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Notice restricts flat rent phase-ins

Posted by BEMuser on Sep 11, 2015 3:47:53 PM

As we reported earlier this week, HUD has issued two notices concerning changes to the flat rent rule included in the fiscal year (FY) 2015 appropriations act: an interim rule published Tuesday, and Notice PIH 2015-13, published Wednesday. The notices offer PHAs two methods for setting flat rents at a lower level than 80 percent of the applicable fair market rent (FMR): by utilizing an FMR for a smaller geographic area, or by requesting an exception flat rent from HUD.

Notice PIH 2015-13 also places some restrictions on PHAs’ ability to phase in flat rent increases. Under the previous HUD guidance (Notice PIH 2014-12), PHAs were required to phase in increases exceeding 35 percent, and had discretion to phase in increases of 35 percent or less over a three-year period. For example, a 30 percent increase could be phased in at 10 percent per year over three years.

Notice PIH 2015-13, which replaces Notice PIH 2014-12, restricts PHA flexibility to phase in flat rent increases. Since PHAs are now permitted to establish flat rents at a lower level, only increases exceeding 35 percent will be phased in. Flat rents will be phased in at the full 35 percent per year. The notice contains the following instructions for implementing the new requirement:

On a case-by-case basis, at the family’s next annual rent option, compare the updated flat rent amount applicable to the unit to the rent that was being paid by the family immediately prior to the annual rent option;

a. If the new flat rent amount would not increase a family’s rental payment by more than 35 percent, the family may choose to pay either the updated flat rent amount or the previously calculated income-based rent;

b. If the PHA determines that the updated flat rent amount would increase a household’s rental payment by more than 35 percent, the family may choose to pay the phased-in flat rent amount resulting from the flat rent impact analysis or the previously calculated income-based rent.

Is your PHA in search of a proven methodology for ensuring that program participants are paying reasonable rents? GoSection8.com can help. Specializing in rent reasonableness, Go8 has served tenants, landlords, and housing authorities across the United States since 2004. Go8 can also assist public housing agencies with the new flat rent requirements. To learn more about how you can bring Go8 to your agency, email sales@nanmckay.com.

Topics: appropriations, flat rent, FMR, interim rule, PIH notices, rent reasonableness

HUD follows flat rent rule with supplemental guidance

Posted by BEMuser on Sep 10, 2015 8:55:26 AM

falt rent rule Yesterday HUD posted Notice PIH 2015-13, "Changes to Flat Rent Requirements — FY 2015 Appropriations Act." The nine-page notice follows Tuesday’s publication of the interim rule on "Streamlining Administrative Regulations for Public Housing: Revisions to Public Housing Flat Rents." In addition to providing supplemental guidance and clarification on the interim rule, yesterday's notice replaces Notice PIH 2014-12.

As we previously reported, the interim rule provides PHAs with two alternatives to the current requirement for setting flat rents at 80 percent of the applicable fair market rent (FMR). First, PHAs may establish flat rents based on 80 percent of an FMR representing a smaller geographic area. This second FMR would be either the small area FMR (SAFMR), issued for metropolitan counties, or the unadjusted rents, for counties not covered by an SAFMR. Yesterday's notice explains the term “unadjusted rents” as follows:

The unadjusted rent is the FMR estimated directly from the American Community Survey (ACS) source data that HUD uses to calculate FMRs before HUD applies its state non-metropolitan minimum rent policy.

HUD will publish the unadjusted rents annually on its website. If neither a SAFMR nor an unadjusted rent has been determined for an area, PHAs must set flat rents based on the applicable FMR for the larger area.

Alternatively, PHAs may request an exception from HUD for a flat rent amount that is lower than either of the two FMRs. Such requests must include a market analysis and a demonstration that the lower flat rent is reasonable in comparison to similar unassisted units. The new notice clarifies that while HUD does not prescribe a particular formula for determining the market analysis, PHAs must compare the public housing unit to unassisted units in the area using the nine factors considered in rent reasonableness determinations for the voucher program:

  • Location, quality, size, unit type, age of the unit, and
  • Amenities, housing services, maintenance, and utilities the PHA will provide under the lease

PHAs utilizing exception flat rents must conduct a new market analysis, and obtain HUD approval, annually. PHAs that submit an exception request prior to the publishing of final fiscal year (FY) 2016 FMRs (likely in October 2015) will not be required to submit another exception request until HUD publishes final FY 2017 FMRs (likely in October 2016). Proposed FMRs for FY 2016 were posted last week on the Office of Policy Development and Research (PD&R) FMR page.

The new notice also contains the following reminder regarding "over-income" families:

As flat rents are fully implemented, the higher rent levels will ensure that families with higher incomes pay an appropriate market-based rent. It is an important policy goal to provide scarce public resources to those most in need of deeply affordable housing. PHAs are therefore reminded that they have the discretion, in accordance with federal law and regulations (24 CFR 960.261; FR-4824-F-02), to establish occupancy policies that include the eviction of public housing tenants who are above the income limits for eligibility to participate in public housing programs. HUD encourages PHAs to provide a balance between the important goals of supporting the sustained self-sufficiency of families with the ever increasing demand for affordable housing units among families on their waiting lists.

The notice includes previously-issued HUD guidance on flat rents and utility allowances, rent increase phase-in requirements, and annual rent options.

Is your PHA in search of a proven methodology for ensuring that program participants are paying reasonable rents? GoSection8.com can help. Specializing in rent reasonableness, Go8 has served tenants, landlords, and housing authorities across the United States since 2004. Go8 can also assist public housing agencies with the new flat rent requirements. To learn more about how you can bring Go8 to your agency, email sales@nanmckay.com.

Topics: appropriations, flat rent, FMR, interim rule, PIH notices, rent reasonableness, utilities

HUD publishes interim rule on flat rents

Posted by BEMuser on Sep 8, 2015 12:49:02 PM

flat rentsToday in the Federal Register, HUD published an interim rule titled "Streamlining Administrative Regulations for Public Housing: Revisions to Public Housing Flat Rents." The interim rule provides PHAs with increased flexibility in setting flat rents, as reflected in the 2015 appropriations act. Today’s rule amends the requirements of the 2014 appropriations act implemented by Notice PIH 2014-12.

As explained in the notice, the 2015 appropriations act provides PHAs with two alternatives to the current requirement for setting flat rents at 80 percent of the applicable fair market rent (FMR). First, PHAs may establish flat rents based on 80 percent of the applicable FMR, or 80 percent of an FMR representing a smaller geographic area. This second FMR would be either the small area FMR (SAFMR), issued for metropolitan counties, or the unadjusted rents, for counties not covered by an SAFMR. If neither a SAFMR nor an unadjusted rent has been determined for an area, PHAs must set flat rents based on the applicable FMR for the larger area.

Second, PHAs may request an exception from HUD for a flat rent amount that is lower than either of the two FMRs. Such requests must include a market analysis and a demonstration that the lower flat rent is reasonable in comparison to similar unassisted units. PHAs are not, of course, required to exercise the new flexibility described in today’s notice:

Some PHAs may want to wait for the conclusion of public comment and the final rule before taking advantage of the new authority, and HUD understands and supports this position.

While HUD published the interim rule without soliciting public comments in order to expedite flat rent relief for PHAs, a 60-day public comment period is now open and will close on November 9, 2015. The interim rule is effective today. Proposed FMRs for federal fiscal year (FFY) 2016 were posted last week and are available on HUD’s FMR page.

Got questions about the new flat rent guidance? NMA experts will be available for limited free one-hour consulting sessions at the 2015 NMA and GoSection8 Housing Conference. Registered participants can sign up on a first-come, first-served basis now. Register online or email sales@nanmckay.com for more information.

Topics: appropriations, flat rent, FMR, interim rule, PIH notices, The Housing Conference

HUD publishes interim rule on new housing trust fund

Posted by BEMuser on Jan 30, 2015 12:32:18 PM

Today in the Federal Register, the Department of Housing and Urban Development (HUD) published an interim rule that does not affect the regulations governing the public housing and housing choice voucher (HCV) programs but should be of interest to PHAs. Here’s the summary:

The Housing and Economic Recovery Act of 2008 (HERA) establishes a Housing Trust Fund (HTF) to be administered by HUD. The purpose of the HTF is to provide grants to state governments to increase and preserve the supply of rental housing for extremely low- and very low-income families, including homeless families, and to increase homeownership for extremely low- and very low-income families.

This rule establishes the regulations that will govern the HTF. HUD is issuing this rule as an interim rule. It is HUD’s intention to open this interim rule for public comment to solicit comments once funding is available and the grantees gain experience administering the HTF program.

According to the accompanying press release, "States and state-designated entities are eligible grantees for the HTF. Annual formula grants will be made, of which at least 80 percent must be used for rental housing; up to 10 percent for homeownership; and up to 10 percent for the grantee's reasonable administrative and planning costs." The press release also links to a new webpage for the HTF program at the HUD Exchange website.

Today’s interim rule will become effective on March 31. If you're interested in learning more about the HTF program, the National Low-Income Housing Coalition (NLIHC) will be offering a free webinar next Thursday, February 5, from 1 to 2 p.m. eastern time (10 a.m. to 11 a.m. Pacific time). The webinar will provide state and local housing advocates and providers with detailed information on how to prepare for the first NHTF dollars coming to states in early 2016. If you would like to participate in the webinar, click here to register.

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

Topics: HERA, interim rule

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