U.S. Department of Housing and Urban Development

H O U S I N G

Special Attention of: Notice H 97-54 (HUD)

State Coordinators; Directors of

Housing; Director, Multifamily Issued: September 3, 1997

Housing Division; Multifamily Asset Expires: September 30, 1998

Management and Development Branch

Chiefs; Contract Administrators- Cross References:

Owners and Managers of Projects with

Expiring Section 8 Contracts

Subject: This Notice provides guidance for implementing provisions

of the Emergency Supplemental Appropriations Act for FY

1997 (P.L. 105 -18), approved June 12, 1997.

A. Tenant Notification of Expiring Section 8 Contracts

\(1\) Statutory Authority: Section 10002 of the Act amends

Section 8(c)(9) of the U.S. Housing Act of 1937 to read \"not less

than 180 days prior to terminating any contract\" under which

assistance payments are received under \[Section 8\]. . . an owner

shall provide written notice to the Secretary and the tenants

involved of the proposed termination . . . . The term

\'termination\' means the expiration of the assistance contract or

an owner\'s refusal to renew the assistance contract. . . . .\"

\(2\) Effect: This changes current law to allow for shortening

the notice requirements from \"not less than one year\" to \"not less

than 180 days\". For owners who have previously given notice, they

are bound by the original one year notification period.

\(3\) Implementation: For all Section 8 contracts that expire

on or after the effective date of the Emergency Supplemental

Appropriations Act for FY 1997 (June 12, 1997), owners shall

provide written notice to all affected households that the-Section

8 contract will expire or terminate not less than six months from

the date of the tenant notification. Attachments 1(a), 1(b) and 2

are provided to meet the owners notification criteria.

H: Distribution: W-3-1

2

B. New Statutory Definition of \"Owner\"

Statutory Authority: Section 10006 of the Act amends Section

211(b)(4)(B) of the Departments\' of Veterans Affairs and Housing

and Urban Development, and Independent Agencies Appropriations Act

of 1997 (P.L. 104-204) by inserting the following at the end: The

term \"owner\", as used in this subparagraph, in addition to it

having the same meaning as in Section 8(f) of the United States

Housing Act of 1937, also means an affiliate of the owner. The

term \"affiliate of the owner\" means any person or entity

(including, but not limited to, a general partner or managing

member, or an officer of either) that controls an owner, is

controlled by an owner, or is under common control with the owner.

The term control means the direct or indirect power (under

contract, equity ownership, the right to vote or determine a vote,

or otherwise) to direct the financial, legal, beneficial, or other

interests of the owner.

For any questions or clarifications concerning this Notice,

calls may be directed to the Program Management Division at (202)

708-3944.

Nicolas P. Retsinas

Assistant Secretary for Housing-

Federal Housing Commissioner

Attachments

ATTACHMENT 1(a)

(for projects meeting HQS)

\[date\]

Dear \[Owner\]:

As a project owner participating in the Section 8 Program,

you are required under Section 8(c)(9) of the U.S. Housing Act of

1937 (42 U.S.C. Sec. 1437f ) to provide not less than 180 days

notice to the U.S. Department of Housing and Urban Development

(HUD) or Department) and the affected tenants about the

termination or expiration of your project-based Section 8

contract. Specifically, Section 8(c)(9), as amended, says:

\"Not less than 180 days prior to terminating any contract

under which assistance payments are received under \[Section

81 . . . an owner shall provide written notice to the

Secretary and the tenants involved of the proposed

termination . . . . The term \'termination\' means the

expiration of the assistance contract or an owner\'s refusal

to renew the assistance contract . . . .\"

Some owners incorrectly assume that the reinstatement of the

right to prepay the HUD-insured, HUD-held or State-assisted

mortgage under the Low-Income Housing Preservation and Resident

Homeownership Act of 1990, as amended, supersedes their

obligations under the Section 8 HAP contract. This is an

incorrect assumption. Repayment of the mortgage removes an

owner\'s obligations under the regulatory agreement. Prepayment

of the mortgage does not relieve the owner\'s responsibilities to

HUD and the tenants under the Section 8 HAP contract and the U.S.

Housing Act of 1937. An owner\'s obligations under a regulatory

agreement are separate obligations from those responsibilities

under a Section 8 HAP contract.

Owners who fail to give the mandatory not less than 180 days

notice will be faced with one of two options: (i) renew the

project-based contract for up to 180 days under the authority

granted to HUD by the Departments of Veterans Affairs and Housing

and Urban Development, and Independent Agencies Act, 1997, P.L.

104-204, (ii) permit the tenants to remain in their unit for the

180 day notice period without an increase in the share of the

rent they were paying under the expiring contract.

If your Section 8 HAP contract has expired, or will expire

in less than 180 days and you have not provided the 180 days

notice, you must select one of the aforementioned options and

notify HUD of your choice within calendar days after the date set

out at the top of this letter. If you do not make such a

selection, HUD may seek appropriate remedies to enforce the

notice requirement. These remedies include: injunctive relief to

prevent you from raising the tenant\'s portion of the rent for \[if

owner has previously provided one year notice to tenants, insert

the following here: one year beyond the expiration of the Section

8 HAP contract\] \[If owner has not previously provided one year

notice to tenants, insert the following here: up to 180 days

beyond the expiration of the Section 8 HAP contract\] after notice

is actually given to HUD and the tenants; and/or the initiation

of administrative sanctions against you.

If your have any questions about this matter, you should

contact \[Asset Manager, phone number of local office\] at the

earliest opportunity.

Sincerely,

\[name\]

\[title\]

ATTACHMENT 1(b)

(for projects not meeting HQS)

\[date\]

Dear \[Owner\]:

As a project owner participating in the Section 8 Program,

you are required under Section 8(c)(9) of the U.S. Housing Act of

1937 (42 U.S.C. Sec. 1437f ) to provide, at minimum, not less than

180 days notice to the U.S. Department of Housing and Urban

Development (HUD or Department) and the affected tenants about

the termination or expiration of your project-based Section 8

contract. Specifically, Section 8(c)(9), as amended, says:

\"Not less than 180 days prior to terminating any contract

under which assistance payments are received under \[Section

81 . . . an owner shall provide written notice to the

Secretary and the tenants involved of the proposed

termination . . . . The term \'termination\' means the

expiration of the assistance contract or an owner\'s refusal

to renew the assistance contract . . . .\"

Some owners incorrectly assume that the reinstatement of the

right to prepay the HUD-insured, HUD-held or State-assisted

mortgage under the Low-Income Housing Preservation and Resident

Homeownership Act of 1990, as amended, supersedes their

obligations under the Section 8 HAP contract. This is an

incorrect assumption. Prepayment of the mortgage removes an

owner\'s obligations under the regulatory agreement. Prepayment

of the mortgage does not relieve the owner\'s responsibilities to

HUD and the tenants under the Section 8 HAP contract and the U.S.

Housing Act of 1937. An owner\'s obligations under a regulatory

agreement and responsibilities under a Section 8 HAP contract are

separate obligations.

However, HUD is not permitted to enter into Section 8

contracts or projects that do not meet minimum decent, safe, and

sanitary standards. As our letter to you on

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \[date of letter\]
states, inspection of on

your units on \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \[date of
inspection\], by

\[inspecting entity\] show the units do not meet\'s HUD\'s decent,

safe, and sanitary standards. Therefore, the eligible tenants in

your project will be given tenant-based section 8 assistance

which they may use to find suitable housing elsewhere. However,

since you have failed to give the mandatory 180 days notice,

you must permit the residents currently assisted by the section 8

project-based contract to remain in their units until the

Department can process their section 8 certificates or vouchers.

During this time period, which we anticipate will take 90 days,

you are not permitted to increase the portion of the rent these

residents are paying under the expiring contract.

If you do not follow these instructions, HUD may seek

appropriate remedies to enforce the notice requirement. These

remedies include: injunctive relief to prevent you from raising

the tenant\'s portion of the rent for \[if owner has previously

provided one year notice to tenants, insert the following here:

one year beyond the expiration of the Section 8 HAP contract\] \[If

owner has not previously provided one year notice to tenants,

insert the following here: up to 180 days beyond the expiration

of the Section 8 HAP contract\] after notice is actually given to

HUD and the tenants; and/or the initiation of administrative

sanctions against you.

If you have any questions about this matter, you should

contact \[Asset Manager, phone number of local office\] at the

earliest opportunity.

Sincerely,

\[name\]

\[title\]

ATTACHMENT 2

SAMPLE NOTIFICATION LETTER TO TENANTS

Dear Resident:

As participants in HUD\'s Section 8 program, we are required

to provide you with no less than 180 days written notice prior to

the termination or expiration of \[name of project\] Section 8 HAP

contract. The Section 8 contract that pays the government\'s

share of your apartment rent expires on \[date at least one

hundred and eighty days from now\]. This is to notify you that:

\_\_\_\_\_\_ we do not intend to renew the contract when it expires.

\_\_\_\_\_\_ it is our intention to renew the contract. However, if

HUD does not offer us a new contract or if we decide not to renew

our project-based contract at the end of this extension, it is

our understanding that HUD will provide rental certificates or

vouchers to all eligible residents. This tenant-based subsidy

will let you choose the place you wish to rent. It is also

possible that we may agree with HUD to a renewal of the contract

and the termination would be avoided.

If you receive a certificate or voucher, you nay use it to rent

another apartment or house, or:

\_\_\_\_\_\_ you will be allowed to use a voucher to continue living

here, or,

\_\_\_\_\_\_ you will be allowed to use a certificate to continue

living here, provided that the rent we charge falls within

the fair market rents established for this area, or,

\_\_\_\_\_\_ we do not plan to accept certificates or vouchers.

You will receive a 90 day notice of any rent increase that

occurs because the contract expires, \[for owners who will accept

the certificates or vouchers, include the following sentence:

\"remember, that any new Section 8 assistance you receive will

help pay the increase\"\].

For the last two years, Congress has provided money to renew

expiring Section 8 contracts for one year at a time. When that

one year term expires, Congress, HUD and the owner will have to

determine whether or not the contract will be renewed for another

year.

If you have any questions, please call (local HUD office\] at

(office phone number\]. You may also call \[local group offering

preservation assistance\] at \[phone number\].

Sincerely,