New Guidance on Asset-Repositioning Fee Eligibility

On Dec. 21, HUD published a notice titled “Guidance on Eligibility for Asset-Repositioning Fee (ARF)” (PIH 2021-37). This guidance is for PHAs that are demolishing or disposing public housing units. It details instances when a PHA may be eligible for an Asset-Repositioning Fee (ARF), which helps PHAs manage costs related to the “administration of demolition and disposition [actions], tenant relocation, and minimum protection and services associated with such efforts.” This notice replaces Notice PIH 2017-22. It makes two major changes: 1) including ARF eligibility for projects a PHA demolishes in accordance with de minimis demolition authority; and 2) eliminating ARF eligibility for units sold or projects transitioned to homeownership under a homeownership plan.

Housing agencies must ensure that data related to ARF in the Public and Indian Housing Information Center (PIC) is accurate. If the data in PIC is not accurate, the notice provides information on revising it within the system.

The notice provides guidance on which projects, or entire buildings, are eligible for ARFs and which are not. In general, those units that are eligible are projects that are approved for section 18 demolition or disposition, projects approved for demolition pursuant to a HOPE VI or Choice Neighborhoods plan, and projects slated for demolition through certain de minimis demolition authority. Ineligible projects include Rental Assistance Demonstration (RAD) conversions; voluntary conversions; certain retentions of units; units that have reached the end of their ARF timeline, but remain under an annual contributions contract; mixed-finance modernization projects; projects sold pursuant to an approved homeownership plan; and projects removed from inventory through a combined process of ARF eligible methods and ineligible methods (e.g., blended RAD conversions incorporating demolition and disposition funds).

Eligible agencies must follow the ARF timeline discussed in the notice. The ARF timeline begins “on the first day of the next quarter six months after the date the first unit becomes vacant after the relocation date included in the approved relocation plan.” The notice provides additional information and detail on the timeline, including a chart visually depicting it. Additionally, there is guidance on how to properly report units that have not been removed from inventory, but are eligible for ARFs.

Finally, the notice provides additional information on the financial side of ARFs. This includes information on how to calculate ARFs (including the needed documentation), the length of the ARF funding period and its relationship with the operating subsidy funding year, information on demolition or disposition actions with different relocation dates, and information on when ARF-eligible units are no longer eligible for other operating fund add-ons and how the rolling base is recalculated.

The full notice may be found here.