IPED HUD Multifamily Housing Compliance Arlington VA May

IPED HUD Multifamily Housing Compliance Arlington, VA May 10 – 11, 2007 Section 8 Project Based, Voucher and PBV Contracts Michael H. Reardon, Esq. Nixon Peabody LLP 401 9 th Street, NW, Suite 900 Washington, DC 20004 (202) 585 -8304 mreardon@nixonpeabody. com

• The House HUD FY’ 07 spending bill passed the House of Representatives in June. • The Senate HUD appropriations bill never made it to the Senate floor. • Several “continuing resolutions” which fund government programs at FY ’ 06 levels. Last CR expired February 15, 2007. Joint Funding Resolution (H. J. Res 20) to fund government programs through September 30 th signed by President on February 15 th (Public Law 110 -5).

• Most programs funded at 2006 levels but increases to several programs; total increase $1. 74 billion over 2006 – Project based Section 8: $5. 976 billion; $939 million increase - Tenant-based vouchers (including enhanced vouchers): $15. 920 billion; increase of $502 million – Public Housing Operating Fund: $3. 864 billion, $300 million increase - HOPE VI: reauthorized through 2007 and funded at $99 million

Bush FY ’ 08 HUD Budget Proposal (compared against ’ 07 Budget request of $33. 6 billion) Total Budget: $35. 2 billion Project based Section 8: $5. 813 billion ($300 million increase) Section 8 Vouchers - $16 billion ($9 million increase) (includes Enhanced) HOME - $1. 967 billion ($210 million increase) PH Operating - $4 billion ($500 million increase)

Bush FY ’ 08 HUD Budget Proposal (Cont. ) PH Capital - $2. 024 billion ($385 million decrease) CDBG - $3. 037 billion ($735 million decrease) Section 202 - $575 million ($160 million decrease) Section 811 - $125 million ($112 million decrease) HOPE VI – Zero (rescinds ’ 07 $99 million)

Summary of HUD Section 8 Programs • Section 8 Project-Based Assistance – Administered by HUD’s Office of Housing – Section 8 assistance provided to Projects • Section 8 Tenant-Based Assistance – Administered by HUD’s Office of Public and Indian Housing – Section 8 assistance provided to households – Includes Section 8 Project-Based Vouchers

Project-Based Assistance Programs • New Construction / Substantial Rehabilitation / State Agency Programs – Between 1974 – 1983 – Administered by HUD and PHAs – Long Term Contracts – Renewed under MAHRA

Project-Based Assistance Programs (Cont. ) • Loan Management Set Aside and Property Disposition – Between 1976 and 1997 – Administered by HUD and PHAs – 15 -year term – Renewed under MAHRA

Project-Based Assistance Programs (Cont. ) • Multifamily Assisted Housing Reform Act of 1997 • Defining Feature: attached to projects, not households

Tenant-Based Assistance Programs • Defining Feature: assistance provided to household, not the project • Section 8 Certificate Program – Original tenant-based program – Administered by PHAs under ACC with HUD – Rents set by Fair Market Rents

Tenant-Based Assistance Programs (Cont. ) • Section 8 Voucher Program – The current section 8 tenant-based assistance programs – Administered by PHAs under ACC with HUD – Rents based on Payment Standard set by PHA – 90110% of FMR – Household can choose to rent a unit with rent in excess of Payment Standard

Tenant-Based Assistance Programs (Cont. ) • Section 8 Moderate Rehabilitation Program – Enacted in 1978 by Congress – $3, 000 per unit in rehabilitation – Had features of both tenant-based and project-based program – Repealed in 1990 – but may be renewed under MAHRA • Section 8 Project-Based Vouchers

Common Features of Section 8 Programs • Eligible Tenants must meet income limits – Targeting requirements (50% AMI) – Preferences allowed • Tenant payment limits – Generally, tenants pay 30% of adjusted income – 40% of income limitation on new contracts – Minimum rents – Housing Choice Voucher variation

Project-Based Contract Renewals • MAHRA – Multifamily Assisted Housing Reform Act of 1997 – Provides renewal terms of all section 8 project-based contracts • Contract renewals administered by PHAs under PBCA contracts with HUD • Rent comparability studies

Project-Based Contract Renewal Options • Mark-Up-To-Market • OCAF / Budget-Based Rent Increase • Mark-To-Market

Project-Based Renewal Contract Options (continued) • Exception projects • Demonstration and Preservation projects • Opt-Out • Rent Adjustments after renewal