FY 2017 FMRs Published

~ Tushar Gurjal ~ Leave a comment

HUD has published its FY 2017 FMRs on its website. While we are still in the process of going through the notice announcing the publication of the FMRs, here are some of the main takeaways:

  • After the passage of the Housing Opportunity Through Modernization Act of 2016 (HOTMA), HUD is no longer required to publish FMRs in the Federal Register, but may now publish them on its website, while announcing the postings in the Federal Register.
  • After HOTMA, FMRs shall be effective no earlier than 30 days after the date of publication of the announcement notice in the Federal Register.
  • HOTMA requires that HUD publish proposed “material changes” to the methodology for comment. The notice asks for public comment on “defining the scope of material changes that will trigger notice and comment in future calculations of FMRs.”
  • The methodology for calculating the FY 2017 FMRs will remain the same as the methodology used to calculate the FY 2016 FMRs, except that updated data will be used.
  • There are no geography changes, but “several areas have been renamed to avoid confusion.”
  • The effective date of the FMRs will be October 1, 2016.
  • HUD has established a procedure “for PHAs and other interested parties to comment on such fair market rentals and to request, within a time specified by [HUD], reevaluation of the fair market rentals in a jurisdiction before such rentals become effective.”

Read the full pre-publication notice here.

[8/26/16 UPDATE: The Federal Register publication can be found here. Comments are due by September 26, 2016.]

The FY 2017 FMRs can be found here (scroll to FY 2017). The PDF tables can be found here.

NAHRO Submits Letter to HUD PIH Regarding Costs of Bed Bug Eradication in Public Housing Units

~ Eric Oberdorfer ~ Leave a comment

On August 25, NAHRO submitted a letter to HUD’s Office of Public and Indian Housing (PIH) Principal Deputy Assistant Secretary Lourdes Castro Ramirez regarding the financial strains many PHAs face regarding bed bug infestation. In the letter, NAHRO noted the difference between standard pest extermination methods compared to the more-intensive methods of eradicating bed bugs. The letter continued, stating that in light of the additional effort required to eradicate bed bugs from housing units and properties, bed bug infestations place substantial financial burdens on PHAs, and that bed bugs affect more than just the tenants in an impacted unit.

NAHRO plans to continue working with HUD PIH  to ensure that PHAs can remain financially secure while also ensuring their tenants have access to safe, secure housing free of bed bugs.

Assessment of Fair Housing Tool for Local Governments with Proposed Changes Now Available

~ Jenny Hsu ~ Leave a comment

As NAHRO previously reported, on August 23, HUD published a 30-day Notice in the Federal Register seeking additional public feedback on the proposed changes to HUD’s Affirmatively Furthering Fair Housing (AFFH) Local Government Assessment Tool (Local Government Tool). The Local Government Tool is the standardized tool that communities receiving HUD Community Planning and Development (CPD) formula grant dollars must use to conduct and submit their Assessments of Fair Housing (AFH).

The 30-day Notice proposes a number of additions to the Local Government Tool that would, ideally, help simplify the AFH process for Qualified Public Housing Authorities (QPHAs), defined as PHAs not designed as “troubled” with a combined unit total of 550 or less, and for local governments receiving small CPD formula grants. The tool would include two new sections for streamlined assessments for QPHAs and small local governments, called “inserts.”  QPHAs and local governments seeking to fulfill their Fair Housing requirements through these streamlined “inserts” must be involved in a joint or regional collaboration with a local government as the lead entity.

The proposed Local Government Tool with the new “inserts” is now available for public viewing on  HUD Exchange. The deadline to respond to the 30-day Notice and comment on the Local Government Tool is September 22, 2016.

HUD Announces Changes to the AFFH Assessment Tools for Small PHAs and Local Governments

~ Jenny Hsu ~ Leave a comment

On August 23, HUD will publish a 30-day notice in the Federal Register seeking public feedback on the Local Government Assessment Tool, the instrument with which communities receiving HUD Community Planning and Development (CPD) formula grant dollars must use to conduct and submit their Assessment of Fair Housing (AFH) analysis, as required by the Affirmatively Furthering Fair Housing (AFFH) Final Rule.

Due to limited staff and resources, NAHRO has long-requested for HUD to streamline the AFFH assessment tools for small program participants. The 30-day Notice announces two substantial changes that would, ideally, help simplify the AFH process for Qualified Public Housing Authorities (QPHAs), defined as PHAs not designed as “troubled” with a combined unit total of 550 or less, and for local governments receiving small CPD formula grants:

  • HUD seeks to revise the existing Local Government Assessment Tool to include two new streamlined assessments for small program participants, called “inserts.” The first insert would be for use by QPHAs and the second insert would be for use by local governments that received a CBDG grant of $500,000 or less in the most recent fiscal year prior to the AFH due date. QPHAs and local governments seeking to fulfill their AFFH requirements through these streamlined inserts must be involved in a joint or regional collaboration with a local government as the lead entity.
  • HUD seeks to issue a fourth assessment tool for Qualified PHAs. Prior to this notice, HUD had committed to issuing only three AFFH assessment tools (Local Government, State and Insular Areas, and PHA-only). The new QPHA Assessment Tool would be for use by a QPHA or by multiple QPHAs jointly collaborating to submit an AFH. HUD assumes that many QPHAs will want to take advantage of this option, particularly those unable to enter into a joint or regional collaboration with another partner. HUD intends to issue a separate public notice and comment process for this new tool.

The 30-day notice also addresses the public comments received in response to the 60-day information collection notice that was published on March 23, 2016 (see NAHRO’s comments here). NAHRO’s next issue of The Monitor (members only) will have additional details about the contents of the 30-day notice.

GAO Publishes Report on HUD Management

~ Tushar Gurjal ~ Leave a comment

On August 19, the United States Government Accountability Office (GAO) made publicly available a report it wrote for congressional requesters. The report found that HUD has “not consistently incorporated requirements and key practices  identified by GAO to help ensure effective management into its operations.”

The report identified five management functions and discusses how completely HUD implemented prior GAO recommendations. Selected excerpts can be found below:

Performance planning and reporting – “HUD met most of the requirements in the GPRA Modernization Act of 2010 for its strategic plan and annual performance plan and report . . . [b]ut HUD’s strategic plan does not clearly link HUD’s goals and objectives with federal priority goals.”

Information technology management – “HUD has not demonstrated that it has the capacity to effectively plan for and manage IT projects.”

Human capital management – “HUD has made progress in developing new human capital plans and mostly followed key principle and practices for strategic workforce planning, succession planning, and training planning.”

Financial management – “HUD did not follow seven of eight key practices for financial management.”

Acquisition management – “HUD partially followed key practices for acquisition relating to organizational alignment and human capital.”

The report recommends that HUD take the following eight actions:

  1. Link HUD’s goals and objectives with federal priority goals;
  2. Describe why HUD’s goals were not met and HUD’s plans for achieving them;
  3. Establish procedures and time frames to reach out to Congress and stakeholders to ensure that the strategic plan meets statutory requirements;
  4. Establish a process and schedule to review and update HUD’s human capital strategic plan; strategic workforce plan; and succession plan;
  5. Establish a process and schedule to update policies and procedures to help ensure that policies and procedures for key management functions remain current and complete;
  6. Formalize lines of communication between the Chief Information Officer and the agency head;
  7. Designate entities within program offices for fraud risk management activities; and
  8. Develop written policies for conducting program evaluations.

Thanks to PHADA for bringing this report to our attention.

The full report can be found here. The PDF can be found here.

The highlights page can be found here.

FMRs, SAFMRs, and Volatility

~ Tushar Gurjal ~ Leave a comment

Our friends at the National Housing Conference (NHC) and the Public Housing Authorities Director’s Association (PHADA) have written a blog post with a series of beautiful maps on historical Small Area Fair Market Rent (SAFMR) volatility on NHC’s Open House Blog. Here’s a map from the blog post on the Washington-Arlington-Alexandria HUD Metro Fair Market Rent (FMR) area.

https://nahroblog.org/wp-content/uploads/2016/08/d5a51-washington-arlington-alexandria252c2bdc-va-md2bhud2bmetro2bfmr2barea.jpg

I recommend looking at the blog post to read their take on SAFMRs and volatility and to see the other maps.

Here are a couple of points that I would like to note to further this conversation.

The methodology for calculating Fair Market Rents (and SAFMRs) is changing

In calculating the final FY 2016 FMRs HUD switched from a “historical-based annualized change in gross rent trend factor [to] a forward-looking forecast . . . [that] uses a model that forecasts national rent and utility [Consumer Price Index] indices based on economic assumptions used in the formulation of the President’s Budget.”[1] Since the methodology has changed, we need a time horizon of a few years to see if the volatility remains as bad a problem as before the methodological change.

Additionally, Peter Kahn, the Director of HUD PD&R‘s Economic Market Analysis Division, has stated the following:

We are looking at ways throughout the proposed ’17 FMR process of addressing that . . . variability in general. When the proposed ’17 FMRs are out, the . . . you can read that preamble and see that we are trying to take steps to address that variability. (See the YouTube clip where he said that here.)

Will HUD be successful in addressing this volatility? I don’t know, but it’s good that they’re aware of the problem and are taking steps to address the issue.

The passage of the Housing Opportunity Through Modernization Act of 2016 (HOTMA) may give PHAs a tool in managing volatility of payment standards based on both FMRs and SAFMRs

HOTMA has a provision that allows PHAs to hold harmless households that live in areas that receive lower FMRs. Section 107(b) of HOTMA states that “no public housing agency shall be required as a result of a reduction in the fair market rental to reduce the payment standard applied to a family continuing to reside in a unit for which the family was receiving assistance . . . at the time the fair market rental was reduced.” It is NAHRO’s understanding that this provision will apply to payment standards based on FMRs and SAFMRs.

The chart below shows how if a provision allowing for payment standards to be held harmless was in place between 2010 and 2016, then volatility may have been reduced in some instances. The blue line shows the actual Washington-Arlington-Alexandria FMR for 2 Bedroom units. The orange line shows what a payment standard based on that FMR would have been, had it been held harmless.

WashDCHoldharmlessFMRChart-2010-2016

The HOTMA provision has the ability to reduce volatility in certain instances, though holding FMR payment standards harmless may have budget implications. Another point to remember is that when the payment standard starts being held harmless matters. In the chart above, if the payment standard starts being held harmless in 2013, then the volatility that results from increases in the FMR will still occur.

Although the chart above shows a payment standard based on a FMR being held harmless, the same principle would apply to payment standards based on SAFMRs.

[1] – 80 Fed. Reg. 77,124 (December 11, 2015).

HUD Publishes Notice on Availability of $5 million for TPVs in Low-Vacancy Areas

~ Tushar Gurjal ~ Leave a comment

Today, HUD published a notice (PIH 2016-12) titled “Funding Availability for Tenant-Protection Vouchers for Certain At-Risk Households in Low-Vacancy Areas — Fiscal Year 2016.” The notice makes available the $5 million set-aside  for “certain at-risk households in low-vacancy areas for Fiscal Year (FY) 2016” from the $130 million appropriated for Tenant Protection Vouchers (TPVs) in general.

The $5 million in TPV assistance is available for the purpose of assisting “residents residing in low-vacancy areas and who either are or may have to pay rents greater than 30 percent of household income” because of the following:

  1. The maturity of a HUD-insured, HUD-held or section 202 loan that would have required the permission of the Secretary prior to loan prepayment;
  2. The expiration of a rental assistance contract for which the tenants are not eligible for enhanced voucher or tenant protection assistance under existing law; or
  3. The expiration of affordability restrictions accompanying a mortgage or preservation program administered by the Secretary.

The TPV assistance may be provided as either enhanced vouchers or project-based voucher (PBV) assistance.

NAHRO’s next issue of The Monitor (members only) will have additional details on the notice.

The full notice can be read here.

Interactive Tool Shows the Challenges in Affordable Housing Development

~ Jenny Hsu ~ Leave a comment

The Urban Institute and National Housing Conference have published an interactive and educative tool, “The Cost of Affordable Housing: Does It Pencil Out,” that demonstrates the huge gap between what it costs to build and maintain affordable housing and the affordable rent that low-income families can pay, making it difficult to finance affordable housing without additional subsidy. Aimed at policymakers and those new to the affordable housing world, users can play with the tool by changing specific variables on development costs and see how a development’s funding gap can be closed. The tool spotlights the importance of federal programs that support affordable housing, such as the Low-Income Housing Tax Credit (LIHTC) – which is the largest source of capital supporting the affordable housing inventory in the United States.

The formidable gap in financing affordable housing development is why it is important for the public to call on Congress to pass Sen. Maria Cantwell’s (D-Wash.) and Sen. Orrin Hatch’s (R-Utah) Affordable Housing Improvement Act of 2016. This legislation would expand the overall LIHTC allocation authority by 50 percent and make permanent the 4 percent Housing Credit rate. For more information on this legislation, visit NAHRO’s Community Development Resource Center (log-in required) to access a one-pager on the bills.

NAHRO submits Small Area FMR Comments

~ Tushar Gurjal ~ Leave a comment

NAHRO has submitted comments on HUD’s notice titled “Establishing a More Effective Fair Market Rent System; Using Small Area Fair Market Rents in Housing Choice Voucher Program Instead of the Current 50th Percentile FMRs.”

HUD’s proposed rule would mandatorily impose the use of Small Area Fair Market Rent (SAFMR) areas in 31 metropolitan areas, if it were implemented as currently written.

In NAHRO’s comments, we stated that PHAs should have the discretion to use either SAFMRs or FMRs depending on what made sense in a PHA’s rental housing market. NAHRO’s reasons to oppose the mandatory imposition of SAFMRs in certain areas can be divided into three broad categories: tenant welfare concerns; tenant choice concerns; and administrative burden concerns. NAHRO also noted that additional research needed to be done before mandatorily implementing SAFMRs and responded to specific solicitations about the rule from HUD.

Read NAHRO’s SAFMR comments here.

Read the proposed rule here.

Read NAHRO’s prior post on HUD’s SAFMR proposed rule here.

NAHRO meets with HUD PIH Leadership

~ Georgi Banna ~ Leave a comment

Georgi John HUD 16-8-9

NAHRO’s Acting CEO, John Bohm, and the NAHRO Policy Team members; Georgi Banna, Eric Oberdorfer and Tushar Gurjal; along with PHADA and CLPHA met with HUD’s Public and Indian Housing Principal Deputy Assistant Secretary (PDAS), Lourdes Castro-Ramierz, and many of the PIH department leadership.

Among the topics discussed were the priorities for implementing the Housing Opportunities Through Modernization Act (HOTMA/HR 3700); upcoming HUD rules such as Smoke-Free Housing, Small Area Fair Market Rents (SAFMRs), HCV Administrative Fee Formula; Moving to Work (MTW) Expansion; and Triennial Recertifications; and the current priorities of NAHRO, PHADA, CLPHA and HUD. NAHRO and CLPHA were also thanked for their current and continued work in affordable housing and education and the improvement of educational outcomes for the children our members serve.

NAHRO is committed to keeping open and productive lines of communication and will continue to share the thoughts and concerns of our members with HUD.