HUD Fair Housing Notice Solicits Comments and is Important for LIHTCs

Published by Mark Shelburne on Friday, March 11, 2016 - 12:00am

Last summer the U.S. Department of Housing and Urban Development (HUD) issued its final rule on affirmatively furthering fair housing (AFFH).

AFFH requirements apply to HUD funding recipients and have been the law for four decades. Essentially, program participants agree to use their resources to advance desegregation, expand choice based on protected class status, and otherwise promote the goals of fair housing.

To help implement the new rule, HUD committed to produce assessment tools for local governments, states and housing authorities. The first of those three is already available.

On March 11, 2016, HUD posted a notice regarding the assessment tool applicable to states (and insular areas). The main focus of the notice is to solicit comment on specific topics, but it also contains several policy statements.

The state assessment tool is of particular interest to the low-income housing tax credit (LIHTC) community because many allocating agencies also receive HUD funding. Additionally, the administration’s fiscal year 2017 budget proposes making AFFH a required preference in qualified allocation plans (QAPs) and litigation is underway in federal court claiming the U.S. Treasury and the Office of the Comptroller of the Currency should publish LIHTC regulations implementing the AFFH regulation.

There are several ways implementation of the new rule may be consequential for LIHTCs. The two most apparent are

  1. more allocations sited in areas of opportunity, and
  2. properties carrying out fair housing marketing plans (as happens now when there is a loan with public housing or other federal funds).

The following is a summary of various provisions in the notice. Remember they could change before being finalized.

Policy Positions

An early step in a jurisdiction’s AFFH process is reviewing HUD-provided national data and maps. In addition to the information it will provide, HUD is requiring use of existing local data and knowledge to help inform the assessment of fair housing. Agencies would not have to create or compile new data.

HUD believes public housing authorities (PHAs) are a source of supplemental information, and collaboration with states could help reduce the burden on PHAs. For example, the statewide analysis should fulfill regional reviews PHAs otherwise would have to perform.

In addition to housing options, a fair housing analysis will have to consider disparities in access to opportunity (such as education, employment, low-poverty neighborhoods and transportation). HUD says it is considering differences in ways to structure this aspect between the local and state tools, but there are no details in the notice.

It appears the state tool will contain questions about LIHTCs and QAPs, but the notice did not provide specifics.

Soliciting Comments

As is the case with commenting on QAPs, anyone who has a perspective on the issues involved should respond to HUD’s request for input. The following are some of the items listed in the notice, but anything is fair game. For example, the policy positions described above are open for comment. In fact, HUD has identified collaboration between states and PHAs as a particular area of interest.

HUD is considering two different approaches for how participants will analyze disparities in access to opportunity:

  1. ask general questions and rely on states to be diligent, or
  2. be more specifically directive so as to “guide program participants through the required analysis and reduce the risk of an inadvertent omission of a key point of analysis.”

The latter approach would involve questions on the following:

  • disparities related to emergency management/preparedness
  • prisoner re-entry opportunities (offenders transitioning back into the community)
  • disparities public health services and public safety
  • the broad category of housing and financial opportunities

For the final bullet point, agencies would describe circumstances such as the role a place of residence has on access to affordable housing.

To its credit, HUD recognizes that analysis varies based on geography, and is interested in comments on how states should carry out AFFH implementation in rural areas.

While much of the national attention on fair housing has understandably focused on race, there are seven protected classes, including disability. In the notice HUD asks if the “Disability and Access section” of the proposed state tool is adequately clear.

Those interested have 60 days to submit comments. The notice contains information on how to do so. Please feel free to contact a Novogradac professional with any questions.