House Committee Passes
HOPE VI Reauthorization

Legislation that would reauthorize HOPE VI and require PHAs to replace each unit demolished in a redevelopment project was adopted by the House Financial Services Committee last week, even as key lawmakers indicated a willingness to compromise on the one-for-one replacement provisions.

H.R. 3524’s chief sponsor, Rep. Maxine Waters (D-CA), said the one-for-one requirement is necessary to ensure that HOPE VI adds to the public housing stock and does not result in a net loss of units. Further, said Waters, PHAs have flexibility in where they place replacement units – that they do not have to be built on-site but must be within the jurisdiction of the housing authority.

Rep. Chris Shays (R-CT), a co-sponsor of the bill, offered an amendment that would have required HUD to give additional credit to HOPE VI proposals that included one-for-one replacement, but would not have required that every proposal include such a provision. "The one-for-one requirement may prevent a development from ever taking place," said Shays.

"If I was the only vote in Congress I would keep the bill exactly as it is," said Committee chairman Barney Frank (D-MA), a supporter of one-for-one replacement (CWR, July 9, 2007). "But," said Frank, "I recognize there are other considerations."

Frank said he was not yet ready to compromise on the one-for-one replacement requirements in the bill, but that as the legislation moves forward he would consider the possibility of using incremental vouchers ("if they are genuinely incremental") and other means, such as not requiring replacement of vacant units. Still, said Frank, "We don’t want to give anybody an incentive to keep units vacant."

Frank opposed the Shays amendment ("I’m not ready at this point to be so flexible") and it failed on a voice vote.

The bill approved by the committee would require PHAs to:

-- Replace all public housing units within 12 months of the start of demolition.

-- Carry-out extensive resident notification procedures both prior to a grant application and after an award is made. The PHA would be required to conduct a public hearing regarding the revitalization plan at least 75 days prior to submitting an application.

-- Develop a process "that provides opportunity for [resident] comment on specific proposals for redevelopment, any demolition and disposition involved, and any proposed significant amendment or change to the revitalization plan."

-- Monitor displaced households and provide updated address and contact information for each household affected by the revitalization plan to HUD on a quarterly basis.

-- Make public housing units at a redeveloped site "available for occupancy before any non-assisted dwelling unit is made available for occupancy."

In the bill, HUD is instructed to give preference to HOPE VI grant proposals "likely to be most appropriate and beneficial for families whose housing needs are difficult to fulfill, including individuals who … have been released from a State or Federal correctional facility, have not been arrested for or charged with any crime during the period beginning upon probation or parole, and for whom affordable housing is a critical need."

Further, grant proposals will be judged on the degree to which they meet the components of the Leadership in Energy and Environmental Design (LEED) green building rating system (or their equivalents) for new construction and major renovations." Those "green provisions" were supported by a broad group of housing providers, including CLPHA.

Rep. Frank said that either the HOPE VI legislation or a flood insurance bill passed by the committee last week will likely reach the House Floor this year.

Stop-Loss Agencies
Included in Bill

Stop-loss housing authorities are among those who would be protected from the more onerous provisions of HUD’s approach to asset management under legislation approved by the House Financial Services Committee September 25.

The legislation, H.R. 3521, was approved by voice vote. It originally exempted stop-loss agencies from its provisions, including those that would prohibit HUD from limiting management fees deemed "reasonable" by a PHA. An amendment to include the stop-loss agencies in the bill was offered by Rep. Nydia Velázquez (D-N.Y.) and was agreed to by voice vote.

The amendment, said Velázquez, means that "stop loss agencies [will] enjoy the same safeguards" as other PHAs.

The committee-passed legislation:

-- Prohibits "any restriction or limitation on the amount of management and related fees with respect to a public housing project if the fee is determined to be reasonable by the public housing agency" until January 1, 2011 and only if such limits are agreed to as part of a negotiated rulemaking process "which is to be convened by the Secretary no earlier than April 1, 2009." CLPHA and its industry partners argued that caps on management fees should be implemented in accordance with the Public Housing Operating Fund Final Rule, which requires PHAs to be in full compliance with asset management by 2011.

-- Restricts HUD from limiting "in any way the use by public housing agencies of amounts for Capital Fund assistance … for costs of any central office of a public housing agency." CLPHA and its industry partners argued that HUD has restricted the use of Capital Funds to "property expenses," in contradiction to a provision of the Quality Housing and Work Responsibility Act (QHWRA) that allows PHAs to transfer up to 20 percent of Capital Funds to operations with no further restrictions. The flexibility provided by QHWRA is important to the successful conversion to asset management, as well as to the successful operation of public housing in the present funding environment, the industry groups argued.

-- Exempts smaller agencies from participation. The Public Housing Operating Fund Final Rule exempts housing authorities with fewer than 250 units from an asset management model, but that threshold would be raised to include agencies with 500 or fewer units under the legislation.

The bill’s sponsor, Rep. Albio Sires (D-NJ), said that "asset management is a good idea but it [has been] implemented in a flawed manner." He said that 34 employees of the Jersey City Housing Authority lost their jobs "as a direct result of HUD’s implementation of asset management."

Rep. Barney Frank (D-MA), chair of the full committee, and Rep. Maxine Waters (D-CA), chair of the Housing and Community Opportunity Subcommittee, voiced their support for the measure. Frank held up a letter co-signed by CLPHA and its industry partners, which, he said, included a request "for more flexibility and less rigidity" in the implementation of asset management.

Waters said the bill would "require negotiated rulemaking to settle the issue of management fees," which "appeared to have been arrived at in an arbitrary manner."

The ranking Republican on the committee, Spencer Bachus (R-AL), noted that HUD opposed the bill, but said that a number of Republicans on the committee supported the measure.

 

Working Groups Present
Streamlining’ Proposals to HUD

HUD will move quickly to streamline PHA Plan and Capital Fund processes and programs based on recommendations from one of the administrative reform working groups it established in July to examine ways to simplify procedures in public housing.

The department wants to "maximize local flexibility" as the transition to asset management is made, Assistant Secretary for Public and Indian Housing Orlando Cabrera told a September 27 Washington meeting at which the recommendations of the 10 focus areas were discussed. "We should treat PHAs as responsible business enterprises" and expect "a high level of professionalism," said Cabrera.

Perhaps the strongest commitment to change was made as a result of the PHA Plan and Capital Fund working group’s proposals. These changes, said Greg Byrne, director of HUD’s Financial Management Center, represent "a great simplification of what you’re doing now." Said Byrne, "In the next year of so we can make tremendous progress on this."

Among the working group’s recommendations:

-- Convert to a "narrative description" of capital needs of each project in a PHA plan.

-- Eliminate HUD review of Capital Fund budgets.

-- Convert the Capital Fund to an accounting system based on Generally Accepted Accounting Principles (GAPP) and establish a single chart of accounts for the Financial Data Schedule (FDS). "The resulting conversion to GAAP would significantly simplify and reduce the administrative burden associated with CFP budget preparation and accounting," says the working group final report.

-- Reduce the Number of Budget Line Items (BLIs) in the Line of Credit Control System (LOCCS).

-- Allow Operating Fund submissions to be filed on-line through a process "very similar to the current FASS and MASS systems." Said the report, "Such a system would be a major step in reducing administrative burdens on PHA and HUD staff. It would also better facilitate HUD monitoring and reduce the burden as well as the cost on both PHAs and HUD by having needed data on line."

HUD officials were generally receptive to the proposals of the other working groups, but fell short of offering the same level of endorsement they did to the proposed changes in the PHA Plan/Capital Fund areas.

Among the other areas considered:

-- Homeownership. The working group recommended that HUD centralize its public housing homeownership initiatives into one area, consolidate rulemaking for these programs, implement a Section 32 marketing strategy, provide guidance on the use of proceeds, and phase-out the dormant Turnkey II and HOPE I programs.

-- Development and Asset Repositioning. The working group recommended that field office staff receive additional training on processing development requirements, consolidate processing of CFFP, OFFP and development proposals into a one-stop-shop, and establish CFFP safe harbor standards similar to those in the multi-family program.

-- General Monitoring. The working group recommended that the Public Housing Assessment System (PHAS) focus on four main indicators: physical condition, financial condition, management performance and the Capital Fund. The new PHAS should provide scores for public housing activity and not other housing programs within a PHAs portfolio, said the group. To the degree possible, the monitoring should be consistent with that of multifamily programs, particularly in such areas as physical/management inspections and the ability to correct physical deficiencies prior to a final score being issued.

-- Occupancy. The group noted that a number of changes are already underway, including electronic income verification (EIV) and guidance on grievance procedures and deconcentration. Other areas, such as resident term limits, are statutory and therefore will not receive much attention.

-- Financial Reporting. Byrne said that he would request a document from the HUD General Counsel making clear that a PHA’s fee income is "unarguably your income." He reiterated HUD’s position that such services as painting cannot be charged to a central office account, but must be charged on an allocation basis but must be charged a fee for actual services performed.

-- Resident Participation and Self-Sufficiency. The working group, made up largely of residents and resident advocates, recommended that resident rights under CFR 964 be preserved and strengthened. Further, said the group, residents should be provided more information about asset management and its potential impact on them.

Other working groups dealt with systems and technology issues in public housing, general management issues, and structural concerns such as the "basic legal documents and arrangements between HUD and PHAs."

The reports of all of the working groups are available on HUD’s website at http://www.hud.gov/offices/pih/programs/ph/phari.cfm. Over the next few weeks, said HUD officials, they will post the departments’ formal response to the recommendations and what plans, if any, they have for implementation of specific proposals.

 

Gregg Fortner
Resigns in San Francisco

(On Sept. 27, San Francisco Housing Authority Executive Director Gregg Fortner issued the following statement.)

Over the last two weeks, City Hall staff has expressed to me the Mayor’s feeling that it is time to make a change in the leadership at the San Francisco Housing Authority. I agree.

Therefore, my last day with the agency will be January 4, 2008 after seven years of service.

There are many factors contributing to this decision. For me, the proverbial "straw" was the editorial cartoon printed in the San Francisco Chronicle on September 1, 2007. The cartoon was offensive to me both professionally and personally. Additionally, the degrading racial imagery contained in this cartoon shows an incredible insensitivity to the struggles and history of the African-American people in this country. Although City Hall apparently has little control over what is presented in the media, recent public behavior by City Officials contributed to a perception that such political satire was appropriate and acceptable.

Over the next three months, I will work diligently to facilitate a smooth transition to the City’s new direction. During this time, I wish to express my deepest and most sincere gratitude to the residents of Public Housing and Section 8, the Housing Authority Commission, the staffs of Speaker Pelosi and Senators Feinstein and Boxer, HUD officials in DC and here in San Francisco, the many business and community partners working with the Housing Authority, and the numerous public and private entities that have helped us survive the challenging environment in which we must operate. Most of all, I wish to thank the outstanding staff of the San Francisco Housing Authority who have performed far beyond any reasonable expectation in an environment defined by diminishing resources and increased expenses.

 

FYI

-- HUD has published the Final Fair Market Rents for 2008 in today’s (Oct. 1) Federal Register. Click here to see them.

-- The House and Senate passed a Continuing Resolution that funds the Federal Government through Nov. 16. The stopgap measure, which continues funding at FY 2007 levels, was necessary because the House and Senate did not agree on funding levels for federal departments and programs by the Oct. 1 deadline. President Bush has threatened vetoes of spending bills, including the HUD appropriations bill, that go beyond his requested spending levels.

-- The CLPHA Weekly Report will next be published on Tuesday Oct. 9 due to the Columbus Day holiday.

 

CLPHA Fall Meeting
Agenda Includes LA Summit

On page four of this newsletter is a registration form for our fall executive director’s meeting, Oct. 17-19 in Marina Del Rey, California. The draft agenda can be found here.

We have a great program planned. We’ve arranged to attend the kick-off of Los Angeles Mayor Antonio Villaraigosa’s citywide "Housing Summit" on the morning of Oct. 17, followed immediately by a tour of some Los Angeles public housing developments. If you’ve already registered for the conference and are planning to arrive to make our customary after-lunch start time, please consider rearranging your flight and hotel reservation to arrive in time to attend the Housing Summit kick-off.

We hope you can make it for the 10:30 a.m. bus departure that day, but if your plane arrives later than that, we will provide transportation so you can catch-up with the tour already in progress.

Also, we’ve extended the discount hotel rate until Oct. 5.

Please review the agenda for what promises to be an informative, thought-provoking, and collegial conference. We look forward to seeing you in Marina Del Rey!