RAD PIH Notice 2012-32 (.pdf, 1 MB) - National Low Income ...

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Section II: Moderate Rehabilitation ProjectsTo implement these provisions, HUD is waiving section 8(o)(13)(D) of the Act, as wellas related provisions of 24 CFR §§ 983.56, 983.257(c), 983.261(a) and (d) for initialoccupancy in the RAD converted project. 713. Owner Proposal Selection Procedures. Selections of covered projects shall be made inaccordance with program requirements outlined in this Notice. To implement thisprovision, HUD is waiving 24 CFR § 983.514. Site selection – Compliance with PBV Goals, section 8(o)(13)(C)(ii) of the Act and 24CFR § 983.57(b)(1) and (c). HUD waives these provisions, having to do withdeconcentration of poverty and expanding housing and economic opportunity, for theexisting site.B. PBV Contract Terms1. Length of Contract. Covered projects shall have an initial HAP term of at least 15 years(up to 20 years upon request of owner and approved by the agency administering thevouchers). To implement this provision, HUD is waiving section 8(o)(13)(F) of the Act(which establishes a maximum term of 15 years) as well as 24 CFR § 983.205(a) (whichgoverns contract term). 72 Owners of covered projects are required to make available foroccupancy by eligible tenants the number of assisted units.2. Initial Contract Rent Setting. Pursuant to the RAD statute, the statutory and regulatoryPBV requirements governing contract rents will apply (see 24 CFR § 983.301), exceptthat initial rents cannot exceed the current contract rent levels. As such, initial contractrents cannot exceed the lower of: (a) the current contract rent (adjusted for bedroom size);(b) the reasonable rent (as defined under 24 CFR § 983.303); (c) up to 110 percent of theapplicable FMR (or applicable exception payment standard), minus any utility allowance;or (d) the rent requested by the owner. 733. Method of Adjusting Contract Rents. Contract rents will be adjusted annually byHUD’s Operating Cost Adjustment Factor (OCAF) at each anniversary of the HAP71 See also 73 FR 71037, which implements language in the Housing and Economic Recovery Act, allowing for thecap on the number of PBV units to apply to a project, rather than a building. Although this change is not yetreflected in 24 CFR § 983.56, these statutory changes are self-implementing.72 24 CFR 983.205 (a) has not been updated to reflect changes made to the initial contract term in the Housing andEconomic Recovery Act of 2008. As reflected in 73 FR 71037, these statutory changes are self-implementing;therefore, the initial term of the contract is 15 years.73 In a limited number of situations where converting projects with Low Income Housing Tax Credits (LIHTCs) arelocated outside of a Qualified Census Tract, rents are determined in accordance with 24 CFR 983.301(c).PIH-2012-32 (HA) Rental Assistance Demonstration – Final Implementation 88
Section II: Moderate Rehabilitation Projectscontract, subject to the availability of appropriations for each year of the contract term. 74As such, section 8(o)(13)(I) of the Act and 24 CFR §§ 983.301 and 983.302, concerningrent determinations, shall not apply when adjusting rents. The rent to owner may at notime exceed the reasonable rent charged for comparable unassisted units in privatemarket, as determined by the Contract Administrator (or a third-party entity, ifapplicable) in accordance with 24 CFR § 983.303. However, the rent to owner shall notbe reduced below the initial rent to owner for dwelling units under the initial HAPcontract. 75C. PBV Resident Rights and Participation1. No Re-screening of Tenants upon Conversion. Pursuant to the RAD statute, atconversion, current households are not subject to rescreening, income eligibility, orincome targeting provisions. Consequently, current households will be grandfathered forconditions that occurred prior to conversion but will be subject to any ongoing eligibilityrequirements for actions that occur after conversion. For example, a unit with ahousehold that was over-income at time of conversion would continue to be treated as anassisted unit. Thus, 24 CFR § 982.201, concerning eligibility and targeting, will not applyfor current households. Once that remaining household moves out, the unit must beleased to an eligible family.2. Right to Return. Any residents that may need to be temporarily relocated to facilitaterehabilitation or construction will have a right to return to the development oncerehabilitation or construction is completed.3. Renewal of Lease. Under current regulations at 24 CFR § 983.257(b)(3), upon leaseexpiration, an owner can choose not to renew the lease, without good cause. In such acase, the regulatory consequence is the loss of the assisted unit. Under RAD, the ownermust renew all leases upon lease expiration, unless cause exists. Consequently, 24 CFR §983.257(b)(3) will not apply.D. PBV: Other Miscellaneous Provisions74 OCAF are calculated and published each year in the Federal Register by HUD and are applied to the portion of acontract rent that is not committed to debt service payment in order to calculate the contract rent for the project inthe following fiscal year. For the most recent guidance on OCAFs, please see: http://www.gpo.gov/fdsys/pkg/FR-2011-10-26/pdf/2011-27816.pdf.]75 There are three exceptions. The rent to owner may fall below the initial contract rent 1) to correct errors incalculations in accordance with HUD requirements; 2) if additional housing assistance has been combined with PBVassistance after the execution of the initial HAP contract and a rent decrease is required pursuant to § 983.55; or 3) ifa decrease in rent to owner is required based on changes in the allocation of responsibility for utilities between theowner and the tenant.PIH-2012-32 (HA) Rental Assistance Demonstration – Final Implementation 89
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Appendix I - 24 CFR Part 880 Regula
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