The Nixon Peabody team discusses recent developments in the affordable housing industry. The conversation includes a legislative update, news on HUD’s RAD, Section 8, Section 202, and Section 811 programs, and green and resiliency funding options for HUD-assisted multifamily properties.
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Navigating federal budget uncertainty
Congress has been relying on short-term funding measures, known as continuing resolutions, to keep the government running. There is no proposed long-term budget solution as Congress enters its holiday 2023 recess. HUD is funded through January 19, 2024; a government shutdown in January 2024 could affect HUD's operations and funding.
In the current Senate bill, Section 8 did receive monies targeted to budget-based rent increases for the mark-to-market portfolio. We are optimistic about the funding level adjustments and legislative changes proposed for HUD programs such as Section 8.
New options and flexibilities for the RAD program
The Rental Assistance Demonstration (RAD) program allows public housing authorities and owners of HUD-assisted properties to convert their subsidies to long-term Section 8 contracts and access private financing for rehabilitation and preservation. HUD has made recent changes to the RAD notice, introducing new options and flexibilities for different types of properties and transactions, such as Section 202 properties with project rental assistance contracts, public housing properties blending RAD with Section 18 disposition, and properties seeking to improve their energy efficiency and climate resiliency.
Implementing NSPIRE inspections
HUD has rolled out a new physical inspection protocol for multifamily properties called the National Standards for the Physical Inspection of Real Estate (NSPIRE). The NSPIRE program focuses on health, safety, and functionality over appearance. Many aspects of the NSPIRE protocol vary from the existing system, including a new rating system and new response times for certain deficiencies. Owners and managers are advised to be proactive in understanding the new protocol and prepared for potential technical difficulties during inspections.
Green resiliency funds for HUD-assisted multifamily properties
Owners of HUD-assisted multifamily properties looking to make retrofits that improve energy efficiency, climate resiliency, safety, and resident health should consider the Green and Resilient Retrofit Program (GRRP). GRRP applicants should be aware of the lead times before applying to a GRRP funding cohort. GRRP funds can be distributed as grants or loans.
Service Coordinator Grant
The Service Coordinator Grant program funds social service staff or contractors to support elderly or disabled residents in certain HUD multifamily housing projects. Service Coordinator grants must be maintained yearly and assigned to new owners if a project is transferred. Consult the annual renewal guidance, the Multifamily Housing Service Coordinator Grants website, or your grant specialist for more information.
Section 202 and 811 Notices of Funding Opportunities (NOFOs)
The Section 202 and Section 811 programs provide capital advances and rental assistance for supportive housing for the elderly and persons with disabilities. HUD has made recent awards under the Section 202 program, totaling $160 million across 25 projects. Given the strong demand and support for the program, we expect continued funding for new Section 202 units in the next HUD budget.
There are a number of recently published and to-be-published HUD Notices applicable to Section 202 projects that seek to remedy challenges for these projects, such as the conversion of annual PRAC renewals to five-year funding terms, new guidance on supportive services and resident service plans, and the possibility of converting 202 Assisted Living Conversion Program (ALCP) units into service-enriched housing units.
The Section 811 Disabled Housing Capital Advance NOFO makes available $106 million of funding to build or rehab new 811 Capital Advance Units, which will also be assisted with project rental assistance contracts (PRACs). Nonprofit developers of affordable housing are encouraged to apply to the Section 811 Capital Advance program by February 14, 2024. HUD also published the Section 811 Project Rental Assistance (PRA) NOFO, which will fund State Housing Finance agencies and other awardees, providing 20-year rental assistance contracts for integrated housing for persons with disabilities.