HUD revised, for the first time since 1990, handbook guidance regarding displacement caused by the use of CDBG or HOME funds. The Housing and Community Development Act was amended in 1987 in an attempt to minimize displacement by the addition of Section 104(d), also known as “the Barney Frank amendment” after the provision’s sponsor and champion, Representative Barney Frank (D-MA). The statute creating the HOME program later gained the same provisions.
In short, if CDBG or HOME demolish or convert lower income housing to some other use, then housing units lost must be replaced one-for-one, and lower income people displaced must get adequate compensation that is generally better than Uniform Relocation Act (URA) compensation.
Chapter 7 of HUD Handbook 1378, Tenant Assistance, Relocation and Real Property Acquisition, is completely revised. The previous edition was, primarily, a repackaging of the regulations, which are at 24 CFR Part 42, Subpart C. The September 2011 revision is a streamlined presentation emphasizing guidance.
A casualty of the streamlining is the loss of any reference to the provision offering displaced tenants rental assistance for five years to ensure that they do not pay more than 30% of their income for shelter. This is the primary tenant compensation feature of Section 104(d) that makes it superior to URA’s compensation.
Also, at several places in the revised guidance the term “tenant” replaces “persons.” The statute and the regulations use the terms “persons” or “families” throughout. Chapter 7 could have the effect of implying that lower income homeowners are not entitled to Section 104(d) compensation (although URA might be more beneficial for homeowners).
Chapter 7 is improved by including several examples attempting to draw distinctions between “indirect” and “direct” displacement, focusing on when the use of CDBG for infrastructure activities or code enforcement, which past policy generally exempted, might trigger the Section 104(d) requirements. Any CDBG-funded activity that has a sufficient, physical impact on a property directly causing displacement is subject to the law, while an activity that indirectly leads to displacement is exempt. Notably, if CDBG-assisted code enforcement is part of a single undertaking that plans to demolish or convert affordable homes, even if privately funded, HUD might determine that the code enforcement is being conducted “in connection with” the project, engaging the Section 104(d) obligations.
The revised Handbook clarifies that a manufactured home may be subject to the Section 104(d) provisions if it is considered “real property” under state law and it is on a foundation, without wheels, and connected to utilities.
Governments are reminded that their notices of displacement and relocation assistance must address the needs of people who might require reasonable accommodation due to disabilities or limited English proficiency. Also, notices to tenants inform them that if they are not legally present in the U.S. they are not entitled to relocation compensation, unless it would “result in exceptional and extremely unusual hardship on a qualifying spouse, parent, or child.”
A separate Exhibit 7-2 contains seven important sample situations illustrating crucial meaning of the term “development project.” This is important to ensure that Section 104(d) is activated even if only one component of a project is assisted in part by CDBG or HOME. Three of the samples are enhanced versions that were in the old Chapter 7; the other four samples are new. One sample explains that if a public housing agency gets approval from HUD to demolish a 20-unit public housing project, and receives CDBG from the local government to assist in the demolition and HOME to construct lower income housing on the site, the local government is responsible for one-for-one replacement and tenant relocation assistance (assuming the tenant chooses not to accept alternative public housing or a voucher).
Revised Chapter 7, Exhibit 7-2, and the Transmittal Notice announcing the revision, Change 11, are available at http://www.hud.gov/offices/adm/hudclips/handbooks/cpdh/1378.0/index.cfm.