Relocation Assistance for HUD Funded Projects W. Jay Smith U.S. Department of Housing & Urban Development Relocation Specialist for Region IX Michele Folk , SR/WA, R/W-RAC, R/W-URAC, R/W-NAC Overland, Pacific & Cutler, Inc. Managing Director, Public Agencies & Housing

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Applicable Statutes & Rules URA - Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended 49 CFR Part 24 Applicable to most HUD Programs NOT: FHA Mortgage Insurance Programs NOT: Public Housing Demo/Dispo HUD Handbook 1378

Applicable Statutes & Rules Most, but not all, HUD-funded projects follow the standard process and program requirements under the URA Same relocation planning, advisory services and relocation benefits payments required There are a few differences

Applicable Statutes & Rules Initiation of Negotiations: CDBG: Execution of the grant or loan HOME: Execution of the agreement CofC (Continuum of Care): Execution of agreement between HUD and recipient PIH (Public and Indian Housing): Varies, but generally execution of the agreement

Applicable Statutes & Rules Noticing requirements: General Information Notice Notice of Non-Displacement Notice of Eligibility 90-Day Vacate Notice 30-Day Vacate Notice All with proof of service

Applicable Statutes & Rules Voluntary versus Involuntary Acquisition: Willing seller and willing buyer Voluntary acquisition offer letter – states no threat of eminent domain Offer amount is Fair Market Value and offer states the basis of the value Owner-occupants ineligible for relocation assistance

Applicable Statutes & Rules Other HUD relocation program requirements may ALSO apply or apply INSTEAD: Like….

Applicable Statutes & Rules Specific Program Regs: CDBG 570.201(i) Hearth PIH HOME 92.206(f) MFH

Applicable Statutes & Rules Section 18 – Housing Act of 1937, as amended 24 CFR 970 Limited relocation assistance – moving and advisory assistance only; tenant may apply for Section 8 assistance Applicable to Public Housing Demolition/Disposition Program

Applicable Statutes & Rules Rental Assistance Demonstration (RAD) Notice H 2014-09 PIH 2014-17 Allows public housing agencies and owners of other HUD-assisted properties to convert units from their original sources of HUD financing to project-based Section 8 contracts No involuntary permanent displacements

Applicable Statutes & Rules Section 104(d) – Housing and Community Development Act of 1974, as amended 24 CFR 42 Applicable to: CDBG (Community Development Block Grant) HOME (Home Investment Partnership Program) UDAG (Urban Development Action Grant) Section 108 Loan Guarantee Program

Section 104(d) Two key components: Requires one-for-one replacement of demolished or converted lower-income housing AND Relocation assistance to permanently displaced lower-income tenants (≤ 80% of median income)

Section 104(d) One-for-One Replacement Units demolished, or Lower-income housing “converted” to:  Non-housing (community center, hotel) OR Housing that rents above HUD Fair Market Rent (FMR)

Section 104(d) One-for-One Replacement A like-sized affordable unit must be added to the community inventory of lower-income housing Can be private construction/rehab, government assisted, or other Must rent at, or below, HUD-Fair Market Rent

Section 104(d) Planning Residential Antidisplacement and Relocation Assistance Plan required of grantees as part of their consolidated plan - Efforts to minimize displacements - Relocation assistance to displacees - One-for-one replacement of lower- income dwelling units Relocation Plan still required per project

Section 104(d) Eligibility Specific HUD program funding involved Loss or conversion of low/mod income dwelling unit anywhere on the project site Low-income tenant permanently displaced (Important! Review definitions of “project” and “displaced person” in the HUD guidelines for your funding)

Section 104(d) Relocation Benefits Calculation for RAP/DAP under 104(d): Comparable rent + utilities – Total Tenant Payment = Monthly Need x 60 months RAP/DAP calculation under 104(d) does not consider displacement rent + utilities

Section 104(d) Income Calculation Total Tenant Payment (TTP) The greater of: 30% of the gross monthly adjusted income; 10% of monthly gross income; or The designated allowance for rent/utility costs, if receiving welfare assistance

Section 104(d) Income Calculation Uses the HUD definition of income at 24 CFR 5, with additional deductions and exemptions: $480 per dependent (under 18, full-time student, etc.) $400 per elderly family Reasonable child-care expenses Handicapped assistance expenses

Section 104(d) Relocation Benefits Security deposits + credit check fees are eligible payments Downpayment assistance is limited to purchase of cooperative or mutual housing If conventional replacement housing is purchased, tenant is held to downpayment amount under the URA calculation Downpayment assistance amount under 104(d) = RAP capitalized and discounted at the rate of interest paid on passbook savings accounts in the area

Section 104(d) Relocation Benefits Lower-income tenants can choose relocation total assistance under either URA or Section 104(d); Notice of Eligibility will contain description and amount of benefits under URA and under 104(d); When Section 8 vouchers and Section 8 housing are available, benefits are limited to those under the URA, if Section 8 assistance is refused by the tenant.

Section 104(d) Relocation Owner-occupants are not covered (subject to URA) Businesses are not covered Undocumented aliens are not excluded

Possible differences between Section 104(d) Notice of Eligibility Warning – these can be complicated! Possible differences between URA and 104(d) : Number of bedrooms in the comp (legal status) Income used in RAP/DAP calculation Fixed moving payment (legal status) Downpayment assistance amount

Section 104(d) Case Studies Project: Demolition of a tri-plex for new construction of 42 affordable housing units Funds: HOME and local tax set aside Occupancy: Tenant-occupied; low income Section 8 vouchers: None available Construction: More than 1 year

Section 104(d) Case Studies Is 104(d) triggered?

Section 104(d) Case Studies Is 104(d) triggered? Yes. At least one unit occupied by a Low Income tenant is being demolished, and HOME funds are part of the project’s funding.

Section 104(d) Case Study #1

Occupants: 2 adults, 4 children (husband, wife and 4 minor children) Legally Present in the U.S.: 2 persons Gross Household Annual Income = $48,000 (qualifies as Low Income) Deductibles: None for medical or child care expenses; no one elderly or disabled

What is the Total Tenant Payment? Income $ Minus Dependants (4 x $480) $ Equals $ Divided by 12 months = $ x 30% = $ TTP OR: 10% of gross monthly income ($_______/12 = $_____ x 10% = $______ Whichever is GREATER

OR: 10% of gross monthly income What is the Total Tenant Payment? Income $48,000 Dependants (4 x $480) - $ 1,920 = $46,080 Divided by 12 months = $ 3,840 x 30% = $ 1,152 TTP OR: 10% of gross monthly income ($48,000/12 = $4,000 x 10% = $400) Whichever is GREATER

Q1. How many bedrooms should the comparable dwelling have? Displacement Unit: 2BR apartment Current Rent/Utilities: $1,100/mo. Occupancy Standard: 2 + 0 Q1. How many bedrooms should the comparable dwelling have?

A1. TWO comparable units must be established - 1 Comp based on the URA (legal presence) 1 Comp based on the 104(d) (no legal presence requirement) The tenants must be offered the choice of a URA or Section 104(d) payment

WHY?

Because… Section 104(d): No legal presence requirement - 6 occupants require 3BR URA: Legal presence requirement – 2 legal occupants under a 2 + 0 occupancy standard only require a 1BR unit Penalty – they don’t necessarily get what they had. (Possible hardship exemption)

Facts: 1BR Comp Rent + Utilities = $ 900/mo. 3BR Comp Rent + Utilities = $1,400/mo. Current Rent + Utilities = $1,100/mo. Gross Household Annual Income = $48,000 (qualifies as Low Income) Q2. What is the maximum rental assistance payment under the URA for which the tenants are eligible?

A2. Computation under URA Comp Rent/Utilities $ Minus the lesser of Current Rent/Utilities $ or 30% of gross household monthly income $ = Monthly need $ x 42 month = $________RAP

A2. Computation under URA Comp Rent/Utilities $ 900 Minus the lesser of Current Rent/Utilities $1,100 or 30% of gross household monthly income $1,200 = Monthly need $ 0 The comp rent is less than the current rent or 30% of income, therefore there is no monthly need. $0 RAP

Facts: 1BR Comp Rent /Utilities = $ 900/mo. 3BR Comp Rent /Utilities = $1,400/mo. Current Rent /Utilities = $1,100/mo. Gross Household Annual Income = $48,000 (qualifies as Low Income) Q3. What is the maximum rental assistance payment under 104(d) for which the tenants are eligible?

A3. Computation under 104(d) Comp Rent/Utilities $ Minus Total Tenant Payment $ = Monthly need $ x 60 months = $_______ RAP Plus what other costs?

A3. Computation under 104(d) Comp Rent/Utilities $ 1,400 Minus Total Tenant Payment $ 1,152 = Monthly need $ 248 x 60 months = $14,880 $14,880 RAP Plus security deposit & credit check fees

Moving Payment Room Count - Three rooms FHWA Schedule for this State - $900 Q4.What is the Fixed Moving Payment for the household under URA guidelines? Q5.What is the Fixed Moving Payment for the household under 104(d) guidelines?

A4. URA: $300 (Based on 2 of the 6 occupants being legal) A5. 104(d): $900 (No legal presence requirement)

104(d) Case Study #2

Occupants: 2 adults, 1 child (husband, wife and 1 minor child) Legally Present in the U.S.: all Gross Household Annual Income = $50,000 (qualifies as Low Income) Deductibles: None for medical or child care expenses; no one elderly or disabled

What is the Total Tenant Payment? Income $ Minus Dependants (1 x $480) $ Equals $ Divided by 12 months = $ x 30% = $ TTP OR: 10% of gross monthly income ($_______/12 = $_____ x 10% = $______ Whichever is GREATER

OR: 10% of gross monthly income What is the Total Tenant Payment? Income $50,000 Dependants (1 x $480) - $ 480 = $49,520 Divided by 12 months = $ 4,127 x 30% = $ 1,238 TTP OR: 10% of gross monthly income ($50,000/12 = $4,167 x 10% = $417) Whichever is GREATER

Q1. How many bedrooms should the comparable dwelling have? Displacement Unit: 1BR apartment Current Rent/Utilities: $800/mo. Occupancy Standard: 2 + 0 Q1. How many bedrooms should the comparable dwelling have?

A1. All occupants are legally present. There is overcrowding. Occupancy and DS&S Standards require: 2BR Comp based on the URA 2BR Comp based on the 104(d)

Facts: 2BR Comp Rent + Utilities = $1,200/mo. Current Rent + Utilities = $ 800/mo. Gross Household Annual Income = $50,000 (qualifies as Low Income) Q2. What is the maximum rental assistance payment under the URA for which the tenants are eligible?

A2. Computation under URA Comp Rent/Utilities $ Minus the lesser of Current Rent/Utilities $ or 30% of gross household monthly income $ = Monthly need $ x 42 month = $________RAP

A2. Computation under URA Comp Rent/Utilities $1,200 Minus the lesser of Current Rent/Utilities $ 800 or 30% of gross household monthly income $ 1,249 = Monthly need $ 400 x 42 month = $16,800 RAP

Facts: 2BR Comp Rent /Utilities = $1,200/mo. Current Rent /Utilities = $ 800/mo. Gross Household Annual Income = $50,000 (qualifies as Low Income) Q3. What is the maximum rental assistance payment under 104(d) for which the tenants are eligible?

A3. Computation under 104(d) Comp Rent/Utilities $ Minus Total Tenant Payment $ = Monthly need $ x 60 months = $_______ RAP Plus what other costs?

A3. Computation under 104(d) Comp Rent/Utilities $1,200 Minus Total Tenant Payment $ 1,238 = Monthly need $ 0 x 60 months = $0 RAP Plus security deposit & credit check fees

Section 104(d) Clarity The relocation agent must take special care to explain each of the two options for the tenants – may question differences There are certain restrictions to remember: Can only buy mutual or coop housing under 104(d) If Section 8 is offered and refused, only payment under URA available

Common Monitoring Findings Voluntary letter not issued or it is worded incorrectly; or value does not agree with appraisals/comps Local codes not used for inspections Notices not issued timely or worded correctly Exceptions to illegal alien rule not documented

Common Monitoring Findings 5. Claims not documented adequately Rent and utilities Non-payment of benefits Income (doesn’t add up or is not documented) No explanation of special circumstances 6. Section 104(d) not paid

Preventative Measures Develop Acquisition and Relocation Procedures Keep resources up-to-date HUD regulations and handbook FHWA Q and A Headquarters policy memos Information bulletins Use experienced consultants – bring on early Review relocation process during all project stages

Work With Consultants Selection Experience with URA, Section 104(d) and/or applicable HUD program Experience with HUD Attended HUD local office training Bid is comprehensive, including time spent to adequately document files

Work With Consultants 2. Contract Stage Make sure requirements are clear Give them local acquisition and relocation policies and procedures 3. Implementation Periodic check-in 4. Review Files for Monitoring

Questions ?

Contact Info W. Jay Smith HUD Relocation Specialist for Region IX (213) 534-2615 Jay.Smith@Hud.gov Michele Folk, SR/WA, R/W-RAC, R/W-URAC, R/W-NAC Overland, Pacific & Cutler, Inc. Managing Director, Public Agencies & Housing (949) 951-5263 mfolk@opcservices.com