Legislative Updates

AHMA-PSW’s Weekly Affordable Housing News 04/12/18


  • The FY 2018 budget has increased funding and expanded RAD, as well as clarifying some issues.  These include: 1.  More than doubling the cap of public housing units that can convert under RAD to 455,000 units, an increase of 240,000 units over the previous cap, and extending the application date to September 30, 2024.  The unit cap increase will allow HUD to offer awards to the 92,000 units that are on the waiting list and create room for nearly 150,000 additional units to apply.  It will also create more flexibility for complex transactions that require more time to proceed through RAD.  HUD will issue a Federal Register Notice soon which will describe specifics related to rent setting, application deadlines, and converting letters of interest into applications for these new RAD units.  2.  Adding a new class of properties – Section 202 Project Rental Assistance Contracts (PRACs)– to be eligible for conversion under RAD.  Section 202 PRACs cover over 120,000 units across 2,800 properties serving the very low-income elderly Americans.  Through RAD, these properties will now be able to convert to long-term Section 8 HAP contracts that will better facilitate access to debt and LIHTC financing sources to support recapitalization of these units.  The HUD Appropriations Act also gives the Department the authority to subordinate or restructure documentation of the original capital advance as necessary to facilitate the conversion of assistance, as long as the property retains its affordability period and its designation of the property as serving elderly tenants.  HUD expects to release guidance later in the year on how this program will operate, at which point we will be able to begin processing these conversions.  In the meantime, owners can begin thinking and planning for their conversions and talking with residents about the program. 3.  Makes a number of smaller fixes to RAD, including: Ensuring current households in Second Component conversions (i.e. Rent Supp, RAP, Mod Rehab, Mod Rehab SRO, and now PRAC) can remain at the converted property without any screening, income eligibility, or income targeting requirements; For the remaining properties assisted under Rent Supplement and Rental Assistance Payment contracts that are located in high-cost areas, allowing initial rents to be set at comparable market rents; and Aligning the ownership and control requirements that would apply to public housing conversions in the event of foreclosure or bankruptcy to the requirements that apply at conversion.  4.  Increasing the availability of Low Income Housing Tax Credits and adopting an Income Averaging Rule.  In addition to increasing the LIHTC allocation authority by 12.5 percent in 2018, 2019, 2020, and 2021, the Appropriations Act adopts an important income averaging rule for LIHTC properties, which would permit tenants with incomes up to 80% of area median income (AMI) to qualify under the LIHTC program, as long as the average of all tenant incomes at the property is at or below 60% AMI.  This rule is particularly helpful in RAD conversions where the property currently assists some residents who have incomes between 60% and 80% of AMI.
  • A recent Government Accountability Office (GAO) report considering public housing conversions under the Rental Assistance Demonstration (RAD) program and its impact on residents raises concerns about how the Department of Housing and Urban Development (HUD) measures private-sector leveraging and its process for reviewing information to track the effects of RAD conversions on residents. The report is in response to a request by House Financial Services Committee Ranking Member Maxine Waters to review how RAD is achieving its goals, including long-term preservation of affordable units.
  • The new 2018 Income & Rent Limits for the Low Income Housing Tax Credit (LIHTC) program (post 1989 projects) in AZ have been released by ADOH.  The limits were effective April 1, 2018.  Please download the Information Bulletin for additional information.
  • CTCAC has release the 2018 Income Limits for Low Income Housing Tax Credit.  They may be found at http://www.treasurer.ca.gov/ctcac/2018/supplemental.asp
  • There are 13 days remaining until the application submission deadline for the Youth Homelessness Demonstration Program (YHDP). The FY 2017 YHDP Applications are due Tuesday, April 17, 2018 by 11:59:59 PM EDT. Communities should allow ample time to complete the FY 2017 YHDP Applications, and not wait until the last minute to submit the Applications in grants.gov. HUD strongly recommends that Collaborative Applicants submit their applications at least 24 to 48 hours before the deadline. See Section IV. Application and Submission Information of the FY 2017 YHDP NOFA for application submission and timely receipt requirements for the FY 2017 YHDP Competition.
  • The California Department of Housing and Community Development (Department) is decoupling the federal Emergency Solutions Grant (ESG) from its California program. The Department will release the Notice of Funding Availability (NOFA) for the federal portion of the ESG funds (approximately $12 million) in June of 2018.
  • The remaining 2016 California ESG funds (approximately $25 million) will be combined with the first two quarters of revenues from Senate Bill (SB) 2 that are dedicated to homelessness currently under consideration in the legislature as part of the budget. SB 2, the Building Homes and Jobs Act, establishes a permanent source of funding to address homelessness and affordable housing needs. Fifty percent of the first year of revenues are made available to the Department to assist persons experiencing homelessness. Following the passage of SB 2, the Department interviewed a number of stakeholders to provide input on the use of the homelessness funds. The Department is proposing the following possible eligible uses, subject to further legislative refinement: 1. Rental assistance, which could include rapid rehousing, with expanded flexibility beyond current program parameters; 2. Operating subsidies in the form of 15-year capitalized operating reserves in new and existing affordable housing units to deeply target those units to Californians exiting homelessness; 3. Local programs that establish or support “flexible housing subsidy pools” that pool available local dollars to commit rental subsidies to private landlords and supportive and affordable housing providers; 4. Operating support for short term, emergency housing interventions, such as navigation centers, that provide temporary room and board with limited barriers to entry while case managers work to connect homeless individuals and families to income, public benefits, health services, shelter, and housing; 5. Landlord incentives, such as subsidies for landlords while waiting for Housing Choice Voucher approval and reserves for unexpected vacancies; 6. Systems support for coordinated entry systems, diversion programs and service integration, data and Homeless Management Information Systems reporting, and homelessness planning.  The funds will be block granted and permissive in uses through the menu of eligible activities. The details of these modifications are subject to final budget language approved in the state budget process, which will be completed before the end of June for the 2018-19 fiscal year beginning July 1. Once the budget process is complete, the Department will be prepared to adopt any changes and provide a timeline for a NOFA. For more information about ESG program and the subsequent NOFAs, please visit the program webpage
  • NAHMAnalysis on Affordable Housing Appropriations for Fiscal Year 2018 : NAHMA released a new NAHMAnalysis titled “Affordable Housing and Community Development Programs: Appropriations for Fiscal Year 2018.” This NAHMAnalysis examines funding and policy provisions for affordable housing programs in the Fiscal Year 2018 omnibus bill, and provides an outlook for Fiscal Year 2019.
  • HUD published a Notice to provide owners with pre-1974 Section 202 Direct Loans options to preserve and extend the affordability of their properties to the low-income elderly occupants for the duration of their loan terms, which will mature over the next 5 years, through project-based Tenant Protection Vouchers (TPVs) or Senior Preservation Rental Assistance Contracts (SPRACs).
  • MFH Site Manager and Maintenance Person of the Year program guidelines-RHS announced the FY18 guidelines for the annual MFH Site Manager and Maintenance Person of the Year program. Awards will be presented in mid-June, 2018, in the following four categories: Site Manager of the Year for Elderly Housing; Family Housing; Farm-Labor Housing; and Maintenance Person of the Year. The deadline to submit nominations is May 18, 2018.
  • HUD publishes MAP Guide Clarification, Security for Equity Bridge Loans Memo-HUD issued a memo clarifying language found in the 2016 MAP Guide: In response to questions raised by stakeholders, the Memo confirms that HUD will allow equity bridge loans (EBLs) to be secured with a pledge of the general partner’s interest, in addition to the other means listed in the MAP Guide.
  • HUD issues updated Resident Rights and Responsibilities Brochure-HUD released an updated Resident Rights and Responsibilities brochure, which provides a summary of key resident rights and responsibilities for tenants living in Multifamily assisted housing along with resources and contact information for tenants needing assistance.
  • The 2018 income and rent limits should be available on the CTCAC website next week.  CTCAC will send an email notice through our mailing list when the tables are completed and on the CTCAC website. For 4% non-competitive applications including the joint CDLAC-TCAC application, the 2018 rent limits must be used by applications submitted May 18 for the July 18 Committee meeting.  Do not use the current application for the May application submissions.  CTCAC will send a notice through Listserv when the 2018 applications have been updated to include 2018 rent limits.​
  • The Internal Revenue Service (IRS) recently issued Revenue Ruling 2018-09, which provides various prescribed rates for federal income tax purposes, including applicable federal interest rates, adjusted applicable federal interest rates, and adjusted long-term and tax-exempt rates for April, 2018.  As provided in the ruling, Table 4 contains LIHTC Appropriate Percentages Under Section 42(b)(1) for April, 2018:  Appropriate percentage for the 70% present value low-income housing credit: 7.66%; Appropriate percentage for the 30% present value low-income housing credit: 3.28%.  Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July 30, 2008, shall not be less than 9%.  To view the revenue ruling from the IRS, please click here. ​
  • The San Francisco regional office has issued a notice rescinding the previous notice issued in 2009.  This notice requires O/As to apply late fees on Section 8 properties in accordance with HUD Handbook 4350.3 and the Model Lease,  The notice is located at https://www.hud.gov/states/shared/working/west/mf/ownmgmt/ae