Carol Galante, HUD deputy assistant secretary for multifamily housing, spoke openly and forthrightly about HUD policy, programs, and the President’s 2011 budget at the FASC Housing Policy Forum. Standing at the podium for two hours, Galante first addressed the accomplishments of the first year of the Obama administration, including the Green Retrofit Program (GRP), the Tax Credit Assistance Program (TCAP), and the full funding of the Section 8 project based assistance contract renewals as well as renewals of tenant based assistance. Section 202 properties represented nearly 50% of the projects that have been selected under the GRP. Galante pointed out that of the 2.3 million families including seniors assisted under both programs, more than 50% are seniors.
Galante then tackled the “elephant in the room” --- the proposal to cut the Section 202 capital advance program. As previously reported, the 2011 budget proposal does not include funding for new development in 2011. Galante explained that from HUD’s perspective significant reforms are needed in the program to better target the funding and to make the program more effective and efficient in the development process. She also stated that PRAC renewal funding will eat up the entire 202 allocation within five or six years, if nothing is done to change the way renewals are funded and if nothing is done to improve the performance of the Section 202 program.
Galante acknowledged that many of the changes can be accomplished administratively. HUD already is working on changing the 2010 NOFA to implement some of the changes it believes will reform the program including changing the points system for selection to reward experienced/competent users; to reward most cost effective proposals; to encourage mixed finance projects with leverage already identified; to reward projects that are further along; to reward projects with green and energy efficiencies in the design; and projects which serve frail elderly.
AAHSA will be working with HUD to address these issues and provide stakeholder input to be certain that the modernized 202 program is in place for the funding that Congress will provide for FY2011. However, AAHSA’s and AAHSA members’ advocacy cannot stop now. Please contact your senators and members of Congress to let them know how important the Section 202 development program is to your community. Members can access a story form for interested future residents or direct them to an online survey.
Galante then turned to changes in asset management policies around preservation, section 8 rent policies, and the HUD proposals for the Transformation of Rental Assistance. She announced the release of a new directive to the field to accept waiver requests that will make it easier to complete preservation transactions, including permitting underwriting to the section 8 rents instead of capping at the market rents in tax credit projects; underwriting with post rehabilitation rents; and the access to equity in non profit transactions which until this notice had been prohibited. Permanent changes in the Section 8 Renewal Guide to reflect these policy changes are still in clearance.
Galante finished her remarks by discussing the Transformation of Rental Assistance, HUD’s proposal to create one stream for rental assistance instead of the 13 different types of assistance. For most AAHSA members, any changes are in the future. The first step in this transformation is to turn public housing operating subsidies into project based assistance with a mobility feature so that PHAs can leverage private capital to rehab their old inventory. The second group of projects to access this new assistance will be projects with RAP and rent supplement contracts that never converted to Section 8 and are now expiring. It’s your second bite at the rental assistance apple and could be extremely valuable for preservation. See last month’s Housing Report for more information about the Transformation of Rental Assistance.
For more information, contact Nancy Libson.