VAWA Reauthorization Act of 2013 - Updated HUD Guidance - Notice H 2017-05

person A.J. Johnson today 07/04/2017

On June 30, 2017, HUD issued Notice H 2017-05, Violence Against Women Act (VAWA) Reauthorization Act of 2013 - Additional Guidance for Multifamily Owners and Management Agents. This notice provides guidance to owners and management agents (O/As) of HUD multifamily assisted housing on the requirements of VAWA 2013. The notice supersedes Housing Notices H 2010-23 and H 2009-15. The notice is applicable to the operation of the following programs:
  • Project-based Section 8 programs under the United States Housing Act of 1937;
    • New Construction
    • State agency financed
    • Substantial rehabilitation
    • Section 202/8
    • Rural Housing Services (RHS) Section 515/8
    • Loan Management Set-Aside (LMSA)
    • Property Disposition Set-Aside (PDSA)
  • Section 202/162 Project Assistance Contract (PAC);
  • Section 202 Project Rental Assistance Contract (PRAC);
  • Section 202 Senior Preservation Rental Assistance Contracts (SPRAC);
  • Section 811 PRAC;
  • Section 811 Project Rental Assistance (PRA)
  • Section 236 (including RAP); and
  • Section 221(d)(3)/(d)(5) Below Market Interest Rate (BMIR)
Background On November 16, 2016, HUD published its VAWA Final Rule implementing the requirements of VAWA 2013. This notice expands on and clarifies the HUD Final Rule. Major changes for HUD Multifamily Housing programs include:
  1. Specifies "sexual assault" as a crime covered by VAWA in HUD-covered programs;
  2. Establishes new definitions (e.g., affiliated individual and sexual assault, and others) and revises previously defined terminology (e.g., bifurcate and stalking);
  3. Establishes new requirements for notification of occupancy rights under VAWA, and transmits a Notice of Occupancy Rights under VAWA, form HUD-5380;
  4. Establishes the requirements for creating an emergency transfer plan and for related record keeping and reporting, and provides both a model "Emergency Transfer Plan for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking," form HUD-5381, and an "Emergency Transfer Request for certain victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking, form HUD-5383;
  5. Revises requirements for documenting the occurrence of Domestic Violence, Dating Violence, Sexual Assault, or Stalking, and provides a new "Certification of Domestic Violence, Dating Violence, Sexual Assault, or Stalking, and Alternate Documentation," form HUD-5382;
  6. Where the O/A exercises the right to bifurcate a lease and the evicted or terminated tenant was the recipient of assistance at the time of bifurcation, establishes a new requirement for reasonable time periods during which a tenant who is a victim of domestic violence, dating Violence, sexual Assault, or stalking may remain in the unit while establishing eligibility under the current housing program or under another covered housing program, or seeking alternate housing; and
  7. Clarifies that O/As may establish a preference for victims of domestic violence, dating Violence, sexual assault, or stalking, but are not required to do so.
Determining Who May Receive VAWA Protections VAWA protections cover applicants, tenants and assisted families (both women and men), as defined under program regulations for the covered housing. Guests, unassisted members, and live-in aides of a household are ineligible for VAWA protections that are available only to tenants. As a reasonable accommodation, a tenant can request VAWA protections based on the grounds that a live-in aide is a victim of domestic violence, dating violence, sexual Assault, or stalking. If qualified, the tenant may request an emergency transfer for the entire household, including the live-in aide. In cases where a guest or unassisted member is a victim, a tenant cannot be evicted or have assistance terminated based on the domestic violence, dating violence, sexual assault, or stalking of the guest or unassisted member. Determining Eligibility for VAWA Protections O/As may have to determine whether an adverse factor is a "direct result" of domestic violence, dating violence, sexual assault, or stalking. The law prohibits O/As from denying admission to, denying assistance under, terminating participation in, or evicting a tenant based on a adverse factor, if the adverse factor is determined to be a direct result of the fact that the applicant or tenant is or has been a victim of domestic violence, dating violence, sexual assault, or stalking. An adverse factor refers to any factor that can be used as a basis for denying admission or assistance, terminating assistance or participation in a program, or evicting a tenant. If a denial or termination is required by a federal statute, based on a particular adverse factor, the O/A must comply with that statute, even if the adverse factor is a direct result of domestic violence, dating violence, sexual assault, or stalking. For example, if an applicant is subject to a lifetime registration requirement as a sex offender, the O/A must deny the applicant admission, even if the sex offense(s) was (or were) a direct result of the fact that the applicant was a victim of domestic violence, dating violence, sexual assault, or stalking. The presence of an adverse factor may be due to an underlying experience of domestic violence, dating violence, sexual assault, or stalking. An adverse factor may be present during much of an abusive relationship, or it may present itself only when a victim is attempting to leave, or has left, the abusive relationship. Examples of when adverse factors might be a direct result of domestic violence, dating violence, sexual assault, or stalking include:
  1. Poor credit history - for example:
    • Forcing a victim to obtain credit, including credit cards for the perpetrator’s use;
    • Using a victim’s credit or debit card without permission;
    • Selling the victim’s personally identifiable information;
    • Running up debt on joint accounts;
    • Obtaining loans/mortgages in a victim’s name;
    • Preventing a victim from obtaining and/or maintaining employment;
    • Sabotaging work or employment opportunities, or causing a victim to lose his or her job by physically battering the victim prior to important meetings or interviews;
    • Placing utilities or other bills in a victim’s name and then refusing to pay;
    • Forcing a victim to work without pay in a family business, or forcing him or her to turn earnings over to an abuser;
    • Job loss or employment discrimination due to status as a victim;
    • Job loss or lost wages due to missed work to attend court hearings, seek counseling or medical care; and
    • Hospitalization and medical bills the victim cannot pay or cannot pay along with other bills.
  2. Poor rental history - for example:
    • Property damage;
    • Noise complaints;
    • Harassment;
    • Trespassing;
    • Threats;
    • Criminal activity;
    • Missed or late rental or utility payments;
    • Writing bad checks to the landlord; and
    • Early lease termination.
  3. Criminal Record - for example:
    • Forcing a victim to write bad checks;
    • Property damage;
    • Theft;
    • Disorderly conduct;
    • Threats;
    • Trespassing;
    • Noise complaints;
    • Family disturbance/trouble;
    • 911 abuse;
    • Public drunkenness;
    • Drug activity (drug use of the selling of drugs);
    • Crimes related to sex work;
    • Failure to protect a child from a batterer’s violence;
    • Crimes committed by a victim in self-defense; and
    • Human trafficking.
  4. Failure to pay rent - for example:
    • The victim’s injury or temporary incapacitation;
    • The arrest of the only wage earning member of the household;
    • Preventing the victim from obtaining and/or maintaining employment;
    • Sabotaging work or employment opportunities; and
    • Causing the victim to lose the victim’s job.
Determining When Adverse Factors Are a Direct Result of Domestic Violence, Dating Violence, Sexual Assault, or Stalking To trigger the direct result analysis, it is the responsibility of the applicant or tenant to:
  1. Inform the O/A that he or she is a victim of domestic violence, dating violence, sexual assault, or stalking, and
  2. Provide enough information for the O/A to make a determination regarding the adverse factor and that the adverse factor was the result of domestic violence, dating violence, sexual assault, or stalking.
The O/A should consider the individual’s statement and any supporting documentation in determining if an adverse factor was a direct result of domestic violence, dating violence, sexual assault, or stalking. If further information is necessary for this determination, the O/A may request additional supporting documentation. However, any request for additional documentation must:
  1. Be in accordance with the O/As policies or practices;
  2. Not require evidence of domestic violence (other than as permitted by the VAWA statute); and
  3. Comply with the VAWA confidentiality requirements.
The O/A must make an objectively reasonable determination, based on all the circumstances, whether the adverse factor is a direct result of the fact that the applicant or tenant is or has been a victim of domestic violence, dating violence, sexual assault, or stalking. Certification & Documentation of Victim Status The "Certification of Domestic Violence, Dating Violence, Sexual Assault, or Stalking, and Alternative Documentation," form HUD-5382 may be used to document instances of domestic violence, dating violence, sexual assault, or stalking. This form supersedes the Multifamily Housing VAWA Certification form, JUD-91066, which is now obsolete. The HUD-5382 must be made available by the O/A in multiple languages, consistent with HUD’s LEP guidance. The notice provides additional guidance on the type of documentation that may be required to demonstrate victim status.
  • Acceptance of verbal statement - O/As are not required to ask for documentation when an individual presents a claim for VAWA protections. The O/A may choose to provide protection based solely on an individual’s verbal statement.
  • Requesting documentation - if the O/A chooses to require that an applicant document status as a victim of domestic violence, dating violence, sexual assault, or stalking, the O/A must make such request in writing. Simply providing the victim the certification form HUD-5382 does not constitute a written request for documentation.
Time to Submit Documentation The O/A may require submission of documentation within 14 business days after the date that the request for documentation is made. Once a victim provides documentation, the O/A is "encouraged" to acknowledge receipt of the documentation in a timely manner. (Note - HUD will clarify this issue when next updating HUD Handbook 4350.3). Requests for Third Party Documentation of Victim Status The VAWA final rule prohibits an O/A from requiring the victim to provide third party documentation of victim status, unless:
  1. More than one applicant or tenant provides documentation to show he or she is a victim of domestic violence, dating violence, sexual assault, or stalking, and the information in one person’s documentation conflicts with the information in another person’s documentation, or
  2. Submitted documentation contains information that conflicts with existing information already available to the O/A.
In the case of (a) or (b) above, applicants or tenants may submit any of the following to meet the third party documentation request:
  1. A document:
    1. Signed by an employee, agent, or volunteer of a victim service provider, an attorney, or medical or mental health professional from whom the victim has sought assistance relating to domestic violence, dating violence, sexual assault, or stalking, or the effects of abuse;
    2. Signed by the applicant or tenant; and
    3. That specifies, under penalty of perjury, that the professional believes in the occurrence of the incident of domestic violence, dating violence, sexual assault, or stalking that is the ground for protection and remedies under the VAWA final rule, and that the incident meets the applicable definition of domestic violence, dating violence, sexual assault, or stalking under federal law; or
  2. A record of a Federal, State, tribal, territorial, or local law enforcement agency, court, or administrative agency that documents the incident.
  3. At the discretion of the O/A, a statement or other evidence provided by the applicant or tenant.
Timeframe to Respond Applicants or tenants must be given 30 calendar days from the date of the request to provide such documentation. If an applicant does not submit any third party documentation within the required time or submits documentation that does not meet the criteria in 1a, 1b, or 1c, above, the O/A may, but is not required to, accept that applicant or tenant’s assertion (form HUD-5382 or verbal statement) of victim status for the VAWA protections. Denying VAWA Protections If the O/A requests, but does not receive, third party documentation, the O/A has the option to deny VAWA protections and must notify the applicant or tenant. If this results in one of the tenants being terminated from assistance, the O/A must hold a separate hearing for that tenant. Alternatively, the O/A may develop or follow an existing family break-up policy that may provide assistance to both persons seeking VAWA protections. VAWA Lease Addendum The Office of Multifamily Housing will soon issue an updated form HUD-91067, "VAWA Lease Addendum," which will include the additional provisions required in the final rule. The updated lease provisions will include updates regarding:
  1. Definitions;
  2. VAWA Protections;
  3. Documenting the occurrence of domestic violence, dating violence, sexual assault, or stalking; and
  4. Remedies available to victims.
O/As must provide a new VAWA lease addendum (when issued) to all current households. This may be done at each household’s next Annual Recertification (AR) or at another timely opportunity. All subsequent new move-ins must also receive the updated VAWA lease addendum. Notice of Occupancy Rights, form HUD-5380 O/As must issue the VAWA Notice of Occupancy Rights without changes to the core protections and confidentiality rights in the Notice. O/As must customize the Notice to reflect the specific program and specify the program operations that may pertain to or affect the VAWA Notice of Occupancy Rights. This may include additional language, so long as the language does not make changes to the core protections and confidentiality rights. Any added language cannot include additional requirements to receive VAWA protection. The VAWA Notice of Occupancy Rights, along with the certification form HUD-5382, must be provided to existing households, applicants, and new move-ins/initial certifications no later than each of the following times:
  1. For applicants -
    1. At the time the household is provided assistance or admission, and
    2. At the time the applicant is denied assistance or admission.
  2. For existing households -
    1. Through December 15, 2017, at each household’s annual recertification (AR), and
    2. With any notification of eviction or termination of assistance, (but not with subsequent eviction or termination notices sent for the same infraction).
If households have already had their AR for 2017 and they were not provided with the forms, the O/A must provide the forms to those households through other means no later than 12/15/17. A note or documentation must be made in the files of those tenants indicating when the forms were provided to the household. Note - while the VAWA Final Rule does not require an applicant/household to sign acknowledgement of receipt of the forms, it is strongly recommended that O/As document each tenant file in a way that demonstrates when the required documentation was provided. It is recommended that the files be documented each time the documents are provided. HUD also encourages O/As to post the VAWA Notice of Occupancy Rights and certification form on their websites and in public areas such as waiting rooms, community bulletin boards, and lobbies, where all tenants may view them. HUD assumes that by December 15, 2017, all current households will have received the required forms and O/As are not required to provide the notice and certification form at future ARs. Victim Confidentiality Any information submitted to an O/A, including the fact that an applicant or tenant is or has been a victim of domestic violence, dating violence, sexual assault, or stalking, must be maintained in confidence by the O/A. Employees of the O/A (or those who administer assistance on their behalf, e.g., contractors) must not have access to the information unless explicitly authorized by the O/A for reasons that specifically call for these individuals to have access to such information under Federal, State, or local law, and the O/A must not enter this information into any shared database, or disclose this information to any other entity or individual, except to the extent that disclosure is:
  1. Requested or consented to in writing by the victim in a time-limited release;
  2. Required for use in an eviction proceeding or hearing regarding termination of assistance; or
  3. Otherwise required by applicable law.
The prohibition against entering this information into any shared database does not preclude the O/A from entering this information into a databases system used by the O/A that meets all requirements for securing sensitive personally identifiable information (PII). Communicating with the Victim Unless given permission by the victim to do so, the O/A must not leave messages that contain confidential information or refer to VAWA (e.g., asking the victim to come to the management office to pick up form HUD-5382) on the victim’s voicemail system or with other individuals, including members of the victim’s household. Leaving a voicemail requesting that the victim contact the O/A without reference VAWA is permissible. O/As should not send mail regarding the incident of domestic violence, dating violence, sexual assault, or stalking to the victim’s address, if the perpetrator may have access to the victim’s mail. O/As may determine the procedures for requesting documentation in writing on a case-by-case basis. For example, policies should state whether the applicant or tenant requesting VAWA protections is required to come to an office or other space that may be safe for the individual to receive the written request and that reasonable accommodations will be made as necessary. If the victim gives the O/A permission to contact him or her about the incident of domestic violence via mail, voicemail system, electronic mail, or other method approved by the victim, it is strongly recommended that this permission be obtained in writing. When discussing these matters directly with the victim, take reasonable precautions to ensure than no one can overhear the conversation. O/As may suggest - but cannot require - that the victim designate an attorney, advocate, or other secure contact for communications regarding the request for VAWA protections. Best Practices to Collect Information & Avoid Unintentional Disclosure
  1. Conduct the intake session in a private room, where the individual and staff person can talk without the risk of other staff or clients overhearing;
  2. Explain the O/As information sharing policies;
  3. Communicate to the individual which property management staff person is responsible for handling questions or complaints about confidentiality;
  4. Provide adequate time for the individual to review and sign forms;
  5. Post confidentiality notices in the management office and around the property;
  6. Ensure that relevant staff understand confidentiality policies;
  7. Post notices about the importance of maintaining confidentiality throughout the office;
  8. Direct staff to respond to third-party inquiries only after verifying that written client consent has been obtained;
  9. Clarify information sharing policies with referring/referral agencies and other service and business partners;
  10. Maintain distinct phone lines for certain purposes;
  11. Avoid using language referencing domestic violence in agency names, program name, organization names, and staff titles;
  12. Use a post office (PO) box to receive written correspondence;
  13. Serve individuals off-site as needed or when appropriate;
  14. Provide interpretation and/or documents translated into the appropriate language when necessary; and
  15. Provide accessible documents or assistance filling out forms for individuals with disabilities.
It should be noted that these are best practice recommendations, and some may not be feasible for all O/As. Emergency Transfers - Note: this Notice contains requirements that are not specifically contained in the Model Emergency Transfer Plan provided by HUD Emergency Transfer Plan The VAWA Final Rule requires O/As to adopt an Emergency Transfer Plan, based on HUD’s Model Emergency Transfer Plan (form HUD-5381). O/As must have adopted an Emergency Transfer Plan no later than June 14, 2017. For Management & Occupancy Reviews (MORs) conducted after June 30, 2017, but before December 14, 2017, reviewers will issue a Recommendation, rather than a finding, for non-compliance relating to the Emergency Transfer Plan. For MORs conducted after December 14, 2017, a Finding will be issued for non-compliance relating to the Emergency Transfer Plan. I recommend that all O/As carefully review the Emergency Transfer Plan requirements of this notice and revise Emergency Transfer Plans to ensure the Plans contain all elements required by the notice. Internal Transfers (moving to a unit in the same project) The Emergency Transfer Plan must allow tenants who are victims of domestic violence, dating violence, sexual assault, or stalking to make an internal emergency transfer with a safe unit is immediately available. A victim determines whether a unit is safe. A best practice is to define "immediately available" as a vacant unit, ready for move-in within a reasonable period of time. It is up to the O/A to define "reasonable period of time." The Plan must describe policies for assisting a tenant in making an internal emergency transfer when a safe unit is not immediately available, and describe reasonable efforts the O/A will take to assist a tenant who wishes to make an external emergency transfer when a unit that meets the victim’s safety standard is not available. O/As are encouraged to review their transfer waiting list policies in their Tenant Selection Plans in order to facilitate emergency transfers. The emergency transfer requirements do not supersede any eligibility or occupancy requirements that may apply under a covered housing program. External Emergency Transfers (moving away from the project to another project) O/As are required to make reasonable efforts to assist a tenant who requests to make an external emergency transfer when a safe unit at the current property is not immediately available. O/As are not required to research available units and/or arrange for the move, but they can if they choose. Efforts should include providing contact information for relevant local service providers, government agencies, and other affordable housing developments in the area. Emergency Transfer Plans must include the following:
  1. A description of the reasonable efforts the O/A will take to assist a victim who wished to move to alternative housing, if a safe unit is not immediately available;
  2. A statement that a tenant must be allowed to seek an internal and external emergency transfer concurrently if an internal safe unit is not immediately available; and
  3. Policies for both assisting a tenant/applicant who is seeking an external emergency transfer under VAWA out of the property and an applicant who is seeking an external emergency transfer under VAWA into the property from another property.
Record Keeping & Reporting Requirements The VAWA Final Rule requires that requests and outcomes of VAWA requests be reported to HUD annually. HUD plans to add these data elements to a future release of the Tenant Rental Assistance Certification System (TRACS). The following items should now be tracked to assist in reporting when the TRACS system is updated:
  1. Number of emergency transfer requests received;
  2. Number of requests resolved;
  3. Number still pending;
  4. Outcomes of requests -
    1. Number of internal unit transfers (within same project);
    2. Number relocated to other HUD-funded housing sites (e.g., other multifamily assisted, public housing/housing vouchers/ or HOME);
    3. Number of other move-outs; and
    4. Number of tenants who chose to remain in unit.
The requirement to report this information in not in effect until TRACS has been updated. HUD will communicate additional details at a later date. Tips When Bifurcating a Lease VAWA permits owners (when otherwise allowed by State or local laws) to "bifurcate" a lease in order to remove a perpetrator from a unit while permitting the victim to remain in the unit. While it may be a necessary step to protect victims of domestic violence, dating violence, sexual assault, or stalking, bifurcation may also result in family break-up. The HUD notice provides extensive guidance relating to family break-ups, and based on that guidance, I offer the following tips. If a victim informs the O/A that a family member is committing domestic violence against him or her and he or she wishes to remain in the unit, the following steps are recommended:
  1. The O/A should already have provided the household members with their VAWA rights, but if not, this should be done immediately. Even if the victim was previously informed of his or her rights under VAWA, the O/A is again encouraged to provide the victim with the VAWA Notice of Occupancy Rights and certification form;
  2. Accept the victim’s statement or request permitted documentation;
  3. Ensure the victim knows of the upcoming notification of eviction of the perpetrator, including the exact date the notification will take place. At the same time, provide the victim with contact information for local victim service providers (the victim may need to leave the unit temporarily and stay in a domestic violence shelter until the eviction takes place);
  4. Begin the eviction process. If the victim wants to move out of the unit for his or her safety, follow the requirements of the Emergency Transfer Plan. If the victim wants to stay in the unit, the O/A should bifurcate the lease by evicting the perpetrator and allowing the victim to remain on the lease. An Interim Recertification (IR) should be conducted to determine the new rent (this is required due to the change in family composition);
  5. If the perpetrator requests a hearing, the O/A is encouraged to conduct an expedited hearing within no more than ten days following the effective date of the notice. The perpetrator has a right to examine the O/As documentation relevant to the eviction. This means the perpetrator has a right to examine the relevant documentation the victim provided when claiming VAWA protections. This is an exception to the victim’s confidentiality rights). To protect the victim’s safety, any information that would reveal the location of the victim, or the location of any services that the victim is receiving must be maintained confidentially (i.e., redacted from the shared documentation), unless it meets the exceptions noted in the law. O/As are encouraged to consult with local domestic violence experts or victim service providers (that have not worked with either the victim or perpetrator) to serve on the grievance hearing panel;
  6. If it is determined that the perpetrator did indeed commit the acts, the case will then be moved to eviction court; and
  7. If the eviction is upheld, the O/A processes the IR to remove the household member and completes the bifurcation of the lease agreement.
Remember, VAWA protections, including bifurcation, do not apply to guests or unreported members of a household or anyone else living in a unit who is not a tenant. Eviction, removal, termination of occupancy rights, or termination of assistance must be done in accordance with the procedures prescribed by federal, state, or local law. Some jurisdictions may prohibit partial or single tenant evictions. Once a lease is bifurcated, it becomes null and void once the O/A regains possession of the unit. The O/A should then execute a new lease with the victim. Note - as a result of lease bifurcation, it may be necessary to transfer the existing household to an appropriate size unit in accordance with the lease. Establishing Waiting List Preferences O/As may establish an admission preference for victims of domestic violence, dating violence, sexual assault, or stalking. HUD approval is not required to adopt such a preference, but O/As must modify their Tenant Selection Plan to include the owner-adopted preference. This synopsis provides a summary of some of the major elements of the new HUD notice. The notice itself is very comprehensive and all O/As of covered properties should obtain and review the notice in detail. In order to avoid potential non-compliance with VAWA requirements, all O/As should have VAWA procedures in place and fully understood no later than December 14, 2017.

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However, the effectiveness of these changes depends largely on the availability of gap financing sources, since LIHTC generally covers only 60-70% of development costs. This could become a critical issue since the Administration s 2026 budget proposal calls for the elimination of the HOME and CDBG programs. Construction capacity and workforce availability pose significant challenges to implementation. The U.S. construction industry faces major labor shortages, and the possibility of adding over one million new housing units could strain existing resources. Material costs might also increase due to new tariffs announced by the administration, potentially reducing some of the financial advantages of the increased tax credit provisions. Stakeholder reactions reveal sharp divisions The housing provisions have received enthusiastic support from industry groups despite opposition to the broader legislation. The National Association of Home Builders described the act as "the first time in a long time that housing has been prioritized, while the National Association of Realtors commended the achievement of their "top 5 priorities, including permanent lower tax rates and improved business income deductions. The Mortgage Bankers Association emphasized that the legislation preserves "pro-housing and pro-economic growth tax provisions, especially highlighting the permanent mortgage interest deduction and the reestablished mortgage insurance premium deduction. These industry groups see the legislation as offering crucial long-term certainty for housing investment and development. However, housing advocacy organizations offer a more nuanced view. The National Low Income Housing Coalition supports expanding the LIHTC but strongly opposes the broader legislation s cuts to Medicaid and SNAP programs. Executive Director Kim Johnson stated that "while LIHTC is an important program, LIHTC units are rarely affordable enough for households with the lowest incomes, who will be most affected by safety net reductions. The National Housing Conference praised the legislation, with President David Dworkin calling the housing provisions "the most consequential and positive housing legislation in decades. This highlights the industry s focus on production capacity rather than broader affordability issues. Implementation timeline and administrative challenges The legislation s housing provisions take effect on January 1, 2026, with state housing agencies already preparing for implementation. States will receive their enhanced LIHTC allocations starting with the 2026 allocation year, requiring updates to Qualified Allocation Plans and application processes to handle the increased volume. The Treasury Department and IRS need to develop regulatory guidance for the new private activity bond threshold calculations and basis boost provisions. State housing finance agencies are updating their technology systems and training staff for the expected increase in application volume, with some smaller states worrying about their ability to handle the expanded program scale. The Congressional Budget Office estimates that the housing provisions will cut the primary deficit by $85 billion through economic growth effects, indicating that increased housing production will generate enough economic activity to partly offset the legislation s fiscal costs. However, this estimate relies on successful implementation and full use of the expanded credit authority. Rural and tribal communities face specific implementation challenges because these areas often lack the developer capacity and technical expertise needed to fully utilize LIHTC programs. The legislation provides for enhanced technical assistance, but successful implementation will require ongoing efforts to build local capacity and expertise. Comparison to previous housing policy initiatives The One Big Beautiful Bill Act represents the largest federal housing investment since the Housing and Economic Recovery Act of 2008, but it has fundamentally different characteristics. While HERA provided temporary expansions in response to the financial crisis, the current legislation implements permanent program improvements that offer long-term stability. The 2008 legislation included a temporary 10% increase in LIHTC allocations and established the 9% minimum credit rate, but these provisions were meant as crisis response measures. The permanent nature of the current expansion sets it apart from earlier temporary initiatives and offers unmatched certainty for industry planning. Compared to Obama-era housing initiatives, the current legislation adopts a supply-side approach that emphasizes tax incentives rather than direct spending programs. The Obama administration focused on foreclosure prevention, GSE reform, and crisis response, while the current strategy prioritizes increasing production capacity through enhanced tax credits and development incentives. The 2018 Consolidated Appropriations Act increased LIHTC allocations by 12.5% for 2018-2021, but this temporary boost expired and required yearly congressional approval. The current legislation s permanent structure removes this uncertainty and allows the industry to plan for the long term. Conclusion and long-term implications The One Big Beautiful Bill Act s housing provisions mark a historic expansion of federal affordable housing programs, with the potential to significantly increase housing production over the next decade. The legislation s permanent improvements to the LIHTC program offer unprecedented stability and certainty for the affordable housing industry, while the enhanced financing mechanisms are expected to streamline development processes and shorten project timelines. However, the overall impact of the legislation on housing affordability remains complex and potentially contradictory. While the supply-side provisions are expected to increase the production of affordable housing, the simultaneous cuts to Medicaid and SNAP programs could lower housing purchasing power for the lowest-income households. The Congressional Budget Office estimates that the lowest-income households will lose an average of $1,600 per year, while higher-income households will gain $12,000 annually, indicating that the benefits may mainly go to higher-income groups. The success of these provisions ultimately depends on effective implementation, sufficient construction capacity, and the availability of additional financing sources. The legislation sets the framework for significant increases in housing production, but turning this potential into actual affordable housing units will require coordinated efforts from federal agencies, state housing finance agencies, and private sector developers. For housing policy analysts and practitioners, the legislation presents both significant opportunities and notable challenges. The permanence of key provisions offers stability for long-term planning, while the scale of potential production increases demands substantial capacity building and system adaptation. The coming years will reveal whether this historic expansion leads to meaningful progress on America s affordable housing crisis.

USDA Proposes Mandatory Market Studies for Section 538 Projects

The U.S. Department of Agriculture s Rural Housing Service (RHS) is tightening requirements for project feasibility under its Section 538 Guaranteed Rural Rental Housing Program (GRRHP). In a newly proposed rule, RHS will require all applicants seeking loan guarantees for new construction to submit a formal market study as part of a complete application. This may sound like a bureaucratic tweak, but it has real implications for lenders, developers, and rural communities. What s the Section 538 Program? Section 538 is the USDA s flagship loan guarantee program for rural multifamily housing. It backs up to 90% of loans made by private lenders for the construction or rehab of rental housing serving low- and moderate-income households in USDA-defined rural areas. It s a public-private partnership model that has delivered thousands of affordable units to small towns that are often overlooked. What s Changing and Why? Up to now, the rules under 7 CFR part 3565 have encouraged applicants to "demonstrate market feasibility, but have not required any specific documentation to prove it. Some lenders submitted comprehensive market studies; others relied on summaries, broker letters, or hastily compiled spreadsheets. That inconsistency is what the USDA wants to eliminate. Under the proposed rule, all new construction applications must include a comprehensive market study. This will: Ensure projects are built in markets with demonstrated need; Avoid oversaturation and risk to the existing affordable housing stock; Align USDA requirements with industry norms (e.g., LIHTC, HUD programs); Improve efficiency and uniformity in loan guarantee underwriting. What s a Market Study, Exactly? A professional market study typically includes: A demographic and economic profile of the market area; Rent comparables and absorption trends; An analysis of supply and demand for affordable units; Impact projections on existing housing stock; Supportable rent and unit mix recommendations. In short, it s the backbone of a smart housing investment and USDA wants it in every file. Who s Affected? Lenders & Developers: Must budget time and cost for a market study before the USDA will consider a loan guarantee for new construction. Property Managers: May see less risk of oversupplied markets hurting occupancy. USDA & Taxpayers: Benefit from better quality control and reduced risk of supporting white elephants in underserved areas. Comments Wanted Speak Now or Forever Hold Your Feasibility USDA is inviting public comments through August 30, 2025 (60 days from publication). Visit regulations.gov and search Docket No. RHS-24-MFH-0024 or RIN 0575-AD42. If you have a stake in affordable rural housing, this is your shot to weigh in. Bottom Line Requiring a market study isn t red tape it s a reality check. The move helps ensure scarce affordable housing dollars are spent where demand is real and sustainable. For lenders and developers, it s one more hoop, but also a safeguard. For rural communities, it s a sign that USDA wants housing investments to be grounded in facts, not optimism. Smart growth starts with smart data. This rule aims to make sure rural housing does just that. For more updates on affordable housing policy and compliance, stay connected with A. J. Johnson Consulting Services.

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.

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