HUD has published the final 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 (79 Fed. Reg. No. 122, Document No. FR-5242-F-02). This long awaited final rule implements the reforms made in the Housing and Economic Recovery Act (HERA) of 2008 and follows both the implementing notice published by HUD on November 24, 2008 and the proposed rule published in the Federal Register on May 15, 2012. The changes reflect the statutory provisions of HERA, as well as some clarification of regulations already in place.

The final rule adopts many of the changes proposed in the proposed rule, but includes several significant changes, such as:

• Prohibition on Execution of AHAP after Commencement of Construction or Rehabilitation.  The proposed rule included language which indicated that the AHAP must be executed prior to the commencement of construction or rehabilitation. However, the final rule goes farther and explicitly prohibits any construction or rehab activity, including site clearance and preparation, between the submission of a proposal for PBVS and the execution of the AHAP. Moreover, the final rule prohibits executing an AHAP after the commencement of construction.

• Existing Housing. The final rule, unlike the proposed rule, does not amend the definition of "existing housing" but retains the original regulatory language.

• Davis Bacon. The final rule states that Davis Bacon requirements may apply to existing housing for rehabilitation work after the execution of the HAP Contract.

• Notification and Certification. The final rule has added increased notification responsibilities for PHAs to HUD and increased certification obligations for owners to PHAs. The obligations include a requirement that before issuing an RFP or selecting a proposal under an alternative competitive selection, the PHA must notify the HUD field office and submit additional information for review.

• Previous Participation. The final rule adds a provision clarifying that 2530 or previous participation clearance is not required prior to awarding PBV assistance.

The final rule will be effective thirty (30) days following its publication in the Federal Register. For more information on changes included in the proposed rule, please see the Client Alert on the proposed rule here.

R&C applauds HUD for the publication of the rule, which brings much needed clarification and guidance to the regulations relating to changes made by HERA in 2008. However, R&C also believes that several of the changes in the final rule may frustrate the use and goals of the PBV program and intends to engage HUD and other industry participants in continuing conversations to ensure that PBVs can be used as a preservation tool for affordable housing.

Please do not hesitate to contact any of the R&C attorneys with questions or concerns on this Final Rule.