HUD Announces Proposed Rule Changes to Section 8 Project-Based Voucher Programs

HUD has published the proposed rule, "The Housing and Economic Recovery Act of 2008 (HERA): Changes to the Section 8 Tenant-Based Voucher and Section 8 Project-Based Voucher Program," in the Federal Register (77 Fed. Reg. 2874; Document No. FR 5242-p-01). HUD is inviting public comment on its proposed rule changes to both the tenant-based and project-based voucher programs.

This long awaited rule implements the reforms made in the Housing and Economic Recovery Act (HERA) of 2008 and follows the implementing notice published by HUD on November 24, 2008. The proposed changes reflect the statutory provisions of HERA, as well as some clarification of regulations already in place.

Public comments on the rule change are due July 16, 2012. R&C plans on submitting detailed comments on the rule; however, below are a few significant items from this proposed rule.

Sampling of proposed rule changes:

• Existing Housing. HUD amends the definition of "existing housing" to exclude housing that has a planned rehabilitation of more than $1,000 per unit. This change will prohibit rehabilitation projects from qualifying as "existing housing" and entering HAP Contracts upon financial closing.

• Notification and Certification. HUD has added increased notification responsibilities for PHAs to HUD and increased certification obligations for owners to PHAs.

• PHA Owned Units. HUD has removed the requirement that PHA-owned units' initial rents be based on an appraisal conducted by a state-certified appraiser. Under the Proposed Rule, PHA-owned units may be determined by a HUD-approved independent third party in accordance with rent reasonableness. However, under the Proposed Rule, HUD would also require the independent entity to set the term of the initial HAP Contract as well as the rents.  

• Execution of AHAP. HUD has added language that requires the AHAP to be executed prior to construction, which is defined as the beginning of any site work or excavation for new construction projects and the physical commencement of rehabilitation activity for rehab projects.  

• Termination of Units from the HAP Contract. Provides additional information on when a PHA must remove units from the HAP Contract in the event of increased tenant payments or overcrowded or under-occupied units.

The Federal Register notice only contained the text of the proposed changes; however, R&C has created a blackline showing the modifications of the existing regulations by this proposed rule, which can be found by clicking here.  Please do not hesitate to contact any of the R&C attorneys with questions or concerns on this Proposed Rule.

This notice is provided by R&C's Housing Policy Group.

Contact: Sarah Molseed, smolseed@renocavanaugh.com, (202) 349-2678

              Efrem Levy, elevy@renocavanaugh.com, (202) 349-2476

              Stephen I. Holmquist, sholmquist@renocavanaugh.com, (202) 349-2462

Issued May 24, 2012.  Reno & Cavanaugh (R&C) represents developers, housing authorities, lenders and other industry participants in matters of housing development, financing and other areas.  This memorandum provides general information and should not be viewed as specific legal advice.  These materials may not be copied or redistributed for commercial purposes or for compensation of any kind without prior written permission from R&C. If you have questions about these terms or would like information about licensing materials from www.renocavanaugh.com, please contact R&C at inquiry@renocavanaugh.com.