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 demolition and disposition applications in accordance with the guidance in (NEW) PIH Notice 2021-07.
To evidence obsolescence for demolition of a project, PHAs must show that the necessary modification and/or rehabilitation to a project is not cost-effective. HUD generally considers modifications not to be cost-effective if costs exceed 62.5% of TDC for elevator structures and 57.14% for other types of structures. PHAs should use the HUD TDC information associated with the year the rehabilitation cost estimate was generated. For instance, if a rehabilitation cost estimated was generated in November 2019, but the PHA did not submit the application until January 2020, the PHA should use HUD’s 2019 TDC information. More information about HUD’s TDC calculations, including procedures HUD uses for establishing TDC limits can be found at 24 CFR 905.314. Annual postings of TDC limits can be found on HUD's webpages at 2020, 2019, 2018, 2017, 2016 and 2015.
An Excel Version of the Total Development Cost (TDC) Addendum (HUD-52860-B) is available here.
In accordance with Section 18(f) of the U.S. Housing Act of 1937 (1937 Act), in any 5-year period PHA may demolish not more than the lesser of 5 dwelling units or 5 percent of the total public housing dwelling units owned by the PHA, but only if the space occupied by the demolished unit is used for meeting the service or other needs of public housing residents or the demolished unit was beyond repair. Read more...
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.
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.
- (NEW) Proceeds Training Video
- PIH Notice 2020-23 (Use of Proceeds under Section 18 Disposition or Section 22 Voluntary Conversion)
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;
- 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”;
- PHA 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.