1. Transferring Section 8 Budget Authority Under Section 8(bb)
Tammy Fotinos, Director of Contracts
Southwest Housing Compliance Corporation

2. Brief history of Section 8
Section 8 Program authorized by Congress in 1974
Project-based Section 8 developed to encourage private partnerships with HUD
Subsidy lives with the unit, rather than the tenant
Owners can elect to opt-out of the Section 8 HAP contract
Approximately 1.4 million units of affordable housing stock remain
Ask for a show of hands of who has a HAP contract on their property
©2018 SHCC - TX Rental Housing Preservation Academy

3. 8(bb) Transfer of budget authority
HUD Notice H (current notice)
FAQs issued on 2/18/16, 3/14/16, and most recently, 4/22/16
Allows budget authority to be transferred from one project to another
Can occur between two owners or the same owner
Owner A: owner wanting to get rid of budget authority
Owner B: owner receiving the new budget authority
Can be transferred to projects/owners in other states, but HUD will review concentrically
Can be transferred to a property without a current HAP contract
©2018 SHCC - TX Rental Housing Preservation Academy

4. 8(bb) Transfers (cont.) Goal is to preserve affordable housing
Transfer has to be budget neutral
Great tool when an owner wants to opt out of the Section 8 program
Owners can transfer budget authority within their own portfolio
Examples of transfers
Owner wants to tear down old project, move subsidy to newly built project
Owner wants to move from partially subsidized to wholly subsidized
©2018 SHCC - TX Rental Housing Preservation Academy

5. 8(bb) Transfers (cont.) General Requirements for Owner/Project A
Must be current in the submission of Annual Financial Statements
If 236 property, must have submitted Excess Income Reports for the past 7 years
Must resolve all compliance flags
If Project A will remain a HUD project after the transfer:
Any deficiencies from the last physical inspection must be cured
If MOR less than Satisfactory rating, corrective actions must be completed or in a plan for completion
Owner must certify that they will make all mortgage payments, meet all physical standards and management requirements
©2018 SHCC - TX Rental Housing Preservation Academy

6. 8(bb) Transfers (cont.) Owner A’s Proposal:
Written request to terminate the Section 8 Contract to include whether all or a portion of the budget authority will be transferred
Description of the proposed transaction, why it is being proposed and how there will be no adverse impact to the existing assisted tenants
The number and configuration of the units, current rents and operating budget
A relocation plan, if applicable
Copy of the Notice to Tenants
Owner must identify any Fair Housing litigation settlement agreements, voluntary compliance agreements, or any other remedial agreements between the owner and HUD
©2018 SHCC - TX Rental Housing Preservation Academy

7. 8(bb) Transfers (cont.) General Requirements for Owner/Project B
Owner must show that receipt of budget authority is warranted by local demands for affordable housing and will ensure the long term preservation of the property
Must be an existing multifamily project consisting of existing dwelling units before receiving any transfer of budget authority
Conditional approval can be granted for projects under construction
Owner B may use approval letter from HUD to secure financing
©2018 SHCC - TX Rental Housing Preservation Academy

8. 8(bb) Transfers (cont.)
General Requirements for Owner/Project B (cont.)
Owner must provide documentation to assist HUD in an environmental review
Owner must not be subject to any of the following actions that have not been resolved to HUD’s satisfaction:
A charge from HUD concerning a systemic violation of the Fair Housing Act
A Fair Housing lawsuit filed by the Department of Justice alleging a pattern of discrimination
Project must comply with site and neighborhood requirements
Site and neighborhood requirements: Must be suitable from the standpoint of facilitating and furthering full compliance with all of the applicable provisions of Title VI of the Civil Rights Act of 1964, Title VIIO of the Civil Rights Act of 1968, and Executive Order 11063
Must not be one that is detrimental to family life or in which substandard dwelling or other undesirable conditions predominate
Must be accessible to social, recreational, educational, commercial, and health facilities and services
©2018 SHCC - TX Rental Housing Preservation Academy

9. 8(bb) Transfers (cont.)
General Requirements for Owner/Project B (cont.)
If Project B is New Construction
May not be located in a racially mixed area if the project will cause a significant increase in the proportion of minority to nonminority residents in the area and may not be located in an area of minority concentration
There are allowable exceptions
Must meet all applicable accessibility requirements
Owner must receive 2530 approval
Owner must provide a tenant selection plan and an AFHMP
If Project B is an FHA insured project, there may be no liens on the project other than the 1st mortgage
©2018 SHCC - TX Rental Housing Preservation Academy

10. 8(bb) Transfers (cont.)
General Requirements for Owner/Project B (cont.)
If Project B is HUD-affiliated
If the project received a less than Satisfactory rating on its last MOR, corrective actions must have taken place or have a plan in place
Owner must be current in the submission of Audited Financial Statements, if applicable
Owner must resolve all noncompliance flags, if any
Project B must have a REAC score of at least 60, or if it does not, submit a plan acceptable to HUD to correct any deficiencies
If there is an existing HAP contract, Owner B must execute an Amendment B in addition to the new HAP contract
If there is no existing HAP contract, Owner B must execute a new Section 8 HAP contract
©2018 SHCC - TX Rental Housing Preservation Academy

11. 8(bb) Transfers (cont.)
General Requirements for Owner/Project B (cont.)
If Project B is not HUD-affiliated
Project must have a REAC inspection prior to the transfer and receive a score of at least 60
If project has repair needs, owner must submit a repair plan of how the physical needs will be addressed
Owner B must execute a new Section 8 HAP Contract
©2018 SHCC - TX Rental Housing Preservation Academy

12. 8(bb) Transfers (cont.) Owner B Proposal
Written notification that the owner agrees to accept the transferred budget authority
The current number and configuration of the units, current rents, and operating budget; the proposed number and configuration of the units, rents, the amount of budget authority to be transferred, and the operating budget after the transfer
Written verification to demonstrate the long term financial viability of the property, including current and proposed financing
Written narrative that Owner B has at least 5 years of successful experience owning and managing assisted housing
©2018 SHCC - TX Rental Housing Preservation Academy

13. 8(bb) Transfers (cont.)
Proposals will be reviewed and analyzed by the Fort Worth Multifamily Hub (or applicable regional office) before being sent to Headquarters for final approval
SHCC and HUD maintains a list of interested owners
Tammy Fotinos at SHCC to be placed on list
Letter must be sent to HUD at applicable address
HUD approval could take up to one year, so plan accordingly
©2018 SHCC - TX Rental Housing Preservation Academy

14. HUD addresses for owner letter
Subject line of
Property Name-8(bb) Letter of Interest
addresses for all regions:
Northeast:
CT, DE, DC, ME, MD, MA, NH, NJ, NY, PA, RI, VT, VA, WV
Southeast:
AL, FL, GA, KY, MS, NC, PR, SC, VI
Midwest:
IN, IL, MI, MN, OH, WI
Southwest:
AR, IA, KS, LA, MO, NE, NM, OK, TX
West I:
AK, CA, HI, ID, NV, OR
West II:
AZ, CO, MT, ND, SD, UT, WA, WY
©2018 SHCC - TX Rental Housing Preservation Academy

15. Questions?
©2018 SHCC - TX Rental Housing Preservation Academy