guidance for phas: required and voluntary conversion of public housing units “a toolkit for...

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

“A Toolkit for Change: From Removal to Redevelopment”

September 15-16, 2008Chicago, IL

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?

2

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

3

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

4

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

5

Logistics

•Q & A session•Materials•Exercises

6

Conversion Overview

7

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

8

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.

9

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

10

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

11

Moving to Work (MTW)

•Training materials will also highlight “MTW” provisions

•May follow slightly different process•Highlighted in text through graphics and

text boxes

12

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

13

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

14

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

15

Guide Materials

•Guide is not a substitute for the regulations

•Additional notices will be issued

16

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

17

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

18

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

19

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

20

Required Conversion

21

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

•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• 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

• 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

25

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.

26

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

decreased27

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

28

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

29

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

30

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

31

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.

32

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

33

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

34

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

35

36

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

XY001025 274 0 274

XY001040 34 0 34

Development Project Name Report Date Total Units Vacant Units Vacant Pct. Distressed

XY001025 High Point 4/5/2008 274 45 16.4 Distressed

XY001025 High Point 5/7/2008 274 47 17.1 Distressed

Conversion Information from HUD Website

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

37

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

38

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

39

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

40Conversion Guide Traning Manual

Timeline Table for Required Conversion

SAMPLE TIMELINE FOR INCLUSION OF FINALIZED REQUIRED CONVERSION INFORMATION IN ANNUAL PLAN

Action Jan 1 FY Start Apr 1 FY Start Jul 1 FY Start Oct 1 FY Start Property appears on SAC website list as a possible conversion candidate

Prior to Nov 1 (13 months or more before FY begins)

Prior to Mar 1 (13 months or more before FY begins)

Prior to Jun 1 (13 months or more before FY begins)

Prior to Sep 1 (13 months or more before FY begins)

PHA issues draft Annual Plan for public review, including FINALIZED required conversion information

Mid July (5 1/2 months

before FY begins)

Mid October (5 1/2 months

before FY begins)

Mid January (5 1/2 months

before FY begins)

Mid April (5 1/2 months before

FY begins) PHA submits Annual Plan to HUD with FINALIZED required conversion information


before FY begins)


before FY begins)

Mid April (2 1/2 months

before FY begins)

Mid July (2 1/2 months before

FY begins)

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

(Training Manual: Page 12)

41

Timeline Table for Required Conversion

SAMPLE TIMELINE FOR INCLUSION OF A REQUIRED CONVERSION STATUS REPORT IN ANNUAL PLAN

Action Jan 1 FY Start Apr 1 FY Start Jul 1 FY Start Oct 1 FY Start Property appears on SAC website list as a possible conversion candidate

Nov 1 to Jul 1 (6 to 13 months

before FY begins)

Mar 1 to Oct 1 (6 to 13 months

before FY begins)

Jun1 to Jan 1 (6 to 13 months

before FY begins)

Sep 1 to Apr 1 (6 to 13 months before

FY begins) PHA issues draft Annual Plan for public review, including a required conversion evaluation status report *

Mid July (5 1/2 months

before FY begins)


before FY begins)


before FY begins)

Mid April (5 1/2 months before FY

begins) PHA submits Annual Plan to HUD with a required conversion evaluation status report *


before FY begins)


before FY begins)

Mid April (2 1/2 months

before FY begins)

Mid July (2 1/2 months before FY

begins)

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

(Training Manual: Page 13)

42

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

43

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

44

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.

45

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

46

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

47

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 available48

49

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•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

50

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

51

Six Components of the Required Conversion Plan

1. Identification of units to be converted2. Obligation status of public housing capital

funds allocated to the development3. Evidence that public officials were

consulted4. Evidence that residents were consulted5. Description of PHA’s proposed future use

of the development6. Relocation Plan

52

Identification of Units

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

53

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

54

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

55

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

56

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

57

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…

58

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

59

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

60

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•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

62

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

63

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

64

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

65

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

66

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

67


•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

68


• 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…)

69

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

70

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

71

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

72

73

Required Conversion of Public Housing Activity Description

1a. Development(s) name(s):1b. Development(s) (project) number(s):1c. Asset Management Project (AMP) Number(s):1d. The specific public housing units that are (or may be) involved in the required

conversion if only a portion of a development listed above is to be converted.2. Has the PHA completed the Cost Analysis comparing the costs of continuing to

operate the units as public housing to the cost of providing tenant-based assistance? Yes No

3. Is a Conversion Plan required? Yes No Not Yet Determined (If yes, go to block 4; if no or not yet determined, explain below.)

4. Status of Required Conversion Plan (select the statement that best describes the current status)

Conversion Plan is in development Conversion Plan has been completed and is being submitted as part of this Plan (if

this is the status, complete blocks 5 through 9 below) Conversion Plan was submitted to SAC on: (DD/MM/YYYY) Conversion Plan was approved by OPHI on: (DD/MM/YYYY) Activities pursuant to the HUD-approved Conversion Plan are underway5. Has the PHA identified the obligation status of modernization, reconstruction, or

other capital funds for the distressed development(s), and has the PHA made recommendations concerning the transfer of these funds to alternative public housing uses? Yes No

6. Has the PHA consulted with appropriate public officials in developing the required conversion plan? Yes No

Has the PHA obtained the required certification? Yes No 7. Has the PHA consulted with the residents in the development of the conversion plan?

Yes No Does not apply because the site is vacant

Does the PHA have documentation to support the consultation? Yes No8. Has the PHA described how it proposes to use the development after the conversion

as well as the means and timetable for accomplishing any planned demolition, disposition, or redevelopment of the development? Yes No

9. Has the PHA developed a resident Relocation Plan that complies with 24 CFR

792.130? Yes No Does not apply because the site is vacant

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

74

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

75

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

76

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

77


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.

78

Case Study

79

Voluntary Conversion

04/18/23

80

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

81

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 community82

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

83

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

84

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

85

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)

86

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 development87

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

88

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

89

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

90

91

Voluntary Conversion Assessment Activity Description

1a.Development(s) name(s):1b.Development(s) (project) number(s):1c.Asset Management Project (AMP) Number(s):1d.The specific public housing units that are (or may be) involved in the

voluntary conversion if only a portion of a development listed above is to be converted.

2. Has the PHA completed the Cost Analysis comparing the costs of continuing to operate the units as public housing to the cost of providing tenant-based assistance? Yes No

3. Has the PHA completed an independent appraisal (market analysis) of the development before and after conversion? Yes No

4. Has The PHA completed a rental market analysis of existing conditions to determine the likely success of using tenant-based assistance for the residents of the public housing development? Yes No

5. Has the PHA completed an analysis of the likely impacts of the voluntary conversion on the community in which the development is located?

Yes No6. Has the PHA described its conversion implementation plans, including the

actions it plans to take to convert the development and to transition the residents to tenant-based assistance? Yes No

7. Has the PHA consulted with the residents in the development to review the conversion assessment? Yes No Does not apply because the site is vacant

Does the PHA have documentation to support the consultation? Yes No

Assessment Plan Activity for PHA Plan- Page 33

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

92

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

93

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)

94

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

95

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

96

Voluntary Conversion Assessment Components

1. Cost Analysis2. Analysis of Market Value3. Analysis of Rental Market

Conditions4. Impact Analysis5. Conversion Implementation

97

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

98

HUD Spreadsheet

•Located on HUD website:▫http://www.hud.gov/offices/pih/centers/sac/

docs/costcomparison.xls•Different for Required and Voluntary

99

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.

100

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

101

Cost Analysis

•Must have an independent appraisal to determine the market value to complete the cost analysis▫Before the conversion▫After the conversion

102

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

103

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

104

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

105

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

106

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

107

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

108

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

109

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)

110

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

111

Professional Judgment

•In accordance with USPAP•Conversion requirements•Common industry practices regarding

market valuations of real estate

112

113

Market Analysis Approach Used Market Value(Insert estimate)

1. Current Value “As Is” Public Housing

(_)Income(_)Comparable (_)Tax-assessment(_)Cost Approach

2. Future Value “Post-Rehab” Public Housing

(_)Income(_)Comparable (_)Tax-assessment(_) Cost Approach

3. Current Value “As Is” (depends on proposed future use) Select One: (_)Assisted Housing (_)Unassisted Housing (_)Market-Rate Housing(_)Other: _____________________________________


4. Future Value “Post-Rehab” (depends on proposed future use) Select One: (_)Assisted Housing (_)Unassisted Housing (_)Market-Rate Housing(_)Other: _____________________________________


5. “Highest and Best Use” Value or “Market Value” (*Insert this value at Section 5(c) of the Cost Analysis Excel Spreadsheet as the “market value of property”. Also insert this value whenever the “market value” of the property is requested in the calculation.)

(_)Income(_)Comparable Sale(_)Tax-assessment(_)Land Value

Options for Intended Future Use- page 38

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

114

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

115

“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

116

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

117

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 area118

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

119

Appraisal Methods

•Income Capitalization Appraisal Approach•Market Comparison Approach•Tax Assessment Approach•Cost Approach

•HUD expects appraisers will select the most feasible appraisal methods

120

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

121

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

122

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

123

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

124

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

125

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

126

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

127

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

128

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

129

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

130

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

131

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

132

Value

•Determined by dividing the net income by the capitalization rate

•Determination of value dependent upon▫Location▫Neighborhood conditions▫Market demand▫Etc

133

Special Considerations

•Utilities•Vacancy•Physical Needs Assessment (PNA)•Low Income Housing Tax Credits

134

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

135

Vacancy

•Appraisers may exercise professional judgment considering▫Management trends▫Historical patterns▫How trends will be altered in the future

under new management practices

136

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

137

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

138

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

139

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

140

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

141

Cost Approach• Hard cost

▫Land▫Improvement cost

• Soft Cost▫Design▫Appraisals▫Bond financing▫Construction loan interest▫Relocation▫Lease-up cost

142

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

143

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.

144

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

145

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

146

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

147

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

148

Number 4- Impact Analysis for VCA

•Impact on the community in which the development is located

•Detailed discussion ona. the availability of affordable housing in

the community; b. the concentration of poverty in the

community; and c. any other substantial characteristics of

the community.

149

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

150

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;

151


▫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.

152

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

153

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.

154

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

155

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

156

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

157

Eight Required Components of the Plan

1. Future Use of the Development2. Impact Analysis3. Description of How the Voluntary

Conversion Plan is Consistent with the Findings of the Conversion Assessment

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

158

Eight Required Components of the Plan- continued

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

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

7. Relocation Plan8. 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

159

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)

160

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 guidance161

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

162

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.

163

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.

164


•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.

165

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

166

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

167

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

168

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…

169

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

170

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

171

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

172

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

173

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

174

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

175

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

176

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

177

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

178

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

179

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

180

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.

181


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

182


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

183

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

184

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

185

The Uniform Relocation ActCFR § 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.

186

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

187

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

188

189

Voluntary Conversion Plan Activity Description

1a. Development(s) name(s):1b. Development(s) (project) number(s):1c. Asset Management Project (AMP) Number(s):1d. The specific public housing units that are (or may be) involved in the

voluntary conversion if only a portion of a development listed above is to be converted.

2. Has the PHA provided information on its plans for the development after the voluntary conversion? Yes No

3. Has the PHA provided an impact analysis of the voluntary conversion of the development on the community? Yes No

4. Has the PHA demonstrated that the voluntary conversion plan accurately describes the findings of the conversion assessment? Yes No

5. Has the PHA consulted with the residents in the development to review the conversion plan? Yes No Does not apply because the site is vacant.

Does the PHA have documentation to support the consultation? Yes No6. Has the PHA consulted with appropriate public officials in developing the

voluntary conversion plan? Yes No

Has the PHA obtained the required certification? Yes No 7. Has the PHA confirmed that any proceeds received from a conversion

activity will be subject to the limitations on the use of these net proceeds found in Section 18 of the 1937 Housing Act? Yes No

8. Has the PHA completed a detailed Relocation Plan in accordance with 24 CFR 972.230(b) as part of its voluntary conversion plan? Yes No

9. Has the PHA summarized how the conversion of these public housing units supports the three conditions necessary for HUD to approve a voluntary conversion pursuant to 24 CFR 972.224? Yes No

Voluntary Plan Activity for the PHA Plan- Page 52

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

190

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

191

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

192

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.

193

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 §972.230194

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

195

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

196

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.

197

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

198


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

199Conversion Guide Training Manual

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

200

Case Study

201

Question and Answer Time

Questions?

202

guidance for phas: required and voluntary conversion of public housing units “a toolkit for...

Documents

required conversion

conversion approval

conversion overview

mandatory conversion

conversion option

conversion assessment

voluntary conversion

il slide