News

HUD Publishes Section 8 Annual Adjustment Factors (AAF)

On April 3, 2016, HUD published in the Federal Register the 2016 Section 8 Housing Assistance Payments Program Annual Adjustment Factors (AAF). The factors are based on a formula using residential rent and utility cost changes from the most recent annual Bureau of Labor Statistics Consumer Price Index (CPI) survey. These factors are applied at the anniversary of Housing Assistance Payments (HAP) Contracts for which rents are to be adjusted using the AAF. Tables showing AAFs will be available electronically from HUD at huduser.gov/portal/datasets/aaf.html.

Revision of Tenant Participation Requirements, HUD Notice H 2016-05

Revision of Tenant Participation Requirements, HUD Notice H 2016-05   On March 31, 2016, HUD published Notice H 2016-05, Revision of Tenant Participation Requirements.   This notice restates requirements originally issued in Notice H 2014-12 and revises penalties for non-compliance. This revised notice expands the types of properties that may be assessed civil money penalties to include non-insured projects that have a project-based Section 8 contract that has been renewed under the Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA).   Applicability   This notice applies to any mortgagor or owner of any multifamily housing project that meets any of the following: Projects subject to a HUD-insured or Secretary held mortgage under the National Housing Act; Section 236 projects; Section 221(d)(3) and (d)(5) Below Market Interest Rate (BMIR) insured projects; The Rent Supplement Program; The Section 8 Loan Management Set-Aside (LMSA) program; State or local housing finance agency projects that receive assistance under Section 236 or Rent Supplement, but does not have a HUD-insured mortgage; Properties with project-based Section 8 (does not include Project-based vouchers); Projects with enhanced vouchers under the Low-Income Housing Preservation and Resident Homeownership Act of 1990, the provisions of the Emergency Low-Income Housing Preservation Act of 1987, or the Multifamily Assisted Housing Reform and Affordability Act of 1997; Section 202 Direct Loan Program or the Section 202 Supportive Housing for the Elderly Program; and Section 811 Supportive Housing for Persons with Disabilities Program.   Rights of Tenants & Tenant Organizations   The notice makes it clear that tenants have the right to establish and operate a tenant organization for the purpose of addressing issues related to their living environment as well as activities related to housing and community development. A tenant organization is considered legitimate if it meets regularly, operates democratically, is representative of all residents in the development, and is completely independent of owners, management, and their representatives. The organization does not have to have a specific structure, written by-laws, elections, or resident petitions.   Owners and/or management agents are required to provide the head of household with a copy of the "Residents Rights & Responsibilities" brochure at move-in and annually at recertification. This brochure addresses tenant rights to organize.   Protected Activities   Owners must permit tenants and tenant organizations to undertake the following activities:   Distribution of leaflets in lobby and common areas, under tenants doors, and posting of information on bulletin boards; Initiation of contact with tenants, conducting door-to-door surveys to determine interest in establishing a tenant organization, and to offer information about the tenant organization; Offering assistance for tenants to participate in tenant organization activities; and Convening tenant organization meetings on-site in a manner that is fully independent of management representatives. Management representatives may not attend such meetings unless invited by the tenant organization.   Tenants also have the right to be notified of and to formulate responses to: Owner s requests for budget-based rent adjustments; Partial payment of claims; Conversion from project paid utilities to tenant-paid utilities; A reduction in tenant utility allowances; Conversion of units to non-residential use, cooperative housing, or condominiums; Major capital additions; and Loan prepayments.   Meeting Space   Owners and management agents must reasonably make available the use of any community room or other available space appropriate for meetings when requested by tenants or the tenant organization for activities related to the operation or establishment of the tenant organization, or to address issues relating to their living environment collectively. All programs or activities must be held in accessible locations unless the owner can demonstrate that doing so would result in a fundamental alteration of the program or an undue financial and administrative burden (i.e., would not be a reasonable accommodation).   Unless the project has low-income housing tax credits, an owner may charge a reasonable fee, approved by HUD and placed in the project account.   Tenant Organizers   A "tenant organizer" is a tenant or non-tenant who assists other tenants in establishing and operating a tenant organization, and who is not an employee or representative of current or prospective owners, managers, or their agents. Owners and management agents must allow tenant organizers to assist tenants in establishing and operating tenant organizations.   I recommend that a non-tenant "tenant organizer" be accompanied by a tenant while on the property. However, in order to require this, the owner must have a written policy against canvassing, and the policy must be consistently enforced. If the owner does not have a policy prohibiting canvassing, non-tenant organizers must be allowed to access the property without being accompanied by a tenant.   Impediments to Residents or Resident Associations Attempting to Exercise Their Rights   Owners may take no action that will impede the ability of tenants to establish a tenant organization or interfere with the activities of such organizations once they are organized. Examples of prohibited impediments include the following: Unreasonable denial of accessible meeting space; Repeatedly sending management representatives to resident meetings when management has requested that management not attend; Evicting, threatening to evict, withholding entitlements, or otherwise penalizing residents for organizing or asserting their rights; Attempting to form a competing resident organization under control of the management company or owner; and Running for office or otherwise serving as a member of the resident organization.   HUD Enforcement Options   A violation of the requirements outlined in the notice by an owner or management agent may result in one or more of the following sanctions: Debarment; Suspension; Limited Denial of Participation - this type of action excludes a party from further participation in a certain HUD program area. The action may be limited to a certain geographic area, and normally expires in one year; Civil Money Penalties - fines may be imposed on owners, principals of owners, and management agents who knowingly and materially fail to comply with the provisions of this notice. The maximum civil penalty for each offense is currently $42,500.    

HUD Releases Final AFFH Assessment Tool

HUD Releases Final AFFH Assessment Tool   On March 23, 2016, HUD published a Notice in the Federal Register regarding the final Affirmatively Furthering Fair Housing Assessment tool. This tool is for Public Housing Agencies. HUD had already released assessment tools for use by local governments and States and Insular Areas. This Notice solicits public comment for a period of 60 days on the proposed tool. The comment due date is May 23, 2016.   On July 16, 2015, HUD published the Affirmatively Furthering Fair Housing (AFFH) final rule that provides HUD program participants with a new process for planning for fair housing outcomes in order to assist them in meeting their statutory obligation to affirmatively further fair housing. This process includes an assessment tool that program participants must use to evaluate fair housing choice and access to housing opportunities in their jurisdictions.   The Proposed PHA Assessment Tool   The purpose of the tool is to provide certain nationally uniform data to program participants that will be useful in completing an Affirmative Fair Housing Plan (AFH). All program participants must use the HUD-provided data when completing an AFH.   HUD is only able to provide data for those protected class groups for which nationally uniform data are available. For this reason, some questions in the PHA Assessment Tool focus on specific protected classes based on the availability of such data. For these questions, local data and knowledge may be more helpful than the HUD assisted data.   Local Data & Local Knowledge   In addition to the nationally uniform data provided by HUD, program participants are required to use local data and local knowledge to assist in their assessments. Such local information will be necessary when answering the questions in the assessment tool.   Structure of the Proposed PHA Assessment Tool   The proposed PHA Assessment Tool has three key objectives: (1) The assessment tool must ask questions that are sufficient to enable program participants to perform a meaningful assessment of key fair housing issues; (2) the assessment tool must clearly convey the analysis of fair housing issues and contributing factors that program participants must undertake; and (3) the tool must be designed so program participants can use it to prepare an AFH that HUD will accept without unnecessary burden.   The tool has six sections: Section I: Cover sheet and certification. This section also covers basic program information applicable to the program participant or participants; Section II: Executive Summary; Section III: Addresses the community participation process and directs the PHA to describe outreach activities to encourage community participation in the development and review of the AFH, to describe how successful its outreach efforts were in obtaining community participation related to the AFH, and to summarize all comments obtained in the community participation process; Section IV: Assessment of Past Goals and Actions - requires PHAs to reflect upon the progress of past goals and actions and the efforts undertaken to achieve fair housing goals; Section V: Fair Housing Analysis - this section is designed to assist PHAs in identifying the fair housing issues and contributing factors in their service area and region; and Section VI: Fair Housing Goals & Priorities - this section contains a summary table of the fair housing issues that the PHA has identified.   The PHA Assessment Tool may be used by PHAs, including Qualified PHAs that elect to submit either an individual AFH or a collaborative AFH involving a collaboration of more than one PHA.   PHAs should carefully review the content of the proposed tool and send comments to HUD by the deadline date noted above.

HUD Issues Guidance on Criminal Record Screening

On April 4, 2016, the HUD Office of General Counsel (Helen R. Kanovsky) issued guidance on the relationship of using criminal records as a screening tool for housing decisions to federal fair housing laws. The essence of the guidance is that reliance on criminal history as the basis for a housing decision may be a violation of fair housing law if it creates a disparate impact for individuals due to a federally protected characteristic.   The guidance states that "A housing provider violates the Fair Housing Act when the provider's policy or practice has an unjustified discriminatory effect, even when the provider had no intent to discriminate." The guidance goes on to state "where a policy or practice that restricts access to housing on the basis of race, national origin, or other protected class, such policy or practice is unlawful under the Fair Housing Act if it is not necessary to serve a substantial, legitimate, nondiscriminatory interest of the housing provider, or if such interest could be served by another practice that has a less discriminatory effect."   Disparate impact cases relating to criminal history will be decided using a three-step approach, as follows:   A plaintiff must prove that the criminal history policy has a discriminatory effect, that is, that the policy results in a disparate impact on a group of persons because of their race or national origin. Presenting evidence proving that the challenged practice actually or predictably results in a disparate impact satisfies this burden.   If the plaintiff proves discriminatory impact, the second step of the analysis shifts the burden to the housing provider to prove that the challenged policy or practice is justified - that is, that it is necessary to achieve a substantial, legitimate, nondiscriminatory interest of the provider. For example, the protection of other residents and the property could be cited as a reason for such a policy. However, the guidance indicates that that the policy must actually assist in making the residents or property safer.   If the housing provider is successful in demonstrating that the criminal history policy is necessary to achieve its substantial, legitimate, nondiscriminatory interest, the burden shifts back to the plaintiff or HUD to prove that such interest could be served by another practice that has a less discriminatory effect. HUD's position here is that an individualized assessment of relevant mitigating information beyond that contained in an individual's criminal record is likely to have a less discriminatory effect than categorical exclusions that do not take such additional information into account. HUD infers that owners and managers should delay consideration of criminal history until after an individual's financial and other qualifications are verified in order to minimize any additional costs that an individualized criminal record assessment might add to the applicant screening process. This guidance is enlightening, in that it indicates that HUD is intent or requiring (not recommending) individual assessments, and that owners who fail to implement such a policy will be presumed to have a potentially discriminatory policy.     The guidance explicitly prohibits - for all housing providers - a policy or practice of excluding individuals because of one or more prior arrests (without any conviction). HUD states that such a policy cannot satisfy the burden of showing that the practice is necessary to achieve a substantial, legitimate, nondiscriminatory interest. This is also something I recommend in my guidance to clients when creating criminal screening policies; arrest records should not be used in the determination of housing approval - only conviction records should generally be considered.   The HUD policy is more forgiving with regard to policies that use a record of prior conviction as a reason for declining housing services. However, even a prior conviction policy does not relieve the owner of the requirement to prove that such policy or practice is actually necessary to achieve a legitimate business goal. A policy that denies a person based on any conviction record - regardless of when the conviction occurred, what the underlying conduct entailed, or what the convicted person has done since then - will not be acceptable.   In other words, a housing provider must show that its policy accurately distinguishes between criminal conduct that indicates a demonstrable risk to resident safety and/or property and criminal conduct that does not.   It is clear from this HUD guidance that HUD will consider any criminal screening policy to be discriminatory if it does not (1) take into account the nature and severity of an individual's conviction; and (2) consider the amount of time that has passed since the criminal conduct occurred. Apparently, HUD believes, based on this guidance, that all denials of housing assistance based on criminal convictions, are subject to assessment on a case-by-case basis.   HUD does give approval for one blanket exclusion from housing based on a criminal record. A housing provider will not be liable under the Act for excluding individuals because they have been convicted one or more time of the illegal manufacture or distribution of a controlled substance as defined in the Controlled Substances Act. Again, this is only if there has been a conviction for manufacture or distribution - not arrest. Also, this does not apply for cases involving drug "possession," - only manufacture or distribution.   Based on this new guidance, owners and managers should carefully examine their criminal screening policies. Such policies should never permit the refusal of housing services based solely on arrest records, and use of criminal conviction records should be limited to crimes relating to drugs, violent crimes, property crimes, and sex crimes. Also, any such policies should have reasonable timeframes in terms of how much of a "look back" is used when determining that a person's criminal history poses a threat to the community.   This represents a significant intrusion by HUD into the legitimate operational issues that housing providers must face on a regular basis. How this will all play out in the long run remains to be seen, but as the federal agency responsible for enforcing the nation's fair housing laws, the guidance promulgated by HUD cannot be disregarded. If you want to discuss your current policies or need assistance in developing new policies, please feel free to contact me.

Fair Housing Enforcement at LIHTC Properties

Fair Housing Enforcement at LIHTC Properties   A violation of fair housing law is reportable noncompliance for Low-Income Housing Tax Credit (LIHTC) properties. It is reported on Line 11h of IRS Form 8823, along with any other finding of noncompliance relating to a violation of the general public use rule. While the IRS has indicated that Housing Finance Agencies responsible for implementation of the LIHTC program should not report a taxpayer for a fair housing issue that the HFA believes has occurred, the Agency should report the issue to HUD for administrative follow up.   HUD is responsible for enforcing the Fair Housing Act (FHA). When a fair housing complaint is filed, HUD or a substantially equivalent State or local Fair Housing Agency will investigate it.   The Department of Treasury, HUD, and the Department of Justice (DOJ) entered into a Memorandum of Understanding (MOU) in August 2000, in an effort to ensure cooperation between the agencies with regard to fair housing enforcement at LIHTC properties. Key points of the MOU include coordinated procedures for notifying the state agencies and the IRS of charges, lawsuits, or other actions under the Fair Housing Act that involve LIHTC properties. Based on the terms of the MOU, HUD or DOJ will notify a state agency of:   A charge by the Secretary of HUD for a violation of the FHA; A probable cause finding under a substantially equivalent state law or local ordinance by a substantially equivalent state or local agency; A lawsuit under the FHA filed by the DOJ; or A settlement agreement or consent decree entered into between HUD or DOJ and the owner of an LIHTC property.   Non-FHA civil rights actions and lawsuits, such as Section 504 Rehabilitation Act lawsuits or administrative actions, are not covered under the MOU and are not to be reported to the IRS as noncompliance for Section 42 purposes.   When an HFA receives notification from HUD or DOJ of a violation under the FHA, the agency will immediately file a Form 8823 with the IRS (there will be no correction period given) checking the "out of compliance" box on Line 11h and will notify the property owner in writing of the action that has been taken.   When the IRS receives the 8823, they will send a letter to the property owner stating that a finding of discrimination, including an adverse final decision by HUD or a substantially equivalent state or local fair housing agency, or an adverse judgment by a federal court, will result in a loss of low-income housing credits. Similarly, the IRS will also send a letter to owners notifying them that a judgment enforcing the terms of a settlement agreement or consent decree will result in the loss of low-income housing credits.   In order for the finding to be corrected, documentation that the owner has complied with the court order and/or HUD's requirements and that the violation has been corrected is required.   Depending on the nature of the violation, noncompliance may be determined at the unit, building, or project level.   In summary, the two key elements to be aware of relative to fair housing violations at LIHTC properties are (1) HFAs are required to report potential fair housing violations to HUD or other appropriate fair housing enforcement agencies, and (2) uncorrected 8823s will be issued to the IRS for fair housing violations. It will be the responsibility of the owner to provide evidence to the HFA that the terms of the settlement agreement or consent decree have been complied with in order to have a corrected 8823 sent to the IRS.

HUD Publishes 2016 Income Limits

On March 28, 2016, HUD published the 2016 income limits for HUD programs as well as for the Low-Income Housing Tax Credit and Tax-Exempt Bond programs. The limits for the LIHTC and Bond projects are published separately from the limits for HUD programs. HUD has indicated that the U.S. median income limit is lower this year than it was in 2015.   LIHTC and Bond properties use the Multifamily Tax Subsidy Project (MTSP) limits, and are held harmless from income limit (and therefore rent) reductions. These properties may use the highest income limits used for resident qualification and rent calculation purposes since the project has been in service. HUD program income limits are not held harmless.   Projects in service prior to 2009 may use the HERA Special Income Limits in areas where HUD has published such limits. Projects placed in service after 2008 may not use the HERA Special Limits.   Projects in rural areas that are not financed by tax-exempt bonds may use the higher of the MTSP limits or the National Non-Metropolitan Income Limits (NNMIL). According to HUD, the NNMIL have gone down from 2015 to 2016.   Owners of LIHTC projects may rely on the 2015 income limits for all purposes for 45 days after the effective date of the newly issued limits. This 45-day period ends on May 12, 2016.   The limits for HUD programs may be found at http://www.huduser.org/portal/datasets/il.html. The limits for LIHTC and Bond programs may be found at http://www.huduser.org/portal/datasets/mtsp.html.   Please feel free to contact me with any questions.   AJ

Discrimination Based on National Origin

This is my second in a series of articles focusing in detail on each of the seven characteristics that are protected under the federal Fair Housing Act. These seven characteristics (also known as "Protected Classes") are race, color, national origin, religion, sex, handicap, and familial status. While all housing professionals are certainly familiar with these seven protected characteristics, there are details and specifics regarding each that may be of interest. The purpose of these articles is to provide some historical context as well as case law to assist those who are in the housing field in their understanding of the law relative to each of the characteristics. The first of the six articles covered race and color; this month I am dealing with discrimination based on National Origin   Discrimination Based on National Origin   The Fair Housing Act prohibits discrimination on the basis of nationality. This applies to both the country where the person being discriminated against comes from and where their ancestors came from. Approximately 12% of current fair housing complaints are based on national origin, and more than half of those involve Hispanic or Latino individuals.   A number of recent court cases illustrate the type of national origin discrimination now being adjudicated.   Lozano v. City of Hazleton, July 2013: In this case, a federal court ruled that the City of Hazleton, PA could not regulate residence based solely on immigration status. A Hazleton city ordinance required that anyone seeking to rent housing in the city had to demonstrate legal immigration status. Persons age 18 and older were required to obtain an "occupancy permit" indicating "proof of legal citizenship or residency." Landlords faced fines or prison if they permitted violations of the occupancy permit. When the ordinance was challenged, the court held - "Congress has not banned persons who lack lawful status or proper documentation from obtaining rental or any other type of housing in the United States. Hazleton s decision to impose this distinct, unusual and extraordinary burden upon aliens impermissibly intrudes into the realm of federal authority."   Long Island Housing Services, Inc. et al v. German-American Settlement League, Inc (GASL), 2015: The GASL owns Siegfried Park in Yaphank, Long Island, where, in the late 1930 s, German-Americans traveled to rally together in support of Nazism. GASL still displays one of the Hitler Youth emblems on top of a flagpole flying the German flag in its clubhouse at Siegfried Park.   Siegfried Park is a 50-home residential community. Since its 1937 incorporation, GASL has excluded non-whites from its membership, recreational programs, and summer homes in favor of new residents with German ancestry.   GASL rents lots on an annual basis to its members who live year-round in Siegfried Park in single-family homes. Community rules restrict homeownership to members who are primarily of "German extraction." New members must be sponsored by a current member and accepted by a majority of the Board and membership. Membership may be extended under limited circumstances to "other national elements" only if they are sponsored by current members, all of who are white.   GASL prohibits members from renting homes and from publicly advertising homes for sale. Homes may be listed for sale only in the minutes of the GASL Board meetings that are hand-distributed to GASL members.   The suit has been brought on behalf of Philip Kneer and Patricia Flynn-Kneer who are white American citizens of German ancestry. They have owned a home at Siegfried Park since 1999. They claim they have been unable to sell their home due to the GASL racially restrictive policies. The suit was filed in October 2015 and claims discrimination based on race and national origin. GASL has never granted full membership to any non-white individual.   In theory, claims based on national origin discrimination are distinguishable from racial claims. In Patel v. Holley House Motels, 1979, the court stated, "national origin has come to mean the country of an individual s ancestry, rather than his race or color."   The Supreme Court ruled in Espinosa v. Farah Mfg. Company, Inc (1973), that the term "national origin" refers to "the country where a person was born, or, more broadly, the country from which his or her ancestors came."   What these various cases illustrate is that in order to substantiate a national origin discrimination case, a plaintiff must show that the defendant is willing to deal with some countries, but not others.   Under the FHA, plaintiffs who allege discrimination due to being "Hispanic" have sufficiently identified their national origin to state a claim - they do not have to identify the specific "Hispanic" nation from they or they or their ancestors originate. This is also the case for Arabs, persons from the Middle East, and perhaps Muslims. Either U.S. citizens of a particular national background or citizens of other countries may bring a national origin complaint under the FHA. The FHA does not prohibit discrimination on the basis of U.S. citizenship, unless it has the effect of discriminating against particular national origins, racial minorities, or religions. However, housing discrimination against persons who are not U.S. citizens may be prohibited by other civil rights laws, such as 42 U.S.C. 1981, which finds its statutory authority in the Civil Rights Act of 1866. 1981 of this law provides equal rights under the law for "all persons within the jurisdiction of the United States."   Discrimination against persons who do not speak English is also not a specific violation of the FHA. In Veles v. Lindow (2000), the court affirmed a jury verdict in favor of a landlord who required at least one adult member of a household to speak fluent English in order to lease a unit. In order to be legitimate, such a policy could not be applied against only certain national origins. Keep in mind that HUD-assisted housing providers must assist persons with limited English proficiency, and a policy of requiring an English speaking member of a household in federally assisted properties will probably not be acceptable.   Dark-skinned plaintiffs, including Mexican-Americans, Pakistanis, and Native Americans, have brought most national origin discrimination cases.   There is often not a clear distinction between what constitutes race vs. national origin discrimination. This may be relevant if the housing involved is exempt from the FHA (such as single family homes if sold or rented by the owner) and the only applicable law is the Civil Rights Act of 1866, which bans racial but not national origin discrimination.   Owners and managers can avoid potential claims of discrimination based on national origin by following some common sense guidelines, including: Promote policies to treat everyone equally - regardless of where they come from. Do not stereotype people based on their names, appearance, or clothing. Be sensitive to other cultures. For example, don t ask applicants why they wear head coverings or garb related to the country from which they or their ancestors originate. In fact, during the applicant selection process, it is not even a good idea to ask what country someone comes from. If you re going to screen for legal residency in the United States, apply the standards consistently. Keep in mind that while discrimination based on citizenship or legal status in the country does not violate the FHA, there may be state or local protections. Don t steer households based on national origin by assuming that people will be more comfortable living near people from the same region. Enforce reasonable occupancy standards. Keep in mind that overly restrictive occupancy standards could discriminate against multi-generational households, which are common among certain national groups, including Hispanics, Native-Americans and Asians. Finally, watch out for resident relations; one of the most common types of resident-on-resident harassment is based on national origin.  

Affirmatively Furthering Fair Housing Assessment Tool for States and Insular Areas - Notice March 11, 2016

Affirmatively Furthering Fair Housing Tool for States and Insular Areas - Notice March 11, 2016   On March 11, 2016, HUD published a Notice in the Federal Register providing information on the Affirmatively Furthering Fair Housing Assessment Tool for States and Insular Areas. On July 16, 2015, HUD published the Affirmatively Furthering Fair Housing (AFFH) final rule that provides HUD program participants with a new process for planning for fair housing outcomes that will assist them in meeting their statutory obligation to affirmatively further fair housing. This process involves an assessment tool that must be used by program participants to evaluate fair housing choice and access to opportunity in their jurisdictions, to identify barriers to fair housing choice and opportunities at the local and regional levels, and to set fair housing goals to overcome such barriers and advance fair housing choice.   Three assessment tools will be provided by HUD. One is for use by local governments that receive assistance under certain grant programs administered by HUD s Office of Community Planning & Development (CPD), as well as by joint and regional collaborations between various agencies. The second tool (the subject of this Notice) is to be used by States and Insular areas, and is known as the "State and Insular Area Assessment Tool." The third assessment tool will be for PHAs. On December 31, 2015, HUD issued the Local Government Assessment Tool.   This Notice solicits public comment for a period of 60 days on the proposed State and Insular Area Assessment Tool. Comments are due no later that May 10, 2016.   The Proposed State and Insular Area Assessment Tool   In developing the new AFFH process, HUD will provide certain nationally uniform data to program participants. All program participants must use the HUD provided data when completing the Affirmative Fair Housing plan.   In creating the proposed State and Insular Area Assessment Tool, HUD recognizes that there are other important data sources that may be available and have local relevance, including data that may be unavailable from the Assessment Tool. Consequently, although HUD will provide nationally available data that are expected to be of use to program participants, the AFFH rule recognizes the value of local data and knowledge.   Program participants will be required to use local data and local knowledge to assist in completion of the assessments. The AFH process does not require program participants to create or compile new data. Only currently existing data should be relied on.   A program participant must complete its AFH using the assessment tool designated for its use and HUD-provided data, as well as any local data and local knowledge that are relevant. To the extent that HUD does not provide data for a program participant to respond to a question in the assessment tool, and there is no local data and no local knowledge that would assist with the question, the participant may state that data and knowledge are unavailable.   Structure of the Proposed State and Insular Area Assessment Tool   The following presents the structure for the proposed State and Insular Area Assessment Tool: Section 1: contains the Cover Sheet and Certification and addresses basic information applicable to the program participant; Section II: this is the Executive Summary; Section III: addresses the community participation process and directs the State or Insular Area to describe certain outreach activities to encourage community participation in the development and review of the AFH; Section IV: this is the "Assessment of Past Goals and Actions," and asks States and Insular Areas to explain the fair housing goals they selected in their recent fair housing plans, and the progress that was made in achieving those goals; Section V: this is the "Fair Housing Analysis, " and presents the core analysis that will be undertaken by States, Insular Areas, and program participants that may be participating with the State or Insular Area in a collaborative AFH. This section will also include an assessment of certain key fair housing issues, including segregation and integration, racially or ethnically concentrated areas of poverty, disparities in access to opportunity, disproportionate housing needs, publicly supported housing, and disability and access. One area of analysis that is included in the State and Insular Area Assessment Tool pertains to low-income housing tax credits (LIHTCs). The LIHTC questions presented in the proposed tool include questions pertaining to a State s Qualified Allocation Plan (QAP). Section VI: Fair Housing Goals & Priorities.   Upcoming PHA Assessment Tool   HUD will soon issue the 60-day public comment notice for the proposed PHA Assessment Tool. This tool will differ from the questions addressed to "Qualified PHAs" that collaborate with States using the proposed State and Insular Areas Assessment Tool.   The State and Insular Area Assessment Tool is primarily designed for use by State and Insular Area program participants. These include the 50 States, the Commonwealth of Puerto Rico, and four Insular Areas (American Samoa, the Territory of Guam, the Commonwealth of the Northern Marianas Islands and the U.S. Virgin Islands). States and these Insular areas should review the HUD Notice in detail, and provide comments by the due date noted above.