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HUD Housing Programs: Tenants’ Rights (The Green Book): 12.2.3.2.2 Demolition and Redevelopment under the “Mixed Income” Model

For many years, HUD made two kinds of HOPE VI awards: revitalization awards and demolition awards.156 In general, it was the revitalization awards, not demolition awards, that lead to losses of public housing units, because HUD usually limited demolition grants to developments already identified for removal under some other statutory authority, such as Section 18, requiring additional effort on the part of PHAs.157

HUD Housing Programs: Tenants’ Rights (The Green Book): 12.2.3.2.4 Legal Claims to Prevent the Loss of Public Housing Under HOPE VI

Essentially, all of the legal arguments applicable to challenge the demolition or disposition of public housing under Section 18 of the U.S. Housing Act are potentially available to challenge the loss of public housing units under HOPE VI.176 CDBG and HOME funds are commonly used in connection with HOPE VI redevelopment activities, thereby triggering replacement housing requirements under § 104(d).177 As financial assistance provided under the U.S.

HUD Housing Programs: Tenants’ Rights (The Green Book): 12.2.3.3 Choice Neighborhoods Initiative

HUD’s Choice Neighborhoods Initiative (CNI) was authorized by Congress187 as a successor to the HOPE VI program, expanding eligible projects to include severely distressed188 HUD-assisted housing189 and vacant or foreclosed private housing, as well as public housing. Eligible applicants include public housing authorities, local governments, nonprofits, and for-profit developers that apply jointly with a public entity.

HUD Housing Programs: Tenants’ Rights (The Green Book): 12.2.4.4.3 Legal Strategies to Prevent Voluntary Conversions

Compared to required conversions, voluntary conversions should be more vulnerable to challenge. Because they are not statutorily mandated, voluntary conversion activities, especially to the extent that they displace families and reduce affordable housing opportunities, can be challenged using essentially the same strategies for challenging demolition or disposition, including programmatic noncompliance and fair housing violations.309

HUD Housing Programs: Tenants’ Rights (The Green Book): 12.2.5.1 Introduction

Because of the normally long waiting list for public housing, the effective vacancy rates in well-managed projects should approach zero, reflecting only the very limited amount of time required to prepare a recently vacated unit for new occupants. In some projects, however, vacancy rates may be much higher. Most often this occurs because of poor management and maintenance policies, such as excessive turnover and inordinate delays in the process of preparing the units for new occupants.

HUD Housing Programs: Tenants’ Rights (The Green Book): 12.2.5.3 Strategies to Combat Excessive Public Housing Vacancies

As with demolition or disposition of public housing, the problem of excessive vacancies is one that may be solved by political as well as legal methods and will require the organized effort of project tenants, of applicants denied admission, and of organizations concerned about the shortage of low-income housing. Using tenant and community participation rights in the PHA plan process can improve a PHA’s policies to promote higher occupancy rates.325

HUD Housing Programs: Tenants’ Rights (The Green Book): 12.2.6 Responsible Conversion of Public Housing

Because of the continuing and growing need to recapitalize the public housing stock, programs and policy proposals to replace units with other forms of subsidy will continue to arise at the federal and local level.336 Whatever their promise for addressing the physical conditions of the units, these replacement initiatives necessarily pose risks for tenants and communities, by possibly changing the rules governing affordability, long-term use restrictions, ownership and management, and a wide array of tenant and applicant protections.

HUD Housing Programs: Tenants’ Rights (The Green Book): 12.5.1 Introduction

Units can be lost from the Tenant-Based Section 8 Voucher program for a variety of reasons. Two factors that can result in loss of actual Vouchers to the community and possibly to currently assisted households are: (1) PHA underutilization of authorized Voucher units or budget authority that results in fewer units used in the community and could trigger HUD’s reallocation of the funds elsewhere; and (2) changes in Voucher funding formulas or annual appropriations.

HUD Housing Programs: Tenants’ Rights (The Green Book): 12.5.2 PHA Underutilization

A PHA that does not use its full Voucher allocation assists fewer families, and applicants must wait longer for housing assistance. In addition, a low PHA lease-up or “utilization rate” may result in less funding for a PHA in future years or prevent a PHA from obtaining additional Vouchers that occasionally become available, which again affects the number of applicants admitted and their waiting time. Finally, a low utilization rate may result in Voucher funding being removed from the jurisdiction and allocated elsewhere, despite unmet local needs.

HUD Housing Programs: Tenants’ Rights (The Green Book): 12.5.3 Funding Shortfalls

Each PHA’s Voucher program depends on annual federal appropriations, as well as the formula used to distribute those funds.633 Since 2007, Congress has used a Voucher renewal funding formula that bases each PHA’s annual renewal funding on Voucher leasing (not to exceed the number of authorized Vouchers) and costs for the prior calendar year, adjusted for inflation.634 This policy has reduced funding uncertainty and generally increased utilization rates.

HUD Housing Programs: Tenants’ Rights (The Green Book): 12.3.2.3 Prepayments after Restricted Use Period

Most owners of properties with HUD-subsidized mortgages have the unilateral option to discontinue their participation in the program by prepaying the loan any time after 20 years from original mortgage endorsement.364 However, unilateral prepayment is available only where the property is not subject to an additional prepayment approval requirement under federal, state, or local law. The “Prepayment Eligibility” flowchart, Appendix 12C, at the end of this chapter, can help identify which laws apply to new prepayment requests.

HUD Housing Programs: Tenants’ Rights (The Green Book): 12.3.2.5 Legal Claims to Challenge Attempted Prepayments

Generally, most conversions to market-rate use are now subject to the owner’s choice. However, in many cases, the existing restrictions on some properties, and the procedural and substantive requirements of federal, state, and any local laws may provide legal claims to delay, inhibit or prevent conversion. Legal claims may be important to achieve some or all of the objectives of tenants; alternatively, the judicial process may not be well-suited to doing so.

HUD Housing Programs: Tenants’ Rights (The Green Book): 12.3.3 Conversion Upon Mortgage Maturity

Of increasing scope and concern is the conversion risk posed from the retirement of the mortgage through repayment of the entire principal loan amount over its scheduled term. Most HUD-subsidized loans were for a 40-year term, although some were for 30-year terms, often those that were state-financed rather than HUD-insured. When any loan is fully repaid according to its original amortization schedule, the mortgage and accompanying regulatory agreement are extinguished.