Public Housing Administrative Reform Initiative

Development and Asset Repositioning II

MEETING MINUTES

(Issued 8/16/07)

**Date: August 14, 2007**

**Attendees:** Caroline Clayton (acting facilitator), Eric Brown
(chair), Maria Marquez, Mac McCreight, Tara O'Neill, Vivian Bryant
(secretary)

**RE:** **August 14, 2007 Conference Call**

**Tentative Dates/Goals:**

-   September 27, 2007: Read-out of group's ideas, suggestions, etc.

-   September 15, 2007: Final report completed and submitted

-   September 13, 2007: Meeting at REAC to work on final report

-   Conference calls each Tuesday at 10:00 AM (Eastern) starting July
    24, 2007

**Action Items:**

-   Review 24 CFR 972 and provide comments/observations/ideas as how to
    improve the process.

-   Minutes from the 8/7/07 call were approved.

-   The Acting Facilitator had to leave the call in the middle of the
    because of a fire alarm that went off at HUD HQ, and another group
    member agreed to take notes.

**Main Discussion Items:**

-   The form of the report and the follow-up steps were discussed. One
    suggestion was made to assign topics to volunteers to take the lead
    in writing up what would go into the report. Members will be
    e-mailed to see interest/willingness to do this as to particular
    topics.

-   The topic of how our the work of our focus group and the parallel
    Development & Asset Repositioning I focus group would be coordinated
    in terms of the final report. We were told last time that each group
    would be compiling its own report, but that we could periodically
    check to see what was on-line from the other group. It was
    recommended that we try to coordinate with the other group in some
    way, possibly through a joint meeting. The Facilitator will follow
    up on this.

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-   **Comments on 24 CFR Part 972 begin on page 2.**

**Next Meeting Scheduled:** Tuesday, August 21, 2007; call number: (866)
209-3385

Conference ID: 10240240

**Discussion of specific comments on 24 CFR Part 972**:

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  Section       Comments

  972.100       "Other affordable housing" could be subject to a variety of
                interpretations. Should instead use the term from the
                statute, i.e., that the housing is comparable in terms of
                rental rate to the original unit. See 1437z-5(d)(2)(ii).

  972.103       The term "project based assistance" is not defined in the
                regulation or the statute, and should be. Could a PHA have
                the option of having the tenant-based assistance be
                Project-Based Vouchers from the inception?

  972.106       There appears to be nothing in the statute that requires an
                annual assessment of mandatory conversions, and this is
                burdensome for PHAs. Perhaps doing this every 3 years, or
                every 5 years?

  972.115       This discusses HOPE VI, but doesn't discuss other types of
                mixed finance development. Does this definition work? Is it
                too broad? Too narrow? Any possibility for streamlining, so
                as to avoid duplicative or burdensome submissions? (It's
                understood that the HOPE VI proposal and the conversion
                proposal will need to be consistent).

  972.121       Probably the term "these" is not meant here, and should
                instead say "those" (since this is referring to different
                regulatory requirements in 24 CFR Part 971).

  972.124       (b)(1) Where did the specific vacancy rate figures come from?
                It may make sense to push back the date to switch from the
                higher vacancy threshold to the lower threshold to match with
                the date of Asset Management implementation (2011 instead of
                2009). Under (b)(2), additional exceptions should be
                included, consistent with the Operating Fund rule: (a)
                vacancies due to litigation; (b) vacancies being addressed
                through scheduled modernization work \[although this may be
                caught already in the lead-in description\]; (c) units being
                held vacant for relocation purposes; and (d) units which are
                vacant due to 504 work (which may or may not be part of
                litigation).

                \--(c)(1): The phrasing here is slightly different than the
                statute, and probably the statutory phrase should be used.
                Statute uses "reasonable modernization expenses" , rather
                than "reasonable revitalization" (and revitalization can be
                subject to a range of interpretations); moreover, the statute
                also says "or other measures", raising the possibility that a
                PHA could demonstrate other ways in which long-term viability
                can be achieved, and that the list here is not exclusive. See
                1437z-5(a)(3)(A).

  972.127       As this is written, it makes it appear that a PHA must show
                all of this. However, that doesn't appear to be what the
                statute says. The factors in (b) and (c) should only be
                relevant if the housing is distressed (measured by costs or
                vacancies), and then only to show that the PHA has a strategy
                to insure viability through density reduction or greater
                income mix. The burden on PHAs should be limited to what the
                statute says.

  970.130(b):   Should cross-reference to 972.112, so that PHAs are reminded
                when compliance with URA is mandated (for demolition) and
                when not (if simply disposition); moreover, if a PHA is
                utilizing other funding which would trigger additional URA or
                relocation, etc. requirements (such as CDBG, HOME, etc.),
                PHAs should be advised of this in the regulation, to avoid
                making costly mistakes.

                Question was asked, how does this differ, if at all, from the
                normal relocation plan? Under (b)(4)(ii), the same issues as
                above for "project-based assistance", and make sure
                "comparable" is defined, as in statute, with reference to the
                rental rate for the original unit; term "affordable housing"
                may create some ambiguity.

                Suggestion was made that the term "suitably sized" be added,
                so that it is clear that the PHA need not replicate exact
                unit sizes if they are not what families require (i.e.,
                existing residents may be over-housed or under-housed).

                Question was also raised if the unit is "comparable" where
                it's tenant-based Section 8, since the tenant may end up
                paying more than 30% of adjusted income; likely answer is
                "yes", because this is a matter of tenant choice as to
                whether to lease up a unit with a higher rent burden. On the
                other hand, the PHA may need to insure that the range of
                units offered give tenants an opportunity to find units where
                they don't have to exceed 30% of income if they don't want
                to. Question best directed to HUD.

  972.133       Question what the term "appropriate public officials" may
                mean.

  972.137       The statute also includes a provision for cessation of
                payments to the PHA, but with an exception if this could
                create a health/safety risk for residents---useful to
                incorporate that here. In addition, the statute includes a
                provision that a PHA may be required to provide additional
                information to HUD or its residents necessary for the
                administration of the program, and it would be helpful to
                include this in the regulation. See 1437z-5(e) and (h)(1).

  972.203       Same issue as above regarding "project-based assistance".
                Moreover, this statute, too, includes comparability measured
                by the rental rate of the original unit. See 1437t(d)(4).

  972.206       Haven't all the required initial assessments been done (it's
                now more than 2 years after QHWRA's effective date)? See
                1437t(b)(2). If so, is this just here for historic
                references?

  972.218       In (a), language can be changed since the cost methodology
                has now been developed (in the Appendix). In (c)(2),
                reference to "certificates" can be removed. In (d), the
                phrase "to tenant-based assistance" should be added between
                "conversion" and "of the public housing development", so as
                to track the statute. See 1437t(b)(1)(B).

  972.230       In (d), significant comments to which the PHA should respond
                may come from residents, but it may come from other sources
                (government officials, others who've commented during the
                public process); phrase should be revised to say "resident or
                other". In (g)(4)(ii), here again, should be made clear that
                the "comparable" is in comparison to the rental rate for the
                original unit, and may also want to add the phrase "suitably
                sized".

  972.236       No consensus on this, but concern raised that the provision
                on approval due to lapse of time could be a problem where a
                conversion plan is flawed but HUD staff may not have caught
                it in time (due to reduced staffing, etc.)---nothing in the
                statute to provide for this, and it could raise major
                resident concerns. On the other hand, everyone agreed that
                there should be a time period for HUD to either act or to
                send back specific concerns/questions, and the 90-day period
                should work.

  Appendix      Question was raised whether the Operating Costs provision
                here is consistent with Asset Management. There should now be
                accurate site-based figures, and so what's in I. A.4(b) may
                no longer make sense. There was concern about who determines
                if the cost data is "reliable", and what "reliable" means, as
                well as how units under scheduled modernization, etc. are
                treated. This whole section should be analyzed in light of
                the new Operating Subsidy rule. It was also noted, in Section
                II., that the statute refers to the cost of Section 8
                assistance being calculated "based on a net present value
                basis and in terms of new budget authority requirements". See
                1437t(b)(1)(A). It's not clear exactly what this means, but
                if this would have some positive effect on how PHAs are
                treated, it should be factored in.
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