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“A Toolkit for Change: From Removal to Redevelopment ” September 15-16, 2008 Chicago, IL. Guidance for PHAs: Required and Voluntary Conversion of Public Housing Units. Introduction. HUD has adopted a property-based focus for managing a PHA’s housing inventory

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a toolkit for change from removal to redevelopment september 15 16 2008 chicago il
“A Toolkit for Change:

From Removal to Redevelopment”

September 15-16, 2008

Chicago, IL

Guidance for PHAs: Required and Voluntary Conversion of Public Housing Units

introduction
Introduction

HUD has adopted a property-based focus for managing a PHA’s housing inventory

This approach helps PHAs identify poor-performing developments

When a non-viable development is identified, what can a PHA do?

options
Options
  • Options include:
    • Modernize/revitalize to stabilize the development
    • Redevelop the development (HOPE VI, bond financing, etc)
    • Demolish the non-viable units
      • Keep the land or dispose of the land
    • Dispose of the development
    • Convert the non-viable units from public housing to vouchers
  • This discussion will focus on the conversion option
required conversion
Required Conversion
  • There are two types of conversions:
  • Required conversions
    • When HUD determines that units are non-viable
    • HUD WILL deprogram these units and the PHA WILL loose subsidy
    • Similar to the previous Section 202 Mandatory Conversion process
    • The PHA can apply separately for vouchers
voluntary conversion
Voluntary Conversion
  • Voluntary conversions
    • When a PHA requests HUD approval to convert units the PHA believes are non-viable
    • Once approved, the PHA can apply separately for vouchers
logistics
Logistics

Q & A session

Materials

Exercises

introduction1
Introduction
  • QHWRA made changes in requirements governing conversion of PH
    • Rules amended 24 CFR 972
  • PHAs are required to annually review inventory and identify distressed developments
conversion what does it mean
Conversion- What Does it Mean?

In this context, conversion means the removal of public housing developments (or portions of developments) from a PHA’s public housing inventory and ACC and the provision of tenant-based or project-based assistance for the residents who lived in those developments. Conversion does not require that the PHA convert the development to any particular future use after conversion.

introduction continued
Introduction- continued
  • PHAs may at any time determine that units are eligible for voluntary conversion
  • Guidance is to summarize
    • Eligible activities
    • Requirements for required or voluntary conversion
    • Outline the rights and responsibilities
hud approval
HUD Approval
  • Required before a PHA may undertake a voluntary or required conversion
  • Approval obtained through Special Application Center (SAC) and/or Office of Public Housing Investments (OPHI)
    • SAC- based in Chicago
  • Must be contained in the Annual Plan
moving to work mtw
Moving to Work (MTW)

Training materials will also highlight “MTW” provisions

May follow slightly different process

Highlighted in text through graphics and text boxes

guide materials
Guide Materials
  • Summarizes eligible activities and requirements
  • Rights and responsibilities
    • Must work with the resident group to inform and consider
  • Intended to assist PHAs in assessing future viability of the public housing stock
  • Planning appropriate actions for use of the stock
assistance of guide to phas
Assistance of Guide to PHAs
  • Identify PH units (developments) that PHA is required to convert
  • Identify PH units (developments) that PHA is not required to convert but may be legally authorized to convert
    • How to conduct and analyze a conversion assessment
  • Compare the cost of continuing to operate PH units to the cost of providing tenant-based assistance
assistance of guide to phas continued
Assistance of Guide to PHAs- continued
  • How to develop and implement a conversion plan
    • How to provide transition of displaced residents
    • How to remove the inventory from PH
  • Compliance with
    • Forms
    • Procedures
    • Submission requirements
    • Timelines
guide materials1
Guide Materials

Guide is not a substitute for the regulations

Additional notices will be issued

history of required and voluntary conversion
History of Required and Voluntary Conversion
  • Section 537 of QHWRA
    • Added new Section 33- Required Conversion
  • Section 533 of QHWRA
    • Amended Section 22 – Voluntary Conversion
  • Separate implementing conversion published September 17, 2003; effective March 15, 2004
  • Appendix to the rule addressing methodology for comparing cost published March 21, 2006; effective April 20, 2006
regulations
Regulations
  • 24 CFR 972
  • Required or voluntary
    • Means the removal of the units from the inventory and the ACC
    • Provisions of tenant-based or project-based assistance for residents of PH being removed
    • Conversion does not necessarily mean the removal of the PH development- demolition
annual review for required voluntary optional
Annual Review for Required/Voluntary Optional

Annual review PH inventory

Identify distressed developments (or parts of developments)

PHA can also determine at any time the option for determining inventory for voluntary conversion

HUD approval is required in both cases

Approval is obtained from Office of Public Housing Investments (OPHI); processing is through SAC

pha plan or mtw plan
PHA Plan or MTW Plan

HUD’s approval of the PHA Plan or MTW Plan does not constitute approval of the “Conversion Program”

Separate approval process for conversion

Provisions to proceed with conversion are contained in the PHA Plan or MTW Plan

required conversion overview
Required Conversion Overview

Phase One:

PHA first determines if they have public housing units that MUST be converted

Phase Two:

If they do, the PHA then MUST develop a Required Conversion Plan and deprogram the units out of the public housing program

determining if units must be converted
Determining if Units Must be Converted

PHAs must identify if they have units that are subject to Required Conversion requirements

If they do, the PHA must determine if the units fail the HUD viability test

If they do, the PHA must determine if it would be less expensive to serve the residents with vouchers

If it is, the PHA MUST convert the units

converting the units
Converting the Units

If the PHA must convert units, the PHA must develop a Required Conversion Plan

The Required Conversion Plan must be included in the PHA’s Annual PHA or MTW Plan

The PHA must also submit a Required Conversion Inventory Removal Application to SAC

Once HUD approves the Application, the PHA can then request Vouchers if they are needed

Once needed Vouchers are available, Conversion can begin

required conversion nuts bolts
Required Conversion Nuts & Bolts

Section 33 of the U.S. Housing Act of 1937 requires PHAs to identify developments that must be removed from their public housing inventory and their ACC

PHAs must annually review eligible units to identify distressed developments

If these properties do not have long-term viability, residents must be converted to tenant-based or project-based assistance

required to develop plan
Required to Develop Plan
  • In instances where either
    • (1) the PHA cannot assure the long-term viability of a distressed development, or
    • (2) it would be more expensive for the PHA to modernize and operate a development as public housing for its remaining useful life than to provide tenant-based assistance to its residents, the PHA must develop and carry out a Required Conversion Plan to remove the development from its public housing inventory.
which properties are subject to a required conversion
Which Properties are Subject to a Required Conversion?
  • Public Housing developments, portions of developments or contiguous developments may be subject if they meet all of the following:
    • Must be a “Cluster” of 250 or more units on the same or on one contiguous site
    • Must be units that are open to “general occupancy” by families
    • Must be units that have had chronically high vacancy rates for each of the last 3 years
      • Has remained above 15% (before March 16, 2009)
      • Has remained above 12% (after March 16, 2009)
      • And, these vacancy rates have not significantly decreased
properties long term viability
Properties Long-Term Viability
  • The Long-Term viability standard is:
    • With reasonable investment, it is probable to:
      • Sustain full occupancy
      • Be structurally sound
      • Not be excessively dense by local standards
      • Achieve a broad range of incomes, and
      • Have no disqualifying site impairments
    • And the property is not more expensive to operate as Public Housing than serving the residents with vouchers
viability assessment based on comparing
Viability Assessment Based On Comparing
  • The projected cost to repair, operate and maintain the public housing units during their remaining useful life
  • The cost of a market rate unit utilizing a tenant-based voucher under HUD’s Housing Choice Voucher Program
how are public housing and voucher costs compared
How are public housing and voucher costs compared?
  • The public housing cost are described in 24 CR §972.124(c)(2). These are the costs needed to
    • Produce a revitalized development
    • Operate the revitalized units
    • Address future modernization needs
    • Address accrual needs
  • These public housing costs will be compared to the PHA’s adopted voucher Payment Standards
  • Note: Gross costs are compared, NOT subsidy amounts
clusters vs amps
Clusters vs. AMPs

Conversion clusters are a development, portion of a development, or group of developments of 250 or more dwelling units in the same geographical location

AMP groupings are the result of PHA’s asset management decisions

Thus, there is no direct relationship between AMPs and Clusters

vacancy calculation
Vacancy Calculation
  • Vacancy Data used must be consistent
    • PHA must use the same data it relied on for other reports to HUD, including PHAS, Form HUD-51234 Report on Occupancy, or successor reports
    • MTW PHAs must use the same vacancy data submitted to HUD as per their MTW agreement.
units excluded from vacancy calculation
Units Excluded from Vacancy Calculation

Units vacated to enable modernization activities

Vacant units previously approved by HUD for Demolition or Disposition under Section 18 of the Act

Vacant units where resident belongings are abandoned, but only if state law mandates that such units remain vacant for an established period of time

Vacant units having sustained casualty damage, but only until the insurance claim is adjusted

Units occupied by an employee of the PHA

Units used for resident services activities

Non-distressed units that were intentionally kept vacant

developments exempt from required conversion
Developments Exempt from Required Conversion

Developments with an approved HOPE VI Plan

Developments restricted to occupancy by Elderly/Disabled residents under a HUD approved Designated Housing Plan

Developments identified before October 21,1998 for Mandatory Conversion under Section 202 of the Fiscal Year 1996 HUD Appropriations Act (42 USC §1437) until those conversion requirements have been fulfilled

identification of properties on hud s website
Identification of Properties on HUD’s Website
  • To assist PHAs, SAC has created reports from HUD Field Offices listing clusters that may be Required Conversion candidates
    • www.hud.gov/offices/pih/centers/sac/rconv.cfm
  • These cluster reports may not be fully complete and may be further refined with data from HUD field offices and PHAs
  • PHAs are still required to annually monitor their own eligible developments, even if their developments are not on the SAC cluster list
slide36

Conversion Information from HUD Website

  • DETAILED REPORT
  • HA CODE:XY 001
  • HA NAME:Sample Housing Authority
  • Cluster Number:XY001C009
  • Cluster Total:308
    • Development Total Units From PIC Designated Units DD Approved Non Designated
  • XY001025274 0 274
  • XY001040 34 0 34
  • DevelopmentProject Name Report Date Total Units Vacant Units Vacant Pct. Distressed
  • XY001025High Point 4/5/2008 274 45 16.4 Distressed
  • XY001025High Point 5/7/2008 274 47 17.1 Distressed
required conversions and pic
Required Conversions and PIC
  • Accurate vacancy rates are critical for the Required Conversion vacancy calculation
  • Vacancy rates are impacted by whether units are reported in PIC as
    • ACC-Yes, or
    • ACC-No
  • PHAs may not move subsidized dwellings to a non-subsidized status to avoid a negative vacancy impact
correcting sac cluster report errors
Correcting SAC Cluster Report Errors
  • If the PHA disputes the SAC Cluster Report information they may report to their HUD field office and SAC that:
    • The cluster does not contain 250 eligible units
    • The occupancy information is inaccurate
    • The data relied on for the report is incorrect
  • If SAC receives no response from the PHA it will assume the report is correct
  • If the development/cluster remains on the SAC cluster report, the PHA must address the development in their next Annual PHA or MTW Plan
phas responsibility to respond
PHAs Responsibility to Respond
  • Developments on the SAC report are not required to be converted, the report only identifies possible candidates
  • If a development is on the report, PHAs must address the following in their Annual PHA or MTW Plan:
    • Explain why the cluster should not be on the report, or
    • If the report data is accurate, certify that the cost analysis has been completed and report on the results of the cost analysis, and
    • If adequate time is available, complete and submit the Required Conversion Plan if the development is not cost effective to continue as public housing
required conversion information in the annual pha or mtw plan
Required Conversion Information in the Annual PHA or MTW Plan
  • HUD wants PHAs to have adequate time to develop their Required Conversion Plans
    • If sufficient time is not available to finalize the Conversion Plan, the PHA must provide the status of required conversion planning activities in their next Annual PHA or MTW Plan submission
    • The following timeline tables have been developed to ensure adequate time is available

Conversion Guide Traning Manual

timeline table for required conversion
Timeline Table for Required Conversion

Time table for developments identified more than 13 months before PHA fiscal year

(Training Manual: Page 12)

timeline table for required conversion1
Timeline Table for Required Conversion

Time table for developments identified less than 13 months before PHA fiscal year

(Training Manual: Page 13)

cost analysis
Cost Analysis
  • If an eligible cluster fails the vacancy test
  • Then, a Cost Analysis must be completed
  • PHAs must follow the Calculation Rule
    • Comparing the cluster’s operating, capital and accrual cost
    • With the cost to serve the residents with vouchers
  • HUD has developed an Excel spreadsheet to assist PHAs with this analysis
  • PHAs must use this HUD Excel spreadsheet
hud spreadsheet
HUD Spreadsheet
  • The Spreadsheet is located on HUD website:
    • http://www.hud.gov/offices/pih/centers/sac/docs/costcomparison.xls
  • The same spreadsheet is utilized for both Required and Voluntary Conversions, but
  • Different portions of the Spreadsheet are used for each type of Conversion
other obligations
Other Obligations
  • Not all financial factors are included in the Spreadsheet
  • PHA must identify additional financial, contractual, or legal obligations that may affect a Conversion
    • Energy performance contracts
    • Capital fund leveraging agreements
    • Legal or Voluntary Compliance Agreements
    • Etc.
public housing cost analysis
Public Housing Cost Analysis
  • Can use either Development-Based Method or PHA-Wide Method to determine public housing operating costs
  • Must determine the useful life of the development, once it has been revitalized
    • 20-year period if only light or moderate rehab is undertaken
    • 30-year period if all backlog needs are addressed
    • 40-year period if equivalent to new construction
determining long term viability
Determining Long-term Viability
  • To achieve long-term viability, all the following conditions must be met
    • The revitalization costs must be reasonable
    • The development must be structurally sound
    • The development can sustain full occupancy
    • The density is appropriate for the community
    • A broader range of family incomes can be achieved
    • No site impairments exist to disqualify the site as public housing
investment is reasonable
Investment is Reasonable
  • Costs for revitalization must be
    • Less than 90% of HUD’s TDC
    • Less than 100% of TDC for any “infill” new construction
  • Must be consistent with the revitalization cost in the most recent Annual Plan or 5-year plan
    • Overall cost should not exceed cost estimated in Annual or 5-year plan
    • If previous cost was lower PHA must provide a compelling explanation
  • Funding must be identified and available
slide49

Extract of HUD Conversion Website for the Spreadsheets

A rule addressing the methodology for comparing the cost of individual public housing developments to the cost of tenant-based Section 8 assistance was published in the Federal Register March 21, 2006 (Calculation Rule). The rule is effective April 20, 2006. The cost methodology for Required Conversion is different than that for Voluntary conversion.

Calculator Rule 24 CFR 972 (Adobe PDF)

Cost Comparison Spreadsheet (MS-Excel)

A sample of a completed spreadsheet has been included as well.

Sample completed Cost Comparison Spreadsheet (MS-Excel)

relationship between required conversion and section 18 of the act
Relationship Between Required Conversion and Section 18 of the Act

Demolition NO. 24 CFR §972.112 and 24 CFR §970.3(15), Section 18 of the Act does not apply for (full or partial) demolition pursuant to required conversion

Disposition YES. Section 18 of the Act does apply to disposition of developments removed pursuant to required conversion

applicability of uniform relocation act
Applicability of Uniform Relocation Act

URA applies UNLESS it is a Section 18 action

Thus, if there is a Disposition – URA does not apply

If residents are displaced as a result of any other Required Conversion action - URA does apply

six components of the required conversion plan
Six Components of the Required Conversion Plan

Identification of units to be converted

Obligation status of public housing capital funds allocated to the development

Evidence that public officials were consulted

Evidence that residents were consulted

Description of PHA’s proposed future use of the development

Relocation Plan

identification of units
Identification of Units

The PHA must list the specific units that will be removed from PHA’s public housing inventory

identification and obligation status of ph funds
Identification and Obligation Status of PH Funds
  • The PHA must identify the obligation status of capital funding allocated to the development
    • Modernization funds
    • Reconstruction funds
    • Other capital funds
  • The PHA can recommend how un-obligated funds might be transferred to alternative housing authority uses
evidence of local governmental consultation
Evidence of Local Governmental Consultation

The PHA must demonstrate the Conversion Plan is consistent with local consolidation plans

The PHA must obtain a certificate from the appropriate public official

Can use the same certification issued for the Agency’s Annual PHA Plan - so long as that certification specifically references the Conversion Plan

evidence of significant participation of residents
Evidence of Significant Participation of Residents
  • It is required that the PHA must:
    • Hold at least one meeting with residents of the development
    • Provide a reasonable period for the residents to comment
    • Summarize all resident comments and PHA responses
resident meetings
Resident Meetings

PHA must include developments duly elected Resident Council (if one exists)

PHA must explain the requirements of the required conversion

PHA must supply draft copies to meeting attendees

It is recommended that the PHA meet numerous times to ensure resident questions and concerns are addressed

resident comments
Resident Comments

PHA must provide a reasonable period for residents comments

PHA must summarize all resident comments and PHA responses

PHA must include this summary as part of the finalized Conversion Plan

Make sure to document the meetings, sign-in sheets, meeting agendas, handouts, resident written comments, etc…

description of proposed future use
Description of Proposed Future Use
  • PHA must indicate the proposed use of the development after conversion
  • PHA must indicate the means and timetable for carrying out any planned demolition, disposition, or redevelopment
  • If disposing of the property,
    • Please note that the PHA must also comply with HUD’s Section 18 disposition procedures and requirements
relocation plan components
Relocation Plan Components
  • Must note the number of households to be relocated
    • Note bedroom size and number of accessible units
  • Must describe the relocation resources to be utilized
    • Note if additional Section 8 resources will be needed for relocation
    • Confirm that PHA unit vacancies will be available when needed to accommodate relocating families
relocation plan components continued
Relocation Plan Components(continued)

Must provide the schedule for family relocation and the removal of units

Must provide proof that residents were given timely written notice of the relocation plan

If not subject to URA, written notice to residents must be at least 90 days before displacement

If subject to URA, General Information Notice must given to residents no later than date the Conversion Plan is submitted to HUD

relocation notice to residents
Relocation Notice to Residents
  • Contents of the notice pursuant to 24 CFR §972.103(b) must contain:
    • Development must be removed from PH inventory
    • Residents will be offered comparable housing
      • Tenant-based housing
      • Project-based housing
      • Other PH or PHA owned or operated housing
    • Actual and reasonable relocation cost are paid including
      • Counseling
      • Mobility counseling
relocation notice to the residents continued
Relocation Notice to the Residents(continued)
  • Family will be located to safe and affordable housing, and to the maximum extent possible, to the housing of their choice
  • If the PHA retains the development, the family will be given the choice to remain the in the development using tenant-based assistance
  • If a voucher will be utilized for relocation, it will be issued at least 90 days before displacement
notice to residents subject to ura
Notice to Residents Subject to URA
  • The written notice must also contain:
    • A family will not be required to move without at least 90-day notice
    • A family will not be required to move permanently until they are offered comparable housing
    • Aliens not lawfully present in the United States are ineligible for relocation payments or assistance, unless there will be an unusual hardship to a qualifying spouse, parent, or child
notice to resident subject to ura continued
Notice to Resident Subject to URA- (continued)
  • The family has the right to appeal the PHA’s determination for relocation assistance
  • Families will be provided the URA notice at the date HUD approves the Conversion Plan
  • Families moving into the development after the PHA submits the application are eligible for relocation assistance, unless the PHA issues a written move-in notice to the family prior to leasing stating that the family will be ineligible
resources for relocation
Resources for Relocation
  • If using local resources for relocation such as vacant public housing units or already allocated vouchers
    • Complete an analysis of unit or voucher turnover rates to ensure that units or vouchers will be available when needed
      • For example, if PHA is converting 300 units and 100 units that annually turnover, then it would be realistic to anticipate 3 years for relocation without other resources
required conversion application submission requirements
Required Conversion Application Submission Requirements
  • In addition to submitting a Required Conversion Plan with the Annual PHA or MTW Plan
  • PHA must submit a Removal from Inventory Application to SAC via PIC containing the following:
    • Removal from Inventory Application (HUD-52860)
    • Required Conversion Addendum (HUD-52860-D)
    • PHA Certification of Compliance – Section 33 Required Conversion
required conversion application submission requirements1
Required Conversion Application Submission Requirements
  • Disposition – The PHA may submit one Inventory Removal Application to request approval for both a Required Conversion and for the disposition of the property
    • PHA must complete application sections for both removal actions
    • PHA must provide evidence of satisfaction of both statutory and regulatory requirements for Section 18 dispositions
required conversion application submission requirements2
Required Conversion Application Submission Requirements
  • Demolition - HUD may approve a Required Conversion Application without requiring the PHA to comply with Section 18 requirements for demolition
  • Environmental Reviews – Environmental review must be completed under 24 CFR Part 58 or 24 CFR Part 50 for either Disposition and Demolition
    • HUD may authorize the PHA to undertake some activities without a completed environmental review (relocation, unit deprogramming, etc…)
hud actions
HUD Actions
  • To clarify PHA Conversion Application issues
    • HUD may conduct a site visit
    • HUD may request additional information
  • HUD anticipates that the review of a Conversion Plan will normally occur within 90 days following submission of a complete Plan
  • HUD approval will be issued by OPHI
pha must first receive hud approval
PHA Must First Receive HUD Approval

Under no circumstances should a PHA commence conversion, demolition, or disposition until HUD approves the Required Conversion Application and Plan in writing

referencing a conversion in the annual pha plan or mtw plan
Referencing a Conversion in the Annual PHA Plan or MTW Plan
  • The existing PHA Plan template or MTW Agreement does not include a tool for providing information on Required Conversions
  • Following are suggestions for providing this information
    • The PHA may provide a summary of the Required Conversion Plan, including the 6 required conversion plan requirements as an attachment to the Annual PHA or MTW Plan document
    • The PHA may insert the Sample Conversion Plan table into Part 10.C of the Annual PHA Plan template
failure to comply actions
Failure to Comply Actions
  • Failure to identify or comply with conversion requirements may result in:
    • Disqualification from HUD funding competitions
    • HUD can direct the PHA to cease additional spending at the development
    • HUD can identify non-viable developments the PHA has failed to acknowledge for a Required Conversion
    • HUD can ensure that a Conversion is carried out where the PHA has failed to develop or implement a Required Conversion Plan
failure to comply actions continued
Failure to Comply Actions (continued)
  • HUD can require a PHA to revise their Conversion Plan, or prohibit a Conversion when a development is erroneously identified
  • HUD can authorize or direct the transfer of capital funds associated with the development to use for tenant-based assistance or to pursue an appropriate site revitalization activity
  • Any other HUD action determined appropriate
effect of a required conversion on operating subsidy
Effect of a Required Conversion on Operating Subsidy
  • A Required Conversion is equivalent to a formal request for a removal of units from the public housing inventory and the PHA’s ACC
  • PHAs may be eligible for receiving a Repositioning Fee as a result of a Conversion
    • PHAs should contact their HUD financial analyst about Repositioning Fee eligibility
    • HUD intends issuing additional guidance on this issue
tenant based assistance funding for units approved for conversion
Tenant-Based Assistance Funding for Units Approved for Conversion

HUD can provide funding for one-for-one unit replacement, if funds are available

HUD may require initial year funding from the PHA’s existing Capital and/or Operating Funds

Approval of a Conversion Plan does not guarantee tenant based assistance or relocation funds for the PHA

PHA must submit a separate application for tenant based assistance funds in response to a HUD published application request

tenant based assistance funding for units approved for conversion1
Tenant-Based Assistance Funding for Units Approved for Conversion
  • Should needed voucher funding not be available to the PHA after the required Conversion Plan has been approved by OPHI, the PHA may not be able to pursue the conversion per its approved implementation schedule.
    • In such cases, the PHA may submit a request to SAC to revise its implementation plan to reflect these conditions.
overview
Overview
  • PHA may undertake an assessment to determine if units are eligible for conversion
  • Compare cost of running as PH versus providing tenant-based rental assistance
  • PHA must consider other factors
    • Market value of the development
    • Rental conditions in the community
    • Likely impact of the conversion on affordable housing
    • Planned implementation process
3 voluntary assessment result requirements
3 Voluntary Assessment Result Requirements
  • PHA could carry out a voluntary plan in instances where the assessment results indicate that the public housing stock would:
    • Not be more expensive than continuing to operate as PH stock
    • Principally benefit the residents of the development, PHA and community
    • Not adversely affect the availability of affordable housing in the community
compliance process
Compliance Process

Completion of a Required Initial Assessment (RIA)

Complete a new and comprehensive conversion assessment

Prepare a voluntary conversion plan

HUD must approve the conversion plan before PHA can proceed

compliance process ria
Compliance Process (RIA)
  • PIH Notice 2001-26 instructed PHAs to identify those developments that were potentially appropriate for voluntary conversion
    • Non-binding preliminary evaluation
    • Known as a Required Initial Assessment (RIA)
    • PHA’s Certification of Compliance for Voluntary Conversion
    • Included as part of formal submission of an Inventory Removal Application (form HUD-52860) to SAC
new conversion assessment
New Conversion Assessment

Completed in accordance with 24 CFR 972.218-972.224

Referenced in the PHA Annual Plan submission

If MTW- in the Annual MTW Plan submission

voluntary plan
Voluntary Plan

Completed in accordance with 24 CFR 972.227-972.233

Referenced in the PHA Annual Plan or Annual MTW Annual Plan

Must be completed within one year after completing the conversion assessment

PHA must submit information on voluntary conversion plan to SAC via Voluntary Conversion Addendum HUD form 52860-E for formal approval (Appendix 10)

Written approval required via Office of Public Housing Investments (OPHI)

identification of properties
Identification of Properties
  • Required Initial Assessment (RIA)
    • Certification only
    • Do not need to submit the RIA as part of the voluntary conversion assessment, plan or application
  • Conversion Assessment
    • New comprehensive assessment
    • Must comply with statutory and regulatory requirements
    • Should consider the intended future use of the development or portion of the development
identification of properties continued
Identification of Properties- continued
  • Conversion Assessment- continued
    • PHA must provide a confirmation in PHA Plan or Annual MTW Plan that each of the 5 voluntary conversion elements has been addressed
  • Conversion assessment and supporting documents remain on file at the PHA central office, and be available for resident, public and HUD review
pha plan or mtw plan1
PHA Plan or MTW Plan

PHA Plan template form (HUD-50075) does not provide a format for including information on voluntary conversion

Part 10.B of template reserved for voluntary conversion

MTW Plan does not specifically reference voluntary conversion

PHAs must provide sufficient information

voluntary conversion table
Voluntary Conversion Table

Recommended but not required

Used to ensure PHA completes the voluntary conversion assessment components

MTW agencies can also use the same table

Inserted into Plan templates

Assessment sample provided on page 33

Plan sample provided on page 52

conversion assessment
Conversion Assessment
  • If conversion assessment is more than 1 year old
    • Must be updated
    • PHA must ensure that analysis of rental market is based on the most recent available data
  • HUD cannot approve the voluntary conversion plan or application until PHA has completed information and included it in PHA Plan or Annual MTW Plan
high performer phas
High Performer “PHAs”

“High performers” or PHAs who manage less than 250 PH units are exempt from the requirement to submit their conversion assessments to HUD as part of Annual Plans or Annual MTW Plans

Still must submit documentation to SAC and their HUD Field Office at the time they submit the conversion plan

resident involvement
Resident Involvement
  • Must involve residents in development and preparing the final conversion assessment and conversion plan
  • Consultation Requirement (at least the minimum) in addition to the Annual Plan requirements
    • At least 1 public meeting with residents on the affected site (including resident council- if one exists)
resident consultation
Resident Consultation
  • In most cases, PHA will have numerous meetings
    • Ensure full understanding of reasons
    • Understand the anticipated approach
    • Have a meaningful opportunity to discuss options and make suggestions to ensure residents will benefit as a result of the conversion
meeting information
Meeting Information

Explain the requirements

Provide draft copies of conversion assessment and discuss conclusions

Provide for a reasonable period for comment on the draft conversion assessment

PHA should contain summary of comments and PHA responses to any significant issues raised by the residents

voluntary conversion assessment components
Voluntary Conversion Assessment Components

Cost Analysis

Analysis of Market Value

Analysis of Rental Market Conditions

Impact Analysis

Conversion Implementation

number 1 cost analysis for vca
Number 1-Cost Analysis for VCA

Evaluate the viability

Operating, capital and accrual cost

Information on tenant-based assistance

Voluntary conversion only allowed only if they are cost effective

Follow the Calculation Rule and voluntary conversion Appraisal Notice

Use the HUD spreadsheet

hud spreadsheet1
HUD Spreadsheet
  • Located on HUD website:
    • http://www.hud.gov/offices/pih/centers/sac/docs/costcomparison.xls
  • Different for Required and Voluntary
other obligations1
Other Obligations
  • PHA must identify additional financial, contractual, or legal obligations that may affect the conversion
    • Energy performance contracts
    • Capital fund leveraging agreements
    • Voluntary Compliance Agreements
    • Etc.
cost analysis1
Cost Analysis
  • PHAs must determine the length of useful life of the development
    • 20- light, moderate rehabilitation
    • 30- addresses all back log needs and any redesigns
    • 40- rehabilitation performed equal to new construction
  • Guidance found in 24 CFR 972 Modernization
cost analysis2
Cost Analysis
  • Must have an independent appraisal to determine the market value to complete the cost analysis
    • Before the conversion
    • After the conversion
cost analysis viability criteria for continuing to operate as ph
Cost Analysis Viability Criteria for Continuing to Operate as PH

The investment made in the property is reasonable

Appropriate density is achieved, and

A greater income mix can be achieved

investment is reasonable1
Investment is Reasonable
  • Cost must not exceed 90% of HUD’s total development cost (TDC) limit
  • PHA should use revitalization estimates of most recent Five-Year and Annual Plan
    • Exception, if PHA demonstrates another is more realistic
    • Must prove compelling evidence
  • Must provide information on the source of funding and that it is available to PHA
appropriate density is achieved
Appropriate Density is Achieved

The resulting revitalized development must have a density that is comparable to or is appropriate for assisted rental housing, or similar types of housing in the community

greater income mix
Greater Income Mix
  • Measures to broaden the income mix of residents
    • Includes a significant mix of households with at least one full time worker
  • Evidence includes census or other statistical evidence of a broad range of incomes
    • Census tract
    • Neighborhood tract
    • Unique advantages of public housing
number 2 analysis of market value for vca
Number 2- Analysis of Market Value for VCA
  • Appraisal determines
    • “Highest and best use” or “market value” of the property
    • Before and after rehabilitation
  • Value included in the cost calculator
  • Assists PHAs in considering recapitalization decisions
  • Assists PHAs and HUD is assessing the market feasibility
analysis of market value continued
Analysis of Market Value- continued
  • PHA’s intended future use after conversion is essential
  • Realistic and achievable plan
  • Means and timetable for accomplishing
    • Demolition
    • Disposition
    • Redevelopment
  • Matrix must be complete and sent to SAC (HUD-form 52860-E) Appendix 10 of materials
analysis of market value new pih notice 2008 35
Analysis of Market Value- New PIH Notice 2008-35

Issued August 20, 2008

Applies to voluntary conversions

Linked to the cost analysis and cost-test

Market-value analysis will evaluate various proposed development scenarios and sets of assumptions

Guidance on Procurement of Services

procurement
Procurement
  • In accordance with PHA’s procurement policy and Procurement Handbook 7460.8 REV 2, dated March 2, 2007, or subsequent versions
  • Generally accepted and recognized standards are found in Uniform Standards of Professional Appraisal Practice (USPAP)
    • Standards published by Appraisal Standards Board (ASB)
procurement of services
Procurement of Services
  • Must procure services from a provider that is
    • Qualified
    • Competent in the relevant specialized area
    • Addresses the requirements of the conversion assessment
  • The appraisal may be a relatively complex task
    • Appraisal as subsidized housing
    • Appraisal with proposed improvements
    • Appraisal as altered use
    • Highest and best use
professional judgment
Professional Judgment

In accordance with USPAP

Conversion requirements

Common industry practices regarding market valuations of real estate

guidance on conducting market analysis
Guidance on Conducting Market Analysis
  • Current Value (Box 1)- based on the “as is” condition
  • Market Value as Public Housing (Box 2) “Post Rehab”
    • 20, 30, 40 years as selected by the PHA depending on the degree of modernization to keep the property viable
    • PHA must provide capital needs information to appraiser
market value box 2
Market Value- Box 2

Based on operation as public housing, assisted, unassisted, or market-rate housing and a sale based on the remaining value of the property at the end of the specific term assuming no further use restrictions.

Should be stated as a Net Present Value

as is condition box 3
“As is Condition” Box 3
  • How the property would like to be used after conversion
    • Based on proposed use and either comparable sale, income, or most feasible appraisal method
    • If developer already procured, then future use should be provided to the appraiser
  • Proposed use will largely depend on:
    • Site location and physical condition
    • Land use regulations and property tax consideration
    • Local market conditions and financing options
    • Zoning limitations and other restrictions
future value post rehab box 4
Future Value “Post rehab” Box 4

At a minimum, the PHA must consider the conversion cost-test that are necessary to keep a property viable for the remainder of its useful life

Describe the means and timetable to complete these redevelopment activities

highest and best use market value box 5
Highest and Best Use Market Value Box 5
  • Based on the use that provides the greatest potential return to the PHA
  • Assumes the use that will generate the highest economic return associated with the sale of the property
  • Value may be determined with or without regard to the plans by the PHA or developer
  • Proposed uses in the area and recent changes in the marketplace
    • For example- new highway interchange, proposed redevelopment in the area
definitions to be used by the appraiser and pha
Definitions to be used by the Appraiser and PHA

Public Housing- built and operated under ACC and the Act

Assisted Housing- subsidized by private, state, or local agencies, Rural Development Agency, tenant-based HCV Assistance, or other non-public housing funding; income levels are regulated

Unassisted Housing- has no subsidy, but provides a rental cap such as property rent controls; income levels are regulated

Market Rate- no restrictions on rental rates, operating cost, profits, rental rate increases, or improvements

appraisal methods
Appraisal Methods

Income Capitalization Appraisal Approach

Market Comparison Approach

Tax Assessment Approach

Cost Approach

HUD expects appraisers will select the most feasible appraisal methods

income capitalization approach
Income Capitalization Approach

Current value by projecting potential net income and the expected rate of return

In general, these are based on historical income and rent for a property

Degree of speculation associated with this method

Requires a pro-forma statement to project cash flow

Problem in that PH rarely generate net income, profit, or market value since in most cases tenants rents are less than the actual operating expenses

Appraisers then considers flat rent, HCV Assistance Rent, or rent from a comparable property

ten key elements of income approach
Ten Key Elements of Income Approach

Rental Income

Vacancy Rate

Operating Expenses

Capital Reserves

Property Taxes

Net Operating Income

Debt Service

Net Income

Capitalization Rate

Market Value

rental income
Rental Income
  • Flat rent
  • HCV Assistance Rents
    • Use rents based on the percentage of area median income (AMI) adjusted for family size (bedroom)
  • Rents for Comparable
    • If rents differ significantly from existing HCV FMRs, flat, or local market rent, the appraiser may use local standard when adequate justification is provided
    • PHA may conduct a Rent Comparable Study (RCS) to determine the rental income- Chapter 9 of Section 8 Renewal Policy Guidebook, HUD-92273 and HUD-92273-S8
rental income1
Rental Income

In no event shall the rents in any appraisal exceed the Tenant-based HCV assistance rents for the area in which the property is located

vacancy rate or allowance
Vacancy Rate or Allowance

Actual condition should be reflected in an “as is” Market Appraisal

“post rehab” should carry a vacancy allowance appropriate for the market and unit type

operating expenses
Operating Expenses

The expenses currently being incurred, unless there is a pattern of deferred maintenance

“As is” should use pro-rated historical operating expenses, or the expenses recorded under site-based management approved by HUD that includes at least one full year

Exclude capital cost

In no case should the appraisal operating expense be less than the current operating expense of the authority

“Post rehab” uses expenses common to similar affordable units

capital reserves
Capital Reserves

“As is” uses the most recent Physical Needs Assessment (PNA) as a guide to establish capital reserves

Low Income Housing Tax Credits use the standard capital reserve established by the state’s housing finance authority for “post rehab” appraisals

In all cases, the capital reserves should reflect the actual needs to maintain at UPCS standards

property taxes
Property Taxes

“As is” reflects the current condition, PILOT, etc.

Post rehab or other should reflect the final outcome of property

If the appraisal assumes that any real estate taxes will be subject to a PILOT, then evidence of such an agreement must be provided as part of the appraisal

net operating income noi
Net Operating Income (NOI)

For PH, generally the NOI is a negative number- hence the reason for operating subsidy

However, once a voluntary conversion has been completed, a PHA can redevelop the subject property in ways to create a positive NOI without the benefit of any direct subsidy

debt service
Debt Service

When post conversion plan will utilize debt of any kind, appraisal will reflect the revenue, NOI and cover debt service associated with borrowed financing

Debt can be from bank loan, bond issue, PHA loan, other institutional debt, tax credit investors

net income
Net Income
  • Net Income is NOI less the debt service
  • If no debt service, net income= NOI
  • Generally the presence of LIHTC adds to the value of the property
    • This potential would occur after the conversion of a property if tax credits are secured
    • Any savings represent a source of income to the investor that is not wholly dependent upon the subject property, and therefore not part of the Net Income
capitalization rate
Capitalization Rate
  • Depends on
    • Market conditions
    • Perceived risk
    • Expectations on desired return for capital invested in the venture
    • Use of debt
    • Desire to reinvest in the community
  • Greater the risk, the higher the rate of return
value
Value
  • Determined by dividing the net income by the capitalization rate
  • Determination of value dependent upon
    • Location
    • Neighborhood conditions
    • Market demand
    • Etc
special considerations
Special Considerations

Utilities

Vacancy

Physical Needs Assessment (PNA)

Low Income Housing Tax Credits

utilities
Utilities

Since “post rehab” units will generally have individual metered units, all “as is” should be adjusted to that standard to avoid skewing any comparison of the two appraisal results

vacancy
Vacancy
  • Appraisers may exercise professional judgment considering
    • Management trends
    • Historical patterns
    • How trends will be altered in the future under new management practices
physical needs assessment pna
Physical Needs Assessment (PNA)

Maintenance funding may have been diverted to properties in anticipation of a voluntary conversion plan that is skewed toward high rehabilitation costs

low income housing tax credits lihtc
Low Income Housing Tax Credits (LIHTC)
  • LIHTC may
    • Increase the value of a property
    • Lessen the capital investment required
    • Increase a property’s Internal Rate of Return (IRR)
    • Provide for more capital for redevelopment
  • PHA shall provide this information to appraiser
method 2 market comparison approach
Method # 2 Market Comparison Approach

Look at sales of similar properties within a defined geographic area

Sales should have occurred in a year or two

Evaluated for similarities and differences

Actual condition of property

Adjust for unit size, amenities, tax credits, rent subsidies, changes in interest rate, location

More likely to find comparables in urban area than rural area

method 3 tax assessment approach
Method # 3 Tax Assessment Approach

Rare instances when this approach has merit

HUD has discretion to accept a market analysis conducted using this approach

Often values bear no resemblance to reality, so special care must be taken when using this approach

method 4 cost approach
Method #4 Cost Approach
  • Would be of little use for the “as is” appraisal
  • May have elements for Market Value for redevelopment or “post-rehab” appraisal
  • Considers
    • Value of land
    • Additional cost of environmental remediation
    • Improvements to be made
cost approach
Cost Approach
  • Hard cost
    • Land
    • Improvement cost
  • Soft Cost
    • Design
    • Appraisals
    • Bond financing
    • Construction loan interest
    • Relocation
    • Lease-up cost
cost approach continued
Cost Approach- continued

Total hard + soft cost = total development cost (TDC)

As a general rule, soft cost can be expected to be at least 20%-30% of the total project cost

TDC usually represents a total cost and cost per unit

number 3 analysis of rental market conditions for vca
Number 3-Analysis of Rental Market Conditions for VCA
  • Essential that PHA demonstrates the current market can absorb tenants that will be displaced if using vouchers for relocation
    • Vacancy rates
    • Location of affordable units that pass HQS
    • Types of units that will be needed
      • Accessible
      • Large family
      • Etc.
analysis of market
Analysis of Market
  • Takes into account
    • The overall use of tenant-based assistance under lease
    • The PHAs current success rate for the appropriate bedroom size
    • The recent success rate at or below payment standards
    • Any particular characteristics of the specific residents that will be affected
analysis of rental market
Analysis of Rental Market
  • Affordability in the vicinity
  • Hard-to-house issues
  • Data sources
    • Census
    • Local consolidated plan
    • PHA historical data
    • Other available local data
analysis of rental market specific areas
Analysis of Rental Market- Specific Areas

An overview of the rental housing market in the jurisdiction in which the development is located

Identification of the number and location of private rental housing units presently occupied by residents

Concentration of poverty in the surrounding community and its specific location(s) within the area around the development

analysis of rental market specific areas1
Analysis of Rental Market- Specific Areas

An evaluation of the types of housing units and rental rates that are available for occupancy that could accommodate the housing needs of the displaced families (i.e., 3, 4, or 5 bedroom units and units that are available to accommodate persons with disabilities) within the community

Areas where residents would likely reside in the surrounding neighborhood, and an evaluation of housing affordability and availability in those areas

Location and availability of affordable units in any new housing developments that could accommodate the housing needs of the displaced families

number 4 impact analysis for vca
Number 4- Impact Analysis for VCA
  • Impact on the community in which the development is located
  • Detailed discussion on
    • the availability of affordable housing in the community;
    • the concentration of poverty in the community; and
    • any other substantial characteristics of the community.
impact analysis continued
Impact Analysis- continued

Market rental rates

Availability and diversity of housing in the community

Demand for tenant-based assistance

How the occupancy patterns and rental rates of the housing market will be affected by the new demand for tenant-based assistance units

Fair housing choices of housing and issues

impact analysis continued1
Impact Analysis- continued
  • Demonstrate how the conversion will:
    • Contribute to the diversification of available housing opportunities (types and prices) within the community;
    • Positively impact the affordability of housing for the displaced residents;
    • Enable the displaced residents to have easy access to public and private facilities and services, such as retail establishments, parks, public transportation, employment, and schools;
impact analysis continued2
Impact Analysis- continued
  • Demonstrate how the conversion will:
    • positively impact the unique needs of special household groups; and
    • decrease the concentration of poverty in the community in which the displaced residents will be relocating.
number 5 conversion implementation for vca
Number 5- Conversion Implementation for VCA
  • Actions and action steps
  • Planned use of the development, means and timetable for accomplishing
  • Plans for the development after conversion
    • Demolished
    • Disposed
    • Retained and utilized for assisted, unassisted or market-rate housing
    • Etc
conversion implementation specifically
Conversion Implementation- Specifically

PHA must specifically:

Provide a realistic timeframe to undertake the voluntary conversion;

Indicate that adequate resources and financing are available for the implementation of the voluntary conversion, including demolition, disposition, or redevelopment;

Indicate the resources that will be utilized to ensure that residents are appropriately relocated, if such relocation is required; and

Provide creditable evidence that the PHA’s and its partners, if applicable, have the capacity and capability to successfully achieve the proposed future use of the development.

voluntary conversion plan
Voluntary Conversion Plan

Completed after the PHA submits a conversion assessment that demonstrates the units are eligible for conversion

Part of the Annual Plan or Annual MTW Plan

May submit both assessment and conversion plan in the same Annual Plan or Annual MTW Plan, but must at least submit within 1 year of the assessment

Implementation of the plan must be complete within 5 years

voluntary conversion plan1
Voluntary Conversion Plan
  • PHA must reference in several places
    • HUD Field Office
      • PHA Plan or Annual MTW Plan
        • Referenced as a significant amendment
    • SAC
      • HUD Form 52860-E (appendix 10)
      • Submitted via PIC
    • HUD strongly encourages PHAs to publish the draft on their websites to encourage additional comments
voluntary conversion plan2
Voluntary Conversion Plan
  • SAC
    • Will evaluated to determine if it is complete
    • Determine if it includes all required information required by 24 CFR 972.230
    • Determine if it is consistent with the conversion assessment
eight required components of the plan
Eight Required Components of the Plan

Future Use of the Development

Impact Analysis

Description of How the Voluntary Conversion Plan is Consistent with the Findings of the Conversion Assessment

Evidence that the Voluntary Conversion Plan was Developed with Significant Participation from Public Housing Residents

eight required components of the plan continued
Eight Required Components of the Plan- continued

Evidence the Voluntary Conversion Plan was Developed with Appropriate Local Government Consultation

Confirmation that any Proceeds Received from the Conversion are Subject to Limitations under Section 18 Applicable to Proceeds Resulting from Demolition or Disposition

Relocation Plan

A Summary of how the Conversion Assessment of the Public Housing Project Supports the Three Conditions Necessary for HUD to Approve a Voluntary Conversion Pursuit to 24 CFR 972.224

future use of the development
Future Use of the Development
  • Plans after the Voluntary Conversion
    • Demolition
    • Disposition
    • Retained
      • Assisted
      • Unassisted
      • Market-rate Housing
    • Conversion will remove from ACC, however the underlying land will continue subject to a Declaration of Trust (DOT)
release of declaration of trust dot
Release of Declaration of Trust (DOT)
  • HUD will provide the release in writing either through
    • Section 18 removal action
    • Action under 24 CFR 85
    • Other Means
  • Natural expiration of DOT
  • If PHA retains the property and later decides to sell the land, PHA must apply to HUD for approval
  • HUD will issue additional guidance
impact analysis
Impact Analysis
  • Same criteria as the conversion assessment
  • Additional Information
    • How the conversion will contribute to diversification
    • Whether rents and housing prices will be affordable
impact analysis additional information
Impact Analysis- additional information
  • Whether relocated residents will have easy access to
    • Public and private facilities and services
    • Parks
    • Public transportation
    • Employment
    • Schools
    • Special Needs
    • Concentration of poverty
    • Etc.
impact analysis1
Impact Analysis
  • If development is retained by the PHA and uses as low-income housing, PHA must:
    • Convincingly demonstrate why retention is a viable option versus relocating residents in the community
      • Lack of affordable housing
      • Market cannot absorb influx of residents
      • Market are substandard and will not pass HQS
      • Etc.
impact analysis continued3
Impact Analysis- continued
  • Should PHA decide demolition/disposition, then PHA must demonstrate no negative community impact
    • Decrease in affordable housing
    • Increase in concentration of poverty
    • Distress within the local community
    • Significant impact on transportation, public services, etc.
plan consistent with the conversion assessment
Plan Consistent with the Conversion Assessment

Plan accurately describes the findings of the assessment

Address any additional deficiencies or problematic issues identified in the assessment

Any differences must be fully explained

evidence of significant participation of ph residents
Evidence of Significant Participation of PH Residents
  • It is required that the PHA must:
    • Hold at least one meeting with residents of the development
    • Provide a reasonable period for the residents to comment
    • Summarize all resident comments and PHA responses
resident meetings1
Resident Meetings

PHA must hold at least one meeting with residents

Must include developments duly elected Resident Council (if one exists)

PHA must explain the requirements of the voluntary conversion

Supply draft copies to meeting attendees

It is recommended to meet numerous times to ensure residents understand and updated on the process

resident comments1
Resident Comments

PHA must provide a reasonable period for residents comments

Summarize all resident comments and PHA responses

Include the summary as part of the Voluntary Conversion Plan

Make sure to document the meetings, sign-in sheets, meeting agendas, resident comments, etc…

evidence of local governmental consultation1
Evidence of Local Governmental Consultation

The PHA must demonstrate the conversion plan is consistent with local consolidation plans

Obtain a certificate from the appropriate public official

Can use the same certification for Annual Plan and voluntary conversion plan- so long as certification specifically references the voluntary conversion plan

confirmation that proceeds are subject to limitations
Confirmation that Proceeds are Subject to Limitations
  • All proceeds from conversion activities are subject to Section 18 of the Act resulting from demolition/disposition
  • PHAs must use proceeds to pay for reasonable cost of the disposition
    • Relocation cost
    • Remediation cost
conformation that proceeds are subject to limitations continued
Conformation that Proceeds are Subject to Limitations- continued

Unless waived by HUD, the PHA may use proceeds for any outstanding debt on the original development

With written HUD approval, proceeds may be used for items listed under Section 18 of the Act

section 18 eligible activities
Section 18 Eligible Activities
  • May be used for:
    • (i) the provision of low-income housing or to benefit the residents of the PHA; or
    • (ii) leveraging amounts for securing commercial enterprises, on-site, in public housing projects of the PHA, that are appropriate to serve the needs of the residents.
  • Low-income housing under Section 18(a)(5) of the Act is limited to:
    • public housing units under an ACC or
    • housing assisted by the HCV Program
approval process on proceeds
Approval Process on Proceeds

Include narrative

SAC will review

Once SAC approves- PHA cannot change without prior written approval

When PHA expends, must notify HUD Field Office by providing financial statement showing how funds were expended and amount

relocation plan components1
Relocation Plan Components
  • Number of households to be relocated
  • Description of relocation resources
  • Schedule of relocation and removal of units
  • Proof residents given timely written notice of the plan
    • Not subject to URA, written notice to residents must be at least 90 days before displacement
    • Subject to URA, General Information Notice given to residents no later than date of conversion plan submission to SAC
notice to residents
Notice to Residents
  • Contents of the notice pursuant to 24 CFR §972.103(b) must contain:
    • Development must be removed from PH inventory
    • Residents will be offered comparable housing
      • Tenant-based housing
      • Project-based housing
      • Other PH or PHA owned or operated housing
    • Actual and reasonable relocation cost are paid including
      • Counseling
      • Mobility counseling
notice to the residents
Notice to the Residents
  • Family will be located to safe and affordable housing, to the maximum extent possible, the housing of their choice
  • If the PHA retains the development tenant is given the choice to remain the in the housing using tenant-based assistance
  • Voucher will be issued at least 90 days before displacement
notice to resident subject to ura
Notice to Resident Subject to URA
  • The written notice must also contain:
    • No family required to move without at least 90-day notice
    • Family not required to move permanently until offered comparable housing
    • Aliens not lawfully present in the United States are ineligible for relocation payments or assistance, unless of unusual hardship to qualifying spouse, parent, or child
notice to resident subject to ura continued1
Notice to Resident Subject to URA- continued
  • Family has right to appeal determination for relocation assistance
  • Families will be provide URA notice at the date HUD approves the voluntary conversion plan
  • Families moving into the development after the PHA submits the application are eligible for relocation assistance, unless PHA issues written move-in notice to the family prior to leasing that family will be ineligible
resources for relocation1
Resources for Relocation
  • HUD may have Vouchers through future allocations
  • If using local resources for relocation such as PH or HCV
    • Complete an analysis of unit turnover
    • For example, if PHA is converting 300 units and 100 units that annually turnover, then it would be realistic to anticipate 3 years for relocation without other resources
summary of how the conversion assessment supports the three conditions
Summary of How the Conversion Assessment Supports the Three Conditions
  • PHA must demonstrate to HUD that the voluntary conversion:
    • Will not be more expensive than continuing to operate the development (or a portion thereof) as public housing;
    • Will principally benefit the residents of the development, the PHA, and the community; and
    • Will not adversely affect the availability of affordable housing in the community.
summary of how the conversion assessment supports the three conditions1
Summary of How the Conversion Assessment Supports the Three Conditions
  • To demonstrate that it meets the conditions the PHA should summarize the:
    • Results of the appraisal and cost analysis
    • Feedback from residents
    • Rental market analysis
    • Analysis of impact
    • Future use of the development
    • Availability of landlords to absorb
summary of how the conversion assessment supports the three conditions2
Summary of How the Conversion Assessment Supports the Three Conditions
    • Summarize
      • Relocated residents access to services, etc
      • Conflicts with litigation
      • Rental market analysis
      • Impact on conversion on the neighborhood
  • Overall a PHA must show clear and convincing evidence in its conversion assessment to support the PHA’s assertion that the proposed conversion activity is both necessary and warranted, and satisfies the three required conditions for HUD to approve a voluntary conversion
voluntary conversion and section 18 of the act
Voluntary Conversion and Section 18 of the Act

Applies to all dispositions and demolitions of developments

Must meet all requirements of Section 18 of the Act

Not required to submit separate application

Must demonstrate compliance as part of the conversion plan

voluntary conversion and the ura
Voluntary Conversion and the URA

The URA also applies to the demolition and disposition of developments related to Voluntary Conversion

Any demolition or disposition means your PHA has to develop a relocation plan

the uniform relocation act
The Uniform Relocation Act

CFR § 972.215 Applicability of the Uniform Relocation Act.

To the extent tenants are displaced as a direct result of the demolition, acquisition, or rehabilitation of federally-assisted property converted under this subpart, the requirements of the Uniform Relocation Assistance and the Real Property Acquisition Policies Act of 1970 (42 U.S. C. 4601) (URA), and the implementing regulations issued by the Department of Transportation at 49 CFR part 24, apply.

submission requirements
Submission Requirements
  • Before implementation of the Voluntary Conversion plan and PHA must:
    • Submit PHA Annual Plan or Annual MTW Plan
    • Submit the Voluntary Conversion Application to SAC
    • HUD will review the application and either approve or disapprove
annual plans
Annual Plans

Unless exempt from the Annual Plans, a Voluntary Conversion Plan must be submitted within one year of the Voluntary Conversion Assessment

The application must reference the assessment in the Annual Plan or MTW Annual Plan

Must provide and document the 8 conversion plan elements

There is no Changes to the HUD PHA Plan Template, the template in 3-7 of the guide is recommended

hud special application center sac
HUD Special Application Center (SAC)

PHA must submit to SAC Inventory Removal Application (HUD-52860) via PIC

May submit on Inventory Removal Application for Voluntary Conversion and demolition/disposition of the development

HUD will not approve any application until a Environmental Review has been completed under 24 CFR Part 58 and 24 CFR Part 50

hud actions1
HUD Actions

HUD reviews the application

May conduct site visit before plan finalization

Anticipate review within 90 days of application submission

If longer than 90 days PHA will be given a preliminary response period

HUD approval or disapproval of the conversion plan through OPHI after the response period

hud approval1
HUD Approval
  • PHA must show clear and convincing evidence of:
    • Conversion is less expensive than continued operation as public housing using cost calculation methodology
    • Will principally benefit the residents and community of the development
    • Will not adversely affect the availability of affordable housing within then community
reminder
Reminder!

Before proceeding to implement the conversion plan, make sure the PHA has written approval from HUD specifically for the voluntary conversion plan.

Approval of the PHA Annual Plan does not constitute approval of the voluntary conversion plan. A separate approval that is specific to the voluntary conversion plan must come from HUD.

reasons for hud disapproval
Reasons for HUD Disapproval
  • PHA must the demonstrate how impacted families will be relocated
  • PHA must demonstrate no significant impact to available affordable housing
  • HUD will disapprove a conversion plan if HUD determines that:
    • Conversion Plan is inconsistent with the conversion assessment
    • There is reliable information contradicting conversion assessment
    • Conversion Plan is incomplete and fails to meet the requirements of 24 CFR §972.230
pha s resolutions
PHA’s Resolutions

HUD and PHAs may work together to resolve outstanding issues or submission deficiencies

HUD may request additional information for clarity or deficiencies during the process of making any determinations

hud approval disapproval and what to do next
HUD Approval/Disapproval and What to Do Next

PHA can resubmit at a later date

PHA can further consult with HUD and supply additional information

PHA can obtain other plans that have been approved from other PHAs to use as a guide

PHA should review comments and correct for the future

reminder1
Reminder!

HUD will investigate any apparent contradiction or written challenge to the information presented in the PHA’s voluntary conversion assessment of plan.

HUD will not approve a conversion application until a determination has been made by HUD on the validity of the challenge or conflict.

effect of voluntary conversion on operating subsidy
Effect of Voluntary Conversion on Operating Subsidy

Equivalent to formal request of removal of units from inventory and ACC

PHA may be eligible for repositioning fee for approved demolition and disposition

Contact HUD financial analyst about repositioning fee

HUD intends issuing additional guidance on this subject

tenant based assistance funding for units approved for conversion2
Tenant-Based Assistance Funding for Units Approved for Conversion

Approval of Conversion Plan does not guarantee tenant based assistance or relocation funds for the PHA

Approval or implementation may be delayed until allocation of vouchers is available

PHA must submit separate HUD published invitation application of request for tenant-based assistance funds

Conversion Guide Training Manual

tenant based assistance funding
Tenant-based Assistance Funding
  • HUD will issue vouchers subject to funding and availability
  • Priority for Voucher request given to
    • Relocation for HOPE VI
    • Relocation for required conversion
  • HUD PIH notice will be issued to further qualify this in the near future
  • The approval process can be delayed until allocation of Vouchers are available
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