Congress passes “Minibus” funding bill; preservation provisions included

by Stephen J. Wallace on Nov 21, 2011

This article is reprinted with the permission of Nixon Peabody LLP

On November 17, 2011, the House of Representatives and Senate passed the so-called “Minibus” legislation (H.R. 2112), which included funding for three of the twelve appropriation bills: Agriculture; Commerce, State, Justice, and Transportation; Housing, and related agencies. A short term “Continuing Resolution” funding the remaining federal agencies through December 16, 2011 was attached to this legislation; the current Continuing Resolution expires today. The House vote was 298-121; the Senate vote was 70-30. Congress is now in recess for the Thanksgiving break. The President signed the legislation today.

The bill contains authorizing language for HUD’s signature initiative, the Rental Assistance Demonstration program. This demo, which is limited to 60,000 units, will provide public housing and Section 8 Mod Rehab (Mod Rehab) properties with project-based rental assistance, which can be used to leverage private sector resources including tax-exempt bonds and low income housing tax credits to rehabilitate existing housing properties. HUD will accept applications through 2015. Funding will be provided through transfers from other public housing programs.

The bill also contains several provisions addressing the maturity of Rental Assistance Payments (RAP), Rent Supplement contracts (Rent Supp), and Mod Rehab contracts. During FY 2012 and 2013, owners may convert tenant protection vouchers to Section 8 project-based vouchers (PBV) for projects which are covered by a RAP, Rent Supp, or Mod Rehab contracts. This provision also has a “reach back” to 2006 that allows for the project basing of previously issued tenant protection vouchers. Tenants in the properties will need to be consulted about the conversion and the voucher administrator must agree to the project basing. The provision of the PBV statute which caps the number of vouchers a voucher administrator can project base at 20% is not applicable to these conversion actions. Also, the Secretary can “waive or alter” other PBV provisions including the provisions which deal with a voucher administrator plans and goals, and the 25% per project PBV cap on family projects.

Another provision provides $10 million to provide either Enhanced Vouchers or PBVs for certain properties, including i) the maturity of HUD-insured, HUD-held, or Section 202 properties that require the Secretary’s consent to prepay; ii) the expiration of a rental assistance contract for which the tenants are not eligible for enhanced vouchers under current law (RAP contracts); or iii) the expiration of mortgage affordability restrictions or a HUD preservation program (ELIHPA/LIHPRHA). This provision is limited to residents living in low-vacancy areas.

Finally, there is yet another provision which allows for the one-year extension of RAP and Rent Supp contracts expiring in FY 2012. This provision was introduced in last year’s funding bill.

The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

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