Understanding NSPIRE: HUD’s New Physical Inspection Program

This year has already brought an avalanche of changes to HUD’s physical inspection program, and the Department continues to work on more changes. While the Department has been receptive to the input of PHADA and other industry groups (holding the nationwide listening sessions suggested by PHADA, for example) and promises to listen to and consider input from housing authorities (HAs) and private owners moving forward, it has implemented regrettable policies, most notably the 14-day notification period.

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Setting the Record Straight on the Annual Contributions Contract

HUD’s Explanation to HAs and Congress is Misleading

Since 1937, HUD has contracted with Housing Authorities (HAs) to develop and manage public housing apartment complexes. The Annual Contributions Contract (ACC) is the document that governs HUD’s relationship with HAs. Recently, HUD has been meeting with Congressional staff to discuss its proposed new ACC. In response to HAs’ and the industry association’s expressions of concern, staff of the Offices of General Counsel and Public and Indian Housing have asserted that the new ACC did not contain substantive changes from the existing ACC.

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HUD’s Proposed Rule on Noncitizen Residency in Assisted Housing

On May 10, 2019, the Department of Housing and Urban Development published a proposed rule (Housing and Community Development Act of 1980: Verification of Eligible Status) in the Federal Register. The proposed rule would end the eligibility of “mixed families” in assisted housing. Mixed families are households comprised of both individuals with and without eligible status to receive housing subsidies, based on their immigration status.

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Funding for Public Housing Through an Infrastructure Bill

Why It Makes Sense

Public housing is a unique and crucial affordable housing resource for nearly two million people in just over one million homes. In many cities across the nation, seniors, veterans, persons with disabilities and families with children rely on public housing. In some instances, no other source of housing could take its place more readily or affordably. While we have seen some relatively modest increases in the last two appropriations bills (FY 18 and 19), the Capital Fund is about where it was seventeen years ago, even before adjusting for inflation, as the chart below indicates. The effects of this serious decline in funding can be seen through the many alarming accounts of deteriorating public housing stock throughout the nation.

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Small Agency Streamlined Voluntary Conversion? What to Ask

The opportunity presented to small Public Housing Authorities (PHAs) to Voluntarily Convert their last remaining public housing properties to Section 8 Housing Choice Voucher Program assistance (PIH Notice 2019-5) is worth considering. With the removal of the cost test and other conversion assessment requirements, rents received may be significantly higher and justification is easier. See PHADA’s article “HUD Pushes Public Housing Repositioning; Streamlines Conversions for Small Agencies” published in the April 17, 2019 issue of the Advocate for additional background.

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Opportunity Zones

Opportunity Zones are low income census tracts designated by Governors. Certain investments located in an Opportunity Zone are eligible for potentially significant tax breaks. The goal of the program is to incentivize private equity investors to re-invest their unrealized capital gains into Opportunity Funds, which will then make 10+ year investment commitments in disinvested neighborhoods. The goal is to create “a vital new pathway for investors and entrepreneurs to kickstart economic growth in distressed areas across America,” according to Sean Parker, founder and chairman of the Economic Innovation Group. It is hoped that such investments and the resulting economic activity will have benefits for neighborhood residents and businesses. Many observers have concerns that the benefits will go primarily to wealthy investors and will exacerbate gentrification and displacement. Nearly all observers agree that the incentive will have little or no utility in leveraging investment in rent-restricted housing. PHADA coverage of Opportunity Zones can be found in the Advocate from January 9, May 29, and two articles on July 17, 2019.

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Section 3 Proposed Rule

As reported in the April 17 and June 12 issues of the Advocate, HUD has published two notices relating to Section 3 of the Housing and Urban Development Act of 1968. The first notice proposes a new Section 3 rule to replace the existing rule. The second notice proposes specific Section 3 benchmarks and ‘safe harbor’ standards. PHADA submitted extensive comments on the proposed rule and benchmarks.

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Cash Management in Public Housing

PHADA Believes the “Sea Change” Under Cash Management Would Be One for the Worse

HUD is considering instituting a Cash Management (CM) system for providing public housing operating funding to housing authorities (HAs). Cash Management was initially implemented in 2012 for the Housing Choice Voucher (HCV) program for disbursing voucher funding to HAs, limiting disbursement to amounts “currently needed” for expenses. The remainder of an HA’s voucher funding is retained in a HUD-held reserve.

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Watch video of PHADA Executive Director Tim Kaiser discussing the Association’s concerns about the potential of instituting a Cash Management system for funding public housing agencies.

Update: Over 100,000 Go Without Housing

PHADA’s Cost Neutral Proposal Would Help Fix this Growing Voucher Leasing Crisis

PHADA estimates that for each of the last four years well over 100,000 low-income households (4 percent) could have been otherwise housed with Housing Assistance Payment (HAP) funding already appropriated by Congress in prior years. However, underfunding of Section 8 administrative fees has, in part, contributed to lower levels of leased households and higher levels of HAP reserves than would otherwise be the case if fee prorations had been higher. The primary reason for this outcome is that it takes people to help people.

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Who is Served by the Public Housing and Housing Choice Voucher Programs?

A Closer Look at Who Receives Housing Assistance

IN LIGHT OF THE CURRENT BUDGETARY ENVIRONMENT, as well as the likelihood that funding for federal housing programs may continue to see deep cuts in the future, it is important to reflect on who is served by the public housing (PH) and Housing Choice Voucher (HCV) programs. Housing authorities (HAs) nationwide currently serve approximately 7.8 million people within 3.3 million households, many of them the United States’ most vulnerable populations, like children, the elderly and the disabled.

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Forced Consolidations Would Damage Housing Choice Voucher Program

Theory is Untested, Unproven, and Costly

CERTAIN ORGANIZATIONS HAVE PROPOSED consolidating local housing authorities (HAs) based on the assumption that there are too many HAs administering rental voucher programs and claiming this impedes low-income households’ access to neighborhoods of opportunity. They contend that having smaller agencies operate the program increases administrative costs, and makes it more difficult for HUD to oversee the program. Part of their argument is based on HUD’s flawed proposal for ZIP code-based rents that would increase per-voucher subsidy costs. In reality, these proposals would increase out-of-pocket costs for low-income households, displace many from their neighborhoods, serve fewer families, or substantially increase appropriations if Congress chooses to pay these higher costs.

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PHADA Comments on UPCS-V Demonstration

Potential Outcomes Raise Concerns, Many Unanswered Questions Remain

PHADA SUBMITTED COMMENTS to the Department of Housing and Urban Development’s (HUD) “Notice of Demonstration to Test a Proposed New Method of Assessing the Physical Conditions of VoucherAssisted Housing.” The Association’s submission included approximately 20 pages of questions and concerns for the Department related to both the demonstration and the new proposed inspection standard for the Housing Choice Voucher program (HCV), UPCS-V. Listed below are a selection of highlights from the July 2016 comment letter submitted to the Department. PHADA will continue to urge HUD to move ahead cautiously with the demonstration, and will keep members apprised of its development as it progresses.

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Congress Should Enact Major Changes in the PH & HCV Programs

HAs Can’t Adequately Serve Residents When Their Existence is Imperiled

The Public Housing program has been grossly under-funded. Deep prorations in the Operating Fund have forced HAs to reduce staff, cut services and maintenance, and resulted in an overall decline in quality of life for many low-income families. It should be noted that more than one-third of PH residents are elderly and/or disabled. The federal government should not abandon this vulnerable population.

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With Funding at Historic Lows, HUD Keeps Increasing Burdens on Housing Authorities

Cutting administrative fees to the degree that PHAs are unable to sustain the leasing and utilization supported by the renewal funding ultimately defeats the purpose for which that renewal funding is appropriated

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Flat Rent Rule Plays Havoc with Residents and Agency Finances

Using a “One Size Fits All” Approach Does Not Work

The “Quality Housing and Work Responsibility Act of 1998” (QHWRA) required Housing Authorities (HAs) to establish private unassisted market rental values of each of their public housing developments – flat rents – based on their location, quality, size, unit type, age, amenities, housing services, maintenance, and utilities. However, the FY 2014 Consolidated Appropriations Act required HAs to set flat rents at no less than 80 percent of HUD’s Fair Market Rents (FMRs) regardless of the individual characteristics as established under QHWRA.

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Over Income Families: Mixing Income in Public Housing

Congress and HUD Should Not Penalize Successful Public Housing Residents

There has always been a small proportion of public housing residents whose incomes exceed the income limit for admission because of their success at becoming self-sufficient. All of these families had eligible incomes when they moved in to public housing. For decades, income limits have applied to admission to assisted housing, not for continued occupancy, and different programs dealt with over income families in different ways for sound policy reasons.

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HUD’s Salary Caps on Housing Authorities Risk Program Quality and Make Little Sense

HUD has once again proposed, and included in the President’s FY 2016 budget, that Congress cap the use of federal funds for housing authority salaries. Based on size and location, three tiers would set caps for agencies with fewer than 250 combined public housing and voucher units at the rate of a federal government GS-11, Step 10; between 250 and 1249 units at the rate of a GS-13, step 10; and for agencies with 1250 units or more at the rate of a GS-15, step 10, which is $157,100.

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Sequestration/CR and the HUD Budget

Congress is making some momentous funding decisions about the Public Housing and the Housing Choice Voucher programs in FY2013. These decisions will likely have both immediate and far-ranging impacts on your ability to effectively operate your agency, maintain important physical assets for your community and provide a decent quality of life for your residents.

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Interim PHAS Rule

HUD’s Unfair PHAS Rule Must Change

The Interim PHAS Rule is HUD’s attempt to update its Public Housing Assessment System (PHAS) to align it with changes to public housing including implementation of Asset Management. The interim rule was published just as the Administration proposed to sweep $1 billion away from Asset Management Projects (AMPs). This historic taking of property reserves undermines Asset Management. The PHAS rule fails to account for current funding and program realities. The rule, applied retroactively to woefully underfunded agencies, could harm residents and properties, will likely lower the number of High Performer agencies and perhaps send some agencies into “troubled” status.

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HCV Administrative Fees

Damage to Voucher Program Continues

The housing voucher program is an essential lifeline to some of the nation’s poorest households. More than 2 million households, most of which are extremely low-income (average annual income of approximately $13,000) families, seniors or disabled, depend on vouchers to secure decent, affordable housing of their choice in the private rental market. In spite of the program’s importance to poor households, the Administration and Congress have severely crippled the voucher program by neglecting the Administrative Fee. Full implementation of existing vouchers relies exclusively on an adequately funded Administrative Fee. The Administrative Fee pays the direct costs of issuing vouchers -- for skilled professionals to perform a prescribed, complex series of closely-timed and labor-intensive tasks. PHADA believes that the Administration and Congress needs to find more ways to save labor and costs related to the uniquely burdensome voucher program requirements during the last five years.

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HUD 2012 Budget Recaptures $1 Billion in Public Housing Operating Reserves Through Subsidy Offset

HUD Also Prohibits Housing Authorities from Using Reserves for Capital Improvements

HUD’s 2012 budget requests only $3.9 billion for public housing’s operating fund, $1 billion below the required amount. If passed this funding level will be the lowest level of eligibility ever for the public housing program. The $1 billion difference will be taken from agencies with operating reserves above a certain threshold as an offset to their operating subsidy. In addition, HUD has essentially frozen spending operating reserves by changing its policy and prohibiting their use for capital improvements.

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HUD Plans to Set Metropolitan Fair Market Rents for Very Small Areas

Demonstration Program’s Risks Could Outweigh Benefits

HUD plans to conduct a 12 month demonstration of this method to assess administrative impacts of the policy, but will not investigate other impacts on participants, applicants, landlords or program costs.

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MTW Success Documented

HUD Report Recommends MTW Expansion

A recent HUD report found that the 11-year old Moving to Work (MTW) demonstration has produced significant efficiencies and innovations that should “inform” affordable housing policy makers. The report to Congress, Moving to Work: Interim Policy Applications and the Future of the Demonstration, cites numerous innovations devised and implemented by the 33 participating MTW agencies. These innovations resulted from the funding and regulatory flexibility provided by the MTW demonstration.

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Public Housing Energy Conservation Incentive

Freeze Rolling Base Utility Consumption for 20 Years

Reducing utility consumption in public housing is an important goal in order to reduce program costs, dependence on foreign oil and carbon emissions, and many housing authorities have undertaken energy conservation measures. HAs have many competing goals, however, and have fewer financial resources than they are entitled to receive. As a result, they generally focus their insufficient resources on their core purposes—filling vacant units, making repairs and helping the residents.

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