Congress Creates Opportunity Zone Program

Established by the Tax Cuts and Jobs Act of 2017, Congress has created a new community development program that encourages long-term investments in low-income urban and rural communities. The Opportunity Zone Program provides tax incentives for investors to re-invest unrealized capital gains into Opportunity Funds by providing a temporary tax deferral for capital gains. Opportunity Funds are private sector investment vehicles that invest at least 90 percent of their capital in Opportunity Zones. This new program has the potential to become an important, viable program for housing and community development agencies across the country.

Governors for all U.S. states and territories, along with the mayor of the District of Columbia, are allowed to identify 25 percent of the total number of low-income census tracts in their state, territory, or federal district as an Opportunity Zone. States must conform to the Low-Income Community federal standard as a baseline for zone designations but are free to establish additional criteria to reflect local needs and priorities.

Governors have until March 22, 2018 to identify their Opportunity Zones to the Treasury Department.

HUD Releases Lead-Based Paint Capital Fund Program NOFA

HUD has released its Notice of Funding Availability (NOFA) for its Lead-Based Paint Capital Fund Program (LBPCF). The FY 2017 Appropriations bill provided $25 million to be available for competitive grants to PHAs to evaluate and reduce lead-based paint hazards in public housing. These grants are for risk assessments, abatement, and interim controls as defined in Section 1004 of the Residential Lead-Based Paint Hazard Reduction Act of 1992. Grants are subject to normal PHA regulations. Applications are due Tuesday, March 20, 2018.

Properties eligible for funding under this NOFA must have at least one family with a child under age six at the time of application. HUD will use data in the IMS/PIC system to verify family occupancy for eligible applications after the threshold review is completed. Eligible properties may include playgrounds or child-care centers that are part of the public housing project. Applications that request more than $1,000,000 in grant funds will not meet the threshold eligibility and will not be reviewed further. A PHA that is troubled or under the direction of HUD is eligible for funding, provided the PHA is in compliance with any current Memorandum of Agreement or Recovery Agreement.

Funds can only be used for the activities of lead-based paint risk assessments, inspections, abatement, interim controls, and clearance examinations. Other work in the property, including work to prepare for lead hazard control (e.g., repairs to the substrate, fixing leaks or other renovations) cannot be funded with this grant. Housing units that have had lead-based paint abated (as demonstrated by documentation of a prior lead evaluation and abatement), and where the abatement is still performing are not eligible for enrollment under this grant program.  Funds under this NOFA may not be used at projects under Commitments to enter into Housing Assistance Payments Contracts (CHAPs) under the Rental Assistance Demonstration (RAD).

Applications should be submitted to grants.gov. Applications are due Tuesday, March 20, 2018. 

HUD Sends Email on Transition Funding Issue in Form-52723

On January 24, HUD sent out an email notifying PHAs that there is an issue with the calculation of Transition Funding in the PHA HUD-52723 tool. According to HUD, PHA tools are not calculating Transition Funding for PHAs that have one project initially approved for stop loss and that continue to comply with asset management requirements. HUD is currently working on the issue and notes that they do not expect the solution to impact the PHA tools. HUD notes that PHAs experiencing this issue should proceed to submit their tools to their Field Offices within the published timeline/deadline, and that impacted PHAs should indicate that they are eligible for Transition Funding and specify the amount in the comments section of the PHA tool.

PHAs should contact their Field Office if there are any questions or concerns.

2018 Public Housing Management Fees Published

On January 17, HUD released it’s 2018 Public Housing Management Fee Table. PHAs may use the amounts published in the table to establish “reasonable” fees for each of their public housing projects. Some PHAs may see a decrease from the 2017 schedule. Fees in the fee table have already been adjusted for occupancy. Nationally, the 80th percentile management fee is $60.46 per unit month (PUM).

HUD Posts Updated ’18 Operating Subsidy Processing Schedule

HUD has posted it’s updated schedule for Calendar Year (CY) 2018 Operating Subsidy Process to the CY 2018 Operating Subsidy Processing Webpage.

HUD will release the PHA tools Form HUD-52723 and Form HUD-52722 by Friday, Jan. 12, or earlier. PHAs must submit these forms to their Field Offices no later than February 2. HUD will publish preliminary eligibility for 2018 based upon HUD-52723 by March 5, and and PHAs will be required to contact HUD with any issues regarding their preliminary eligibility by March 12.

 

HUD Issues Notice on Hurricane Harvey CDBG-DR Funding

On December 27, HUD issued a notice announcing allocations, common application, waivers, and alternative requirements for Community Development Block Grant-Disaster Recovery (CDBG-DR) to the state of Texas. The notice allocates $57,800,000 of CDBG-DR funds to the State of Texas in response to Hurricane Harvey. Funds must be used only for specific disaster recovery related purposes. The notice is applicable starting January 2, 2018.

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HUD to Withdraw Five Proposed Rules

On Friday, December 22, HUD will withdraw five proposed rules in an effort to reduce regulatory and financial burdens. As HUD is only withdrawing proposed rules that have yet to go into effect, PHA operations will not be impacted. PHAs are not required to follow proposed rules. However, NAHRO had previously expressed concerns with some of these proposed rules and is glad to see that HUD will not be moving forward with flawed final rules. HUD’s action is consistent with Executive Order 13771 that requires at least two prior regulations be identified for removal for every new regulation issued and Executive Order 13777 that established a Regulatory Task Force aimed at identifying agency regulations that should be repealed, replaced, or modified.

The five proposed rules to be withdrawn include:

NAHRO has long advocated for reduced regulatory burden from HUD, and had serious concerns with  HUD’s demolition/disposition proposed rule, streamlined consortia proposed rule, floodplain management proposed rule, and HUD’s proposed changes to Physical Needs Assessments (PNAs) that would have required MTW agency PHAs, and PHAs with 250 units or less to perform PNAs.

Again, withdrawing these proposed rules will not impact PHA operations as PHAs are not required to comply with proposed rules.

NAHRO’s comment letters on the withdrawn proposed rules can be found here (members only).

NAHRO’s comment letter on reducing regulatory burden can be found here (members only). 

HUD Issues Guidance on Third-Party Agreements Encumbering Public Housing

On November 29, HUD’s Office of Public and Indian Housing (PIH) issued PIH-2017-24 (HA) titled, “Guidance on Third-Party Agreements Encumbering Public Housing Property.”  The Notice discusses the procedures and requirements for PHAs that enter into a third-party agreement that would encumber the PHA’s use or interest in public housing property. Third-party agreements may take various forms including but not limited to leases, licenses, leaseholds, rights-of-ways, easements, operating agreements, contracts, liens, assignments, and asset transfers.

The Notice discusses the types of third party agreements that are permissible. These include agreements for normal uses associated with the operation of public housing and agreements unrelated to normal uses associated with the operating of public housing. PHAs are responsible in determining whether a third-party agreement requires HUD approval. This is determined via a disposition analysis and an annual contributions contract (ACC) analysis. PHAs may need approval from either HUD’s Special Application Center (SAC) or their Field Office before entering into a third-party agreement, however this is not always the case. The PHA is responsible for determining whether the SAC or the Field Office is responsible for approval.

Lastly, the notice contains requirements for third-party agreements, and contains a suggested HUD rider to third-party agreements.

 

HUD Releases Updated Guidance on Flat Rents

On November 15, HUD’s Office of Public and Indian Housing (PIH) released Notice PIH-2017-23 (HA), entitled “Updates to Flat Rent Requirements.” This Notice supersedes and replaces the guidance provided in Notice PIH 2015-13 and clarifies HUD’s interpretation of the statutory amendment related to flat rents.This notice also serves as supplemental guidance to the interim rule published on September 8, 2015 with an effective date of October 8, 2015.

The FY 2014 Appropriations Act requires PHAs to establish flat rents at no less than 80 percent of the applicable Fair Market Rent (FMR). However, if a new flat rent amount for a unit increased a family’s existing rental payment by more than 35 percent, then the new flat rent amount was required to be phased in as necessary to ensure that the family’s existing rental payment did not increase by more than 35 percent annually.

The FY 2015 Appropriations Act further amended the public housing rent requirements for flat rents. Specifically, the statute was amended to require that flat rents must be set at no less than the lower of 80 percent of the fair market rent or at the discretion of the Secretary if the Secretary determines a different amount more accurately reflects local market conditions. This can be done by a PHA applying for an exception waiver.  

Notice PIH-2017-23 provides guidance and clarification on using smaller geographic area FMRs to determine flat rents, applying for exception flat rents, incorporating utility expenses into flat rents, complying with flat rent policies on an annual basis, and conducting annual rent options.