Rental Assistance Demonstration in Final FY12 Bill
The FY12 conference agreement authorizes a Rental Assistance Demonstration (RAD), requested as part of the Administration’s FY12 budget. A version was included in the Senate’s FY12 T-HUD bill, S. 1596 (see Memo, 9/23). The version of RAD in the final bill, H.R. 2112, includes some important improvements to the Senate’s language, which aligns RAD more closely with the Senate’s intent as spelled out in the report on S. 1596, with HUD’s RAD language circulated in August (see Memo, 8/26), and with NLIHC’s priorities for RAD. On November 3, NLIHC Board Member Charles Elsesser testified in support of HUD’s RAD language at a hearing of the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity (see Memo, 11/4).
The final bill’s RAD language includes moderate rehabilitation (mod rehab) properties in the RAD demonstration, which is capped at 60,000 public housing and mod rehab units that apply to HUD for conversion of current assistance streams to project-based Section 8 contracts or project-based vouchers by September 30, 2015.
NLIHC asked that the Senate-passed RAD language be improved in the areas of resident rights and protections, public ownership and long-term contract renewals. The report to the Senate-passed T-HUD bill made clear that each of these areas was a priority for RAD. The final RAD bill language responds to NLIHC’s concerns by assuring additional resident protections, providing more clarity on who can own converted units, including after foreclosure or bankruptcy, and providing explicit language that HUD must offer, and the owner must accept, contract renewals.
The final RAD language also includes provisions to help preserve Rent Supplement and Rental Assistance Payment properties (see description in Assisted Housing Preservation Provisions, below).
Assisted Housing Preservation Provisions
Mark to Market Extension
The final bill extends the authority of the Mark to Market program until September 30, 2015. Mark to Market authority provides owners of assisted housing the ability to restructure assisted mortgage loans when rents are marked down to market levels. Without the extension of this authority, the requirement to mark rents to market would have remained, but the authority to restructure mortgage loans so that new lower rents would cover the financing would have expired. Mark to Market extension was in the Senate’s T-HUD bill.
Tenant Protection Vouchers for Certain Unassisted HUD Tenants Facing Expiring Use Restrictions
The final bill includes the Senate bill’s $10 million set-aside of the voucher renewal account’s funds for Tenant Protection Vouchers or Enhanced Vouchers to at-risk tenants in buildings with expiring mortgages or use restrictions who are not now eligible for assistance. Advocates in Illinois, Massachusetts and across the nation worked closely with Senators Richard Durbin (D-IL) and Scott Brown (R-MA), who advocated for these protections.
The National Housing Trust estimates that in FY12 alone, almost 13,000 affordable housing units nationwide, financed through various HUD-subsidized mortgage programs, face expiring restrictions, but tenants are not covered by project-based Section 8 contracts. These tenants do not qualify for any tenant protection assistance when these HUD-subsidized mortgages mature or certain non-renewable rental assistance contracts expire.
The final FY12 HUD language would provide tenant protection assistance, through Tenant Protection Vouchers or Enhanced Vouchers, to tenants in these properties if they are in low-vacancy areas and may have to pay rents greater than 30% of household income. This tenant protection assistance could also be utilized as project-based vouchers. HUD must issue implementation guidelines by mid-March.
Project-Basing Tenant Protection Vouchers
The final T-HUD bill also includes an amendment, championed by Senators Jeff Merkley (D-OR) and Scott Brown (R-MA), to authorize project-based vouchers in lieu of tenant-based vouchers that would otherwise be issued for expiration of a Rent Supplement (Rent Supp), Section 236 Rental Assistance Payment (RAP), or Section 8 mod rehab contract.
Eligibility to project-base these tenant protection vouchers is limited to Rent Supp, RAP or mod rehab projects that converted to vouchers since October 1, 2006, or will do so in the future. HUD must issue guidelines that include tenant consultation and the agreement of a housing authority administrator. This authority was included under the bill’s Rental Assistance Demonstration but will only be in effect in FY12 and FY13. In FY12 alone, HUD is expected to issue about 2,000 tenant protection vouchers for expiring Rent Supp and RAP tenants. This amendment will ensure these and other tenants have affordable housing, and that these homes are affordable for the long-term.
Any project-based vouchers issued under this provision will not count toward a public housing agency’s 25% limit on the number of housing choice vouchers it may project-base.
Schumer Amendment to Retain Project-Based Assistance
The T-HUD appropriations bill has included the “Schumer Amendment” for several years. The language, spearheaded by Senator Charles Schumer (D-NY), requires the HUD Secretary to preserve project-based contracts on troubled properties before or during the foreclosure process. The Schumer amendment language is improved in FY12. The requirement now applies to all project-based contracts, not just those on HUD-insured or HUD-held properties Also, prior to abating a contract and relocating tenants for health and safety threats, HUD must provide notice to tenants and obtain tenant consent, and first use other available remedies, including partial abatements and receivership.
Transfer of Project-Based Assistance
The T-HUD bill includes revised language authorizing the HUD Secretary to transfer some or all project-based assistance, debt, and use restrictions from one multifamily project to another multifamily project or projects. The FY12 T-HUD bill includes a new provision here, allowing the transfer to be done in phases to accommodate financing and other requirements related to rehabilitating or constructing the project or projects to which the assistance will be transferred. New language also allows the number of units in the property receiving the transferred assistance to be fewer than at the original property if those units were unoccupied and the reduction is needed to reconfigure bedroom sizes to meet current market demands. The FY12 T-HUD language also brings Section 811 properties under this overall transfer authority.
SEVRA Changes Not Included
The final FY12 HUD bill does not include rent simplification provisions sought by HUD in its FY12 budget request (see Memo, 2/18). HUD requested the FY12 bill include cost-saving provisions from earlier Section 8 Voucher Reform bills. These included changing the definition of extremely low income (ELI), which, in effect, would have modified the current income targeting for public housing, voucher, and project-based assistance program eligibility. The new definition of ELI would have been the higher of the national poverty level, adjusted for family size, or 30% of area median family income.
The Administration’s FY12 request would have also raised the standard deduction for elderly and disabled families from $400 to $675, while raising the threshold for medical and handicapped assistance expense deductions for the purpose of determining rents, from 3% to 10% of a family’s annual net income. The FY12 request would have also given the HUD Secretary the authority to conduct “rent policy demonstrations.” HUD’s FY12 request also sought to change how fair market rents (FMRs) are developed, adopted, and used.
Moving to Work Expansion Not Included
The final FY12 bill does not give the HUD Secretary the authority to extend the Moving to Work demonstration to any new agencies, as have recent HUD appropriations bills.
Student Fees and Program Eligibility
Led by Senator Tom Harkin (D-IA), Congress changed the rules regarding college students living in Section 8 housing to address widespread concerns that student athletes with significant scholarships, including housing allowances, were living in HUD-subsidized housing. Among other changes to ensure low income students truly in need of assistance have access to it, the new law says that financial assistance in excess of tuition will be included in the student’s annual income when determining a student’s eligibility for Section 8 assistance (unless the student is older than 23 and has dependent children). The FY12 bill expands “tuition” and says that financial assistance in excess of tuition and “any other required fees or charges” will be included in a student’s income for purposes of eligibility. Congress wants to protect low income students with high required fees associated with college costs.