Repositioning Public Housing
Demolition and Disposition Applications (Section 18)
The demolition and disposition of public housing is authorized under Section 18 of the Housing Act of 1937 (the Act), as amended. The implementing regulation, 24 CFR part 970, was published in the Federal Register on October 24, 2006, and took effect on November 24, 2006. Minor corrections to the regulation were published in the Federal Register on January 23, 2008. HUD reviews these applications in accordance with the guidance in PIH Notice 2024-40.
SECTION 18 APPLICATION CHECKLIST
Demolition Application
Removal of public housing units or other property from the public housing stock by demoing (in whole or part). Demolished property must be obsolete as to physical condition, location, or other factors.
Disposition Application
Transfer of public housing units or other property via sale, lease or other transaction, if the transfer is justified under statutory, regulatory, notice, and other HUD criteria.
Demolition and Disposition Application
Removal of public housing units from the public housing stock by demolishing first and followed by the sale or lease of the now vacant land (in whole or part). Demolition will occur prior to the disposition of the public housing property.
Removal of public housing units from the public housing stock by demolishing first and followed by the sale or lease of the now vacant land (in whole or part). Demolition will occur prior to the disposition of the public housing property.
If demolition will occur after the proposed disposition to an acquiring entity for the demolition, then submit a disposition only application.
If a PHA's property sustains substantial destruction due to a casualty loss or natural disaster (e.g., fire, tornado, hurricane, flooding), the PHA may need to submit an after the fact Section 18 application to ensure HUD records are accurate. A PHA may also need to submit a Section 18 demolition and/or disposition application in conjunction with demolishing, restoring, rebuilding, or repositioning Public Housing property damaged by casualty loss or natural disaster. The SAC application is subject to all Section 18 application requirements when submitting documentation to HUD, but there are some submission requirements.
Application exceptions, not required to submit include:
- Resident Consultation
- Board Resolution
- Local government consultation
- Letter of support from local government
- FHEO review
Possible accidental loss justifications include: 24 CFR 970.15(a)(1) for demolition OR 24 CFR § 970.17(a) for disposition. Learn more >
To evidence physical obsolescence for the demolition (24 CFR § 970.15) OR disposition (24 CFR § 970.17(c)) of a project, PHAs must show that the necessary modification and/or rehabilitation to a project is not cost-effective. i.e., costs exceed the HUD Total Development Cost (TDC) Limit threshold (62.5% of TDC for elevator structures and 57.14% for non-elevator structures)).
PHAs should use the TDC information associated with the year the rehabilitation cost estimate was generated. TDC estimates are released annually. For instance, if a rehabilitation cost estimate was generated in November 2022, but the PHA did not submit the application until March 2023, the PHA should use HUD’s 2022 TDC information. Learn more about HUD’s TDC calculations 24 CFR 905.314.
- Annual TDC Limits: 2024, 2023, 2022, 2021, 2020, 2019, 2018, 2017, 2016, and 2015. If the PHA's municipality is not listed, please select the nearest municipality to the property proposed for removal under obsolescence.
- 52860-B form: This is the TDC & Rehab Cost Estimate Addendum (HUD-52860-B, excel or PDF), required for all applications considering physical obsolescence justification for repositioning.
- Detailed Needs Assessment Report*: A detailed scope of work (PNA preferred). The report outlines the required rehabilitation and repair work within the next 3 years.
- 0-3 Year Rehab Cost Estimate*: An excel document of specific and detailed work-items that require rehabilitation or repair only within next 3 years as it pertains to the needs assessment report. Note: this is separate from the 52860-B form.
- > Maximum Allowable Soft Costs: Construction contingency (7.5%), Architectural/engineer’s design/monitoring fees (5.5%), Profit/Overhead fees for ONLY specialty subcontractor e.g., HVAC, electric, plumbing, elevator (10%); General condition fees e.g., permit, insurance, bonds (5%), PHA administrative costs (2%). See PIH Notice 2021-07 for guidance on allowable soft costs based on hard construction estimates.
> *Preferably prepared by an outside engineer or architect.
> Reach out to the SAC office at SACTA@HUD.gov for guidance
on non-dwelling structure's physical obsolescence review.Section 18 – Physical Obsolescence RAD Common Report Name Physical Needs Analysis (PNA) Capital Needs Assessment (CNA) or RAD Physical Condition Assessment (RPCA) Report Analysis Immediate Physical Needs for repair over next 0-3 years Modernization needs over the next 20 years Rehab Cost Estimate Standard Rehab costs meets threshold compared to HUD’s Total Development Cost (TDC) limits for the locality: 57.14% (non-elevators) 62.5% (elevators) Actual Estimated Costs for the next 20 years Guidance 24 CFR 970.15 - demolition | 24 CFR 970.17(c) - disposition | PIH Notice 2024-40 | PIH Notice 2011-38 Determining Physical Obsolescence under Section 18 (Video) | (Slides) RAD Notice 2019-09
Guide to RAD Physical Condition Assessment (RPCA)
RAD CNA e- toolHUD Forms/Submission -52860-B form
-Excel version of rehab cost estimate
-Full PNA report with photo evidence
Submit as part of SAC DDA application-RAD CNA e-tool
Submit as part of RAD ApplicationFor more information on Determining Capital Needs: RAD vs Section 18
The disposition allows for the development of other properties that will be more efficiently or effectively operated as low-income housing projects. Repositioning applications that apply under more efficient and effective for off-site development (24 CFR § 970.17(b)) OR on-site development (24 CFR § 970.17(c)) will only be eligible to receive up to 25% of the TPVs requested by the PHA. For example, if 80 units were occupied in the last 24 months at time of application submission under efficient and effective, the PHA can only receive up to 20 TPVs or (25% of 80 units).
In accordance with Section 18(f) of the U.S. Housing Act of 1937 (1937 Act), the PHA may demolish not more than the lesser of 5 dwelling units or 5% of a PHA’s total public housing dwelling units in a 5-year period, see 24 CFR 970.27(b). Also, determine if the unit(s) meet criteria under 24 CFR 970.27(c). Note: There is a submission protocol to notify SAC via the Public Housing Information Center/Inventory Management System (PIC/IMS) prior to the de minimis demolition, but HUD approval and application is not required. PHAs should check that De Minimis Demolition exception is the only option for them. PHAs should verify whether a different SAC application type may be more suitable and not use up the limited De Minimis Demolition capacity the PHA has available.
PHAs demonstrate conditions (density, or industrial or commercial development) present serious obstacles in maintaining the units as healthy or safe housing and why the PHA cannot cure or mitigate those conditions in a cost-effective manner. 24 CFR § 970.17(a) is a possible application justification.
PHAs demonstrate a lack of demand for the units. Supporting documentation includes evidence the units have long-term vacancy issues, notwithstanding due diligence in marketing (e.g., census tract data on declining population in the jurisdiction; units located in an isolated area with limited access to transportation and infrastructure; high turnover rates). On a case-by-case basis, HUD may require a PHA to submit a market analysis or HUD may perform one. 24 CFR § 970.17(a) is a possible application justification.
The PHA owns and operates 50 or fewer public housing units under its ACC and has determined that it is in the best interests of the residents and PHA to closeout its Section 9 public housing program in accordance with Notice PIH 2016-23. 24 CFR § 970.17(c) is a possible application justification.
Must submit a HUD-5837 form. Learn More Closeout FAQs >
Due to distance between units and lack of uniformity of systems (e.g. HVAC, utilities), the PHA demonstrates an unsustainability to operate and/or maintain the units as public housing. For purposes of this notice, scattered site units generally mean units in non-contiguous buildings with four or fewer total units. 24 CFR § 970.17(c) is a possible application justification.
The PHA certifies, by narrative statement and supporting documentation, that disposition of non-dwelling buildings or vacant land meets the criteria because the property either:
- Exceeds the needs of the project after the date of full availability (DOFA) (24 CFR 970.17(d)(1)); OR
- The disposition of the property is incidental to, or does not interfere with, continued operation of the remaining portion of the project (24 CFR 970.17(d)(2)).
PHAs should only use one of the justifications under 24 CFR § 970.17(d) for the disposition of vacant land and/or non-dwelling structures.
A land swap between a PHA and another entity will be pursuant to 24 CFR 905.608, which requires PHAs to get HUD approval to acquire property. The land swap will be an exchange of public housing property for another property that is of equal or greater value. Generally, land swap transactions will fall under 24 CFR 970.17(d) and include vacant land.
Three kinds of RAD/Section 18 Blends:
- Construction Blend
- Small PHA Blend
- Sequence Blend
These RAD/Blends allow for:
- Higher contract rents support greater financing;
- Robust resident rights;
- RAD one-for-one replacement requirements apply (with de minimis);
- Public housing funds can be used in project conversion;
- HUD underwriting of entire project to ensure project viability.
Seller/Promissory Note
Transactions with a Seller/Promissory Note (typically in tax credit deals) are seen as a below FMV transaction by the SAC. The SAC sees this as a below FMV transaction because the seller note is typically subject to cash flow and may not be paid back in full to the PHA by the acquiring entity. The PHA may consider this a FMV transaction for the purposes of their tax credit underwriting, as the PHA would receive a seller's note that is the appraised “FMV of the property”.
Resident Relocation
The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (URA) does not apply to Section 18 actions. However, Section 18 of the Act and 24 CFR Part 970 contain similar, but distinct, requirements for the relocation of residents. 104(d) of the Housing and Community Development Act of 1974 applicable, the notice requirements at 24 CFR 970.21(e) apply. Such notice must also explain to the tenant the assistance available under section 104(d) (which includes offering the choice of assistance calculated at section 104(d) or URA levels).
See Appendix 33 of HUD Handbook 1378.
Proceeds
PHAs may realize proceeds when they sell, transfer, ground lease or otherwise dispose of public housing property. PHAs retain flexibility to determine the use of proceeds, provided the use is consistent with the 1937 Act which requires that proceeds be used for the provision of low-income housing or to benefit the residents of the public housing agency; or leveraging amounts for securing commercial enterprises, onsite in public housing projects of the PHA appropriate to serve the needs of the residents. A PHA’s use of proceeds is subject to HUD (SAC) approval pursuant to 24 CFR part 970.19. See PIH Notice 2020-23 for allowable use of proceeds.
- Proceeds Training Video >
- PIH Notice 2020-23 (Use of Proceeds under Section 18 Disposition or Section 22 Voluntary Conversion) >
- Memo: Proceeds for SAC Letter Disposition Approvals >
PIC Reporting After Demolition/Disposition
In accordance with 24 CFR 970.35 and SAC's approval letter, PHAs must ensure the Public Housing property is in “Removed from Inventory” (“RMI”) status in IMS/PIC within 7 days of making the final payment to the demolition contractor (demolition) or execution of sales or lease contract (disposition).
Specific instructions are as follows:
- Select the "Development Number", then select "Add Transaction”
- Select the appropriate "Application (DDA) Number" from the drop-down menu;
- Select the "Development Number", then select "Add Transaction”
- Select the appropriate "Application (DDA) Number" from the drop-down menu;
- In the "Action/Closing Date" box, enter the removal (demolition) date If the properties in a DDA application were demolished/disposed of (phased) on multiple dates, a separate transaction is needed for each action date;
- Use “Remove Residential Inventory by Building” section, select the appropriate building(s) available in the "Complete Buildings Available" box and transfer them to the "Proposed Buildings" box
- Save the information using the "Save" button. The status of this information is then displayed as "Draft”;
- SPHA supervisory staff submits the information to the PHA Executive Director, or the designated final reviewer at PHA, using the Submission sub tab. The status becomes "Submitted for Review”;
- PHA Executive Director or designee uses the Review sub tab to reject the transaction, which places it in a "Rejected" status, or approves, which places it in a "Submitted for Approval" status;
- The Field Office reviews the request, and once the Field Office approves it, the status of the units in IMS/PIC permanently changes to RMI.
All requests for HUD's consent for demolition and/or disposition must be made electronically through PIC. The PHA must complete the applicable sections of the HUD-52860 (see Detail Matrix on page 9 of HUD-52860).
Required Forms:
- HUD-52860;
- HUD-52860-A addendum;
- If physical obsolescence justification HUD-52860-B addendum; and
- If closing out the public housing unit portfolio or adding public housing units,
HUD-5837 form. Closeout FAQs >
De Minimis Demolition (Section 18)
De Minimis Demolition authorizes PHA to demolish units under Section 18(f) of the Housing Act of 1937 (the Act) and pursuant to 24 CFR 970.27. PHAs are required to provide formal notice to the SAC prior to demolition. The PHA should look at other repositioning options before using the De Minimis.
DE MINIMIS DEMOLITION SUBMISSION CHECKLIST >
Requirements
24 CFR 970.27(a) & (b)
In any 5-year period a PHA may demolish no more than 5 dwelling units OR 5% of the total dwelling units owned by the PHA, which ever is fewer.
24 CFR 970.27(c)
The demolished unit is for meeting the service or other needs of the public housing residents (i.e., community center, laundry facility, office space, etc.) OR Beyond repair
- Determine the PHA has the authority to demolish the proposed units (not more than the lesser of 5 dwelling units or 5 percent of the total public housing dwelling units and limited by the 5-year period, see 24 CFR 970.27(b) for how to count the units)
- Determine that the units meet one of the criteria for demolition outlined in 24 CFR 970.27(c) (the units are “beyond repair” or the space occupied by the units will be used for meeting the service or other needs of the residents such as use of space to construct a laundry facility, community center, child care facility, office space for a general provider or for use as open space or garden)
- Ensure an Environmental Review is done under 24 CFR part 58 or 50
- If the demolition involves an alteration of existing housing facilities, follow the requirements of 24 CFR 8.23
- Include the demolition in the PHA Plan (or significant amendment); follow the PHA plan requirements at 24 CFR part 903 (e.g., including resident consultation and public meeting), and provide certification as described in 970.7(a)(1).
- Consult local government officials and provide evidence in accordance with 24 CFR 970.7(a)(14).
- Secure a Board Resolution approving the de minimis demolition after all resident and local government consultation has been completed.
- Assure the demolition will not jeopardize any agreements that PHA has entered into regarding its public housing units (e.g., Energy Performance Contracting; Capital Fund Financing Program; Operating Fund Financing Program or Rental Assistance Demonstration (RAD) Commitment to Enter into a Housing Assistance Payment Contract (CHAP), Financing Plan or RAD Conversion Commitment (RCC)) or assure that it satisfies the terms and conditions of such agreement before proposing the demolition action.
- Assure the demolition is consistent with all applicable civil rights requirements, including the PHA’s duty to affirmatively further fair housing as demonstrated by compliance under 24 CFR part 903 and its annual certification.
- Consult with the resident advisory board (RAB), resident groups, and any residents who will be displaced, including consultation on where the residents will be relocated (e.g., other public housing units or units in the private market with a voucher)
- Prior to commencing the demolition, submit the applicable information to HUD via the “Inventory Removals Module” of IMS/PIC. Select “De Minimis Demolition” from the drop-down menu. Upload a completed copy of the HUD-52860. Note that the instructions for De Minimis Demolition on Page 9 of the HUD-52860 inadvertently omit the requirement for the PHA to consult its local government officials in accordance with 24 CFR 970.7(a)(14) and step 5 above. Regardless, PHA must still submit evidence of this consultation as part of the IMS/PIC De Minimis Application
SAC Processing
If the PHA’s submission meets all applicable requirements including submission of all information, HUD SAC will accept the PHA’s submission and certifications unless HUD has independent information that the requirements for de minimis demolition have not been met. The HUD SAC will provide written review to the PHA before the de minimis demolition action occurs.
Resident Relocation
Prior to commencing the demolition, if the units are occupied, the PHA must assure that all residents living in the units are provided with housing assistance in accordance with applicable federal laws and requirements. Because Section 18(g), which excepts Section 18 demolitions and dispositions from the Uniform Relocation and Real Property Acquisition Act of 1970 (URA), also applies to de minimis demolitions under Section 18(f). If CDBG or HOME funds are involved in a covered activity, relocated residents may be eligible for assistance under Section 104(d) of the Housing and Community Development Act of 1974. If a PHA is planning on relocating residents with a Section 8 tenant-based voucher, the PHA should confirm that its Section 8 Administrative Plan (24 CFR part 982) provides a priority preference for residents who are displaced by a de minimis demolition. The PHA’s Admissions and Continued Occupancy Policy (ACOP) (24 CFR part 966) and the PHA’s policy regarding mandatory/involuntary transfers (see PIH Occupancy Guide) are also useful resources.
PHA Requirements Following Demolition
After completing a de minimis demolition under Section 18(f) and 24 CFR 970.27, the PHA must comply with the record-keeping and PIC reporting requirements outlined in the HUD acceptance letter. This includes requesting that the units be put into “Removed From Inventory” (RMI) status in PIC after the actual demolition.
All de minimis demolition submissions must be made electronically through PIC.
Submit the following information:
- Environmental Review under Part 50 or 58
- 24 CFR § 970.9: Resident Consultation
- 24 CFR § 970.7(a)(1): PHA Plan (under 24 CFR part 903)
- 24 CFR § 970.7(a)(2): Description of the Property
- 24 CFR § 970.7(a)(12): If PHA is requesting a waiver of the requirement for the application of proceeds for repayment of outstanding debt, the PHA must request such a waiver
- 24 CFR § 970.7(a)(13): Board Resolution, signed after resident and government consultation
- 24 CFR § 970.7(a)(14): Consult local government official and Letter of Support
Required Forms:
- HUD-52860;
- If closing out the public housing unit portfolio or adding public housing units,
HUD-5837 form. Closeout FAQs >
Required Conversion (Section 33)
Conversion of public housing to tenant-based assistance is authorized through Section 22 (Voluntary Conversion) and Section 33 (Required Conversion) of the United States Housing Act of 1937, (42 U.S.C. 1437t) (the 1937 Act) and its implementing regulations at 24 CFR part 972. 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 assistance for the residents who lived in those developments.
Section 33 of the United States Housing Act of 1937 requires PHAs to identify developments (or parts of developments) that must be removed from the stock of public housing operated under an Annual Contributions Contracts (ACC) with HUD.
HUD's rule implementing Section 33 was published in the Federal Register via 24 CFR Part 972, Subpart A. Learn more about the Required Conversion Program, PIH Notice 2019-10.
The cost methodology that PHAs must use to compare the cost of continuing to operate developments as public housing to the cost of providing tenant-based assistance was subsequently published as an appendix to the final rule on March 21, 2006, with an effective date of April 20, 2006.
The following conditions must be met for a unit to be considered either Vacant or Occupied:
- ACC unit: hhqnwd018.picdb.dbo.P113PT_PH_unit.acc_unit_ind = 'Y'
- Under management: hhhqnwd018.picdb.dbo.p113pt_physical_development.pd_status_type_code = 'M'
- Initially approved unit: hhhqnwd018.picdb.dbo.P113PT_PH_unit.initial_approved_ind = 'Y'
- Status is not "Removed from Inventory" or "Proposed Removed from Inventory": hhhqnwd018.picdb.dbo.P113PT_PH_unit.unit_status_type_code not in ('RMI', 'RMIPRP')
- A general occupancy unit type or official designation disabled or official designation elderly or official designation mixed or mixed not officially designated: hhhqnwd018.picdb.dbo.P113PT_PH_unit.unit_type_code in ('FA', 'ODD', 'ODE', 'ODM', 'MED')
To be considered Occupied:
- Reported on a form 50058: hhhqnwd018.picdb.dbo.P113PT_PH_unit.unit_tenant_status_code = 'OCCAT'
To be considered Vacant:
- 'Vacant' in PIC (EOP on a form 50058) (Also prior to Sept. 2009 'Not Reported'): hhhqnwd018.picdb.dbo.P113PT_PH_unit.unit_tenant_status_code = 'VACOOC', 'VACHUD', (pre-Sept. 2009 'NR')
The snapshot data is captured by a job run on the first day of the month.
This data resides on: HDRFNDD00(server).extract(database).dbo.P113PT_PH_UNIT_HISTORY(table)
The data all comes from the PIC database. Here are the tables and the fields in each table that is collected:
Table Name: P113PT_PH_UNIT
Fields:
- development_number
- building_number
- building_number_entrance
- unit_number
- bedroom_count
- unit_type_code
- unit_status_type_code
- acc_unit_ind
- initial_approved_ind
- capfund_ind
- unit_tenant_status_code
- exception_reason_code
- last_update_timestamp (renamed unit_update_date)
Table Name: P113PT_DEVELOPMENT_BUILDING_ENTRANCE
Fields:
- amp_group_number
- building_status_type_code
- unit_count
- last_update_timestamp (renamed unit_update_date)
Table Name: PP113PT_PHYSICAL_DEVELOPMENT
Fields:
- participant_code
- pd_program_type_code
- pd_structure_type_code
- pd_status_type_code
- last_update_timestamp (renamed devel_update_date)
Each record is appended with the date when the snapshot was taken.
All requests for HUD's consent for a Required Conversion (Section 33) removal of public housing must be made electronically through PIC. The PHA must complete the applicable sections of the HUD-52860 (see Detail Matrix on page 9 of HUD-52860). Note: The cost methodology for Required Conversion is different than that for Voluntary Conversion.
Required Forms:
For Guidance:
Blends RAD /Section 18 Blends
On December 26, 2024, HUD issued PIH Notice 2024-40 on the Demolition and Disposition of Public Housing under Section 18 of the U.S. Housing Act of 1937. This Notice supersedes and replaces Notice PIH 2021-07.
Types of RAD/Section 18 Blends:
- Construction Blend
- Small PHA Blend
- Sequence Blend
These RAD/Section 18 Blends allow for:
- Higher contract rents support greater financing
- Robust resident rights
- RAD one-for-one replacement requirements apply (with de minimis)
- Public housing funds can be used in project conversion
- HUD underwriting of entire project to ensure project viability
PIH Notice 2024-40 describes examples of expanded eligibility for projects to "blend" project-based voucher ("PBV") assistance through a Rental Assistance Demonstration ("RAD") conversion with assistance from tenant protection vouchers ("TPVs") that are awarded through a Section 18 disposition approval, even if those units would not otherwise qualify for disposition. This Notice allows for units in a project to qualify for Section 18 on a graduated scale based on the percentage of Housing Construction Costs ("HCC") that is met as part of the RAD conversion.
The aggregate number of replacement units (RAD and PBV) must meet the RAD "substantial conversion of assistance" requirements, the replacement units must be either new construction or substantially rehabilitated. The new RAD/S18 blends will assist PHAs with preserving public housing assets, as all units removed under Section 18 must be replaced under a Section 8 contract.
RAD/SECTION 18 BLENDS STEPS
Generally, a RAD/Section 18 Blend conversion follows the standard RAD conversion procedures
- Step 1: PHA Submits RAD Application The PHA submits a RAD application through the RAD Resource Desk (RRD) at www.radresource.net for the entire “Converting Project” that will encompass the transaction, including both RAD and Section 18 units.
- Step 2: Recap Issues CHAP The Office of Recapitalization (Recap) issues the Commitment to Enter into a Housing Assistance Payments Contract (CHAP).
- Step 3: Step 3: PHA Estimates Blended Rents PHAs can navigate to the Concept Call transaction page on the RRD and input key information about the proposed RAD/Section 18 blend to view the estimated “Blended Rents.” A PDF of the revised Blended Rents is available to share with developers/lenders as they assemble their Financing Plan. At this stage, the Blended Rents are estimates based on the PHAs inputs and current Fair Market Rents. The final Blended Rents will be reviewed and confirmed through a formal CHAP amendment once Recap reviews the Financing Plan.
RAD/SECTION 18 BLENDS AS IT PERTAINS TO HUD NOTICE 2021-07, REV-4 & NOTICE H-2023-08
RAD Notice H-2023-08 and Rev 4 made a few changes to the blends criteria described in HUD Notice 2021-07:
- RAD/Section 18 Construction Blend Section: "If the hard construction costs are equal to or exceed ninety percent (90%) of the Housing Construction Costs as published by HUD for the given market area, at the PHA’s discretion up to sixty percent (60%) of the units in the Converting Project may be disposed of under Section 18. For high-cost areas, defined as those where HCC exceeds 120% of the national average, or where the amount of construction necessary to convert the units from their current condition to the condition proposed as a result of the Work would cost in excess of two hundred percent (200%) of the national average HCC,5 at the PHA’s discretion up to eighty percent (80%) of the units in the Converting Project may be disposed of under Section 18."
- RAD/Section 18 Small PHA Blend: "For any PHA with 250 or fewer public housing units under its ACC, at the PHA’s discretion up to eighty percent (80%) of the units in a Converting Project may be disposed of under Section 18. The PHA is not required to remove all of its remaining public housing units through a Small PHA Blend transaction. However, to be eligible for the Small PHA blend, the PHA must submit to HUD a feasible repositioning plan approved by the PHA’s board of commissioners and acceptable to HUD that removes all of a PHA’s public housing ACC units, reflects that the PHA will not develop additional public housing units under otherwise available Faircloth authority, and will not transfer that Faircloth authority to another PHA and will result in the closeout of the PHA’s Section 9 public housing program and termination of its Section 9 ACC. Any PBV contract created under this subparagraph must be administered by an HCV contract administrator with at least 250 HCV units under its HCV Consolidated ACC prior to the creation of the PBV HAP contract unless the field office determines that the proposed contract administrator has sufficient capacity to administer the PBV contract. The field office will consider factors such as the proposed contract administrator’s prior SEMAP scores, recent HCV-related audit findings for the contract administrator, whether the contract administrator has updated its Section 8 Administrative Plan to administer project-based vouchers, and whether the proposed contract administrator will have sufficient voucher authority, (in addition to any existing RAD or Non-RAD PBV HAP Contracts) to adequately serve the tenant-based waiting list and provide mobility options for the PBV residents. Please see Section 1.5.B of the RAD Notice relating to the applicability of RAD relocation requirements to residents of the Section 18 units and Section 1.6 of the RAD Notice relating to the applicability of RAD requirements to non-RAD units to facilitate the uniform treatment of residents where specified in the RAD Notice"
CONSTRUCTION BLENDS
HUD approves a portion of units under Section 18, to be replaced under a Section 8 contract, based on level of rehab/construction achieved. Percentage of units eligible for Section 18 disposition within the Converting Project is based on the housing construction costs (HCC) proposed for the new construction or rehabilitation of the Covered Project compared with HUD’s published Housing Construction Costs for the market:
Eligibility | Unit Mix Percentage |
|---|---|
| at least 10% RAD / up to 90% Section 18 |
| at least 60% RAD / up to 40% Section 18 |
| at least 30% RAD / up to 70% Section 18 |
HUD has also developed an Excel tool available on the RAD Resource Desk that PHAs can use to assess whether the scope of work meets any of the thresholds for the Construction Blends.
SMALL PHA BLENDS
For any PHA with 250 or fewer public housing units under its ACC, at the PHA’s discretion, up to 90% of the units in a Converting Project may be disposed of under Section 18 and at least 10% of the units must be converted under RAD.
- Blend is applied at the project level
- PHA must submit a repositioning plan to HUD showing how it will remove all of its public housing units
- Any PBV contract must be administered by a PHA operating at least 250 HCV units
SEQUENCE BLENDS
A PHA that has first received approval for a Section 18 disposition removal under another justification (24 CFR 970.17(a)(b) or (c), except for under efficient and effective) shall be subject to the provisions governing RAD/Section 18 Blends provided they request and receive SAC approval to conditionally rescind the Section 18 approval for some portion of RAD eligible units and convert the public housing assistance of at least 10% of units under RAD.
The Section 18 portion of the blended repositioning application must follow the approved RAD application and PHA Plan for both RAD and Section 18 as well as a Financing Plan.
The PHA is not required to submit a separate Section 18 application through IMS/PIC. Instead, HUD’s Special Applications Center (SAC) reviews the additional material provided in the RAD application and uploads it into IMS/PIC in the form of a DDA Section 18 application.
Required Submissions:
- RAD submission requirements (not through the SAC).
- Step 1: RAD Application at www.RADresource.net.
- Step 2: PHA Plan.
- Step 3: Concept Call with HUD RECAP (prior to Financing Plan submission).
- Step 4: Submit Plan for attached PBV assistance.
- Step 5: Financing Plan/Section 18 Application Materials.
- SAC Application Materials:
- Units Proposed
- Resident Consultation
- Local Government Consultation
- PHA Annual Plan
- Board Resolution
The SAC will alert the PHA if there are any missing items necessary for the Section 18 application.
- SAC Application Materials:
- Step 6: Revised CHAP/Amendment of RAC PIC Application/Creation of Section 18 Application.
- Step 7: Apply for TPVs.
- Step 8: Submit Draft PBV HAP contract (HUD 52530-B: PBV HAP Contract – Existing Housing) or AHAP (HUD 52531-A and HUD 52531-B) with the closing package.
Guidance:
- Check the “RAD Tools” for current RAD Rent Estimates
- Annual HCC Limits can be found on HUD’s webpages at 2023, 2022, 2021, 2020, 2019, 2018, 2017, 2016, and 2015.
- HUD 5900: Non-RAD PBV Rider to RAD Use Agreement (doc)
- Workbook to Test HCC Threshold for RAD Blends (xlsx)
- RAD and Section 18 Blend Process
Eminent Domain
Eminent Domain is an exercise of the power of government or quasi-government agencies (such as airport authorities, highway commissions, community development agencies, and utility companies) to take private property for public use. Sometimes these entities may propose to use their eminent domain authority to take public housing property.
Eminent Domain takings are exempt from the requirements of Section 18 of the U.S. Housing Act of 1937 and 24 CFR 970. Taking bodies can proceed with a court proceeding or enter into a settlement agreement with the PHA. However, because of the federal government interest in public housing property, HUD's consent to the taking of public housing property is necessary, if a PHA would like to enter into a settlement agreement with a taking body in lieu of a court proceeding. PIH Notice 2012-08 provides guidance on the factors that HUD will consider in its decision to approve a settlement agreement. Alternatively, a PHA may choose to dispose property to a taking body under Section 18 if the disposition meets Section 18 justification criteria.
- Agreement Between the PHA and the Taking Body. HUD will consider if the PHA has agreed to the taking and/or has entered into an agreement with the Taking Body for the taking.
- PHA Board Support. HUD will consider evidence (e.g., Board Resolution) showing the PHA Board supports the taking.
- Authority of the Taking Body. HUD will consider the legal sufficiency of the evidence of the Taking Body's authority under applicable State laws to acquire the public housing property.
- Compensation for the Dwelling Units Taken.
- Compensation for Vacant Land, Non-Dwelling Structures, and Facilities Taken.
- Compensation for Severance Damages.
- Appraisal of the FMV of the Public Housing Property. The FMV of the public housing property being taken should be determined by an independent state-licensed or state-certified appraiser.
- Evidence that the Taking Body Will Pay for the Costs of Relocating the Residents to Comparable Housing for any Displacement that Occurs as a Result of the Taking.
- Satisfaction of all Applicable Environmental and Historic Preservation Requirements for the Public Housing Property and any Replacement Unit.
- HUD Site and Neighborhood Standards shall apply to all replacement properties irrespective of the manner of development (e.g., acquisition or construction). The local HUD Office of Public Housing shall conduct a site and neighborhood standards review of all proposed replacement properties in accordance with 24 CFR 905 and/or other HUD regulation(s), as applicable.
All requests for HUD's consent for an Eminent Domain proceeding must be made electronically through PIC. The PHA must complete the applicable sections of the HUD-52860 (see Detail Matrix on page 9 of HUD-52860).
Required Forms:
Voluntary Conversion (Section 22)
Conversion of public housing to tenant-based assistance is authorized through Section 22 (Voluntary Conversion) and Section 33 (Required Conversion) of the United States Housing Act of 1937, (42 U.S.C. 1437t) (the 1937 Act) and its implementing regulations at 24 CFR part 972. 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 assistance for the residents who lived in those developments.
Section 22 of the U.S. Housing Act of 1937 authorizes PHAs to voluntary convert public housing to tenant-based assistance.
VOLUNTARY CONVERSION CHECKLIST
Conversions must be cost-effective. HUD’s rule implementing Section 22 was published in the Federal Register on September 17, 2003, with an effective date of March 15, 2004 as 24 CFR Part 972, Subpart B.
The cost methodology that PHAs must use to compare the cost of continuing to operate developments as public housing to the cost of providing tenant-based assistance was also published as a final rule on March 21, 2006. Notice PIH 2011-62 which indefinitely extends Notice PIH 2008-35 (HA), assists PHAs in completing the cost-test analysis and in complying with the applicable cost-test requirements. Excel spreadsheets containing the calculations associated with the cost methodology are available below.
PHAs may realize proceeds when they sell, transfer, ground lease or otherwise dispose of public housing property under a Voluntary Conversion Plan. PHAs retain flexibility to determine the use of proceeds, provided the use is consistent with the 1937 Housing Act and PIH Notice 2020-23, which requires that proceeds be used for the provision of low-income housing or to benefit the residents of the public housing agency; or leveraging amounts for securing commercial enterprises, onsite in public housing projects of the PHA appropriate to serve the needs of the residents. A PHA’s use of proceeds is subject to HUD (SAC) approval as part of the Voluntary Conversion Plan.
All requests for HUD's consent for a Voluntary Conversion (Section 22) removal of public housing operated under ACC with HUD must be made electronically through PIC. The PHA must complete the applicable sections of the HUD-52860 (see Detail Matrix on page 9 of HUD-52860). Note: The cost methodology for Required Conversion is different than that for Voluntary Conversion.
Required Forms:
For Guidance:
- Notice PIH 2008-35 (HA): Cost-Test & Market Analysis Guidelines for the VC of public housing units pursuant to 24 CFR 972
- Notice PIH 2009-42 (MS-Word): Extension of Cost-Test & Market Analysis Guidelines for the VC
- Notice PIH 2020-23: Use of Proceeds under Section 22
- Calculator Rule 24 CR 972 (Adobe PDF)
- Sample completed Cost Comparison Spreadsheet (MS-Excel)
Homeownership (Section 32)
The sale of public housing units to qualifying families is authorized under Section 32 of the Housing Act of 1937 (the Act), as amended. The final rule for Section 32 Homeownership was published March 11, 2003, and became effective April 10, 2003.* Learn More.
*Homeownership programs approved before April 10, 2003, will continue to operate under the previous Section 5(h) rule. Please note that both regulations have the same number, 24 CFR 906, and are accessible from this site.
SECTION 32 APPLICATION CHECKLIST
The Quality Housing and Work Responsibility Act (QHWRA) permits PHAs, through Section 32 of the U.S. Housing Act of 1937, to make public housing dwelling units available for purchase by low-income families as their principal residence. Under Section 32, a PHA may do any of the following:
Public Housing Sold to Residents
The sale of an existing or newly acquired public housing unit to eligible public housing or non-public housing resident.
Financing Only Homeownership Plan
Homeownership Plan would approve a PHA's use of Capital Funds to assist public housing families in purchasing a home.
Homes Sold to Low-Income Families
Provide Capital Fund assistance to acquire homes that will be sold to eligible low-income families.
- Section 32 can be implemented in conjunction with the Housing Choice Voucher Homeownership Program (HCVHP). The HCVHP program is described separately in the PHA’s Section 8 Administration Plan, if applicable to the PHA. HCVHP can only be used in connection with units that are not currently under ACC or that are released from the ACC as a result of the sale of the unit. For example, lease to purchase programs would not be eligible for HCVHP during the lease phase.
- Non-purchasing public housing residents may need to be relocated. In selling a public housing unit under a homeownership program, the PHA must initially offer the unit to the resident occupying the unit if they meet the eligibility requirements. PHAs must provide the resident with notice 90 days prior to the date of the sale of their unit, counseling, relocation expenses, and comparable replacement housing options. The right of first refusal does not extend to residents in nonpublic housing units.
Section 32 is one of a few different resources available to PHAs to help residents become homeowners.
HCV SECTION 8Y
HCV Section 8(y) Homeownership Program: May use HCV to buy a home and receive monthly assistance.
MIXED-FINANCE / CAPITAL FUND
Mixed- Finance/ Public Housing Capital Funds: Can fund certain homeownership activities.
UTILIZING RAD
OFFICE OF HOUSING COUNSELING
Office of Housing Counseling: Sponsors homeownership counseling
In order to participate in Section 32, a PHA must create a Section 32 Homeownership Plan. This plan is then submitted to the SAC along with all applicable materials, see application submission requirements below. The specific requirements for the preparation of a homeownership plan are found in the Section 32 Desk Guide.
Essential Criteria
HUD will use four key criteria to evaluate Section 32 homeownership plans. See the information on the Helpful Resources & Document Library to help guide your Homeownership Plan.
- Feasibility: The program must be practically workable, with sound potential for long-term success. Simply put, the plan should make sense for the PHA to implement in its community. All the necessary components including sufficient demand for the proposed housing and adequate funding to cover program costs should be in place.
- Legality: The program must be consistent with all applicable federal, state, and local statutes and regulations and existing contracts law. The PHA must include a letter from the housing authority's legal counsel attesting to the legality of the proposed homeownership plan to HUD.
- Documentation: The program must be complete and clear enough to serve as a working document for implementation and have sufficient basis for HUD review. The plan should be internally consistent and reflect the PHA's careful consideration of its elements.
- PHA track record in implementing homeownership programs: The PHA (and any other entity with substantial responsibility for implementing the homeownership program) must demonstrate its commitment and capability to successfully implement the homeownership program. PHAs should describe successes in related activities including similar homeownership programs or modernization and development projects.
Eligibility Requirements
Eligible purchasers may earn up to, but not exceed 80% of Area Median Family Income (AMI). Except in the case of a PHA's offer of first refusal to a resident occupying the unit, a PHA must certify that the applicants' income is not over 80% of AMI at the time the contract to purchase the property is executed.
- Purchase and Resale Entity (PRE): The PHA may sell units to a PRE. The PHA must demonstrate that the PRE has the necessary legal capacity and practical capability to carry out its responsibilities under the program and sell the units within five (5) years from the date of acquisition; otherwise the PRE must transfer ownership of the units back to the PHA. The PHA's homeownership program also must contain a written agreement and the applicable legal documentation that specifies the respective rights and obligations of the PHA and the PRE.
- Affordability Standards:Affordability standards must be met for the purchaser. On an average monthly basis, the estimate of the sum of the applicant's payments for mortgage principal and interest, insurance, real estate taxes, utilities, maintenance and other recurring homeownership costs will not exceed the sum of 35% of the applicant's adjusted income and any subsidy that will be available for such payments.
- Principal residence requirement: The dwelling unit sold to an eligible family must be used as the principal residence of the family.
- Minimum Down Payment: PHAs must require purchasers to pay a minimum down payment. Each household purchasing housing must use its own resources to contribute an amount of the down payment that is not less than one percent of the purchase price of the housing.
- Other eligibility restrictions: A PHA may establish additional limitations for households to purchase housing. Such requirements may include employment, no past criminal activity, participation in homeownership counseling programs, or other requirements.
Recapture and Anti-Speculation Restrictions
- Anti-speculation: A PHA must have a policy that provides for retaining all or a portion of the gain from appreciation generated by the resale of the property to the extent that there are net proceeds if the house is sold within five years after purchase. The PHA may not recapture gains from appreciation if the home is resold over five years from the initial purchase. Gains from appreciation is defined as financial gain solely attributable to the home's appreciation over time and not attributable to below-market financing or government-provided assistance (recapture of that subsidy is discussed in recapture below). The anti-speculation provision must be recorded as a deed restriction or a restrictive covenant. The recapture amount can be one that the PHA considers appropriate under the guidelines in this section.
- Recapture of subsidy: The PHA must implement a stated policy to recapture upon resale government-provided assistance and/or below-market financing made to the purchaser to the extent that there are net proceeds. This includes the PHA down payment, closing cost assistance, subordinate mortgage financing, or below-market financing (i.e., sale the unit for less than appraised value of the home). The PHA may recapture a portion or entire subsidy provided to the purchaser even for a period of longer than five years. [PHAs that elect to take back none of the subsidy must include that in a stated recapture policy.] This provision must be recorded in the appropriate form of title restriction(s).
- Resale: Section 32 regulations do not require a PHA to implement a resale provision limiting resale to low-income buyers.
Eligible Program Activities
PHAs implementing a Section 32 program may use their funds to provide the following services:
- Subsidy to public housing residents (using Capital Funds or program income) or other low-income families (using only program income) in the forms of (a) down payment or closing cost assistance, (b) subordinate mortgages, and/or (c) below-market financing.
- Acquisition of existing homes (or homes built for the PHA by a third party 24 CFR 906.41(2)) using Capital Funds for the purpose of sale to income-eligible purchasers without adding these units to the Annual Contributions Contract (ACC).
- Sale of public housing rental (ACC) units to income-eligible purchasers.
- Operation of a lease-purchase program.
Key Program Features
PHAs must use Davis-Bacon wages for all construction activity. Except in specific cases of non-routine maintenance, Davis-Bacon prevailing wage rates apply to all construction activities under the program.
Section 32 can be implemented in conjunction with the Section 8(y) program. The Section 8(y) program is described separately in the PHA's Section 8 Administration Plan, if applicable to the PHA. See the Housing Choice Voucher (Section 8) homeownership program summary below for details regarding implementation of a voucher homeownership program. 8(y) can only be used in connection with units that are not currently under ACC or that are released from the ACC as a result of the sale of the unit. Lease to purchase programs would not be eligible for 8(y) during the lease phase.
Non-purchasing public housing residents may be displaced. In selling a public housing unit under a homeownership program, the PHA or Purchase and Resale Entity (PRE) must initially offer the unit to the resident occupying the unit if they meet the eligibility requirements. The current residents of the public housing units have the option of applying to the program in order to purchase their unit, relocating to another comparable unit, or receiving tenant-based assistance. PHAs must provide the resident with notice 90 days prior to the date of the sale of their unit, counseling, relocation expenses, and comparable replacement housing options. The right of first refusal does not extend to residents in non-public housing units.
Plan Implementation/Monitoring Review
After a homeownership plan has been approved, the local HUD office having jurisdiction for the PHA will monitor the plan's implementation using the Monitoring Review Checklist.
Combining Section 32 and HCV/Section 8(y) Program
A PHA may be able to use the Section 8(y) program in conjunction with Section 32 as long as the requirements for both programs are met.
New Construction & Substantial Rehabilitation
No new construction or substantial rehabilitation is allowed under Section 32. However, Section 32 generates an exception, allowing Public Housing Capital Funds to be used to acquire units for sale to residents that will not be put under public housing ACC contracts. This does not apply to the use of Capital Funds by a PHA to build or substantially rehabilitate units that are not public housing for sale under Section 32. Although public housing units that are newly constructed or substantially rehabilitated may be sold under Section 32, such construction and rehabilitation by the PHA is not covered under Section 32, but rather is governed by the public housing development regulations. Nonetheless, the final Section 32 rule (effective April 10, 2003) replaces the Section 5(h) rule.
If a PHA wants to use Capital Funds to newly construct or substantially rehabilitate units that are not currently public housing, it has two options:
- Construct the units as low-rent, public housing units under 24 CFR part 905. After units are added to the PHA's ACC (low-rent PH inventory), the PHA can sell them under Section 32.
- Apply under Mixed-Finance Public Housing requirements. In this case, the units are never added to the PHA's low-rent, public housing inventory but are immediately sold to eligible low-income families after development. No Section 32 approval is required.
All requests for HUD's consent for demolition and/or disposition must be made electronically through PIC. The PHA must complete the applicable sections of the HUD-52860 (see Detail Matrix on page 9 of HUD-52860).
Required Forms:
- HUD-52860;
- HUD-52860-C addendum; and
- If closing out the public housing unit portfolio or adding public housing units,
HUD-5837 form. Closeout FAQs >
Retention of Public Housing Property (Part 200)
Part 200 may allow PHAs to retain public housing property after a disposition if certain criteria are met.
HUD PIH Notice 2016-20 (HA) provides disposition instructions for the retention of Certain Public Housing Real Property (that is no longer used or was never used for public housing dwelling purposes) Free from Public Housing Use Restrictions in accordance with the requirements of 2 CFR 200.311(c)(1)
- Why did HUD issue PIH Notice 2016-20? HUD issued this notice to provide PHAs with another tool for making inventory decisions about certain public housing real property. HUD recognizes PHAs may have good reasons to retain this public housing real property outside of public housing use restrictions. Additionally, 2 CFR 200.311(c) states that “When real property is no longer needed for the originally authorized purpose, the non-Federal entity must obtain disposition instructions from the Federal awarding agency or pass-through entity.”
- Can PHAs apply under this notice to retain public housing dwelling units?No. This notice has limited applicability and applies only to public housing real property that is no longer or was never used for public housing dwelling purposes. This notice does not apply to public housing dwelling units that are currently under an Annual Contributions Contract (ACC) or are receiving assistance under Section 9 of the 1937 Act. HUD Examples of public housing real property that are eligible for retention under this notice include, but are not limited to: non-dwelling buildings, vacant land, and property that once comprised public housing dwelling units but is now vacant and no longer receiving the benefit of any Section 9 assistance.
- Is this notice providing a new retention tool or were PHAs already able to request this kind of retention outside of this Notice?Prior to the issuance of this notice, PHAs were able to request retentions through 2 CFR 200.311(c)(1) (and previously through 24 CFR 85.31(c)(1)). However, PHAs were required to request “disposition instructions” from HUD and HUD would provide instructions on a case-by-case basis. This notice provides clear and consistent “disposition instructions” to PHAs who may be considering a retention request.
- Are there any limits on when a PHA may apply for a retention action under this notice? For instance, does a PHA need to be pursuing RAD or a Section 18 demolition/disposition action? Or removing all of its public housing units from its ACC? No. All PHAs may apply for retention actions under this notice if a retention meets its local goals and the real property otherwise meets the requirements of the notice (e.g. the property) is no longer needed for the originally authorized purpose). Often, these retention actions may be in conjunction with another removal action, but that is not required. For instance, a PHA that has never removed a public housing unit from its ACC may still apply under this notice to retain a parcel of excess land adjoining one of its public housing projects so that it can develop new affordable housing on that parcel outside of public housing program.
- How does this notice relate to public housing program close-out requirements (as more fully described in PIH Notice 2016-23) that apply to PHAs that are removing all of their public housing units from ACC (through RAD, Section 18 demo/dispo or another program)? The ACC dictates that all public housing property will facilitate the PHA’s operation of public housing units. When a PHA removes all of its public housing units from ACC and does not intend to build new public housing units, any remaining non-dwelling public housing property (e.g. administrative buildings, central warehouses, garages, community buildings) no longer supports the public housing units. Accordingly, PHAs are required to remove this property from ACC and DOT public housing restrictions. One of the available tools for removing this property from public housing restrictions is a retention action under this notice.
- My PHA has a non-dwelling community building that it is not recorded in IMS/PIC. It is on a site that does not include units. The property has a DOT recorded against it and our records indicate that the property was acquired with Section 9 funds. My PHA would like to operate this building for purposes other than public housing. Does my PHA need to apply for retention under this notice? Yes. PHAs are required to ensure that all of their public housing property is uploaded in HUD’s IMS/PIC system and has a valid DOT recorded against it. Even if a PHA is not in compliance with these requirements, HUD requirements still apply to the use, retention, or disposition of that public housing property. The PHA must work with its local HUD Office of Public Housing to bring the property into compliance with all applicable IMS/PIC and DOT requirements.
- My PHA wants to develop some vacant excess public housing property as new affordable low-income housing tax credit (LIHTC) units. Can my PHA propose to retain property under this notice and then ground lease it to single-asset LIHTC entity (that my PHA controls)? No. Because the ground lease involves a transfer of property interest to another entity (LIHTC entity) and thus constitutes a disposition under 24 CFR part 970, the PHA must apply for disposition under Section 18 of the 1937 Act and 24 CFR part 970.
- Why is it necessary to obtain environmental clearance for retention applications under 2 CFR 200.311(c)(1)? Because the retention involves a removing the federal use restrictions from the property, HUD requires environmental clearance.
- When will HUD require a PHA to execute and record a new use restriction against a former public housing property as part of a retention approval under 2 CFR 200.311(c)(1)? A 30-year use restriction is generally required when HUD approves a PHA’s request for an exception to the compensation requirement of 2 CFR 200.311(c)(1).
- The notice states that HUD may consider certain factors in determining whether to allow for a shorter use restriction period than 30 years. Can you elaborate on those factors? HUD may consider the following:
- Estimated FMV of the public housing real property. If a property has a low FMV (e.g. less than $5000), and the PHA is requesting that the use restriction only encumber the property for 5 or 10 years (instead of 30), HUD could take into consideration the low value of the property as a factor in granting the shorter use restriction term. Conversely, HUD would be much less willing to allow for a use restriction term of less than 30-years if the property was worth several million dollars.
- Amount of time the public housing real property would be required to be under DOT/DORC. This factor “looks backward”. For instance, if the PHA has not spent any Capital or Operating Funds at the property for the past 18 years, and there is only 2 years remaining under the DOT/DORC use restriction (until they would expire), HUD may take that into consideration in reviewing a PHA’s request for a use restriction period of less than 30-years.
- Proposed future use of the property. This factor “looks forward”. For instance, if a PHA is proposing to use property as supportive housing for homeless families but the use will only last 15 years because that’s the amount of time required by a state grant (that is providing the supportive service funding), HUD may take this into consideration, along with other factors, in reviewing a PHA’s request for a use restriction period of only 15-years.
- Are there certain sources of funds my PHA cannot use to compensate HUD for the value of the property? PHAs may use any available non-1937 Act funds, which may, depending on the circumstances, include available program income, Central Office Cost Center (COCC) funds, or other non-restricted funds.
- My PHA has been approached by a major telecommunication company that identified a portion of vacant public housing property as an ideal location to construct a cell tower. This property is excess to the needs of the adjoining project. Instead of selling this property to Sprint, my PHA would like to retain the property as a local asset. If my PHA fully compensates HUD for this property in accordance with this notice and complies with all notice requirements (including environmental clearances), after HUD releases the DOT, are there any limitations or restrictions on the income my PHA may generate from the property? In other words, could my PHA rent this property to Sprint and keep all rental income as local funds? Yes. If the PHA fully compensates HUD in accordance with this notice, after HUD releases the DOT based on an approval under this notice, there are no restrictions on the use of the property and/or the income the PHA may generate from that property.
- My PHA has been approached by a day-care provider that wants to rent one of our vacant non-dwelling community building that my PHA no longer uses. Can I apply to retain the property under this notice and then rent the property out to the day-care provider? It depends. If the PHA fully compensates HUD in accordance with this notice, after HUD releases the DOT under 2 CFR 200.311(c)(1) there are no restrictions on the use of the property and/or the income the PHA may generate from that property. Therefore, in this instance, the PHA could rent the property to the day-care provider and retain all rental income as local funds. However, if the PHA is requesting an exception from the compensation requirement, HUD generally will impose use restrictions. In this instance, the PHA would need to fully disclose to HUD its plan to rent the property out to the day-care provider (along with any expected rental income) and HUD would take all of this into account in determining whether the proposed future of renting out the property to a day-care provider qualified for an exception to the compensation requirement.
All requests for HUD's consent for a retention of public housing must be made electronically through PIC. The PHA must complete the applicable sections of the HUD-52860 (see Detail Matrix on page 9 of HUD-52860).
Required Forms: