Department of Housing and Urban Development News Briefs – December 2019

Thursday, December 5, 2019

The U.S. Department of Housing and Urban Development (HUD) published a notice in the Federal Register Oct. 10 announcing the posting of the fourth revision to the Rental Assistance Demonstration (RAD). Public comments on the revision are accepted through Nov. 12. The revision includes changes to the first component (public housing conversions) and the second component (six other HUD programs) under RAD. It also includes guidance that implements the authority to convert Section 202 project rental assistance contract developments through RAD to long-term Section 8 contracts as well as updated guidance on other RAD components. The revision allows RAD properties in opportunity zones (OZs) with new construction or substantial rehabilitation to be eligible for rent increases of up to $100 per apartment.

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HUD’s Office of Policy Development and Research published Oct. 22 the Evaluation of HUD’s RAD program. It reports that the 956 RAD conversions studied leveraged $9.66 for every dollar provided through HUD’s public housing program appropriation, which all rehabilitation projects covered their rehabilitation needs, that there is an 87 percent post-conversion decrease in unscheduled capital needs for completed RAD properties and that tenants were pleased with the improvement. The report makes several recommendations, including the ability to raise contract rents and promote more rent bundling, an improvement in long-term oversite by HUD and more programmatic guidance for tenant relocation. The report is available at www.hudresourcecenter.com.

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HUD published a notice Oct. 9 establishing an expedited process for the review of requests for relief from HUD requirements for public housing agencies (PHAs) in counties included in presidentially declared major disaster areas. The notice includes which HUD requirements may be waived; which HUD requirements, if waived, may facilitate a PHA’s ability to participate in relief and recovery efforts; and a checklist for a PHA to complete and submit to take advantage of the expedited waiver request.

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HUD released its contingency plan Oct. 8 for a possible federal government shutdown. The plan lists how many employees would be retained under the plan and what they would do, and dictates that monthly subsidy programs such as the housing choice voucher program, public housing operating subsidies and multifamily assistance contracts continue to operate as long as they have funding.

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HUD published a notice Nov. 11 seeking comment on its collection of information for the Public Housing Capital Fund program. HUD proposes changes to the information collection, including reduction in the number of hours expected to perform the duties due to a conversion to an electronic system and a reduction in public housing authorities that receive the funds because of their participation in the RAD program. Comments are accepted through Jan. 3, 2020.

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HUD announced Oct. 9 a combined $112 million in funding to expand the supply of permanent affordable housing for very-low-income people with disabilities. The funding for two components of the Section 811 program include traditional Section 811 Supportive Housing for Persons with Disabilities and Section 811 Project Rental Assistance. It is the first time HUD has funded both programs in nine years. There is up to $75 million in capital advance funding for nonprofits to fund innovative permanent supportive housing models, which includes two preference points for applicants seeking to build or rehabilitate developments in OZs. HUD is also making up to $37 million in rental assistance available to housing agencies working closely with state Health and Human Service or Medicaid agencies.

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Sen. Jeanne Shaheen, D-N.H., and Sen. Tina Smith, D-Minn., introduced legislation Sept. 26 to expand the U.S. Department of Agriculture Rural Development (RD) rental assistance programs and further expand and align other rural affordable housing programs. The Rural Housing Preservation Act of 2019 (S. 2567) would expand the RD voucher program to include tenants in properties with matured loans, permanently authorize the Multifamily Housing Revitalization demonstration program and direct RD to better align its policies with the low-income housing tax credit.

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HUD released the list Oct. 17 of difficult development areas (DDAs) and qualified census tracts (QCTs) for 2020. These designated areas are eligible for as much as a 30 percent basis boost while receiving low-income housing tax credits. The DDAs and QCTs are effective for allocations of LIHTCs after Dec. 31, 2019, and for bond-financed properties where the bonds are issued and the building is placed in service after Dec. 31, 2019.

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HUD announced Oct. 22 that the Real Estate Assessment Center (REAC) will not adopt the Accounting Standards Update 2016-18 on restricted cash in its financial templates. The decision creates a difference in how financial statements are presented under generally accepted accounting principles and in HUD-based financial statements. This means public housing agencies or other responsible parties will continue to submit to REAC the changes in escrows and reserve for replacements in the investment section of the supplementary statements of cash flows.

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A new frequently asked questions document was released by HUD Nov. 4, explaining how certain public housing conversions in OZs under the RAD program are eligible for increased contract rents. The document explains what properties are eligible for the increase, how HUD will determine whether the rent increase is necessary for the viability of the transaction and when a public housing authority can make a request.

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Walker and Dunlop Inc. announced Oct. 30 that it has provided $28 million in bridge financing for the acquisition and renovation of Pleasant Bay Campus an assisted living community and rehabilitation center in Brewster, Mass. The owner plans to position the development to permanent financing through HUD in 2021. 

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Department of Housing and Urban Development
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