HUD’s Office of Public and Indian Housing (PIH) posted Notice PIH 2021-07 about Section 18 public housing demolition and disposition. The notice posted on the last day of the Trump administration updates Notice PIH 2018-04. The primary change is to the so-called “RAD/Section 18 Construction Blend,” allowing a public housing agency (PHA) to apply to HUD for approval to dispose of public housing “because it is not in the best interests of the residents and the PHA.” In short, the drastically changed provision would allow a PHA to convert anywhere from 40% to 80% of the units in a Rental Assistance Demonstration (RAD) project to Project-Based Vouchers (PBVs) under Section 18. PIH began allowing 25% of the units in a RAD project to convert PBVs under Section 18 in PIH Notice 2018-11 on July 2, 2018. The new notice further accelerates PIH’s public housing “repositioning” policy (see Memo, 11/19/18).
Notice PIH 2021-07 provides PHAs (on page 3) with two sets of reasons to request disposition of public housing, one of which is that a PHA certifies that it has determined that disposition is appropriate (on page 4) given regulations at 24 CFR 970.17(c). Paragraph (e) describes in detail the expanded RAD/Section 18 blend option (page 5).
The percentage of units eligible for disposition within a RAD project is based on the “hard construction costs” of the proposed rehabilitation or new construction. Hard construction costs include overhead and profit, payment and performance bonds, and “general requirements.” Specific details include:
- For high-cost areas, defined as those where Hard Construction Costs exceed 120% of the national average, a PHA may convert up to 80% of the units in a RAD project to PBVs under Section 18.
- If hard construction costs are equal to or greater than 90% of the Housing Construction Costs published by HUD for the given market area, a PHA may convert up to 60% of the units in a RAD project to PBVs under Section 18.
- If hard construction costs are equal to or greater than 60% but less than 90% of the Housing Construction Costs published by HUD for the given market area, the PHA may convert up to 40% of the units in the RAD project to PBVs under Section 18.
- If hard construction costs are equal to or greater than 30% but less than 60% of the Housing Construction Costs published by HUD for the given market area, the PHA may convert up to 20% of the units in the RAD project to PBVs under Section 18.
Small PHAs (i.e., those with 250 or fewer public housing units) may convert up to 80% of the units in a RAD project to PBVs under Section 18. However, to be eligible for the Small PHA blend, a PHA must submit a feasible repositioning plan that removes all of a PHA’s public housing Annual Contributions Contract (ACC) units, reflects that the PHA will not develop additional public housing units under otherwise available Faircloth authority, and will not transfer that Faircloth authority to another PHA.
The Faircloth Amendment to the “Housing Act of 1937” states that HUD cannot fund the construction or operation of new public housing units with Capital or Operating Funds if construction of those units would result in a net increase in the number of units a PHA owned, assisted, or operated as of October 1, 1999.
Although Notice PIH 2021-07 makes only indirect reference to the large RAD notice guiding the entire RAD program, residents in units in a RAD project that are converted under Section 18 must have all of the RAD resident protections afforded to their neighbors in the “regular” RAD units. Protections include: no permanent displacement, relocation assistance if temporary relocation is needed to rehabilitate units, right to return, no rescreening upon returning, $25 per unit for resident participation activities, right to organize, and the right to the Housing Choice Voucher program grievance and termination procedures.
Section 1.6 (page 51) of the RAD Notice states:
“So as to facilitate the uniform treatment of residents and units at a Covered Project, any non-RAD PBV units located in the Covered Project shall be subject to the same waivers and alternative requirements where noted below.”
Those alternative requirements are at 1.6.C (page 60). Also, Section 1.5.B (page 44-45) states:
“The RAD relocation requirements described in the RAD Fair Housing, Civil Rights, and Relocation Notice shall apply to residents of the Section 18 units, in lieu of the relocation requirements under 24 CFR part 970. All of the RAD relocation requirements shall apply to residents of the Section 18 units, including, but not limited to, the resident notice and meeting requirements, the right to return, and relocation assistance and payments. The PHA may not provide different relocation rights and benefits to residents of the project on the basis of whether they reside in a RAD unit or a Section 18 unit.”
Last Minute Implementation of Executive Order 13891
Notice PIH 2021-07 includes new language in compliance with the Trump Administration’s Executive Order 13891 as implemented by an interim final rule that evaded the Administrative Procedure Act (see Memo, 11/16/20). It states:
“The contents of this notice, except when based on statutory or regulatory authority or law, do not have the force and effect of law and are not meant to bind the public in any way. This document is intended only to provide clarity to the public regarding existing requirements under the law or agency policies.”
That interim final rule provides that any member of the public can petition HUD to have a guidance document withdrawn, and HUD must respond within 90 days.
Note about 2012 Demolition/Disposition Notice
NLIHC’s Board of Directors in November 2010 raised concerns to the HUD secretary about legal services attorneys’ observations that PHAs had been abusing the Section 18 demolition regulations and that HUD was lax in monitoring PHA demolition practices. HUD agreed to meet with legal services attorneys in early 2011, and after several meetings, phone calls, and exchanges of letters, HUD issued Notice PIH 2012-7, which addressed many of these issues. Then on October 16, 2014, HUD published proposed demolition regulations correcting many of the problems identified. HUD informally indicated that, as a result of the proposed regulations, demolition of public housing had slowed down. Unfortunately, the proposed improvements to the demolition rule were never finalized. Under HUD Secretary Carson, both the proposed rule and Notice PIH 2012-7 were withdrawn (see Memo, 1/8/18). The old, inadequate demolition regulations are still in place and a new Notice PIH 2018-04 eliminated all of the resident protections of the previous notice (see Memo, 4/2/18).
Notice PIH 2021-07 is at: https://bit.ly/365eeZs
Notice PIH 2018-04 is at: https://bit.ly/3o6YHP1
More information about Section 18 Demolition/Disposition is on NLIHC’s public housing webpage at: https://bit.ly/2XZle5H
More information about public housing repositioning is on page 4-30 of NLIHC’s 2020 Advocates’ Guide.