May 17, 2012

On May 15, the Federal Register published a proposed rule, “The Housing and Economic Recovery Act of 2008 (HERA): Changes to the Section 8 Tenant-Based Voucher and Section 8 Project-Based Voucher Programs.” This proposed rule follows upon a November 24, 2008 notice outlining those statutory provisions of HERA that are self-executing and those that require new regulations or regulatory changes to be implemented. This proposed rule makes conforming changes to regulations to reflect the self-executing provisions of HERA and also amends those regulations required to implement the non-self-implementing provisions. It seeks to establish, in regulation, the reforms made as discussed in the earlier notice and also to make other related regulatory changes. It solicits public comment on the changes, due by July 16, 2012.

Many of the changes included in the proposed rule are conforming changes, around issues such as: the project-based voucher income-mixing provision being applied to the project rather than the building; the eligibility of cooperative housing for project-based vouchers; removal of the requirement to conduct a subsidy layering review in the case of a HAP contract for an existing structure or if such a review has already been conducted; extension of the maximum initial term for project-based vouchers; reasonable rent concerns; and other issues. Many others are clarifying changes, regarding items such as: exceptions to the income-mixing cap; the term of the project-based HAP contract; establishing a bright-line definition of ‘commencement of construction’; the prohibition of tenancy involving family members; continuation of HAP assistance; determination of rent to owners; and others.

The proposed rule would also provide that:

• A unit in which a voucher is to be project-based must satisfy Housing Quality Standards (HQS) requirements within 60 days of the date of selection by a PHA. The new definition of “existing housing” would also limit the total amount of work that must be performed on the unit for HQS compliance to $1,000 per assisted unit. Further, the owner must not plan to perform rehabilitation work that would cause noncompliance with HQS or cost more than $1,000 per unit within one year of HAP contract execution. The purpose of these provisions is to establish “clear and measureable standards in determining whether a proposed project is eligible for selection as existing housing.”

• Although housing authorities have the discretion to decide whether to operate a project-based voucher (PBV) program, they must notify HUD of their intent to project-base their vouchers. The purpose of this amendment is to ensure that housing authorities do not exceed the 20 percent limitation on project-basing vouchers that is imposed by statute.
  
  
• Project-based voucher leases must allow for automatic renewal after their initial terms, removing a paragraph that allows an owner to refuse to renew a lease without good cause upon lease expiration. The purpose of this provision is “to put in place, for the PBV program, a reliable long-term lease for a tenant unless the owner provides good cause for termination of the lease or nonrenewal of the lease. This change is consistent with the purposes of the PBV program.”
  
  
• Rent paid to the owner of a project-based voucher unit shall not be reduced below the initial rent to owner under the initial HAP, except in limited situations.

Please share any thoughts and concerns on this proposed rule, as well as any comments prepared by your housing authority, with CLPHA Research & Policy Analyst Leah Staub.