In a recent webinar, the Nixon Peabody Affordable Housing team discussed updates on HUD programs and policies. The session covered topics ranging from public housing repositioning to new physical inspection standards.
Watch the Nixon Peabody Affordable Housing Update
Public Housing Repositioning and RAD Updates
Kathie Soroka provided an in-depth update on the Rental Assistance Demonstration (RAD) program and public housing repositioning. Key points included:
- RAD Supplemental Notice: A new supplemental notice is expected to address a number of issues, including rent adjustments increasing rents for early adopters of the RAD program, updates to the RAD/Section 18 Blends, which may allow up to 90% of units to be set at higher Project-Based Voucher (PBV) rent limits, combining RAD and Section 18 units into one RAD HAP contract, and allowing Section 18 units in RAD/Section 18 blends to convert to PBRA.
- Future Rent Adjustments: RAD rents for new public housing conversions are expected to decrease in 2025 due to changes in funding levels.
- RAD for PRAC Rent Boost: The RAD for PRAC program has made a rent boost of up to $250/unit available for projects with significant construction costs that also address climate resiliency and/or the ability of elderly residents to age in place.
NSPIRE: New Physical Inspection Standards
Kelly Behr discussed the implementation of the National Standards for Physical Inspection of Real Estate (NSPIRE), which aims to enhance the health and safety of residents. Key aspects of the NSPIRE inspection program include:
- Focus on Health and Safety: NSPIRE prioritizes functional defects over appearance, with a greater emphasis on areas directly impacting residents. It also streamlines the physical inspection standards and processing across all HUD programs.
- Scoring and Appeals: The new scoring system categorizes defects as life-threatening, severe, moderate, or low, with corresponding response times. Owners can appeal scores through a technical review process in the online portal.
- Implementation Challenges: The transition to NSPIRE has faced technical issues and administrative burdens for all participants, but HUD is working to address these through ongoing training and system improvements.
Budget-Based Rent Adjustments for Mark-to-Market Properties
Nate Cushman provided updates on budget-based rent adjustments for Section 8 Mark-to-Market properties. Highlights included:
- Legislative Background: The authority for budget-based rent adjustments, established in December 2022, allows for rent increases up to comparable market rents.
- Application Process: HUD has defined priority groups (Groups A, B, and C) for applications. Group A is currently active; the others are not. The process for Group A involves initial and final submissions, with a significant waitlist for invitations to submit a final application.
- Funding Challenges: Limited funding has slowed the implementation of rent adjustments, with only $12 million identified so far to support 29 properties.
HUD CNA Tool and HEROS System
Deborah VanAmerongen discussed the HUD Capital Needs Assessment (CNA) e-tool and the HEROS system for environmental reviews:
- CNA Tool: Used for FHA, RAD, Section 18, and other HUD programs, the CNA tool ensures all property needs are addressed. It's crucial to select providers familiar with the tool to avoid the need to reformat your CNA.
- HEROS System: This online portal is used to submit the environmental reviews required for various HUD programs. Early identification of floodplains and other environmental concerns is essential to avoid project delays.
Floodplain Issues and New Standards
Karla Chaffee highlighted the new federal flood risk management standard, which expands the floodplain of concern to the 500-year floodplain:
- New Mapping Tools: The Climate Informed Science Approach (CISA) provides forward-looking evaluations of flood risks, accessible via floodstandard.climate.gov.
- Elevation and Floodproofing Requirements: Projects in the expanded floodplain must meet new elevation and floodproofing standards, posing challenges for existing structures.
- Alternative Compliance: HUD offers a discretionary process for projects where compliance with new standards is infeasible, but early engagement with HUD is critical.
Conclusion
The Nixon Peabody Affordable Housing update provided valuable insights into the evolving landscape of affordable housing. From RAD program adjustments to new physical inspection standards and environmental review processes, stakeholders must stay informed and proactive to navigate these changes effectively. Early planning and engagement are essential to ensure compliance and optimize project outcomes.