U.S. Department of Housing and Urban Development

Public and Indian Housing

Special Attention of: Notice PIH 97-46 (HA)

HAs with Section 8 Moderate

Rehabilitation, Tenant Based Issued: September 4, 1997

Certificate and Project Based

Certificate Programs; Secretary\'s Expires: September 30, 1998

Representatives; State and Area

Directors Office of Public Housing;

State Directors Office of Native Cross References:

American Programs

Subject: Replacing Expiring Section 8 Moderate Rehabilitation

(Mod Rehab) Housing Assistance Payments (HAP) Contracts

in Fiscal Year (FY) 1998

PURPOSE: This Notice provides instructions to Public Housing

Agencies and Indian Housing Authorities (HAs) for replacing

expiring Section 8 Mod Rehab HAP contracts in FY \'98. Expiring

Mod Rehab HAP contracts generally will be replaced with

tenant-based rental certificates in FY \'98.

BACKGROUND: During FY \'97, Section 211(b) of the Department of

Veterans Affairs and Housing and Urban Development and

Independent Agencies Appropriations Act, 1997 (FY \'97

Appropriations Act) requires that upon the request of an owner of

a multifamily housing project that is covered by an expiring

project-based HAP contract, the Secretary shall renew the

expiring contract as project-based assistance for a period of not

more than 1 year. (See PIH Notice 96-95 and PIH Notice 97-19 for

additional information). Section 211 (b) of the FY \'97

Appropriations Act expires September 30, 1997 and does not apply

to Mod Rehab HAP contracts expiring in FY \'98. If the FY \'98

Appropriations Act provides that HUD must renew Mod Rehab

contracts expiring during FY \'98, HUD will issue immediate

instructions for renewing expiring Mod Rehab contracts.

APPLICABILITY: This Notice applies to all units under a Section

8 Mod Rehab HAP contract expiring between October 1, 1997 and

September 30, 1998 including Mod Rehab contracts that were

extended in FY \'97.

EFFECTIVE DATE: This Notice is effective upon receipt.

TENANT-BASED RENTAL CERTIFICATE ASSISTANCE: HUD will provide HAs

with tenant-based assistance, on a one-for-one basis, for all

units under a Mod Rehab HAP contract at the time the HAP contract

expires, this includes Mod Rehab units converted

PH: Distribution: W-3-1

to rental certificates during the term of the Mod Rehab HAP

contract. Assisted families residing in a Mod Rehab unit covered

by an expiring Mod Rehab HAP contract must be provided with a

rental certificate at least 60 days prior to expiration of the

Mod Rehab HAP contract. The HA must also notify owners 60 days

prior to HAP contract expiration that assisted families will be

issued certificates and that families may either locate an

eligible unit of their choice on the private rental market or

remain in their current Mod Rehab unit if the owner agrees to

rent the unit to the family under the rental certificate program.

If the family chooses to use its rental certificate at the

current Mod Rehab unit, and the owner agrees to rent the unit to

the family under the rental certificate program, the unit must

meet all requirements of the Section 8 rental certificate program

before an HA may grant lease approval and execute a rental

certificate HAP contract on the unit (see 24 CFR Sect. 982.304). If

the former Mod Rehab family is no longer eligible for rental

assistance, the rental certificate must be provided to the next

eligible family on the HA\'s waiting list.

RENTAL VOUCHERS: HAs that have a documented reason for replacing

Mod Rehab units with Section 8 rental vouchers instead of

certificates must request approval, in writing, from HUD

Headquarters, Finance Division, 451 Seventh Street, SW

Washington, DC 20410, Attention: Mary Conway. All requests must

include justification for rental vouchers to replace expiring Mod

Rehab HAP contracts instead of Section 8 rental certificates.

EFFECTIVE DATE OF REPLACEMENT RENTAL CERTIFICATES: The effective

date of the replacement certificate and replacement funding

increment is the first day of the month in which the term of the

Mod Rehab HAP contract expires (e.g. if the Mod Rehab HAP

contract expiration date is 10/15/97, the effective date of the

replacement certificate and replacement funding increment will be

10/1/97). If the expiration date is the last day of a month, the

effective date for the replacement rental certificate and funding

increment will be the first day of the following month (e.g. if

the Mod Rehab HAP contract expiration date is 10/31/97, the

effective date of the replacement certificate and replacement

funding increment will be 11/1/97).

STATUTORY OWNER NOTIFICATION REQUIREMENTS: Section 8(c)(9) of

the United States Housing Act of 1937 required Section 8 Mod

Rehab owners to provide written notice to HUD and each family not

less than one year before the expiration of the HAP contract.

The 1990 Emergency Supplemental Appropriations Act (P.L. 105-18,

111 Stat. 158) amended section 8(c)(9) to shorten the one year

notice requirement to 180 days. Under 8(c)(9), the owner must

send a copy of the notice to the appropriate HA. This notice is

required to inform the project\'s residents of the impending HAP

contract expiration.

If the owner has failed to provide the proper notice under

Section 8(c)(9), the tenant is protected as if there were an

assisted tenancy until such time as the owner provides the

notice. If the owner has failed to provide the proper notice and

the tenant continues to occupy the unit in an unassisted tenancy,

the owner must not increase the tenant\'s rent above the level of

the tenant payment (i.e. tenant rent) under the expiring HAP

contract.

The owner is not entitled to any Section 8 rental assistance

payments. Also during this time, the owner cannot terminate the

tenancy of the family other than for serious or repeated

violation of the lease, violation of applicable federal, state,

or local laws, or for other good cause.

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Kevin Emanuel Marchman, Acting

Assistant Secretary for Public and

Indian Housing