News

Definitions and Terminology Relating to VAWA 2013

On November 16, 2017, I sent a memo to clients informing them of the publication of the HUD Final Rule implementing the changes to the Violence Against Women Act (VAWA). Over the next few weeks, I will send a series of memos outlining the various sections of the rule. The rule is long and complex, and explaining the requirements through a series of memo/articles may make it easier to digest and understand. In this article, I will review the various definitions and terms used in the Final Rule. General Terminology HUD continues in the Final Rule to make it clear that VAWA applies regardless of sex, gender identity, or sexual orientation. The rule does not apply solely to women, despite the law s title. In the final rule, HUD adds a provision stating that victims cannot be discriminated against on the basis of any protected characteristic, including race, color, national origin, religion, sex, familial status, disability, or, in the case of HUD programs, age. HUD has revised the certification form, notice of occupancy rights, and model emergency transfer plan to list the four protected crimes separately, and to use the term "perpetrator" in lieu of, or in addition to the term "abuser" when referencing a person who commits one of the VAWA crimes. HUD has also revised the notice of rights and model emergency transfer plan to provide resources for victims of sexual assault and stalking, in addition to resources for victims of domestic violence. Affiliated Individual The term "affiliated individual" does not refer to the tenant who requests or is eligible for VAWA protections. Rather, an affiliated individual refers to a person who has a certain relationship to a tenant who is eligible for VAWA protections. A VAWA crime committed against an affiliated individual (who is not necessarily entitled to VAWA protections) is not a basis for denying or terminating assistance to the tenant. The term includes any individual "living in the household of the person who is eligible for VAWA protections." Live-in aides fall under this category. HUD has revised the definition of "affiliated individual" to include a relationship where an individual has guardianship of another individual, regardless of age. An "affiliated individual" means: (A) A spouse, parent, brother, sister, or child of that individual, or a person to whom that individual stands in the place of a parent or guardian; or (B) any individual, tenant, or lawful occupant living in the household of that individual. Covered Housing Provider For HUD s multifamily Section 8 project-based programs, and for the Section 202 and 811 programs, the final rule provides that the owner is the covered housing provider and responsible for implementing the VAWA requirements. If a PHA is the owner of a project under one of these programs, the PHA is the covered housing provider. If a PHA administers the programs at a property, the PHA will have primary oversight responsibilities under VAWA, including the provision of forms and notices for owners to give to tenants and applicants. For the Moderate Rehabilitation SRO program, both the PHA and the owner are responsible for ensuring that an emergency transfer plan is in place for the covered housing, but it is the owner that has the responsibility for implementing the emergency transfer plan. In the case of the housing choice voucher program and project-based voucher program, it is the PHA that is the covered housing provider responsible for complying with the emergency transfer plan. The PHA is also responsible for providing the notice of occupancy rights and the certification form. However, for the housing choice voucher and project-based voucher programs, both PHAs and owners are covered housing providers and must adhere to the rule s basic provisions. For mixed-finance units and public housing developments that received public housing assistance under the Choice Neighborhoods and HOPE VI programs, the PHA is the covered housing provider. For FHA-insured multifamily projects, the new rule clarifies that the covered housing provider is generally the mortgagor. However, if the mortgagor sells the project to a new owner, but continues as the mortgagor, the new owner is the covered housing provider. Domestic Violence VAWA 2013 defines domestic violence as including the following: Felony or misdemeanor crimes of violence committed by a current or former spouse on intimate partner of the victim, by a person with whom the victim shares a child in common, by a person who is cohabitating with or has cohabitated with the victim as a spouse or intimate partner, by a person similarly situated to a spouse of the victim under the domestic or family violence laws of the jurisdiction receiving grant monies, or by any other person against an adult or youth victim who is protected from that person s acts under the domestic or family violence laws of the jurisdiction. The final rule clarifies that the term "spouse or intimate partner of the victim" includes a person who is or has been in a social relationship of a romantic or intimate nature with the victim, as determined by the length of the relationship, the type of relationship, and the frequency of interaction between the persons involved in the relationship. Stalking The definition of "stalking" is when an individual, the perpetrator, engages in a course of conduct directed at a specific person that would cause a reasonable person to fear for their own safety or the safety of others, or suffer substantial emotional distress. Stalking is not limited to situations where the perpetrator is someone with whom the victim was in any specific type of relationship. This article has explained some of the basic terms used in the final HUD regulation. The next article will provide a detailed overview of the emergency transfer provisions of the final rule.

Applicability of Final VAWA Rule

On November 16, 2017, I sent a memo to clients informing them of the publication of the HUD Final Rule implementing the changes to the Violence Against Women Act (VAWA). Over the next few weeks, I will post a series of articles outlining the various sections of the rule. The rule is long and complex, and explaining the requirements through a series of memo/articles may make it easier to digest and understand. In this article, I want to discuss the applicability of the rule.   Applicability   Eligibility for VAWA Protections. The final rule seeks to ensure proper evaluation of individuals who are or have been victims of domestic violence, dating violence, sexual assault, or stalking. VAWA 2013 prohibits the denial of admission or assistance to an individual "on the basis" of that person having been a victim of domestic violence, dating violence, sexual assault, or stalking. HUD interprets "on the basis" to include factors directly resulting from the domestic violence, dating violence, sexual assault, or stalking. g., if an individual has a poor rental or credit history, or a criminal record, or other adverse factors that directly result from being a victim of domestic violence, dating violence, sexual assault, or stalking, the individual cannot be denied assistance under a HUD program if the person otherwise qualifies for the program. VAWA 2013 does not independently provide protection for victims of economic abuse who are not also the victim of domestic violence, dating violence, sexual assault, or stalking. Both VAWA 2013 and the final rule provide that applicants will be provided with notice when they are denied assistance or admission under a covered housing program for any reason. The final rule adopts the universal definition of stalking, which is "any course of conduct directed at a specific person that would cause a reasonable person to fear for their own safety or the safety of others, or suffer substantial emotional distress." The rule clarifies that only tenants who are assisted by a covered program can invoke the VAWA protections that apply solely to residents. The term "tenant" refers to an assisted family and the members of the household on the lease but does not include guests or unreported members of a household. A Live-in aide or caregiver is not a tenant, and cannot invoke VAWA protections. However, a live-in aide or guest could be an affiliated individual of a tenant, and if that aide or guest is a victim of domestic violence, dating violence, sexual assault, or stalking, the tenant with whom the affiliated individual is associated cannot be evicted or have assistance terminated on the basis of the domestic violence, dating violence, sexual assault, or stalking. Also, if a live-in aide is a victim of domestic violence, dating violence, sexual assault, or stalking, and the tenant seeks to maintain the services of the aide, the housing provider cannot require that the aide be removed from the household on the grounds of being a victim of abuse covered by VAWA. To require removal of the aide solely because the aide is a victim of abuse covered by VAWA likely would violate the Fair Housing Act s reasonable accommodation provisions. If a tenant requests and qualifies for an emergency transfer because the aide is a victim of domestic violence, dating violence, sexual assault, or stalking, the tenant s entire household - including the aide - can be transferred. If an unreported person is living in a unit and the tenant is afraid to ask the unreported member to leave due to a domestic violence experience, the tenant is covered by VAWA and eligible for the remedies provided. The final rule clarifies that only properties using HUD covered programs are subject to the rule. Therefore, housing providers with a mixed portfolio (i.e., a combination of HUD and non-HUD projects) may not be required to provide VAWA protection to tenants in non-covered projects. Housing providers should be aware of other Federal, State, and local laws that may apply. g., properties with Low-Income Housing Tax Credits (LIHTC) are subject to VAWA and should seek guidance from the Department of Treasury or the appropriate Housing Finance Agency (HFA). A tenant or family may invoke VAWA protections on more than one occasion and cannot be subjected to additional requirements because they have invoked VAWA in the past. In cases where the presence of the perpetrator on the property will endanger persons other than the tenant, a housing provider may evict or terminate assistance to a tenant. The housing provider must be able to demonstrate an actual and imminent threat to others if the tenant is not removed, and this is considered a last resort action. Victims do not have to contact authorities, such as police, or initiate legal proceedings against an abuser or perpetrator to qualify for VAWA protections. In other words, housing providers may not require that a victim obtains or seek a restraining order. Covered Programs: The final rule lists all the programs covered by VAWA and adds the Housing Trust Fund (HTF) program. Since the HTF is very similar to the HOME program, which is a covered program, HUD states that exclusion of the program from VAWA coverage would not be logical. Virtually all Section 202 projects are also covered, unless the Section 202 direct loan project has no agreements or contracts with HUD (such as project-based Section 8). These projects are limited in number but are not subject to VAWA. Concerning the Rental Assistance Demonstration (RAD) program, tenants in converted units continue to be covered by VAWA protections provided under HUD s Section 8 Project-Based Voucher or Project-Based Rental Assistance Program. Residents residing in units with assistance under the Choice Neighborhoods program receive VAWA protection under the relevant rental subsidy programs if the assistance comes from a HUD covered housing program. Tenants in public housing that received funding under the HOPE VI program will have the same VAWA rights as other public housing tenants. HUD funded emergency shelters are also covered by VAWA.   The next article will focus on the various definitions and terminology unique to the VAWA 2013 Act and final HUD rule.

Occupancy Standards – Recommendations and Best Practices

All communities should have occupancy standards to prevent overcrowding of units. In the case of federally assisted properties, the standards should also prevent underutilization of space.   A primary goal of any occupancy standard should be to ensure that it is not restrictive to the point of inhibiting the ability of families with children in their ability to find housing. This is due to the fact that families with children are protected under the "familial status" provisions of federal fair housing law.   The industry standard is generally two persons per bedroom. This policy was first enunciated in the HUD "Keating Memorandum" in 1991, and became official HUD policy in 1998. However, the memo points out that the two person per bedroom standard is not an absolute and that other considerations are important. In fact, there have been recent challenges to the two-person standard, especially in areas where local occupancy laws may permit more than two people per bedroom based on square footage or other factors.   The Fair Housing Act does not specifically address occupancy standards and Congress has recognized the legitimacy of such rules. Subject to state and local laws, every apartment community should set its own standards. Elements that should be considered in setting these standards include -   How large are the bedrooms? Are there extra rooms (e.g., den, office, or loft) that could serve as a bedroom? What is the age of the children? What is the unit configuration? Does the property have physical limitations (e.g., septic or sewer capacity) that will limit occupancy?   It is not recommended that owners automatically adopt the two-person per bedroom standard. Fair housing settlements have occurred in at least two cases involving the two-person per bedroom standard. Communities with across the board two-person per bedroom policies are at greater risk of testing by fair housing advocacy agencies. If a company wants to set an across the board policy without completing a full review with applicability to the specific property, I recommend a "2+1" standard. This is two-people per bedroom, plus one. So, a two-bedroom unit would permit five occupants.   Generally, the unit size should be a family s choice - not the owner s. Even in federally subsidized properties, families should be able to choose between whatever unit sizes they are eligible for. For example, a family of three could be eligible for anything from a one-bedroom to a three-bedroom unit.   Research State and Local Laws   Some localities set occupancy standards based on square footage (total square footage per person or square footage per bedroom per person are examples). Properties should never have an occupancy policy that violates local or state ordinances. If a local occupancy policy allows only two-persons per bedroom, the "2+1" policy noted above should not be implemented.   Multiple codes may come into play and all should be examined. These may include fire codes, building codes, and zoning requirements.   Issues to Consider When Setting Occupancy Standards   Size of unit and Bedrooms: It may be reasonable to allow for more occupants if a unit is spacious with large bedrooms, while the two-person per bedroom policy may be reasonable for a small mobile home; and Configuration of the Unit: A unit with a den or study will almost certainly be expected to permit more than two-people per bedroom.   One question often raised is whether the age of children should be considered when setting occupancy standards. The answer is yes - if it benefits the family. While it may be reasonable to deny a small one-bedroom unit to an adult couple with a teenager, this policy could be challenged if the same couple had an infant child. In fact, I recommend not counting infant children under 18-months when considering unit occupancy. The family should be able to choose where the child sleeps.   Also, if a household adds a baby, they should not be required to move to a larger unit - regardless of occupancy policies - until the child is at least 12-months old (two years old would be an even safer policy).   Owners should never require children of the opposite sex - regardless of age - to have separate bedrooms. Likewise, there should be no requirement that adults and children of either gender have separate bedrooms. These are all decisions that should be left to the family. Limitations on the number of people per bedroom should be the only consideration; not sex, age, or relationship.       What About Physical Limitations on Building Systems?     If building infrastructure, such as septic or sewer systems, have limited capacity, limitations on occupancy may be acceptable. In such cases, the owner will almost certainly be expected to have engineering studies supporting the occupancy restrictions based on the capacity of the physical plant.   The key in setting limitations on occupancy is to limit the number of people - not the number of children. To quote the Keating Memorandum, "An occupancy policy which limits the number of children per unit is less likely to be reasonable than one which limits the number of people per unit."

Memo on HUD Notice H 2016-7, RAD Notice Regarding Fair Housing and Civil Rights and Relocation Requirements

HUD published Notice H 2016-7 on November 10, 2016. The Notice replaces and supersedes Notice H 2014-09/PIH 2014-17 (issued July 14, 2014).   The Notice provides PHAs, Owners and RAD development partners with guidance regarding fair housing, civil rights, and relocation requirements for First Component (public housing conversion) RAD projects.   This Post focuses on the relocation requirements of the Notice.   Section 6 and 7 of the Notice provide guidance regarding relocation assistance requirements when planning for or implementing resident moves as a result of a conversion of a public housing project under RAD. PHAs and Project Owners implementing RAD transactions may be subject to the requirements of the Uniform Relocation Act.   For properties being redeveloped with funding under a Choice Neighborhoods Implementation (CNI) grant, the relocation requirements set forth in this Notice are superseded by guidance regarding relocation in the CNI NOFA. Permanent involuntary displacement of public housing or Section 8 assisted residents may not occur as a result of a CNI conversion.   Major Notice provisions relating to relocations include: Requires PHAs or Project Owners to prepare a written relocation plan for all transactions that involve permanent relocation or temporary relocation anticipated to exceed 12-months; Requires PHAs to provide residents with a RAD Information Notice (RIN) in order to ensure that residents are informed of potential project plans and of their rights in connection with RAD prior to submission of the RAD application; Clarifies that the General Information Notice (GIN), when applicable, should be provided as soon as feasible and no later than 30-days following the issuance of the Commitment to enter into a Housing Assistance Payments Contract (CHAP); Requires Project Owners to provide a notification of Return to the Covered Project, when applicable; Moves the date before which PHAs are prohibited from beginning any physical relocation earlier in the conversion process (specifically, from the date of Closing to the later of the effective date of the RAD Conversion Commitment (RCC) and the expiration of the 30- or 90-day RAD Notice of Relocation period, as applicable); Clarifies the specific requirements applicable to different types of relocation (e.g., moves within a property, temporary relocation of less than 12-months, etc.); Provides enhanced guidance on the right to return requirements, any offers of alternative housing options and the documentation that must be retained when tenants choose an alternative housing option and decline their right to return; Describes how HUD has administratively implemented URA requirements and URA relocation assistance and payments for displaced persons, when applicable, to residents who choose to decline the right of return and, instead, choose voluntary permanent relocation; Requires PHAs to maintain detailed data regarding each household that will be relocated, with key dates of notices and moves; and Identifies key fair housing and civil rights requirements applicable during relocation.     Accessibility for Persons with Disabilities Throughout the Planning and Implementation Process   Accessibility requirements will apply during all stages of a RAD transaction, including during relocation. This includes the requirement for reasonable accommodations in rules, policies, practices, and services. Common examples of reasonable accommodations that may occur during relocation include permitting an individual with a disability to relocate near public transportation, providing a unit larger than otherwise permitted for a live-in aide, and making exceptions to no-animal rules for assistance and service animals. Reasonable accommodations must follow the disabled individual throughout the RAD process, including during relocation. Furthermore, PHAs and Project Owners may be required to provide particular reasonable accommodations during relocation, such as assistance moving household items.   The Notice s relocation requirements are extensive and cover 23 pages of the 80 page Notice. The Notice also includes Recommended Relocation Plan Contents.   PHAs and Project Owners involved with First Component RAD conversions that may involve resident relocation should obtain and carefully review the requirements of this Notice. Early planning relating to relocation requirements are essential if these public housing conversions are to be successful.        

HUD Final Rule on VAWA - November 16, 2016

The U.S. Department of Housing & Urban Development (HUD) final rule regarding the implementation of housing protections authorized in the Violence Against Women Reauthorization Act of 2013 (VAWA) was published in the Federal Register on November 16, 2016.   In addition to the Final Rule, HUD has published a notice titled the Notice of Occupancy Rights under the Violence Against Women Act that certain housing providers must give to tenants and applicants to ensure that they are aware of their rights under VAWA and these implementing regulations, a model emergency transfer plan that may be used by housing providers to develop their owner emergency transfer plans, a model emergency transfer request form that housing providers could provide to tenants requesting an emergency transfer, and a new certification form for documenting incidents of domestic violence, dating violence, sexual assault, and stalking that must be used by housing providers.   Some of the critical components of the final rule include: Continuation of the core protections - The rule codifies the core protection across HUD s covered programs ensuring that survivors are not denied assistance as an applicant, or evicted or have assistance terminated due to having been a victim of domestic violence, dating violence, sexual assault, and stalking, or for being affiliated with a victim. Emergency Transfers - One of the key elements of VAWA s housing protections are emergency transfers which allows for survivors to move to another safe and available unit if they fear for their life and safety. The final rule includes a model emergency transfer plan, which was required in VAWA 2013, and an emergency transfer request form. Protections Against the Adverse Effects of Abuse - The final rule ensures that covered housing providers do not deny tenancy or occupancy rights based solely on adverse factors that are a direct result of being a survivor. Low Barrier Certification Process - The final rule makes it clear that under most circumstances, a survivor need only to self-certify in order to exercise their rights under VAWA, ensuring third -party documentation does not cause a barrier in a survivor expressing their rights and receiving the protections needed to keep themselves safe. The rule includes a certification form that may be used by covered housing providers. This final rule is effective on December 16, 2016, and compliance with the rule with respect to completing an emergency transfer plan and providing emergency transfers, and associated recordkeeping and reporting requirements, is required no later than May 15, 2017.   All owners and managers of properties subject to VAWA 2013 should obtain a copy of the final rule and move toward implementation. The rule is long (102 pages) and complex. I will be providing guidance on each area of the new rule over the coming weeks to assist clients in implementation. In the meantime, if you have specific questions regarding the new final rule, please feel free to contact me.

Add-on and Special Fees Available for Properties Implementing a Homeless Preference

On October 26, 2016, HUD published a memorandum allowing special and add-on management fees for properties implementing a homeless preference.   HUD has been working to increase the number of assisted properties with homeless preferences. Recognizing that establishing and operating such preferences require time and effort on the part of management agents, HUD is now permitting owners of Multifamily assisted housing to negotiate add-on and/or a special fee with their property management company to assist in implementing a homeless preference.   Fees will cover the cost of staff time associated with establishing and managing a Homeless Preference, including the following activities:   Identifying and engaging local homeless service providers; Learning about the local area needs and determining which families/individuals experiencing homelessness will be the best match for the property; Formalizing agreements and establishing referral processes with local homeless service providers; Amending the Tenant Selection Plan (TSP) and submitting to HUD for approval; Receiving applicant referrals and screening applicants to ensure they meet eligibility criteria; Providing support, education, and tools to property management staff during lease up and management; Facilitating a household s move-in and access to necessary household items; and Documenting results   Special Management Fee   A special management fee will be permitted during a nine-month start up period to enable owners and management agents to create and implement the homeless preference process. The special fee amount is $2.50 per unit per month (PUPM). For example, a 100-unit property can collect up to $2.50 x 100 units x 9 months = $2,250.   The maximum special management fee cannot exceed $4,500 per property, and if the O/A does not complete the process during the nine-month period, the term of the special fee cannot be extended.   Management agents may collect the special fee for the entire nine-month period, even if they complete the preference process in a shorter period of time. Once the nine-month period has ended, the agent may start collecting the add-on fee at the beginning of the 10th month.   Add-on Fee   Once the homeless preference is in place, management agents may collect a monthly add-on fee as long as at least one previously homeless individual or household is admitted to a particular property during a one-year period. The add-on fee is $2.00 PUPM. For example, a 100-unit property can collect up to $2.00 x 100 units x 12 months = $2,400 in a one-year period. The fee may not exceed $3,600 per property per year.   Management agents may not simultaneously collect a special and add-on fee. Collecting an add-on fee is permissible even if a special fee is not requested or approved. The add-on fee can be collected on an ongoing monthly basis as long as the following conditions are met:   A property s homeless preference is active; Local homeless service providers continue to refer eligible applicants; and TRACS shows that the project had a least one homeless household move-in within a one-year period.   Other Provisions   The special and add-on fees cannot be retroactive. If a property already has an approved TSP with a homeless preference and a notification of the preference has already been sent to the waiting list applicants, the management agent cannot collect a special fee for that property.   A rent increase may not be requested in order to pay the special or add-on management fee.   If an owner has agreed to a homeless preference or has reserved units as a homeless set-aside for a specific property as a condition of receipt of Low-Income Housing Tax Credits or other public funding, the management agent can collect a special or add-on management fee for the property.   Interested owners/agents should obtain a copy of the complete Memorandum for information on the request and approval process. If you have questions about the memorandum, contact Carissa Janis at HUD at 202-402-2487 or at Carissa.1.janis@hud.gov.

HUD Policy for Amending Use Agreements for LIHPRHA Deals - October 28, 2016 (Notice H 2016-16)

HUD Policy for Amending Use Agreements for LIHPRHA Deals - October 28, 2016 (Notice H 2016-16) HUD published Notice H 2016-16 on October 28, 2016. This Notice provides guidance on the circumstances under which HUD may consider amended and restated Use Agreements for properties assisted under the Low-Income Housing Preservation & Resident Homeownership Act of 1990 (LIHPRHA). Amended and restated Use Agreements may be approved in order to incentivize and facilitate the prepayment and refinancing or acquisition transactions to preserve the viability of certain affordable properties. Background HUD financed thousands of affordable properties during the 1960s and 1970s. Many of the projects utilized rental assistance from Section 8 or RAP programs. The FHA 221(d)(3) and Section 236 programs were common financing vehicles and provided for 40-year mortgages with the right to prepay after 20-years. Properties that were in desirable areas and that showed appreciation in value were prime candidates for pre-payment. The first prepayments were in the early to late 1980s. The result was hundreds of thousands of apartments converting from affordable to market rate. The federal government implemented a number of strategies to prevent the prepayments, including LIHPRHA. LIHPRHA offered owners fair market-value incentives to: (1) extend low-income affordability for the remaining useful life of the property [not less than 50-years]; or (2) transfer their properties to nonprofits, tenant organizations, or community-based organizations who would keep the housing affordable. HUD s authority to provide incentives under LIHPRHA lasted about six years. In 1996, Congress restored the Owner s right to prepay federally insured mortgages and stopped the funding of LIHPRHA incentives. HUD is currently supervising an inventory of approximately 640 properties with 75,000 units subject to LIHPRHA. These are mostly low-income housing developments with mortgages insured under Section 221(d)(3)-(d)(5) below-market interest rate (BMIR), Section 221(d)(3) market interest rate, and Section 236. All LIHPRHA projects are fully or partially assisted under the Section 8 program. Many LIHPRHA properties are in need of significant repair. Owners may now seek to prepay the FHA-insured mortgage and to refinance their properties with new forms of debt and equity, including the Low-Income Housing Tax Credit (LIHTC) in order to make project improvements. The LIHPRHA Use Agreements in place at these properties may impose restrictions on Owner distributions and refinance proceeds beyond the statutory required restrictions. For example, some agreements restrict Owners from obtaining any proceeds from refinancing, while others prohibit the use of LIHTC equity. Such restrictions hamper the ability of Owners to execute refinancing or acquisition transactions. Previously, the LIHPRHA statute allowed Owners to take distributions up to 8% of "Preservation Equity" as calculated at the time of the original LIHPRHA closing. The LIHPRHA statute was recently modified to allow an Owner, who is currently subject to a Use Agreement to be entitled to distribute annually, all surplus cash generated by the property, once HUD has determined that the Owner is in material compliance with the LIHPRHA Use Agreement. This includes compliance with prevailing physical condition standards. Many current Use Agreements restrict periodic distributions to 0% to 6% of initial equity. In these cases, in order to permit unlimited distributions, the Use Agreement will have to be modified. Applicability In addition to applying to properties subject to LIHPRHA, the Notice also applies to properties subject to a Use Agreement under the Emergency Low Income Housing Preservation Act (ELIPHA). Use Agreements under ELIPHA expired on the maturity date of the original FHA-insured or HUD-Held mortgage. Most ELIPHA Use Agreements have therefore recently expired or will expire in the near future. In these cases, it is unlikely that Owners will desire an amendment to an ELIPHA Use Agreement. However, if Owners wish to do so, HUD will consider requests for amendments of ELIPHA Use Agreements that meet the requirements of this Notice. Unfortunately, Owners subject to ELIPHA Use Agreements are not eligible for unlimited distributions of surplus cash or the release of funds accumulated in a residual receipts account. Owners subject to LIHPRHA are eligible for both of these benefits. Requirements for Amending & Restating Use Agreement HUD will allow the amendment and restatement of the property s LIHPRHA Use Agreement to permit the Owner to receive proceeds from the refinance of the property, to allow the Owner to receive unlimited annual distributions from surplus cash, and to receive funds accumulated is a residual receipt account as allowed by statute. Properties must meet the following requirements in order to amend a Use Agreement under LIHPRHA: Compliance with business agreements - such compliance must be demonstrated by: The project must have a current REAC score of 60 or above, or demonstrate how an amendment to the Use Agreement will result in correction of deficiencies; Owners must be in current compliance with all applicable nondiscrimination and equal opportunity requirements; The project must have an approved up to date Affirmative Fair Housing Marketing Plan; The project must have received satisfactory Management & Occupancy Review (MOR) ratings for the prior three review cycles; If this requirement is not met, the Owner must provide a list of the corrective actions that will be taken relative to MOR issues; The Owner must be current in the submission of Annual Financial Statements, all excess income owed to HUD must be repaid in full; Any FHA-insured, HUD-Held or state insured mortgage on the property must have been current for the prior three-years; and There can be no outstanding notices of default or violation. Except for changes in the Use Agreement permitted by this Notice, all other requirements of the Agreement must remain in place. When an Owner has an Amended & Restated Use Agreement under LIHPRHA that allows for unlimited distributions, the Owner is allowed unlimited distributions of surplus cash. I.e., the distribution must be taken from surplus cash, and may not be listed as a line-item expense in the Section 8 HAP Contract budget. If the project is considered troubled, HUD will require an experienced owner/managing agent who has demonstrated the ability to successfully own and manage troubled projects. If there is a HAP contract in place at the property, and the project is seeking prepayment approval from HUD, the Owner must execute a renewal contract with a 20-year term. Processing of Requests for Amended & Restated LIHPRHA Use Agreements The owner submits a request to the HUD Regional Center or Satellite Office; HUD will review the request for amendment to the Use Agreement; This request must be reviewed within 30-days. The Regional Center will then submit the request to the Office of Asset Management and Portfolio Oversight at HUD Headquarters for consideration. HUD HQ will advise the Regional Center Director if and when the amendment is approved, and the Regional Center will execute the amended Use Agreement. Owners with properties subject to this Notice should obtain a copy of the Notice and determine whether the provisions of this guidance apply to their properties, and if so, whether they want to avail themselves of the benefits that can result from amendment of the LIHPRHA Use Agreements.

HUD Implementation Guidance for Housing Opportunity Through Modernization Act of 2016

In the October 24, 2016 Federal Register, HUD published initial implementation guidance for the Housing Opportunity Through Modernization Act of 2016 (HOTMA). President Obama signed HOTMA into law on July 29, 2016, but only certain parts of the law are currently effective. The purpose of this HUD guidance is to identify the sections of the law that are effective immediately and those that will require further action by HUD in order to become effective. This guidance is effective October 24, 2016.   Introduction   Some of the laws most significant amendments include setting a maximum income level for continued occupancy in public housing, expanding the availability of Family Unification Program (FUP) vouchers for children aging out of foster care, changes to the housing quality standards for Section 8 Voucher Units, multiple changes to the Project-Based Voucher program, modification of the requirements for mortgage insurance for condominiums, creation of a Special Assistant for Veterans Affairs in HUD, and changing the allocation formula for the Housing Opportunities for Persons with AIDS (HOPWA) program.   General Implementation Issues   HOTMA makes several of its provisions effective upon enactment (July 29, 2016). Other statutory changes made by HOTMA become effective only after the issuance of a notice or regulations by HUD, or at the start of the calendar year following the publication of a notice or regulations.   Provisions of HOTMA Effective Upon Enactment or Already in Effect - No HUD Action Required to Implement   Reasonable Accommodation Payment Standards - permits PHAs to establish a payment standard of up to 120% of the Fair Market Rent (FMR) as a reasonable accommodation for a disabled person, without HUD approval. A PHA may also establish an exception payment standard in excess of 120% as a reasonable accommodation with HUD approval. Establishment of Fair Market Rent - provides that in the Housing Choice Voucher (HCV) program no PHA is required, as a result of a reduction in the FMR, to reduce the payment standard applied to a family continuing to reside in a unit under a HAP contract at the time the FMR was reduced. Under prior law, if a reduction in the FMR caused the PHA payment standard to exceed 110% of FMR, the PHA was required to reduce the payment standard so that the payment standard was within the payment range of the new FMR. PHAs may choose, but are no longer required, to reduce the payment standard for a family who remains under HAP contract at the family s second annual reexamination. Owners of LIHTC properties with voucher residents should make note of this change. Family Unification Program for Children Aging out of Foster Care - makes changes to the FUP, revising the length of the term that a FUP-eligible youth may receive FUP assistance from 18 months to 36 months. The change applies to youth currently receiving FUP assistance as well as any new participants. The law also revises the eligibility requirements. Previously, FUP-eligible youth had to be at least 18 years old and not more than 21 and have left foster care at age 16 or older. Under the new law, FUP-eligible youth must: Be at least 18 years old and not more than 24; have left foster care at age 16 or older or will leave foster care within 90-days; and be homeless or at risk of being homeless. Preference for United States Citizens or Nationals - this change applies only to Guam and establishes a preference or priority in receiving financial assistance for any citizen or national of the United States over aliens. Exception to Public Housing Agency Resident Board Member Requirement - provides for an exception for certain jurisdictions (Housing Authority of the County of Los Angeles or any PHA in Alaska, Iowa, and Mississippi) from the resident board member requirements. Inclusion of PHAs and Local Development Authorities in Emergency Solutions Grants (ESG) - authorizes local governments that receive ESG funds to subaward all or a portion of those funds to PHAs and local redevelopment authorities. Inclusion of Disaster Housing Assistance Program in Certain Fraud and Abuse Prevention Measures - provides that the Disaster Housing Assistance Program shall follow the rules of the McKinney Homeless Assistance Act for the purpose of income verifications. Energy Efficiency Requirements Under Self-Help Homeownership Opportunities Program (SHOP) - prohibits HUD from requiring units developed under the SHOP program to meet energy efficiency standards other than those contained in the Cranston-Gonzalez National Affordable Housing Act. Formula and Terms for Allocations to Prevent Homelessness for Individuals Living with HIV or AIDS - makes several changes to the HOPWA program, including (1) alterations to the allocation formula, (2) continued eligibility of FY 2016 grantees, and (3) authorization to award funds to alternative grantees.     Provisions That Require HUD Guidance or Rulemaking   For these provisions, PHAs, multifamily owners, or grantees may not use the provisions of HOTMA until HUD issues a rule or notice.   Initial Inspections of Section 8 Voucher Units - authorizes assistance payments for up to 30-days if an annual inspection reveals non-life-threatening defects and to authorize occupancy of units prior to an inspection by a PHA if the property has met the requirements of an alternative inspection (e.g., LIHTC inspection) in the previous 24-months. HUD is considering the appropriate method for implementation. Enforcement of Housing Quality Standards (HQS) for Section 8 Voucher Units - outlines timeframes for correcting deficiencies discovered by inspections. The law requires life-threatening deficiencies to be corrected within 24 hours and sets the time for correcting other deficiencies at 30-days unless the PHA determines otherwise. It also provides families with 90-days to relocate to a new unit if an owner fails to correct the defaults and permits PHAs to use up to two months of any assistance amounts withheld or abated for costs directly associated with relocation. HUD is developing regulations relative to this change. Income Reviews - revises the frequency of family income reviews and the calculation of income. The law requires that the reviews of family income must be conducted upon admission and annually thereafter, depending on certain decreases or increases in annual adjusted income. It also changes the definitions for the public housing and Section 8 programs of income and adjusted income for each member of the household who is 18 years or older and unearned income for each dependent who is less than 18. HUD is considering the best method for implementation. Income Review for Project-Based Housing - the law eliminates the requirement that reviews of family income shall be made no less frequently than annually. HUD is considering the best method for implementation. Limitation on Public Housing Tenancy for Over-Income Families - sets the maximum amount of annual adjusted income for continued occupancy in public housing at 120% of area median income (AMI). If a family s annual adjusted income exceeds the maximum amount for two consecutive years the family will not be eligible for public housing. PHAs will have the option of terminating the family s tenancy or allowing them to remain at a higher rent. HUD will issue additional information on this requirement in the future. Limitation on Eligibility for Assistance Based on Assets - the law sets limits on the assets that families residing in assisted housing may have. This requirement must be put in place by rulemaking. Units Owned by PHAs - provides that the term owned by a public housing agency refers to units in projects that are owned by a PHA, by an entity wholly controlled by a PHA, or by a limited liability company or limited partnership in which a PHA (or PHA controlled entity) holds a controlling interest. PHAs should continue their current practices until HUD issues additional guidance. PHA Project Based Assistance - the law makes several statutory changes to the Project Based Voucher (PBV) program. HUD is considering the appropriate implementation method. Public Housing Capital & Operating Funds - HUD will issue new rules regarding use of capital funds for establishing replacement reserves. Use of Vouchers for Manufactured Housing - the law extends the definition of "rent" for vouchers to include monthly payments for purchasing a manufactured home, tenant-paid utilities, and monthly rent for real property. This is not effective until HUD issues an implementation notice.   Other elements of the law that also require HUD implementing regulation include (1) Modification of FHA Requirements for Mortgage Insurance for Condominiums; (2) Definition of Geographic Area for Continuum of Care Program; and (3) HOPWA Allocations.   Most changes to the Project-Based Section 8 Program made by the new legislation will not take effect until HUD publishes implementing regulations or notices. Many of these may not occur until 2017 or 2018.