**Special Attention of Notice** PIH 2008-03 (HA)

Public Housing Agencies

Public Housing Hub Office Directors Issued: January 16, 2008

Public Housing Program Center Directors

Regional Directors Expires: January 31, 2009

Field Office Directors
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Resident Management Corporations Cross Reference: Notice PIH 2007-7 (HA)

# 

**SUBJECT:** **Guidance on Appeals under 24 CFR part 990, Subpart G, for
Calendar Year**

**2008**

1.  **[Purpose]{.underline}**

This notice provides processing instructions to public housing agencies
(PHAs) and field offices for certain appeal requests pursuant to 24 CFR
part 990, The Public Housing Operating Fund Program, for Calendar Year
(CY) 2008. Subpart G of the rule contains specific grounds for the
appeal of subsidy amounts along with requirements applicable to each
appeal type.

2.  **[Types of Appeals]{.underline}**

Section 990.245 of the rule establishes five types of appeals:

-   **Streamlined appeal.** This appeal requires the PHA to demonstrate
    that there is a blatant and objective flaw in the application of a
    specific operating fund formula component. An example would be the
    application of an incorrect geographic coefficient because the PHA
    is shown as being in Springfield, IL, when in fact the PHA is
    located in Springfield, MA.

-   **Appeal of formula income for economic hardship.** A PHA may appeal
    to have its formula income adjusted from the level frozen in 2004
    (in accordance with § 990.195(c) of the rule) in order to reflect a
    severe local economic hardship that is impacting the PHA's ability
    to maintain rental and other revenue. An example of an appeal of
    formula income for economic hardship would be the closure of a major
    local employer that has affected tenant incomes and, therefore,
    tenant contributions to rent.

-   **Appeal for specific local conditions.** An appeal for specific
    local conditions requires the PHA to demonstrate that the
    model-generated project expense levels (PELs) fail to reflect local
    conditions. To be eligible for a change in subsidy for an appeal for
    specific local conditions, the PHA must demonstrate a variance of
    ten percent or greater in its PEL. For this type of an appeal, the
    PHA must show verifiable proof through the use of an independent
    assessor that the formula generated PEL is not accurate for that
    market, based on expenses at comparable properties where the PHA is
    located.

-   **Appeal for changing market conditions.** A PHA may appeal to
    receive operating subsidy for vacant units due to changing market
    conditions after the PHA has taken aggressive marketing and outreach
    measures to rent these units. The vacancies cannot be the result of
    action or inaction by PHA management. For example, a PHA that is
    located in an area experiencing rapid population loss or economic
    dislocation may face a decrease in demand for its units, even after
    the PHA has taken aggressive marketing and outreach measures.

-   **Appeal to substitute actual project cost data.** A PHA may appeal
    to HUD to change its PEL when it can produce project cost data,
    derived from actual asset management as outlined in subpart H of the
    rule, for a period of at least two years. In this instance, the PHA
    must also submit a cost assessment conducted by an independent
    assessor.

3.  **[Processing Requirements for CY 2008]{.underline}**

> In accordance with PIH Notice 2007-21, issued July 23, 2007, appeals
> for **formula income** and **changing market conditions** are handled
> through the PHA's normal request for operating subsidy (form
> HUD-52723, Operating Fund Calculation of Operating Subsidy).
>
> Streamlined, specific local conditions, and substitute actual project
> cost data appeals should be submitted to: U.S. Department of Housing
> and Urban Development, Office of Public and Indian Housing, Real
> Estate Assessment Center, Financial Management Division, 550 12^th^
> St., SW, Washington, D.C., 20410. Contact person: Andrea Williamson
> (telephone 202-475-8607). Appeals covering these three categories must
> be postmarked by April 30, 2008. A second copy of the appeal should
> also be submitted to the PHA's field office. The cover memo should
> reflect that a copy of the appeal was transmitted to the Public
> Housing Director at the PHA's local field office.
>
> For specific local conditions and actual project cost data appeals
> (see Item 2), HUD will engage the services of a second professional
> assessor familiar with property management practices and costs in the
> region or state in which the appealing PHA is located to review the
> assessment submitted by the PHA and make a recommendation to HUD. This
> professional's review and recommendation(s) on the appeal will then be
> forwarded to the Assistant Secretary for Public and Indian Housing (or
> designee) for final determination.
>
> For CY 2008, it is expected that HUD will issue final appeal decisions
> by August 1, 2008. If an appeal is granted, HUD will adjust the PHA's
> subsidy by the appropriate amount retroactive to the beginning of the
> year.

4.  **[Special Requirements for Appeals]{.underline}**

    -   **Entire portfolio.** As provided in § 990.240 of the rule, all
        appeals are voluntary and must cover the PHA's entire portfolio,
        not single projects. As a result, the appeal must be the result
        of something that affects the entire portfolio, not an event
        that is particular to a single project or set of projects.
        Therefore, an appeal that addresses single projects and not the
        portfolio in its entirety is subject to immediate denial. As an
        exception to an appeal covering a PHA's entire portfolio, the
        Assistant Secretary for Public and Indian Housing (or designee)
        has the discretion to accept appeals for less than an entire
        portfolio for PHAs with greater than 5,000 public housing units.

-   **Independent assessments.** For appeals citing specific local
    conditions and appeals to substitute actual project cost data, the
    PHA is required to acquire, at its own expense, an independent cost
    assessment of its projects. The assessor must have appropriate
    knowledge of multifamily operating costs in the local market. The
    assessor must complete an individual cost assessment on each public
    housing project. PHAs with more than 5,000 units may request to the
    Assistant Secretary for Public and Indian Housing that assessments
    be performed on less than the entire portfolio.

# [Information to be Included with the Appeal]{.underline} 

# 

# Streamlined appeal. The PHA should describe the reason for the streamlined appeal and include all supporting documentation.

# Appeal for specific local conditions. The PHA must submit an independent assessment from an assessor procured by the PHA as described in Item 4, above, for each project. Special attention should be focused upon:

> *[Comparable Data]{.underline}*: It is the responsibility of the PHA
> to ensure that data cited within the appeal is verifiable by the
> Department. Data should clearly identify the source and specify where
> it can be found. Comparative data should be itemized and include the
> following: locality, occupancy type, building type, and project
> expense levels. (For reference, page 4-7 of the Public and Indian
> Housing *PIC Development Submodule User Manual* lists definitions of
> building types).
>
> *[Adjustments]{.underline}*: When adjustments are made to the
> comparative data, the PHA should clearly explain the nature of the
> adjustment, the reason for the adjustment, and the method utilized,
> citing source documents where applicable.
>
> *[Reporting]{.underline}*: Each submission must describe the entire
> PHA's portfolio in the form of a table. The table should include the
> following for each individual project: (1) the number of units; (2)
> occupancy type; (3) building type; (4) current PEL; and (5) the
> appellant suggested PEL. The table should then also present the
> appellant's unit-weighted average PEL for the entire public housing
> portfolio as compared with the unit-weighted average PEL assigned by
> HUD.

-   **Appeal to substitute actual project cost data.** In addition to
    the requirements listed above for appeals for specific local
    conditions, the PHA must: (1) provide two years of actual cost data
    and show that those costs are not greater than expenses at
    comparable properties in their local market; and (2) provide
    documentation certifying that the PHA has completed transition to
    asset management per § 990.290.

**[Paperwork Reduction]{.underline}**

> The information collection requirements contained in this notice have
> been approved by the Office of Management and Budget (OMB) under the
> Paperwork Reduction Act of 1995 (44 U.S.C. 3520) and assigned OMB
> approval number 2577-0246. In accordance with the Paperwork Reduction
> Act, HUD may not conduct or sponsor, and a person is not required to
> respond to, a collection of information unless the collection displays
> a currently valid OMB control number.

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> Paula O. Blunt
>
> General Deputy Assistant Secretary for Office of
>
> Public and Indian Housing