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From: Catherine Bishop
email: mailto:cbishop@nhlp.org
link: http://
date: 7/21/0 03:09
Date: 12/21/00
Time: 12:09:21 PM
Remote Name: 207.251.188.199
PLEASE POST COMMENTS TO THE PHA PROPOSED RULE OPERATING SUBSIDY
COMMENTS DUE AUGUST 9, 2000
PLEASE VOLUNTEER TO HELP IF YOU CAN.
Allocation of Operating Subsides Under the Operating Fund Formula: Proposed Rule 65 Fed. Reg. 42488 (July 10, 2000)
Below is an outline of some of the key issues raised by the operating subsidy rule. You may do several things with this outline.
A. Refine the arguments and make comments on your own. If you do that could you let others know what you are planning to do?
B. Refine the arguments and submit comments as a group on behalf of LALSHAC
C. If comments are to be submitted on behalf of LALSHAC, we need volunteers to do particular sections and to coordinate the comments.
D. PLEASE VOLUNTEER TO HELP IF YOU CAN.
E. Let me know if you will volunteer to assist with comments.
F. Without volunteers NO comments will be submitted by LALSHAC
Issues presented by the proposed rule.
1. Funding for resident participation activities–(1) Funding amount: Section 990.108. This section provides for $25 per occupied unit per year for resident participation activities. We support the policy of setting aside funds from the operating subsidy account for resident participation.
It should be clear that these funds are available directly to the tenant organization it appears that the problem is that HUD has required PHAs to budget money for resident participation/LTO's, but no separate set-aside or other funds for RAB's. This could then create a dynamic that in order to do good RAB work, PHAs rob from LTO monies. There's also no $ for Section 8 resident participation or Section 8 RAB work (but of course that's the Section 8 operating fund rule). Best idea would be for HUD to make clear that PHAs can budget for both, and the RAB money will be separate & not affect the LTO resident participation set-aside.
We should also urge that the rule provide that it is the LTO that has control over the funds and therefore are the entity which decides how the funds are spent.
What about the issue of where the money is held? Is there a uniform position on that? Will problems result, if the funds are turned over to all tenant organizations? How can these problems be minimized without sacrificing tenants self determination?
Should we object because this provision not subject to the definition of "unit months available," which includes a unit that is vacant for up to 12 months or is the $25 per occupied unit OK?
2. Funding for resident participation activities–(2) Use of vacant rental units: Section 990.108. This section provides that rental units used for resident participation activities are eligible for operation subsidies provided that a) there is not another safe and suitable unit readily available, b) there is only one site per development and c) the unit(s) are the minimum necessary to support the resident participation activities. One or more contiguous units may be used for the resident participation.
We strongly support the policy of providing operating subsidies for such units. It is important that PHAs support resident participation. Providing tenants with a space to conduct their organization affaires will enhance the ability of residents to participate in all aspects that affect their homes including the planning requirements now imposed upon PHAs, tenant organizations, tenants and RABs.
We also support providing operating subsidies for dwelling units that are used for non-dwelling uses to promote economic self-sufficiency and anti-drug activities. Providing operating subsidies for units that are being used for these purposes is specifically limited to uses that are directed towards and for the benefit of residents.
3. Projected operating income level; Section 990.109. PHAs will be able to retain 50 percent of any increases in dwelling rental income. This retention provision should be subject to a PHAs certification that they have fully implemented the earned income disregard. The certification must include a copy of the PHAs policy and the rent recertification forms used by the PHA that implement the EID. If the regulation does not include a reference to full implementation of the EID, there will be a perverse incentive for PHAs not to implement the EID so that they may retain 50 percent of the increased income.
4. Ceiling Rents: QHWRA provided that PHAs may use ceiling rents to attract and keep public housing tenants who are employed. During the year transition period before the implementation of the negotiated rule making, PHAs could set ceiling rents at 75 percent of operating cost and the difference between the ceiling rent and the cost was made up through operating subsidies. QHWRA § 519 (d). The admission and occupancy regulations, provide that a PHA may use ceiling rent in addition to flat rents for the next three years. § 960.253(d). 65 FR 16727 (March 29, 2000). In high rent jurisdictions, ceiling rents are lower than flat rents because the flat rent "is based upon the market rent charged for comparable units in the rental market." Id. at 960.253(b).
The proposed regulations are deficient because they do not determine how ceiling rents will be handled in the future. Will the difference between ceiling rents and the cost of the unit be off set by operating subsidies? If PHAs are authorized to use ceiling rents for the next three years, any short fall should be covered by the operating subsidies. If operating subsidies do not cover the short fall, PHAs will be subject to immense pressure to do away with ceiling rents. This pressure will be even more substantial because PHAs may now retain 50 percent of all increase in rents. Thus PHAs will be pressured to eliminate ceiling rents because not all the short fall is covered and because if they switch to flat rents and thus increase rental income, they will be able to retain 50 percent of the increase. [I am uncertain of this analysis, what do others think?]
5. Operating Subsidies for Vacant Units: Section 990.102 (definitions) PHA may receive operating subsidies for units that are available for occupancy. The term "Unit months available," includes units vacant for up to12 months. A unit is considered a long term vacancy if the vacancy last or than 12 months and the unit is not undergoing modernization (also expressly defined) or is vacant for reasons beyond PHA control (also expressly defined) and PHA determines that it will have a vacancy rate of more than 3 percent. This definition which allows the payment of operating subsidies for units vacant for up to one year, does not encourage a PHA to reduce vacancies or to reduce the time that it takes to re-rent a unit. The length of time that a unit may remain vacant and still receive operating subsidy payments should be substantially reduced to _____ months. [Note that units that are considered "long term vacancies" an continue to receive operating subsidies calculated at 20% of the PHA allowable expense level (AEL). See 990.109(b)(6)(iv)(A).
[Query is the 12 months needed because that is how long it takes to get a unit included in a HUD-Approved modernization budget? Even if the answer is yes, should we argue that there a units that do not need mod and PHAs should have financial incentives to rent up those units quickly.]
6. Moving to Work: Section 990.104(d) The proposed regulation leaves the funding of MTW programs to the Agreement. [What is the effect of this and is this satisfactory to those of you in MTW jurisdictions?]
7. Phase-down of subsidy for units approved for demolition: Section 990.114. [what should be said here?]
8. Computation of Utilities expense level: Section 990.107(a). A PHA utility expense level is determined by multiplying the Allowable Utilities Consumption Level (AUCL) times per unit per month. The concept of "unit months available" is not applicable here. Perhaps it should be applicable. Why pay utilities on a unit that is vacant for more than 12 months? There are arguments that the building is master metered, some utilities are required regardless of occupancy, but eliminating the utility payment for such units may be a way to create the disincentive to maintain vacancies of up to one year.
9. The proposed regulations omitted reference as to how a FSS coordinator cost will be added on to the operating subsidies and how to deal with the escrow payments that FSS families pay so as to determine income levels. [See Barbara Sard for more information on these two points]
10. The proposed rule is in conflict with the statute with respect to the treatment of increased in rent caused by new admitees as contrasted with existing tenants. See § 519 QHWRA, 42 U.S.C. § 1437g(e)(2)(B) Incentive to increase certain rental income, which states that the operating subsidy formula shall include an incentive to encourage increases in earned income by families in occupancy. If the PHA may retain increases in income from newly admitted families, it will have an inappropriate financial incentive to seek out the highest income applicants.