In order to better align the operation of rental policies across federal agencies, the Administration created the Rental Policy Working Group, comprised of representatives from the White House Domestic Policy Council, the National Economic Council, the Office of Management and Budget, HUD, USDA, and the Treasury Department. Stakeholder meetings were held in July 2010 and July 2011, at which stakeholders identified specific areas of concern. Career staff from HUD’s Office of Multifamily Housing, USDA’s Rural Development (RD), and Treasury’s Office of Tax Policy prepared a final document, issued on December 31, 2011, which contains the Administration’s proposal for achieving a more coordinated approach to carrying out federal rental housing programs.
Ten areas of concern and proposed alignment actions are presented in the document.
1. Fair Housing Compliance and Enforcement. The report notes that HUD and USDA signed a memorandum of understanding (MOU) in 1997, but that it has not been followed. A 2000 MOU between HUD, Treasury, and the Attorney General also exists. The report states that although the 2000 MOU has lead to the resolution of dozens of civil rights cases involving projects assisted by the Low Income Housing Tax Credit program, it has not addressed substantive civil rights concerns.
Greater harmonization among the agencies is needed to address accessibility for people with disabilities, local opposition to the development of affordable housing, systemic patterns of discrimination, discrimination against voucher holders, and inconsistent application of the requirement to affirmatively further fair housing, particularly in the LIHTC program.
The report proposes reconstituting and restarting the coordination process of both MOUs, designating staff from each agency to serve as point people, and providing annual training with state and local housing finance agencies as well as associations of developers, syndicators, and property managers.
2. Physical Inspections. The document suggests no more than one federally-sponsored visit be required to each property per year. To enable this, a common physical inspection standard, inspection format, and sample size should be developed. The paper acknowledges that alignment in all of these areas might not be possible for all programs.
3. Capital Needs Assessment. The federal agencies will direct and procure a new, single Capital Needs Assessment (CNA) template for use by federal and state agencies. The CNA template is to include the needs assessment tool, protocols for its use, reporting requirements, and minimal professional qualifications for providers performing CNAs.
4. Subsidy Layering Review. The document recommends agreeing on a standard set of subsidy layering review (SLR) facts such as information about sources and uses of funds, appraised values, market information, and current and projected capital needs. It also suggests collecting SLR facts in a standard format, and establishing a process for agencies to immediately share facts.
5. Common Energy Efficiency Requirements. The document outlines a framework for harmonizing energy efficiency requirements for five types of rental housing activity: new construction or gut rehabilitation with federal grants; new construction or gut rehab for housing supported with public housing capital and operating funds, federal insurance, direct loans, and loan guarantees; substantial rehab; moderate rehab; and energy retrofits.
6. Financial Reporting. USDA RD, whose Section 515 program constructed affordable rental housing, and HUD’s Multifamily Housing office, which provides ongoing project-based rental assistance, have specific actions to address financial statement formats, to enable RD to defer to HUD regarding audit guidelines, and to align eligibility requirements for exemption from audited financial statements. Regarding the LIHTC, the paper suggests creating a unified chart of accounts and audit guidelines, as well as encouraging state housing finance agencies to adopt such new federal standards.
7. Market Study Standards Alignment. USDA RD and HUD’s Federal Housing Administration (FHA) will coordinate guidance on market studies and promote market study literacy.
8. Income Reporting and Definitions. The document states that an effort will be made to promote a single annual income recertification requirement, as well as a single Tenant Income Certification form.
9. Improve Sharing of Data on Owner Defaults. The report suggests allowing USDA RD access to HUD’s Active Partners Performance System (APPS) which reports on financial, physical, management, owner, and civil rights non-compliance. In addition, RD should provide its compliance information to HUD.
10. Appraisal Primer. In order to improve understanding and use of Uniform Standards of Professional Appraisal Practice, a primer should be developed that explicitly describes appraisal principles.
Federal Rental Alignment: Administrative Proposals is available under “News and Updates” at http://www.huduser.org/portal/aff_rental_hsg/home.html