News

RD to Implement HOTMA Income and Certification Rules on July 1, 2025

Although HUD has postponed implementation of HOTMA for its Multifamily Housing Programs until January 1, 2026, the USDA Rural Housing Service (RHS) Office of Multifamily Housing has announced that the Housing Opportunity Through Modernization Act (HOTMA) will take effect on July 1, 2025, bringing significant changes to income calculation rules for multifamily housing programs. Key Implementation Details To accommodate the federally mandated HOTMA requirements, Rural Development published comprehensive updates to Chapter 6 of Handbook 2-3560 on June 13, 2025. All multifamily housing tenant certifications effective on or after July 1, 2025, must comply with the new HOTMA requirements. Recognizing the challenges of the transition period, Rural Development has announced a six-month grace period. Between July 1, 2025, and January 1, 2026, the agency will not penalize multifamily housing owners for HOTMA-related tenant file errors discovered during supervisory reviews. Legislative Background HOTMA was signed into law on July 29, 2016, directing the Department of Housing and Urban Development (HUD) to modernize income calculation rules established initially under the Housing Act of 1937. After years of development, HUD published the Final Rule on February 14, 2023, updating critical regulations found in 24 CFR Part 5, Subpart A, Sections 5.609 and 5.611. The HOTMA changes specifically affecting the RHS Multifamily Housing portfolio are contained in 24 CFR 5.609(a) and (b) and 24 CFR 5.611, which standardize income calculation methods across federal housing programs. Notable Policy Changes Unborn Child Consideration One of the most significant changes involves how unborn children are counted for household eligibility purposes. Under the new rules, pregnant women will be considered as part of two-person households for income qualification purposes, aligning Rural Development policies with other affordable housing programs, including HUD and the Low-Income Housing Tax Credit (LIHTC) programs. However, the household will not receive the $480 dependent deduction until after the child is born, maintaining consistency in benefit distribution timing. Updated Certification Forms Rural Development has released an updated Form RD 3560-8 Tenant Certification, which was initially published on December 6, 2024, and revised on April 18, 2025. The form is available on the eForms Website for immediate use. The previous version of the form has been renumbered as RD 3560-8A and should be used for all tenant certifications effective before July 1, 2025. Implementation Timeline The HOTMA implementation has experienced some delays. Originally scheduled to take effect on January 1, 2025, the Rural Housing Service announced on October 3, 2024, that implementation would be postponed to July 1, 2025, to allow additional time for property owners and managers to prepare. Rural Development initially implemented HOTMA through an unnumbered letter dated August 19, 2024, which outlined the overview and projected timeline for implementation. Industry Impact The HOTMA changes represent the most significant update to federal housing income calculation rules in decades, affecting thousands of multifamily housing properties across rural America. Property owners and managers have been working to update their systems and train staff on the new requirements. The six-month penalty-free transition period demonstrates Rural Development s commitment to supporting property owners through this complex regulatory change while ensuring long-term compliance with federal requirements. Moving Forward Multifamily housing stakeholders are encouraged to review the updated Chapter 6 of Handbook 2-3560 and ensure their staff is adequately trained on the new HOTMA requirements. Property owners should also verify they have access to the updated Form RD 3560-8 and understand the timing requirements for its use. For ongoing updates and additional resources, stakeholders can subscribe to USDA Rural Development updates through the GovDelivery subscriber page. The implementation of HOTMA represents a significant step toward modernizing and standardizing income calculation methods across federal housing programs, ultimately improving consistency and fairness in affordable housing administration.

HUD’s Proposed Rule to Eliminate Affirmative Fair Housing Marketing Plans: A Critical Analysis

Introduction The Department of Housing and Urban Development (HUD) has proposed eliminating the requirement for Affirmative Fair Housing Marketing Plans (AFHMPs), a cornerstone of fair housing enforcement for decades. This proposed rule, published on June 3, 2025, represents a significant departure from established fair housing practices and raises serious concerns about the federal government s commitment to ensuring equal housing opportunities for all Americans. HUD s justification for this elimination rests on six primary arguments, each of which fails to withstand careful scrutiny and analysis. Background on Affirmative Fair Housing Marketing Plans AFHMPs have long served as essential tools in combating housing discrimination by requiring property owners and managers to actively market housing opportunities to groups that are least likely to apply. These plans ensure that information about available housing reaches all segments of the community, not just those who traditionally have had better access to housing information networks. Analysis of HUD s Justifications 1. Claims of Inconsistency with Fair Housing Act Authority HUD argues that its authority under the Fair Housing Act and Executive Order 11063 is limited to the "prevention" of discrimination, claiming that AFHM regulations go beyond this scope by requiring outreach to minority communities through targeted publications and outlets. The agency characterizes this as impermissible "racial sorting." This argument fundamentally misunderstands both the nature of discrimination and the historical context of fair housing enforcement. Information disparities have long been one of the most prevalent and effective forms of housing discrimination. When certain groups systematically lack access to information about housing opportunities, the discriminatory effect is equivalent to being explicitly excluded. The failure to provide equal access to housing information is, in itself, a discriminatory act, not merely a neutral information gap. AFHMPs address this reality by ensuring that housing information reaches all communities, particularly those that have been historically excluded from traditional marketing channels. 2. Constitutional Challenges Under Equal Protection HUD contends that AFHM regulations violate the Equal Protection Clause by requiring applicants to favor some racial groups over others. This characterization is both inaccurate and misleading. AFHMPs do not create preferences or favor any particular group. Instead, they ensure equitable access to information by targeting outreach to communities that are "least likely to apply" for specific housing opportunities. This principle applies regardless of the racial or ethnic composition of those communities. For instance, housing developments located in predominantly minority neighborhoods are required to conduct affirmative marketing in white communities since white residents would be least likely to apply for housing in those areas. The regulation is race-neutral in its application it focuses on reaching underrepresented groups regardless of their racial identity. This approach promotes inclusion rather than exclusion and advances the constitutional principle of equal protection under the law. 3. Delegation of Legislative Power Concerns HUD s third argument that the Fair Housing Act s authorization of AFHM regulations constitutes an unconstitutional delegation of legislative power represents perhaps the weakest aspect of their legal reasoning. Congress explicitly mandated that affirmative efforts be made to eliminate housing discrimination. As the administrative agency responsible for implementing congressional intent in this area, HUD possesses both the authority and the responsibility to determine the most effective means of carrying out this mandate. The development of specific regulatory mechanisms to achieve Congress s stated goals falls squarely within HUD s legitimate administrative authority and represents appropriate implementation of legislative intent rather than overreach. 4. The "Color Blind" Policy Justification HUD frames its opposition to AFHMPs as part of a "color-blind" policy approach, arguing that it is "immoral" to treat racial groups differently and that the agency should not engage in "racial sorting." This argument mischaracterizes the function and operation of AFHMPs. These plans do not sort individuals by race or treat different racial groups unequally. Rather, they ensure that all groups have equal access to housing information by specifically reaching out to those who are least likely to receive such information through conventional marketing channels. Critically, AFHMPs require marketing to the general community in addition to targeted outreach. This comprehensive approach ensures broad access to housing information while addressing historical information disparities that have contributed to ongoing patterns of segregation. 5. Burden Reduction for Property Owners HUD argues that "innocent private actors" should not bear the economic burden of preparing marketing plans unless they have actively engaged in discrimination. This position suggests that property owners should be exempt from fair housing obligations unless they can prove intentional discriminatory conduct. This reasoning effectively provides cover for property owners who prefer that certain groups remain unaware of housing opportunities. The "burden" of creating inclusive marketing strategies is minimal compared to the societal cost of perpetuating information disparities that maintain segregated housing patterns. The characterization of comprehensive marketing as an undue burden ignores the fundamental principle that equal housing opportunity requires proactive effort, not merely passive non-discrimination. This represents a retreat to a "wink and nod" approach to fair housing enforcement that falls far short of the Fair Housing Act s aspirational goals. 6. Prevention vs. Equal Outcomes HUD s final argument contends that AFHM regulations improperly focus on equalizing statistical outcomes rather than preventing discrimination. This argument creates a false dichotomy between prevention and opportunity creation. AFHMPs exist not to guarantee equal outcomes but to ensure equal opportunity by providing equal access to housing information. When information about housing opportunities is not equally available to all segments of the community, the opportunity for fair housing choice is compromised from the outset. True prevention of discrimination requires addressing the structural barriers that limit housing choices, including information disparities. The Broader Implications HUD s proposed elimination of AFHMP requirements represents a concerning retreat from decades of progress in fair housing enforcement. The proposal effectively returns to an era when discrimination, while technically prohibited, was facilitated through information control and selective marketing practices. The reality of housing markets is that access to information varies significantly across communities. Property owners and managers possess considerable discretion in how they market available units. Without regulatory requirements for inclusive outreach, there are few incentives to ensure that information reaches all potential applicants. Anyone with experience in affordable housing development and management understands that information flow can be deliberately targeted and shaped. This targeting can either expand housing opportunities for underserved communities or systematically exclude them. Marketing strategies can be designed to minimize applications from certain groups while maintaining technical compliance with non-discrimination requirements. Conclusion The six justifications offered by HUD for eliminating AFHMP requirements fail to provide compelling reasons for abandoning this critical fair housing tool. The arguments reflect a fundamental misunderstanding of how housing discrimination operates in practice and ignore the crucial role that information access plays in maintaining or dismantling segregated housing patterns. Rather than advancing fair housing goals, the proposed rule exacerbates existing disparities by removing a key mechanism for ensuring that all communities have equal access to housing information. The elimination of AFHMPs would represent a significant step backward in the ongoing effort to achieve the Fair Housing Act s vision of integrated communities and equal housing opportunities for all Americans. The current proposal suggests an agency leadership more committed to reducing the regulatory burden on property owners than to expanding housing opportunities for underserved communities. This represents a troubling departure from HUD s mission and responsibilities under federal fair housing law. Moving forward, policymakers, housing advocates, and community leaders must carefully consider whether this proposed rule serves the public interest or merely provides cover for practices that perpetuate housing segregation through more subtle but equally effective means.

HUD Inspector General Reports Major Financial Recoveries and Oversight Improvements

Federal watchdog agency identifies nearly $500 million in recoveries while addressing critical housing challenges across America. The U.S. Department of Housing and Urban Development s Office of Inspector General (HUD OIG) has published its semiannual report to Congress, highlighting significant financial recoveries and systemic improvements across federal housing programs during the six-month period that ended on March 31, 2025. Record Financial Impact and Enforcement Actions The HUD OIG s oversight activities generated significant financial returns for taxpayers, with audit and investigative efforts yielding nearly half a billion dollars in recoveries and recommendations. Audit activities alone led to collections of $387.4 million, while identifying an additional $42.3 million in funds that could be better utilized and questioning $8.1 million in costs. Investigative efforts produced equally impressive outcomes, with over $61 million in recoveries and receivables. The enforcement actions were thorough, leading to 36 arrests, 58 indictments, and 92 administrative sanctions, including 60 debarments from federal programs. Among the most notable prosecutions, a landlord received a 17-year prison sentence for fraudulently obtaining federal rental assistance while violating the Fair Housing Act. Similarly, a businessman was sentenced to 17 years for orchestrating a reverse mortgage fraud scheme that specifically targeted elderly homeowners. Addressing Systemic Housing Quality Concerns The report highlights ongoing challenges in maintaining adequate housing conditions within HUD-assisted properties. Inspections revealed that 65% of the observed housing units had deficiencies, with 63 life-threatening issues identified. These findings underscore the continued struggle to ensure that federally subsidized housing meets basic safety and health standards. Under the Rental Assistance Demonstration (RAD) program, initial inspections of converted properties experienced significant delays, with 50% lacking timely management and occupancy reviews. The OIG has recommended improvements to the timing and completion processes of inspections to address these critical gaps. One investigation led to a civil lawsuit against a management company for lead paint safety violations impacting over 2,500 apartments, highlighting the serious health risks faced by residents in certain assisted housing properties. Fraud Risk Management Needs Enhancement The report highlights fraud risk management as a vital area needing attention, especially within large public housing authorities. An audit of the New York City Housing Authority (NYCHA) showed a lack of a comprehensive fraud risk strategy, despite some existing anti-fraud measures. The authority s approach was described as mainly reactive instead of proactive. This finding has led the OIG to recommend evaluating fraud risk management practices at other large public housing authorities across the country, indicating that NYCHA s challenges may reflect broader systemic issues. Progress in Resolving Past Recommendations Collaboration between HUD and the OIG has produced positive outcomes in addressing previously identified issues. During the reporting period, HUD resolved 135 open recommendations, bringing the total number of outstanding recommendations down to 693. This trend shows a consistent decrease in unresolved audit findings. However, although not part of the report, it should be noted that the recent and planned cuts to HUD staff may slow the pace of corrective activity. Since October 2022, the OIG has identified 283 non-monetary benefits resulting from its recommendations, including 77 guidance enhancements, 64 process improvements, 112 increases in program effectiveness, and 30 enhanced accuracies. These improvements highlight the broader impact of oversight activities beyond direct financial recoveries. Challenges in FHA Program Oversight The Federal Housing Administration continues to face challenges in managing counterparty risks with mortgage lenders and servicers. The OIG found that Carrington Mortgage and MidFirst Bank misapplied FHA foreclosure requirements in over 18% and 14% of cases, respectively. Additionally, other lenders, including CMG Mortgage and loanDepot.com, demonstrated deficiencies in their quality control programs for FHA-insured loans. These findings underscore the necessity for improved oversight of the private entities on which HUD depends to effectively deliver housing assistance programs. Disaster Recovery and Grants Management HUD s administration of disaster recovery grants continues to encounter monitoring challenges. Although grantees under the National Disaster Resilience Program faced delays in completing activities, they remain on track to achieve their overall goals. The OIG has recommended enhanced action plans and improved documentation of collaboration with partners. In broader grants management, the OIG identified compliance issues with federal transparency requirements, noting that prime award recipients did not consistently report subawards as mandated by the Federal Funding Accountability and Transparency Act. Technology and Cybersecurity Improvements HUD s information security program has achieved maturity level 3, but it has not yet reached full effectiveness. Penetration testing uncovered significant weaknesses in data protection and website security, prompting recommendations for comprehensive enhancements to safeguard sensitive information and systems. Whistleblower Protections and Transparency The OIG continues to underscore the significance of whistleblower protections in ensuring program integrity. During the reporting period, 10,214 hotline intakes were processed, with 6,631 referred to HUD program offices for action. The Public and Indian Housing office received the highest number of referrals at 5,250, highlighting ongoing concerns in this program area. Notably, the report found no attempts by HUD to interfere with OIG independence, and no instances of whistleblower retaliation were reported, indicating a healthy oversight environment. Looking Forward The semiannual report illustrates both the ongoing challenges that federal housing programs face and the effectiveness of independent oversight in addressing these issues. With nearly $500 million in financial impact and numerous process improvements, the HUD OIG s work continues to yield substantial returns on taxpayer investment while ensuring that federal housing assistance reaches those who need it most safely and effectively. The findings emphasize the crucial role of strong oversight in preserving the integrity of programs that offer housing assistance to millions of Americans while pointing out areas where ongoing attention and enhancement are vital for program success.

HOTMA Compliance Deadline Extended to January 1, 2026 for HUD Multifamily Housing Programs

On May 30, 2025, the Office of Multifamily Housing Programs issued a new Housing Notice extending the mandatory compliance date for the Housing Opportunity Through Modernization Act of 2016 (HOTMA). The previous deadline of July 1, 2025, has now been extended to January 1, 2026, for all owners participating in HUD multifamily project-based rental assistance programs. What This Means for Owners and Agents Full HOTMA compliance is required for all tenant certifications dated on or after January 1, 2026. This includes adherence to both the mandatory provisions and any discretionary policies implemented by owners. Owners and agents may voluntarily adopt HOTMA compliance earlier by utilizing the rent override function in the Tenant Rental Assistance Certification System (TRACS). Interim Compliance Guidance Until a property fully implements HOTMA, HUD advises the following: Continue to follow your current Tenant Selection Plan (TSP) as approved by HUD or your Contract Administrator. Maintain adherence to existing Enterprise Income Verification (EIV) policies and procedures. Ensure any early implementation steps are consistent with TRACS capabilities and accurately documented in tenant files. Key Takeaways New HOTMA compliance deadline: January 1, 2026 Optional early adoption is available through TRACS Existing policies remain in effect until full HOTMA compliance is achieved LIHTC Impact Owners and operators of LIHTC projects should contact the relevant Housing Finance Agency (HFA) for information on the effective date in their respective states. If you have any questions regarding the HOTMA implementation timeline, updating your policies, or the use of TRACS features, please contact our office. We are here to help ensure a smooth transition to full HOTMA compliance.

A. J. Johnson Partners with Mid-Atlantic AHMA for December Training on Affordable Housing - June 2025

In June 2025, A. J. Johnson will partner with the MidAtlantic Affordable Housing Management Association for three live webinar training sessions for real estate professionals, particularly those in the affordable multifamily housing field. Following the LIHTC webinars, AJ will review testable areas and in-person administration of the Housing Credit Certified Professional (HCCP ) exam. The following sessions will be presented: June 10: Intermediate LIHTC Compliance - Designed for more experienced managers, supervisory personnel, investment asset managers, and compliance specialists, this program expands on the information covered in the Basics of Tax Credit Site Management. A more in-depth discussion of income verification issues is included, as well as a discussion of minimum set-aside issues (including the Average Income Minimum Set-Aside), optional fees, and use of common areas. The Available Unit Rule is covered in great detail, as are the requirements for units occupied by students. Attendees will also learn the requirements for setting rents at a tax-credit property. This course contains some practice problems but is more discussion-oriented than the Basic course. A calculator is required for this course. June 11: Advanced LIHTC Compliance - This full-day training is intended for senior management staff, developers, corporate finance officers, and others involved in decision-making concerning how LIHTC deals are structured. This training covers complex issues such as eligible and qualified basis, applicable fraction, credit calculation (including first-year calculation), placed-in-service issues, rehab projects, tax-exempt bonds, projects with HOME funds, Next Available Unit Rule, employee units, mixed-income properties, the Average Income Minimum Set-Aside, vacant unit rule, and dealing effectively with State Agencies. Individuals who take both training days will be provided with study materials and a practice exam to assist in preparation for the HCCP exam, which will be administered on June 12. June 12: Review of testable areas and administration of the Housing Credit Certified Professional (HCCP ) exam (In-person exam in Richmond, VA). After two days of intensive and comprehensive LIHTC training, AJ will review program requirements and administer the HCCP exam in person. June 24: Developing Smoke-Free Policies for Multifamily Housing - A smoke-free policy in your apartment community will help protect your property and residents from smoke damage and reduce the risk of fires. You will save money on turnover expenses because apartments will cost less to clean, repair, and repaint. Living in a smoke-free environment promotes healthier hearts and lungs. What are the other benefits of smoke-free housing? Your family, guests, pets, and building staff will all find the air more pleasant. This 2.5-hour training will assist owners in understanding the steps necessary to go "smoke-free." It will include (1) a discussion of the legal issues related to prohibiting smoking, (2) the advantages of smoke-free housing, and (3) the steps to implementing such a policy, including details on what to include in the policy. This session is a must for any property looking to go smoke-free and will provide much-needed reinforcement and guidance for those who already have. These sessions are part of the year-long collaboration between A. J. Johnson and MidAtlantic AHMA and is designed to provide affordable housing professionals with the knowledge needed to effectively manage the complex requirements of the various agencies overseeing these programs. Persons interested in any (or all) training sessions may register by visiting either www.ajjcs.net or https://www.mid-atlanticahma.org.

Navigating Solicitation Bans in Apartment Communities: Religious and Political Canvassing Rights

Understanding the Legal Landscape Property managers and apartment community owners often implement solicitation bans to protect residents from unwanted disturbances. However, these policies can create complex legal scenarios when religious groups and political campaigns seek to canvas on the property. The distinction between commercial solicitation and noncommercial canvassing creates important legal boundaries that property managers should understand. The Constitutional Framework The U.S. Supreme Court has consistently ruled that noncommercial canvassing including religious outreach and political campaigning receives substantial protection under the First Amendment. This protection differs significantly from commercial solicitation, which can be more readily restricted. "The mere fact that the ordinance covers so much speech raises constitutional concerns," wrote Justice Stevens in the landmark Watchtower Bible & Tract Society v. Village of Stratton (2002) case, highlighting how requirements to obtain permits before engaging in door-to-door advocacy fundamentally conflicts with our conception of a free society. This case built upon decades of precedent established in cases like Lovell v. City of Griffin (1938), Schneider v. State(1939), and Cantwell v. Connecticut (1940), where the Court consistently struck down ordinances requiring permits for door-to-door solicitations, particularly those involving religious expression. Private Property Considerations The application of these constitutional principles becomes more nuanced in the context of private property, such as apartment communities. While public spaces must generally respect constitutional freedoms of expression, private property owners maintain certain rights to control access and activities on their premises. Key factors affecting an apartment community s ability to restrict canvassing include: 1. Property Access Structure: Communities with truly private roads and gated access may have greater latitude in restricting entry than those with public access points. 2. Local and State Regulations: Regulations vary significantly by jurisdiction. Some municipalities specifically exempt religious and political canvassers from solicitation restrictions, while others include them in "no solicitation" ordinances. 3. Reasonable Time, Place, and Manner Restrictions: Even when canvassing must be permitted, property owners may implement reasonable restrictions regarding when and how such activities occur, provided these restrictions don t effectively eliminate the ability to canvas. Best Practices for Property Managers Property managers seeking to balance resident privacy with legal compliance should consider these approaches: 1. Review Local Laws: Understand specific municipal and state regulations governing solicitation and canvassing in your jurisdiction, as these vary widely. 2. Differentiate Commercial and Noncommercial Activities: Policies should clearly distinguish between commercial solicitation (which can generally be prohibited) and protected noncommercial canvassing. 3. Implement Reasonable Restrictions: Rather than blanket bans, consider time limitations (e.g., no canvassing after 8 PM) and registration requirements that don t impose undue burdens. 4. Educate Residents: Inform residents about their individual rights to refuse engagement with canvassers while respecting the broader legal framework permitting such activities. 5. Consult Legal Counsel: Given the complex interplay between constitutional rights and property management, seek legal advice when developing solicitation policies. The Resident Perspective Individual residents maintain the right to refuse interaction with canvassers. While the constitutional framework may permit canvassing within the community, no resident is obligated to engage with canvassers who approach their door. Property managers should ensure residents understand they can: Post individual "No Soliciting" signs on their specific units Verbally decline conversations with canvassers Report harassment or persistent unwanted contact to management Conclusion The tension between solicitation bans and constitutional protections for religious and political expression creates an ongoing challenge for apartment community management. While complete prohibition of noncommercial canvassing likely exceeds legal boundaries, thoughtful policies can balance resident privacy concerns with constitutional requirements. Property managers should approach this issue with careful consideration of local regulations, the physical structure of their communities, and the important distinction between commercial solicitation and constitutionally protected expression. By developing nuanced policies rather than blanket prohibitions, communities can navigate this complex legal terrain while maintaining a positive living environment for residents. Disclaimer: This article provides general information for educational purposes only and should not be construed as legal advice. Consult with a qualified attorney for guidance on specific situations.

Federal Budget Cuts Threaten Core Affordable Housing Programs Nationwide

In its latest proposal, the White House has outlined $163 billion in reductions to nondefense discretionary spending, with housing and community development programs bearing a significant portion of the cuts. The proposed budget includes sweeping eliminations and consolidations across HUD and USDA housing initiatives, signaling a dramatic shift in the federal role in affordable housing. Major Reductions and Eliminations 1. HUD State Rental Assistance Block Grant: -$26.7 Billion The proposal restructures HUD s rental assistance programs including tenant-based, project-based, elderly, and disabled housing into a State Rental Assistance Block Grant. States would receive lump-sum funding with broad discretion, capped at two years of rental support for able-bodied adults. This change not only reduces federal oversight but also incentivizes states to assume a greater share of responsibility, potentially resulting in service gaps and uneven access across regions. 2. Community Development Block Grant (CDBG): -$3.3 Billion The complete elimination of the CDBG program would affect over 1,200 local governments that rely on flexible funding to support housing rehabilitation, infrastructure, and neighborhood revitalization. The proposal criticizes CDBG for lack of targeting and misallocation of funds, despite the program s historic value in addressing low-income community needs. 3. HOME Investment Partnerships Program: -$1.25 Billion The elimination of HOME, the largest federal block grant for affordable housing development, would directly impair the ability of localities to build and preserve affordable rental and ownership housing. Eliminating the HOME Program would also significantly impact a major source of secondary financing for LIHTC projects. The justification centers on regulatory burdens and the belief that states can address housing needs more efficiently without federal intervention. 4. Native American and Native Hawaiian Housing Grants: -$479 Million The proposed budget cuts competitive tribal housing assistance and eliminates the Native Hawaiian Housing Block Grant, citing inefficiencies and the presence of only one grantee. This disproportionately impacts Indigenous populations already facing severe housing shortages. 5. Homeless Assistance Program Consolidations: -$532 Million By consolidating existing homeless assistance programs into a narrower Emergency Solutions Grant (ESG) framework with a two-year cap, the proposal risks destabilizing long-term housing solutions and could roll back progress in ending chronic homelessness. The streamlined model focuses on short-term emergency aid, leaving fewer resources for permanent supportive housing. 6. Rural Development Housing Programs: -$721 Million Reductions to USDA rural housing loans, grants, and vouchers would scale back federal engagement in underserved rural areas. The budget prioritizes infrastructure but eliminates smaller, less economically impactful programs such as self-help housing and rural business grants. 7. Additional Cuts Surplus Lead Hazard and Healthy Homes: -$296M - Program labeled as obsolete. Self-Sufficiency Programs: -$196M - Deemed duplicative and ineffective at tracking outcomes. Pathways to Removing Obstacles (PRO) Housing: -$100M - Cut for perceived alignment with DEI-focused policies. Fair Housing Grants (FHIP and Training Academy): -$60M - Eliminated in favor of retaining only enforcement through FHAP. Implications for Housing Access and Equity These proposed cuts reflect a strategic realignment away from federal direct assistance toward state-centered administration and privatized solutions. While proponents argue for efficiency and local control, critics warn of several adverse effects: Reduced Housing Availability: The elimination of HOME and CDBG will shrink the pipeline for new affordable units and rehabilitation projects. Increased Inequity: Block grants without federal regulation risk deepening disparities across states, especially for marginalized populations. Weakened Fair Housing Enforcement: Defunding FHIP undermines outreach, education, and legal advocacy needed to combat discrimination. Vulnerability of Rural and Tribal Communities: Rural America and indigenous populations may lose vital, otherwise inaccessible support. Threat to Homeless Prevention Goals: Shifting focus away from long-term housing solutions could undercut national goals to reduce homelessness. Conclusion If enacted, the budget proposal would represent one of the most significant federal affordable housing support retrenchments in recent history. While it promises state flexibility and fiscal discipline, the risk to vulnerable populations already strained by high housing costs could be severe and lasting. Should these changes advance, stakeholders in the affordable housing sector should prepare for heightened advocacy and strategic adaptation.

Multifamily Housing Projects Subject to Section 504 of the Rehabilitation Act of 1973

Introduction Section 504 of the Rehabilitation Act of 1973 is a foundational federal civil rights law that prohibits discrimination based on disability in programs and activities that receive federal financial assistance (FFA). In the context of multifamily housing, Section 504 imposes critical accessibility and nondiscrimination requirements on housing providers whose properties are developed, operated, or otherwise supported through federal funds. Understanding which multifamily housing projects are subject to Section 504 is essential for ensuring compliance and upholding the rights of individuals with disabilities. Owners and managers often are unsure whether their property falls under Section 504. This article offers a comprehensive list of properties that must comply with the requirements of the Section 504 statute. Applicability of Section 504 in Multifamily Housing Not all multifamily housing developments fall under the purview of Section 504. Only those properties that receive federal financial assistance whether directly from a federal agency or indirectly through a state or local government are subject to its requirements. The following types of multifamily housing projects are covered: 1. HUD-Assisted Multifamily Housing Multifamily projects that receive funding through programs administered by the U.S. Department of Housing and Urban Development (HUD) are unequivocally subject to Section 504. This includes: Project-Based Section 8 Housing Assistance Payments Section 202 Supportive Housing for the Elderly Section 811 Supportive Housing for Persons with Disabilities HOME Investment Partnerships Program (HOME) Community Development Block Grant Program (CDBG) Housing Opportunities for Persons With AIDS (HOPWA) Projects under these programs must comply with both physical accessibility standards and operational nondiscrimination requirements. 2. Mortgage Insurance Programs Section 504 applies to programs and activities that receive federal financial assistance, including housing programs administered by the Department of Housing and Urban Development (HUD). FHA-insured multifamily properties fall under this category because the Federal Housing Administration provides federal financial assistance through mortgage insurance. FHA insured programs subject to Section 504 include: Section 207 Rental Housing Insurance Section 213 Cooperative Housing Insurance Section 220 Rehabilitation and Neighborhood Conservation Housing Section 221(d)(3) and (d)(4) Mortgage Insurance for Rental and Cooperative Housing Section 231 Housing for Elderly Persons Section 232 Mortgage Insurance for Nursing Homes, Intermediate Care Facilities, and Board and Care Homes Section 234 Mortgage Insurance for Condominiums Section 236 Rental Housing 3. USDA Rural Development (RD) Properties Multifamily properties financed through the U.S. Department of Agriculture's Rural Development programs such as the Section 515 Rural Rental Housing Program also fall within the scope of Section 504. These properties must meet physical accessibility standards, ensure non-discriminatory policies and practices, and provide reasonable accommodations to applicants and residents with disabilities. 4. Low-Income Housing Tax Credit (LIHTC) Projects (Under Specific Conditions) The LIHTC program itself does not constitute federal financial assistance under Section 504. However, when LIHTC developments are combined with other sources of federal funding (such as HOME or CDBG), the portion of the property funded with such assistance or potentially the entire development becomes subject to Section 504 requirements. 5. Public Housing Agencies (PHAs) Section 504 covers public housing developments and programs administered by PHAs, including the Housing Choice Voucher (HCV) program. PHAs are responsible for ensuring that sufficient accessible units are available and that reasonable accommodations are provided to individuals with disabilities. Under the Housing Choice Voucher (HCV) program, when a tenant with a disability requires a modification to a unit to make it accessible, the responsibility for the cost depends on several factors: If the landlord is not receiving federal financial assistance directly (which is typical under the HCV program), they are not subject to Section 504 of the Rehabilitation Act. In this case: The landlord is not required to pay for modifications, but must allow reasonable modifications at the tenant s expense under the Fair Housing Act, unless doing so would pose an undue administrative or financial burden. The PHA may use funds (if available and if policy allows) to pay for modifications as a reasonable accommodation. Other sources, such as state or local programs, nonprofits, or disability advocacy organizations, may also assist with funding. So, unless the PHA steps in or there s an alternative funding source, the cost of a reasonable modification typically falls on the tenant but the landlord cannot legally prohibit the modification if it is reasonable and necessary for the tenant s disability. 6. State and Local Government-Funded Projects Using Federal Pass-Through Funds Any multifamily housing project funded through state or local entities utilizing federal grant programs must comply with Section 504. This includes housing initiatives financed through state housing finance agencies or municipal governments administering federal housing resources. Core Requirements of Section 504 Compliance Multifamily housing projects covered under Section 504 must adhere to various physical, operational, and programmatic accessibility requirements. These include: Accessible Units A minimum of 5% of total units must be fully accessible to individuals with mobility impairments. A minimum of 2% must be accessible to individuals with hearing or visual impairments. Design and Construction Standards New construction and substantial rehabilitation must comply with the Uniform Federal Accessibility Standards (UFAS) or other approved standards. Reasonable Accommodations Housing providers must make reasonable policy and procedural modifications to allow individuals with disabilities equal access to housing and services. Effective Communication Providers must take steps to ensure effective communication with applicants and residents with disabilities, including the provision of auxiliary aids and services when necessary. Conclusion Compliance with Section 504 of the Rehabilitation Act is not optional for multifamily housing providers receiving federal financial assistance. It is a legal obligation and a moral imperative that helps ensure equal access to housing opportunities for individuals with disabilities. Owners, developers, and managers of covered properties must proactively meet physical and programmatic requirements.