on the RAD webpage. According to the email, HUD intends to hold live webinars on the notice and will provide more information in the following weeks. Click here to join the RADBlast! email list.

Got questions about RAD? Nan McKay & Associates currently offers three RAD certifications: RAD Project-Based Rental Assistance (PBRA) OverviewRAD Project-Based Voucher (PBV) Specialist, and our newly redesigned Multifamily Housing Specialist (MHS), which is the only training in the affordable housing industry that includes specific requirements for PHAs participating in the RAD program. If your PHA has elected to transform its public housing to project-based rental assistance (PBRA), this training is a must.  If you aren't sure which training is the right one for your agency, give us a call at (800) 783-3100 or email sales@nanmckay.com and our experienced staff will point you in the right direction.

Topics: FMR, Mod Rehab, PBRA, PBV, PIH notices, Program News and Notices, public housing conversion, RAD, lead-based paint

HUD publishes final rule on small area FMRs

Posted by NMA on Nov 17, 2016 2:55:39 PM

Yesterday the Department of Housing and Urban Development (HUD) published in the Federal Register a final rule on the use of small area fair market rents (SAFMRs) in the housing choice voucher (HCV) program.

The rule, which is intended to help reduce the number of assisted families that reside in areas of high poverty concentration, requires the use of SAFMRs in certain metropolitan areas if the area meets a specific set of criteria. It changes the geography used to calculate FMRs in certain areas from a metropolitan area-wide approach to the zip code level, expanding the options of families to live in lower poverty neighborhoods.

In a notice published today in conjunction with the rule, HUD lists the 24 areas required to implement SAFMRs, and discusses several key changes made from the rule proposed in June of this year. These changes include:

  • The addition of three payment standard reduction protections
  • Additional criteria for selecting SAFMR areas
  • The exemption of project-based vouchers (PBVs) except in certain conditions
  • Additional changes to reduce the administrative burden on PHAs and simplify the transition

HUD’s Office of Policy Development and Research (PD&R) established a website earlier this year containing tools and information on the use of SAFMRs in the HCV program. To accompany the final rule, HUD has posted links to several supplementary documents on this website, including today’s press release on the rule, the key aspects notice mentioned above, and second Federal Register notice on SAFMRs, also published this morning, which sets the values for the selection criteria used to determine areas subject to small area FMRs, and lists the areas meeting these requirements. The rule becomes effective on January 17, 2017.

Topics: final rule, FMR, PBV, Program News and Notices

HUD publishes HOTMA implementation guidance

Posted by NMA on Oct 25, 2016 12:05:11 PM

HOTMA

Yesterday in the Federal Register, the Department of Housing and Urban Development (HUD) published the initial implementation guidance for the Housing Opportunity through Modernization Act (HOTMA).

The guidance sets forth the statutory provisions effective immediately under HOTMA, and the actions that may or should be taken now in order to comply with those changes, in addition to identifying the provisions that are not effective until HUD subsequently issues a notice or regulation to implement them.

As specified in the guidance, among the HOTMA provisions that are effective upon enactment, or otherwise in effect, are the following:

  • Reasonable accommodation payment standards. HOTMA allows PHAs to establish a payment standard of up to 120 percent of fair market rent (FMR) without HUD approval as a reasonable accommodation for a person with a disability. Because the streamlining rule previously provided PHAs with this flexibility, no action is required to implement this provision.
  • Establishment of FMR. This provision changes how HUD publishes FMRs and the procedures for comment and requests for reevaluation. Additionally, HOTMA provides that in the housing choice voucher (HCV) program, no PHA is required as a result of a reduction in the FMR to reduce the payment standard of a family continuing to reside in a unit under HAP contract at the time the FMR was reduced. Should PHAs choose to use the higher payment standard for the family’s subsidy calculation, this must be specified in the administrative plan. HUD’s FMRs for 2017 already reflect the new procedures, and HUD will issue additional guidance with regards to payment standards in the future.
  • Family Unification Program (FUP) for children aging out of foster care. HOTMA revises the length of the term that an FUP-eligible youth may receive FUP assistance from 18 to 36 months, in addition to revising the eligibility requirements for FUP-eligible youth. Changes to the FUP program were effective upon implementation of HOTMA and PHAs were made aware of the new provision by means of a letter to FUP PHA executive directors on August 29, 2016. Further details can be found in today’s guidance.
  • Preference for United States citizens or nationals. This section applies to Guam only. The provisions were effective upon enactment of HOTMA and the details can be found within today’s guidance.
  • Exception to PHA resident board member requirement. Certain jurisdictions, as specified in the guidance, are excepted from the resident board member requirement. While effective upon implementation of HOTMA, this exception has already been effective for a number of years through various appropriations acts.
  • Inclusion of PHAs and local development authorities in Emergency Solutions grants. HOTMA authorized local governments receiving these grants to sub-award all or some of those funds to PHAs and local redevelopment authorities. The provision was effective upon implementation of HOTMA, although HUD does intend to issue further guidance on the matter.
  • Inclusion of Disaster Housing Assistance Program (DHAP) in certain fraud and abuse measures. This provision considers DHAP a HUD program for the purpose of income verifications. Like other provisions described in the notice, it has previously been in effect through appropriations acts for a number of years.
  • Energy efficiency requirements under the Self-Help Homeownership Program (SHOP). While this provision was effective upon enactment of HOTMA, changes will be reflected in the future SHOP notice of funding availability (NOFA), where more information will also be provided.
  • Formula and terms for allocations to prevent homelessness for individuals living with HIV or AIDS. This provision makes several changes to the Housing Opportunities for Persons with AIDS (HOPWA) program. They apply to FY 2017 funds and HUD’s Office of Community Planning and Development (CPD) will issue further guidance on how the changes will affect future funding.

As mentioned above, today’s guidance also specifies several other pieces of HOTMA that will require further rulemaking or guidance in order to become effective. In other words, PHAs may not apply these provisions until HUD issues a rule or a notice addressing them. Because they are not immediately effective, they are summarized in brief below, although further details can be found in today’s guidance:

  • Changes regarding initial inspections in HCV units
  • Changes on the enforcement of housing quality standards (HQS) in HCV units
  • Changes regarding the frequency of income reviews
  • Changes on income reviews in project-based housing, in addition to changes on project-based assistance in general
  • Limitations on public housing tenancy for over-income families
  • Limitations on eligibility for assistance based on assets
  • Changes regarding PHA-owned units
  • Revisions to requirements regarding the public housing capital and operating funds
  • Changes regarding the use of vouchers for manufactured housing
  • Modifications of FHA requirements for mortgage insurance for condominiums
  • Changes regarding the definition of geographic area in the Continuum of Care program
  • Changes regarding HOPWA allocations

Got questions about HOTMA? All of NMA's HCV classes have been updated for the new payment standard rules. Register at least 45 days in advance for most seminars and you’ll receive a 10 percent discount. (The discount does not apply to seminars hosted by housing authorities or associations.)

Topics: capital fund, disaster programs, energy efficiency, FMR, HOTMA, HQS, inspections, operating subsidy, over-income families, Program News and Notices, reasonable accommodation, rent calculation, streamlining, voucher reform legislation

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