Impact of the Department of Housing and Urban Development (HUD) 2012 Budget on Section 8 Project Based Rental Assistance

San Francisco Multifamily Industry Meeting
January 19, 2012

1) Impact of HUD's 2012 Budget on Section 8 Project Based Rental Assistance

  1. Correspondence dated November 22, 2011.
  2. Correspondence dated December 5, 2011.

2) Impact of HUD's 2012 Budget on Section 8 Project Rental Assistance

  1. Janet Golrick, Assistant Deputy Secretary for Multifamily Housing Programs sent two correspondences to the industry providing information on the impact of the 2012 budget on the Section 8 Program.
    1. November 22, 2011 Letter - Provided information on the impact of the Fiscal Year budget of 2012, and informed the industry about policy changes in the upcoming Housing Notice.
    2. December 5, 2011 Letter - Stated that a Housing notice is forthcoming to implement policy applicable to Section 8 contracts known as "New Regulation" and subject to regulatory authority at 24 Code of Federal Regulations (CFR) 880.205(e), 881.205(e) and 883.306(e).

3) Residual Receipts

  1. Funds currently held in project residual receipts account will be use to reduce assistance payments.
  2. This policy applies to those properties with Section 8 contracts under the "New Regulations."
  3. Contracts under Section 24 CFR 880.205(e), 881.205(e) and 883.306(e) that were effective after 11/05/1979 will be affected.

4) Residual Receipts

  1. Affected contracts include:
    1. 880 - Section 8 Housing Assistance Payment Program for New Construction
    2. 881 - Section 8 Housing Assistance Payment Program for Substantial Rehabilitation
    3. 883 - Section 8 Housing Assistance Program for State Housing Agencies

5) Residual Receipts

  1. Those contracts not affected are 882, 884, 885 and 886
    1. 882 - Section 8 Moderate Rehabilitation Program
    2. 884 - Section 8 Housing Assistance Payment Program - New Construction Set-Aside for Section 515 Rural Rental Housing Programs
    3. 885 - Loans for Housing for the Elderly or Handicapped (This is now Part 890, Supportive Housing for the Elderly and Persons with Disabilities,) Sub part E - Loans for Housing for the Elderly and Persons with Disabilities
    4. 886 - Section 8 Housing Assistance Payment Program - Special Allocation

6) Residual Receipts

  1. HUD Notice will be forthcoming explaining the process for residual receipts.
  2. Effective as of 11/22/201, all residual receipts requests will be denied; with certain exceptions.
  3. If HUD has already approved but not released any residual receipts funds for project transactions prior to this date, HUD Headquarters' review and approval of such release is required.
  4. Send your request to the San Francisco Multifamily Hub.
    1. Please provide the following information:
      1. Project Name;
      2. IREMS/FHA Number;
      3. Summary detaining the purpose for the approval; and
      4. Date of the HUD approval.

7) Residual Receipts

  1. Please note that the field office may approve the release of residual receipts where an exception applies. However, we have not been given guidance regarding procedures, and current processes are subject to change pending additional guidance from Headquarters.
  2. Exceptions may include:
    1. Repayment of Flexible Subsidy Loan; or
    2. Service Coordinator (generally, if approved in the past).

8) Section 8 Renewal - Option 4

  1. Annual rent adjustments will be limited to Operating Cost Adjustment Factor (OCAF) increases if proposed rent increase exceeds market.
  2. Note: This policy was announced as part of the revision to the Section 8 Renewal Policy Guide.

9) Rent Comparability Studies

  1. All rent comparability studies will be required to justify proposed rents that exceed 110% of Small Area Fair Market Rents (SAFMR).
  2. Historically, HUD uses non-metropolitan and metropolitan area which included multiple counties. SAFMR sets FMR at a more localized level. See website (www.huduser.org/portal/datasets/fmr.html).

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Content Archived: February 17, 2015