March 15, 2019

NAHMA pushes back on newly imposed REAC changes with proposal for alternate approach

This week, NAHMA pushed back strongly on HUD’s recently announced plan to shorten its physical inspection notification timeframe. The agency announced its new policy on February 22^nd, 2019 via PIH Notice 2019-02; the Notice establishes an exact 14-day notice period for REAC inspections across the assisted portfolio or an automatic REAC score of “zero.”

NAHMA members take great pride in providing quality housing that offers a safe, healthy environment for their residents. NAHMA believes that, as published, the severely compressed notice period will lead to a breakdown of the logistical feasibility of managing HUD-assisted properties, as well as the crucial elements of trust and collaboration between the agency and the owners and operators of affordable housing. We also believe that PIH Notice 2019-02 will create hardship for residents and will further erode the confidence and integrity of the agency’s physical inspections as a tool for assessing the state of the portfolio.

We thank our members for discussing this issue thoughtfully with HUD leadership during our recent meeting in Washington, D.C., and for communicating this issue urgently to your representatives in Congress. After thorough discussions about this policy change with NAHMA members and with HUD leadership during agency listening sessions, at the recent NAHMA meeting, and during ongoing engagement, and after bringing the issue to the attention of Members of Congress with jurisdiction over affordable housing programs, NAHMA this week took the following two actions:

1. In a letter to HUD detailing member concerns, NAHMA urged HUD to suspend or amend the newly imposed REAC notification policy; and
2. In a letter to key congressional committees in the House and Senate, NAHMA requested congressional oversight authority in examining impacts of HUD’s recent announcement regarding the newly imposed REAC notification policy.

In its letters, NAHMA proposed a number of alternate solutions for promoting ongoing physical standards of assisted properties to the decent, safe, and sanitary standard required by statute. In partnership with housing providers and in the best interest of residents, NAHMA urged HUD to take the following alternate and constructive approach with regard to its physical inspection process in order to achieve our shared goal of providing access to quality affordable housing:

1. HUD should utilize recently enhanced inspection enforcement tools enacted by Congress to address the 5% of the portfolio that is “troubled,” instead of circumventing Congress and penalizing the entire portfolio with a drastic policy change.
2. HUD should go through appropriate regulatory channels and in partnership with Congress to establish an improved, data-driven policy for physical inspection notification timeframes.
3. HUD should foster strong partnerships between the agency, owners and operators of affordable housing properties, and residents by allowing for proper notification and logistical feasibility when scheduling physical property inspections.
4. HUD should promote private owner participation in its assisted programs by implementing a forbearance policy in a limited number of documentable situations in which the property is held harmless for inspection scheduling non-compliance, such as natural disasters or major property rehabilitation.
5. HUD should improve data integrity of the REAC protocol by reversing its new automatic “zero” score policy in favor of a more accurate and actionable compliance incentive.

Our letters to HUD and to Congress outline in detail NAHMA’s concerns with the new physical inspection notification timeframe, and discusses the concepts that support these suggested alternate approaches to advancing our shared goal of providing quality housing and improving economic opportunity for communities across the country.

To read our letters to HUD and to Congress on the REAC policy change, please visit our “Emerging REAC Issues” webpage here. The webpage continues to be updated with the latest information regarding changes to REAC, including an upcoming NAHMA survey to collect member feedback regarding additional REAC changes planned by the agency.

President’s FY20 Budget Request repeats proposal to drastically cut or eliminate key affordable housing programs

This week, the Administration released an outline of its Fiscal Year 2020 Budget request, which proposes steep cuts to affordable housing programs beginning October 1, 2019. Similar to last year’s request, NAHMA opposes the proposed budget cuts to affordable housing programs and is preparing advocacy materials for members to voice their opposition to lawmakers. Stay tuned for a NAHMAnalysis on the FY2020 appropriations request once more information is released next week.

HUD – Fiscal Year 2019 Budget Request

The Administration’s FY20 budget requests $44.1 billion for HUD programs, $8.6 billion below the current FY19 enacted level. The cuts are achieved primarily by eliminating the Public Housing Capital Fund, HOME, Community Development Block Grant (CDBG), Housing Trust Fund (HTF), and Choice Neighborhoods programs. Similar to last year, the budget proposes funding reductions to the Housing Choice voucher program, Public Housing Operating Fund, Family Self-Sufficiency Program, Section 202 Housing for the Elderly, and Section 811 Housing for Persons with Disabilities. While the budget requests a small increase in funding for Project-Based Rental Assistance, this level is insufficient for renewals; more information is expected from HUD soon on specific program budgets.

The budget request also proposes the same “rent reform” provisions from last year. On a positive note, the budget requests an additional $20 million to modernize information technology (IT) systems.

USDA Rural Housing – Fiscal Year 2019 Budget Request

Similar to the Administration’s FY19 budget, this year’s USDA FY20 budget propose to “zero out” funding for all rural housing programs except Section 502 guarantees, Section 538 guarantees for rental housing production, and renewals of existing Section 521 Rental Assistance and Section 542 vouchers. This year’s budget again proposes a minimum rent, requiring tenants in USDA-assisted rental housing to pay at least $50 per month with a hardship exemption from USDA. The budget proposes to rescind $40 million from the Section 521 Rental Assistance program, which accounts for funding carried over from one year to the next to avoid potential shortfalls in funding availability to renew RA contracts at the beginning of the fiscal year.

The budget proposes to combine to Section 542 Voucher funding with RA in a single account. USDA’s budget summary shows a $1.407 billion line item for Rental Assistance, which includes $32 million for vouchers.

NAHMA continues to advocate for increased investments in affordable housing programs and will provide members with updated advocacy materials for Fiscal Year 2020.