IPED HUD Multifamily Housing Compliance Arlington, VA May 10 – 11, 2007 Michael H. Reardon, Esq. Nixon Peabody LLP th Street, NW, Suite 900 Washington, DC (202) Section 8 Project Based, Voucher and PBV Contracts

The House HUD FY07 spending bill passed the House of Representatives in June. The Senate HUD appropriations bill never made it to the Senate floor. Several continuing resolutions which fund government programs at FY 06 levels. Last CR expired February 15, Joint Funding Resolution (H.J. Res 20) to fund government programs through September 30 th signed by President on February 15 th (Public Law 110-5).

Most programs funded at 2006 levels but increases to several programs; total increase $1.74 billion over 2006 – Project based Section 8: $5.976 billion; $939 million increase - Tenant-based vouchers (including enhanced vouchers): $ billion; increase of $502 million – Public Housing Operating Fund: $3.864 billion, $300 million increase - HOPE VI: reauthorized through 2007 and funded at $99 million

Bush FY 08 HUD Budget Proposal (compared against 07 Budget request of $33.6 billion) Total Budget: $35.2 billion Project based Section 8: $5.813 billion ($300 million increase) Section 8 Vouchers - $16 billion ($9 million increase) (includes Enhanced) HOME - $1.967 billion ($210 million increase) PH Operating - $4 billion ($500 million increase)

Bush FY 08 HUD Budget Proposal (Cont.) PH Capital - $2.024 billion ($385 million decrease) CDBG - $3.037 billion ($735 million decrease) Section $575 million ($160 million decrease) Section $125 million ($112 million decrease) HOPE VI – Zero (rescinds 07 $99 million)

Summary of HUD Section 8 Programs Section 8 Project-Based Assistance – Administered by HUDs Office of Housing – Section 8 assistance provided to Projects Section 8 Tenant-Based Assistance – Administered by HUDs Office of Public and Indian Housing – Section 8 assistance provided to households – Includes Section 8 Project-Based Vouchers

Project-Based Assistance Programs New Construction / Substantial Rehabilitation / State Agency Programs – Between 1974 – 1983 – Administered by HUD and PHAs – Long Term Contracts – Renewed under MAHRA

Project-Based Assistance Programs (Cont.) Loan Management Set Aside and Property Disposition – Between 1976 and 1997 – Administered by HUD and PHAs – 15-year term – Renewed under MAHRA

Project-Based Assistance Programs (Cont.) Multifamily Assisted Housing Reform Act of 1997 Defining Feature: attached to projects, not households

Tenant-Based Assistance Programs Defining Feature: assistance provided to household, not the project Section 8 Certificate Program – Original tenant-based program – Administered by PHAs under ACC with HUD – Rents set by Fair Market Rents

Tenant-Based Assistance Programs (Cont.) Section 8 Voucher Program – The current section 8 tenant-based assistance programs – Administered by PHAs under ACC with HUD – Rents based on Payment Standard set by PHA – % of FMR – Household can choose to rent a unit with rent in excess of Payment Standard

Tenant-Based Assistance Programs (Cont.) Section 8 Moderate Rehabilitation Program – Enacted in 1978 by Congress – $3,000 per unit in rehabilitation – Had features of both tenant-based and project-based program – Repealed in 1990 – but may be renewed under MAHRA Section 8 Project-Based Vouchers

Common Features of Section 8 Programs Eligible Tenants must meet income limits – Targeting requirements (50% AMI) – Preferences allowed Tenant payment limits – Generally, tenants pay 30% of adjusted income – 40% of income limitation on new contracts – Minimum rents – Housing Choice Voucher variation

Project-Based Contract Renewals MAHRA – Multifamily Assisted Housing Reform Act of 1997 – Provides renewal terms of all section 8 project-based contracts Contract renewals administered by PHAs under PBCA contracts with HUD Rent comparability studies

Project-Based Contract Renewal Options Mark-Up-To-Market OCAF / Budget-Based Rent Increase Mark-To-Market

Project-Based Renewal Contract Options (continued) Exception projects Demonstration and Preservation projects Opt-Out Rent Adjustments after renewal