June 2002 Newsletter

Copyright 2002 Ansel Publications. All rights reserved.

Eviction Allowed, But Use Common Sense
After the U.S. Supreme Court upheld HUD's "one-strike" eviction policy, the department quickly issued guidance for compliance, but urged other options before resident termination.  PIH Notice 2002-9 published April 1 explains the authority of public housing agencies to terminate a household's lease for one drug violation by a tenant or visitor regardless of whether the leaseholder knew of the offense and whether the crime was committed on or off the premises. The original rule was stated in HUD's regulation 24 CFR 966.4, and challenged in a case that was resolved by the U.S. Supreme Court in March.  In a letter to public housing agency directors, HUD Secretary Mel Martinez said "Eviction should be the last option explored" and "applying it rigidly could generate more harm than good." Compassion and common sense should be considered when deciding to evict and the effect on the family is important, Martinez wrote.

Funding Needed to Combat Discrimination Increase
Discrimination against people with disabilities, families with children and African-Americans increased last year, despite a wide-spread public relations campaign by HUD and increased penalties for noncompliance.  A lack of funding for enforcement and outreach programs has led to the increase, according to the a "Fair Housing Trends Report" published by the National Fair Housing Alliance. Of the estimated 23,557 complaints to fair housing agencies last year, 71 percent were racial discrimination at 32 percent; discrimination against disabled persons cited at 24 percent, and discrimination because of family status at 15 percent. The remaining complaints concerned national origin, sex, religion, color or other. The results also estimated that only one percent of people who experience discrimination do not report it. The report claims that up to two million people experience housing discrimination annually.  

Thirty-four years after Congress passed the Fair Housing Act, a lack of funding for education/outreach programs and enforcement are the main reasons for the growth of discrimination. The Fair Housing Initiatives Program, HUD's the main funding program for private non-profit fair housing organizations, has remained stagnant at about $20 million for the past few years, but must be increased, according to the report. Strict enforcement of regulations against discrimination in Community Development Block Grant entitlement communities should also be HUD priority.

Neglect Effecting Home Sales Program
Recent attention on new homeownership programs has come at the expense of at least one older HUD program, according to a report by the HUD Inspector General Kenneth M. Donohue Sr.  The Asset Control Program is not achieving its objective of helping to revitalize neighborhoods, partly because of neglect, irregularities in program operations and administration, the IG said in the report, "Nationwide Audit Asset Control Area Program Single Family Housing."  One of the claims put forth by the report says "HUD needs to determine whether it will provide both the financial and administrative resources to make the program a success. If not, the program will be ineffective and neighborhoods will suffer."  

The Asset Control Program assists in the rehabilitation HUD-owned houses along with local non-profits and the homes are then sold to people in need of housing. Started in 1999, only 16 cities nationwide have made use of the program, with 340 houses rehabilitated and moved out of the total HUD inventory 29,000 across the nation. San Bernardino, CA, and Rochester, NY accounted for 328 of the 340 houses rehabilitated and sold.  The program mentioned most frequently in the report concerns the sale of HUD-owned homes, usually houses under foreclosure whose owners had mortgages insured by the FHA.  The IG's report is available online at www.hud.gov/oig/ig220001.pdf

RHS Gets New Chief
The Rural Housing Service has named a banker and college professor as the new head of the agency serving rural housing interests nationwide.  Arthur A. Garcia of  Albuquerque, NM, was the district manager of the New Mexico Educators Federal Credit Union and a part-time college before his appointment as head of RHS, which is administered by the Department of Agriculture.

Copyright 2002 Ansel Publications. All rights reserved.

IRS Bulletin 2002-13 (February 25, 2002)
Population Figures for 2002 Tax Credit & Bond Caps
This notice announces the population figures used in calculating the low-income housing tax credit and tax-exempt private activity bond caps for calendar year 2002.

PIH Notice 2002-8 (March 27, 2002)
2002 Proration Factors & Dwelling Rental Adjustment
This notice provides information to public housing agencies for completion and submission of operation subsidy eligibility requests including information on the federal fiscal year 2002 proration factor, dwelling rental adjustment factor.

PIH 2002-09 (March 29, 2002)
Termination of Tenacy for Criminal Activity
This notice cancels Notice 2001-8 and reconfirms HUD's policy on a public housing agency's right to provide lease terms specifying eviction for drug and criminal activity as upheld by the Supreme Court.

Federal Housing Finance Board 2002-15 (April 17, 2002)
Affordable Housing Program Amendments
This notice amends regulations governing the operation of the Affordable Housing Program including requirements for approval of post-completion project modifications; a new definition for "homeless household;" changes in scoring points for projects using federal and non-federal properties; and re-use of repaid AHP direct subsidies.

RHS Notice 02-10505 (April 29, 2002)
Housing Demonstration Program
This notice announces the availability of $1.5 million in housing funds for fiscal year 2002 for the Rural Housing demonstration Program.

Federal Register FR-4513-N-09 (April 30, 2002)
Credit Watch Termination
This notice announces the cause and effect of termination of Origination Approval Agreements taken by the FHA against HUD-approved mortgagees through the credit watch Termination Initiative.

Bureau of the Census 010209034-2084-04 (May 1, 2002)
Qualifying Urban Areas for Census 2000
This notice announces the list of urbanized areas that qualified based on the results of the 2000 Census of Population and Housing.

HUD Notice 2002-5 (May 13, 2002)
Reinstatement of 96-102
This notice reinstates and extends until May 31, 2002, Notice 96-102, Redesigned Section 202 Supportive Housing for the Elderly and Section 811 Supportive Housing for Persons with Disabilities Programs, Firm Commitment to Final Closing.

HUD Notice 2002-6 (May 17, 2002)
Reinstatement of 99-06
This notice reinstates and extends until May 31, 2002, Notice 99-06, Prepayment of Direct Loans on Section 202 and 202/8 Projects with Inclusion of FHA mortgage Insurance Guidelines.

HUD Notice 2002-7 (May 17, 2002)
Reinstatement of 95-7
This notice reinstates and extends until May 31, 2002, Notice 95-7, Summary of HUD Policies on Multifamily Housing Bond Refinancing Transactions, and also announces several changes and clarifications.

RECENT HOUSING ISSUES IN COURT
A Georgia Court of Appeals agreed with a board of tax assessors that the value of tax credits should be considered when valuing a low-income housing project.  A project owner appealed the board's ruling of it's property tax valuation and claimed that the benefits of the tax credits should not increase the value of the property. The court found that the restrictions and tax credit must be considered in determining fair market value of the property and consider any applicable external factors including deed restrictions and zoning. (Pine Pointe Housing v. Lowndes County Board of Tax Assessors)

A live-in caretaker cannot take over the Section 8 project-based unit of a deceased resident, according to a New York Supreme Court ruling.  Since the caretaker was a nontraditional family member and was listed on the lease as a health care worker, the court ruled with HUD policy that project-based subsidies remain with the unit. (Davidson 1992 Associates v. Corbett)

An appeals court ruled that a public housing agency could not evict a resident for allowing her boyfriend to remain in her unit past the 14-day limit required in the lease.
According to the PHA, the boyfriend had caused a drunken disturbance and stolen a stop sign on two separate occasions while living with the resident in violation of the lease agreement. The Maine court found that the resident could not be evicted and the appeals court found that the PHA could not prove that the boyfriend had participated in any criminal activity according to HUD regulations, and the lease violation was not serious enough to warrant eviction. (Housing Authority of Bangor v. Bush)

Copyright 2002 Ansel Publications. All rights reserved.

House Subcommittee Hears From Housing Organizations
A lack of funding for several HUD programs has Congressmen and national housing advocates stepping forward in support during hearings on the House Appropriations Subcommittee on Veterans Affairs, HUD, and Independent Agencies.  Rep. Barney Frank's (D-MA) request for a $15 billion increase in the budget for housing and community development has been hailed by housing organizations as a step in the right direction. The National Association of Home Builders has asked for continued funding for the Rural Housing and Economic Development Program, which was axed by President Bush's budget blueprint. The general opinion of the majority of advocates testifying at the hearings is to restore cuts and increase funding for several HUD programs.  In his testimony before the subcommittee, HUD Secretary Mel Martinez continued his quest to increase homeownership; consolidate and improve homeless programs; use private resources for public housing; and increase rental housing with new vouchers and the reduction of FHA multifamily premiums.  

Subcommittee Chairperson Barbara Mikulski (D-MD) questioned Martinez on the handling of troubled PHAs and the lack of funding for Shelter Plus Care renewals and its effect on new production. Martinez said he found it "distressing" that some areas expected a certain amount of fraud in public housing, and he assured the subcommittee that Section 202 renewals would be included and an increase in renewals would not tax estimated funding or cause a decrease in new Section 202 projects. Martinez said he would provide the subcommittee with a detailed accounting later.  

Mikulski has said that HUD should focus its attention on basic core housing programs and management and oversight issues, along with close scrutiny of the HOPE IV program. At the hearing, she also expressed concern about the president's proposal for the public housing capital improvement initiative. Both Mikulski and Ranking Subcommittee Member Kit Bond (R-MO) claim that the $418 million decrease in the capital fund is inappropriate considering the current $22 billion already lacking in capital needs.  Bond has called HUD's proposal for private financing of capital repairs for public housing units a "turkey" project and expressed concern that public housing with receive private financing would eventually become market-rate units.  

The eventual fade-out of project-based units, an Office of Management and Budget recommendation, also attracted questions for Martinez. Mikulski said problems with voucher utilization showcased the need for more production of affordable housing and Bond claimed the plan would cause a decrease in the stock of affordable housing. Martinez said he would request more funding for public housing if the private financing initiative failed did not pan out.  

Rep. Michael Capuano (D-MA) provided two amendments for increases to housing and community development programs before the bill passed the House Budget Committee. Additional vouchers and the restoration of funds to some programs cut by the administration's budget, including the Public Housing Capital Fund, Shelter Plus Care, Round II Empowerment Zones, and the Rural Housing Program, were the topics of the amendments, which were defeated during voice votes.  Rep. Capuano and several other Congress members could introduce increases when the bill reaches the floor.

Housing Legislation Continues to Appear
New credits for properties near qualified census tracts and an allowance for PHAs to use Section 8 funds for the HOME program were two issues covered by new housing legislation.  The House Ways and Means Committee is looking at H.R. 4194, an amendment to the Internal Revenue Code of 1986 that would increase the low-income housing credit for properties adjacent to qualified census tracts.  Rep. John Lewis (D-GA) introduced the bill last month.  Another bill that would permit public housing agencies (PHA) to transfer unused Section 8 funds for use in the HOME program was introduced by Rep. Carrie Meek (D-FL). With approval from the HUD secretary, Section 8 funds could be used by a HOME participating jurisdiction serving the same area as the PHA or the funds could be used for capital expenditures with 75 percent used for rental assistance, rental housing development and homeownership assistance for extremely low-income families. The bill is currently in the House Financial Services Committee.

New Office Would Encourage PHAs To Energy Efficiency
An recent amendment to an energy bill in the Senate would establish an Office of Energy Management at HUD to oversee financial incentives for public housing agencies to increase the energy efficiency of their buildings.  According to the amendment to S. 517, all new public housing construction would be required to meet current energy codes if the measures were cost effective; a savings of up to 15 percent in energy costs during the year. PHAs would also be encouraged to install more energy-efficient appliances and equipment in units.  Sen. Jon Corzine (D-NJ), who introduced the bill, said that energy costs average 25 to 40 percent in the operating budget of a PHA and the federal government spends $1.4 billion on energy costs for public housing units.

Frozen ITAG Funds Subject of Representatives' Letter Several Congressmen are encouraging HUD Secretary Mel Martinez to designate a point-of-contact official to handle immediate payment of invoices to groups working under contract to HUD in the Intermediary Technical Assistance Grant program.  In a letter to the secretary, Republican representatives Michael Oxley, Patrick Tiberi and Deborah Pryce, asked that ITAG grantees be allowed to resume their work and receive payment for outstanding invoices after work and payments were halted last fall. An alleged Anti-Deficiency Act (ADA) violation in 2001 stopped the work, along with projects in the Outreach and Technical Assistance Grant program. OTAG contractors were paid earlier this year, but ITAG funds, administered by regional intermediaries to facilitate the preservation of federally assisted housing by tenant groups, community-based non-profits, and public agencies, have not be remanded. The letter claims that some ITAG invoices have not been forwarded to HUD for payment and other ITAG grant recipients have not submitted invoices because HUD has not made funds available to the intermediaries.

Copyright 2002 Ansel Publications. All rights reserved.

New Unit Number Changes
The MAT Guide will soon be updated to reflect a change in the "New Unit Number" in field 11 of 201B MAT70.  With the new change, the field will make it easier to determine that a gross rent is being applied to the correct unit. The old field was used to indicate that the household would be transferring to a new unit or that a gross rent change had occurred, with the field showing a series of the numeral "9" if the rent only was affected. The series of "9s" will now return a fatal error F0192 "MAT70 Not Processed. Unit Number May Not Be all 9s."  For gross rent changes, "GR" must be entered, and unit transfers require a "UT" in the Transaction Type, field 4 area. Any other letters or digits in this area will generate a fatal error F0196 "MAT70 Not Processed.  Transaction Type must be UT or GR."

Dead Letter File Gets Incorrect Mail
Messages sent to TRACSMail with incorrect addresses end up in the Dead Letter File instead of getting the correct response, as some users are finding when they don't receive confirmation of their transmission.  Addresses that are mis-spelled or with letters transposed are the most common problems, according to TRACS officials.  Submissions with the sender's email address instead of the TRACSMail address are also a problem. TRACSMail addresses must be set up correctly in the email client profile to work. Instructions for setting up a TRACSMail profile are in the User Manual or can be provided by the software vendor.  The TRACS system periodically lists incorrect addresses contained in the Dead Letter File on their web site to alert users who may not be aware of the reason they are not receiving responses. The TRACs web site is at www.hud.gov/offices/hsg/mfh/trx/trxsum.cfm

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