Housing Plus

Housing Plus

Guidance and legal insight for all aspects of housing and community development

By the Housing Group at Ballard Spahr

Reminder: Comments to revised RAD forms due October 28th and RAD Report out for review

Posted in Uncategorized

On September 28, 2016, HUD published a notice in the Federal Register to solicit comments to revised form documents used in the Rental Assistance Demonstration (“RAD”).

This notice follows a 60-day comment period on earlier draft changes to the form documents. However, noted in the notice, HUD only received six sets of public comments in response to its prior notice, and we encourage our housing partners to review the revised drafts and provide comments, as necessary, to ensure that the final set of new form documents reflect the needs of all RAD participants. Comments are due Friday, October 28.

Ballard submitted comments to the earlier drafts, and we are currently reviewing the revised drafts.

In other RAD news, HUD has released an interim report on its evaluation of RAD based on 185 projects that closed before October 2015, and we encourage you to delve into the results. In particular, HUD reports the following findings:

  • On average, for every $1 invested by the PHA in their RAD projects, private and public external sources invested an additional $8.91, creating a leverage ratio of nearly 9:1.
  • The sources of private and public external funds break down as follows: 39.4% from low-income housing tax credits (20.3% from 4% credits and 19.1% from 9% credits); 27.6% from soft funding sources (16.1% from seller financing and 11.6% from other soft sources); 22.7% from third-party debt; 10.1% from the PHA’s own resources.
  • PHA size appears to affect a project’s success at obtaining private capital with large PHAs accounting for the largest portion of financing compared with their proportion of projects and units. Large PHAs also have an outsized role in the program because their projects comprise a larger portion of RAD projects, even though they tended to select fewer projects (as a percentage of their entire portfolio) for conversion.
  • As compared to non-RAD public housing projects, RAD projects tend to have tenants with lower median household income, a greater mix of large-size units and are located in more stable areas with lower rates of poverty, greater rates of housing cost burden and high rates of overcrowding.
  • RAD projects are also more likely to have higher per-unit operating subsidies and lower-per unit expenses, which makes financing capital improvements more feasible.

We look forward to HUD’s continued evaluation of the program, including any insight into how these finding may change based on the projects that have closed in the past year.

HUD Issues Guidance on HOTMA’s Self- Implementing Provisions

Posted in Government-Assisted Housing, Public Housing, Section 8

The U.S. Department of Housing and Urban Development (HUD) recently issued this letter to public housing authority (PHA) Executive Directors regarding the five self-implementing portions of the Housing Opportunities through Modernization Act (HOTMA) (Pub. L. 114-201) that was signed into law on July 29, 2016. According to this guidance, which is also expected to be transmitted through a Federal Register notice soon, the following HOTMA sections are effective immediately:

Section 102(d) – Reasonable Accommodation Payment Standards

Section 107 – Establishment of Fair Market Rent

Section 110 – Family Unification Program for Children Aging out of Foster Care

Section 113 – Preference for US Citizens or Nationals (applicable in Guam only)

Section 114 – Exception to Public Housing Agency Resident Board Membership Requirements (applicable to PHAs in specified jurisdictions)

As the letter points out, all remaining HOTMA sections impacting the housing choice voucher and public housing programs will only become effective upon HUD’s issuance of an applicable notice or regulation for those provisions. Until then, PHAs must continue operate under current housing regulations.


Join us for our Eleventh Annual National Housing Conference in Washington, D.C.

Posted in Budget, Fair Housing, FHA and GSE Financing, Government-Assisted Housing, Housing Bonds, Legislative Initiatives, Policy, Public Housing, RAD, Section 8, Tax Credits

Ballard Spahr is committed to facilitating and leading the conversation within the affordable housing community, which makes us thrilled to announce our Eleventh Annual National Housing Conference in Washington, D.C., from November 3 to 4. This two-day, complimentary event features engaging discussions, panel presentations, special insights, and networking opportunities with the key influences and power players of the affordable housing industry.

Day one is our Housing Authority Summit. Housing authority executives will join us to discuss the most critical issues and challenges they face and explore solutions to help push your housing authority into the future. Panels and roundtables will cover various topics, including property tax exemptions, strategic relationship development, financing strategies, fair housing, and RAD transactions. Registration for the Summit is limited to those in leadership roles at housing authorities; however we will curate blog content around the pertinent matters that will be covered. If you would like additional information on attending the Summit, please contact Jennifer Boehm.

Day two will feature our National Housing Symposium, an open event where our high-powered lineup of presenters will explore today’s housing market and look into the future, now that post-recession demand is driving exciting programs and initiatives. In addition to the popular Heard on the Hill discussion, panels will discuss the latest in RAD projects, fair housing problems, demographic trends, Year 15 issues, and multifamily housing bonds. Registration is free, and our detailed program description is available.

We are excited to provide an informative and collaborative forum for dialogue, exploration, and networking within an industry about which we feel so passionate. Though we will certainly blog about conference updates and insights, we hope you will join us in person!

HUD Expands Fair Housing Liability to Include LEP Discrimination

Posted in Enforcement, Fair Housing, Policy

Last week, HUD issued new guidance confirming that persons with limited English proficiency (LEP) are protected under the Fair Housing Act (FHA). LEP includes a limited ability to read, write, speak, or understand English.  The guidance reasons that LEP persons are covered by the FHA because of their close nexus with the protected class of national origin.

The new guidance confirms that discrimination against LEP persons may include intentional discrimination or disparate impact, the latter of which involves facially neutral policies that have a discriminatory effect.  Examples of prohibited or potentially discriminatory practices include:

  • Refusing to rent to or to renew a lease for a person who speaks a certain language, but renting to those who speak another language
  • Refusing to allow translation of housing-related documents, such as leases or mortgages
  • Lending on unfair terms to certain LEP groups who share national origin
  • Restricting a renter’s or borrower’s use of an interpreter
  • Requiring an English speaker to co-sign a mortgage

This prohibition on LEP discrimination in the housing context is an expansion of HUD’s regulations to assist LEP persons in programs receiving federal financial assistance. Under those regulations, recipients of federal financial assistance have an obligation under Title VI of the Civil Rights Act to assist LEP persons to access to federally funded programs, such as public housing, housing choice vouchers, and other subsidized housing. The new HUD guidance, in contrast, interprets LEP discrimination under the FHA, which applies much more broadly to most rental and home sales whether or not federal assistance is involved, as well as lending activity.  Further discussion of the new guidance is available on Ballard Spahr’s website.


HUD Issues Year-End Closing Deadlines for Mixed-Finance Deals

Posted in Government-Assisted Housing, Public Housing

The U.S. Department of Housing and Urban Development (HUD) recently issued a memo outlining its processing schedule for mixed-finance projects targeted to close by the end of 2016. According to HUD’s Office of Public Housing Investments, parties wishing to close a mixed-finance transaction by December 31, 2016 must:

  • Submit a complete Development Proposal by November 7, 2016. This deadline also applies to any Proposal revisions. Year-end approval is not guaranteed for project Proposals that HUD determines still need substantial revisions after its review.
  • Submit final, unexecuted evidentiary materials by November 14, 2016. If changes are made post-submission, HUD cannot assure its approval of those documents before December 30, 2016.

Due to staffing constraints during the last week of the calendar year, HUD strongly encourages parties to submit documents early and attempt to close before December 21st. A full copy of the HUD memo can be accessed here.

New Fair Housing Rule Extends Liability to Housing Providers for Harassment

Posted in Enforcement, Fair Housing, Government-Assisted Housing, Policy

This week, HUD issued a final rule that creates liability under the Fair Housing Act (FHA) for housing providers for occurrences of “quid pro quo harassment” or “hostile environment harassment.” The new rule takes effect on October 14, 2016.

The rule prohibits both quid pro quo and hostile environment harassment because of a resident’s protected class which, under the Fair Housing Act (FHA) includes race, color, religion, sex, familial status, national origin, or disability.

The most concerning section of the rule for housing providers relates to direct liability exposure for any type of discriminatory housing practice. The rule creates three categories of direct liability for housing providers—liability for the housing provider’s own conduct; liability for failing to take prompt corrective action relating to the conduct of its employees or agents; and liability for failing to take prompt corrective action for the conduct of a third party (such as another resident). As a result, providers could be liable for behavior among tenants if the housing provider “knew or should have known of the discriminatory conduct and had the power to correct it.” This potentially interjects housing providers into disputes among tenants related to harassing behavior.  See Ballard Spahr’s e-alert on the rule for more discussion of the new rule and it’s implications.


District Court Dismisses Disparate Impact Claims in Texas

Posted in Community Development, Enforcement, Fair Housing, Government-Assisted Housing, Low Income Housing Tax Credits, Tax Credits

After several years of litigation, the U.S. District Court for the Northern District of Texas recently dismissed disparate impact claims filed against the Texas Department of Housing and Community Affairs (TDHCA) in the fair housing case, The Inclusive Communities Project, Inc. v. The Texas Department of Housing and Community Affairs.

The Inclusive Communities Project (ICP) claims alleged that TDHCA’s procedures for allocating low-income housing tax credits had a disparate impact on racial minorities and thus violated the Fair Housing Act (FHA). Following the District Court’s initial ruling that ICP made a successful prima facie showing of disparate impact, the case was appealed to the Fifth Circuit and U.S. Supreme Court. Even though the Supreme Court held that disparate impact claims were cognizable under the FHA, the case was remanded so ICP’s claims and TDHCA’s defenses could be reassessed in light of the standards in the Supreme Court verdict and new U.S. Department of Housing and Urban Development regulations for evaluating disparate impact claims.

On August 26, 2016, the District Court held that ICP failed to make a prima facie showing of disparate impact under the current standard because its claims (i) did not identify any specific, facially neutral policy that caused the disparate impact, (ii) were in essence claims disparate treatment, and (iii) failed to demonstrate that TDHCA’s policies actually caused the statistical disparities asserted by ICP. For more information, see the Housing Group’s e-alert on this verdict.

Housing Opportunities through Modernization Act of 2016 (HOTMA) Signed into Law

Posted in Government-Assisted Housing, Legislative Initiatives, Public Housing, Section 8

On July 29, 2016, President Obama officially signed H.R. 3700- Housing Opportunities through Modernization Act of 2016 (“HOTMA”). Our previous blog post highlighted some of HOTMA’s most significant changes to the current housing choice voucher program. The Section 8 and public housing components of the bill will become effective upon the issuance of notice or other regulation from the U.S. Department of Housing and Urban Development.

President Obama to sign Housing Opportunities through Modernization Act of 2016

Posted in Government-Assisted Housing, Legislative Initiatives, Public Housing, Section 8

On July 19, 2016, bill H.R. 3700, more commonly known as the Housing Opportunities through Modernization Act of 2016 (“HOTMA”), was presented to President Obama for signature after being unanimously approved by the U.S. Senate on July 14th. First introduced in October 2015, the bipartisan bill previously passed in the U.S. House of Representatives back in February of this year. Although HOTMA touches on a variety of housing issues such as veteran’s assistance, rural housing, and mortgage insurance, the bulk of the legislation deals with reforms to the Section 8 housing choice voucher (“HCV”) program and public housing. Some of HOTMA’s most notable proposed changes to the current HCV statute include:

  • Extending the length of project based voucher (“PBV”) initial contract or extension terms from 15 to 20 years;
  • Adjusting the total allowable number of PBV assisted units in a project to the greater of 25 units or 25% of all dwelling units;
  • Modifying procedures to determine tenant income and tenant rents;
  • Allowing greater flexibility in awarding and administering PBV contracts; and
  • Simplifying initial inspection procedures.

The full text of the bill can be found here. As of Monday July 25th, the bill has not yet been signed, but signature is expected shortly. Ballard Spahr will continue to monitor this legislation and related regulatory updates to come.

HUD proposes Processing Guide for 2530/Previous Participation reviews; comments due June 16th

Posted in FHA-Insured Financing, Government-Assisted Housing, Policy, Uncategorized

On May 17, 2016, HUD published a notice in the Federal Register to announce the issuance of the “Processing Guide for Previous Participation Reviews of Prospective Multifamily Housing and Healthcare Programs’ Participants” (the “Processing Guide”). A copy of the Processing Guide can be accessed here.

HUD proposes that the Processing Guide be used to supplement the proposed rule published in August that announced changes to regulations at 24 CFR Part 200, Subpart H, which govern the previous participation review process (the “Proposed Rule”). HUD reports that commenters expressed concern that the Proposed Rule was overly broad, which could further complicate the current process. In response to those comments, HUD proposes that the Processing Guide be used to supplement the Proposed Rule with specific information on review procedures, including, for the first time, detailed information on how “flags” are to be handled.

The Processing Guide is subject to a 30-day comment period ending June 16, 2016.

In addition to feedback on the Processing Guide, HUD also solicits comments on the following topics:

  1. HUD intends to revise 24 CFR 200.210 to state that the regulations are to be supplemented by the Processing Guide and that significant changes to the Proposed Guide will be subject to a 30-day notice and comment period.
  2. HUD also intends to add a definition of “Risk” to the Proposed Rule. HUD did not provide an actual definition, but states that the definition would clarify that the FHA Commissioner must determine whether the Controlling Participant (as defined in the Proposed Rule) could be expected to participate in the Covered Project (as defined in the Proposed Rule) in a manner consistent with furthering the HUD’s purpose of supporting and providing decent, safe and affordable housing for the public.