E8-5817. USDA Rural Development Voucher Program

AGENCY:

Rural Housing Service, USDA.

ACTION:

Notice of USDA Voucher Program Availability.

SUMMARY:

This notice informs the public that the United States Department of Agriculture (USDA) has established a demonstration USDA Rural Development Voucher Program, as authorized under section 542 of the Housing Act of 1949 as amended, (without regard to section 542(b)), which is being administered by the USDA. This notice informs the public that USDA shall make $4,965,000.00 available for this purpose, as appropriated under the Consolidated Appropriations Act, 2008. The notice also sets forth the general policies and procedures for use of these vouchers.

DATE:

March 24, 2008.

FOR FURTHER INFORMATION CONTACT:

Stephanie B.M. White, Director, Multi-Family Housing Portfolio Management Division, Rural Development, United States Department of Agriculture, 1400 Independence Avenue, SW., STOP 0782, Washington, DC 20250-0782, telephone [phone]. Persons with hearing or speech impairments may access this number via TTY by calling the toll-free Federal Information Relay Service at 800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

The Consolidated Appropriations Act, 2008 (Pub. L. 110-161) (December 26, 2007) (Consolidated Appropriations Act, 2008), appropriates $4,965,000.00 to the USDA for the Rural Development Voucher Program as authorized under section 542 of the Housing Act of 1949, as amended 42 U.S.C. 1471 et seq. (without regard to section 542(b)).

The Consolidated Appropriations Act, 2008, provides that the Secretary of the United States Department of Agriculture shall carry out the USDA Rural Development Voucher Program as follows:

“That of the funds made available under this heading, $5,000,000 shall be available for rural housing vouchers to any low-income household (including those not receiving rental assistance) residing in a property financed with a section 515 loan which has been prepaid after September 30, 2005:

Provided further, That the amount of such voucher shall be the difference between comparable market rent for the section 515 unit and the tenant paid rent for such unit: Provided further, That funds made available for such vouchers shall be subject to the availability of annual appropriations: Provided further, That the Secretary shall, to the maximum extent practicable, administer such vouchers with current regulations and administrative guidance applicable to section 8 housing vouchers administered by the Secretary of the Department of Housing and Urban Development (including the ability to pay administrative costs related to delivery of the voucher funds)”. This notice outlines the process for providing voucher assistance to the eligible impacted families when an owner prepays a section 515 loan or Agency action results in a foreclosure after September 30, 2005.

II. Design Features of the USDA Voucher Program

This section sets forth the design features of the USDA Rural Development Voucher Program, including the eligibility of families, the inspection of the units, and the calculation of the subsidy amount.

Rural Development vouchers under this part are administered by the Rural Housing Service, an Agency under the Rural Development mission area, in accordance with requirements set forth in, “The Rural Development Voucher Program Guide,” which can be obtained by contacting any Rural Development office. Contact information for Rural Development offices can be found at http://offices.sc.egov.usda.gov/​locator/​app. These requirements are generally based on the housing choice voucher program regulations of the United States Department of Housing and Urban Development (HUD) set forth at 24 CFR part 982, unless otherwise noted by this Notice.

The Rural Development Voucher Program is intended to offer protection to eligible multifamily housing tenants in properties financed through Rural Development's section 515 Rural Rental Housing Program (515 property) who may be subject to economic hardship through prepayment of the Rural Development mortgage. When the owner of a 515 property pays off the loan, the Rural Development affordable housing requirements and rental assistance subsidies generally cease to exist. Rents may increase, thereby making the housing unaffordable to tenants. Whether or not the rent increases, the tenant will be responsible for the full payment of rent. The USDA Rural Development Voucher Program applies to any 515 property where the mortgage is paid off prior to the maturity date in the promissory note after September 30, 2005. This includes foreclosed properties. Tenants in foreclosed properties are eligible for a Rural Development voucher under the same conditions as properties that go through the standard prepayment process. The Rural Development voucher will help tenants by providing a short-term rental subsidy, up to 36 monthly payments, that will supplement the tenant's rent payment. This short-term subsidy enables a tenant to make an informed decision about remaining in the property, moving to a new property, or obtaining other financial housing assistance. Low-income tenants in the prepaying property are eligible to receive a voucher to use at their current rental property, or take to any other rental unit in the United States and its territories. In order to utilize a voucher, the rental unit must pass a Rural Development health inspection, and the owner must be willing to accept a USDA Rural Development voucher. USDA Rural Development vouchers cannot be used for units in subsidized housing like Section 8 and public housing, where two housing subsidies would result. The USDA Rural Development voucher may be used for rental units in other properties financed by Rural Development, but it cannot be used in combination with the Rural Development Rental Assistance program. The USDA Rural Development voucher may not be used for the purchase of a home.

1. Family Eligibility

In order to be eligible for the USDA Rural Development voucher under this notice, a family must be residing in the section 515 project on the date of the prepayment of the section 515 loan or upon foreclosure by Rural Development. Furthermore, the date of the prepayment or foreclosure must be after September 30, 2005. As stated in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, the tenant must be a citizen, United States non-citizen national, or qualified alien. Rural Development will determine if the family is a low-income family on the date of the prepayment or foreclosure. When Rural Development determines a family is low-income, Rural Development will send the primary tenant a letter offering the family a voucher and will enclose a Voucher Obligation Form. If the family wants to participate in the USDA Rural Development Voucher Program, the tenant has 10 months from the date of prepayment, but no later than September 15, 2008, to return the Obligation Request Form to the local Rural Development office. A low-income family is a family whose annual income does not exceed 80 percent of the median income for the area. If Rural Development makes a determination that the tenant is ineligible based on income, Rural Development will provide administrative appeal rights. The voucher is issued to the household in the name of the primary tenant. If the primary tenant dies during the term of the voucher, the use of the voucher passes to the co-tenant.

2. Obtaining a Voucher

Rural Development will monitor the prepayment request process or foreclosure process, and as part of that process will obtain a rent comparability study prior to the date of prepayment or foreclosure. The rent comparability study will be used to calculate the amount of voucher each tenant is entitled to receive. All tenants will be notified of eligibility determinations and voucher calculations by Rural Development by the date of prepayment. As previously stated, such notice will include a description of the USDA Rural Development Voucher Program, an Obligation Request Form, and an offer to participate in the USDA Rural Development Voucher Program if the family is eligible to receive such voucher. Once the primary tenant returns the Obligation Request Form to Rural Development, a voucher will be issued. All information necessary for a housing search, explanations of unit acceptability, and Rural Development contact information will be provided by Rural Development to the tenant at that time.

The family receiving a USDA Rural Development voucher has an initial search period of 60 calendar days to find a housing unit. At its discretion, the Agency may grant one or more extensions of the initial search period for up to an additional 60 days. The maximum voucher search period for any family participating in the USDA Rural Development Voucher Program is 120 days. If the family needs and requests an extension of the initial search period as a reasonable accommodation to make the program accessible to a disabled family member, the Agency will extend the voucher search period. If the USDA Rural Development voucher remains unused after a period of 150 days from issuance, the USDA Rural Development voucher will become void and funding will be cancelled. The tenant will no longer be eligible to receive a USDA Rural Development voucher.

3. Initial Lease Term

The initial lease term for the housing unit where the family wishes to use its voucher must be for one year.

4. Inspection of Units and Unit Approval

The inspection standards currently in effect for the Rural Development section 515 Multi-Family Housing Program apply to the USDA Rural Development Voucher Program.

Rural Development must inspect the unit and ensure that the unit meets the housing inspection standards of the program at 7 CFR 3560.103. Under no circumstances may Rural Development make voucher rental payments for any period of time prior to the date that Rural Development physically inspects the unit and determines the unit meets the housing inspection standards. In the case of properties financed by Rural Development under the Section 515 program, Rural Development may accept the results of physical inspections performed no more than one year prior to the date of receipt by Rural Development of Form HUD 52517, “Request for Tenancy Approval,” in order to make determinations on acceptable housing standards. Before approving a family's assisted tenancy or executing a Housing Assistance Payments contract, Rural Development must determine that the following conditions are met: (1) The unit has been inspected by Rural Development and passes the housing standards inspection or has otherwise been found acceptable as noted previously; and (2) the lease includes the HUD tenancy addendum.

Once the conditions for a Housing Assistance Payments contract are met, Rural Development will approve the unit for leasing. Rural Development will then execute with the owner a Housing Assistance Payments (HAP) contract, Form HUD-52641. The HAP contract must be executed before USDA Rural Development voucher payments can be made. While Rural Development must use its best efforts to execute the HAP contract on behalf of the family before the beginning of the lease term, the HAP contract may be executed up to 60 calendar days after the beginning of the lease term. If the HAP contract is executed during this 60-day period, Rural Development will pay retroactive housing assistance payments to cover the portion of the approved lease term before execution of the HAP contract. Any HAP contract executed after the 60-day period is untimely and Rural Development will not pay any housing assistance payment to the owner for that period. In establishing the effective date of the voucher HAP contracts, Rural Development may not execute a housing voucher contract that is effective prior to the section 515 loan prepayment.

5. Subsidy Calculations for USDA Rural Development Vouchers

The monthly housing assistance payment for the USDA Rural Development Voucher Program is the difference between the comparable market rent for the family's former section 515 unit and the tenant contribution on the date of the prepayment. The tenant can appeal Rural Development's determination of the voucher amount through USDA's administrative appeal process, 7 CFR part 11. Since the USDA Rural Development voucher amount will be based on the comparable market rent, the voucher amount will never exceed the comparable market rent at the time of prepayment for the tenant's unit if they choose to stay in-place. Also, in no event may the USDA Rural Development voucher subsidy payment exceed the actual tenant lease rent. The amount of the voucher does not change over time. Due to the short-term nature of the USDA Rural Development Voucher Program, there are no continued income eligibility tests or income recertifications after the family is determined income-eligible at the time of prepayment or foreclosure.

6. Mobility and Portability of USDA Rural Development Vouchers

An eligible family that is issued a USDA Rural Development voucher may elect to use the assistance in the same project or may choose to move from the property. The USDA Rural Development voucher may be used at the prepaid property or any other rental unit in the United States and its territories that passes Rural Development physical inspection standards, and where the owner will accept a USDA Rural Development voucher. HUD Section 8 and Federally-assisted public housing is excluded from the USDA Rural Development Voucher Program because these units are already federally subsidized. Tenants with a USDA Rural Development voucher would have to give up the USDA Rural Development voucher to accept the assistance at those properties. The USDA Rural Development voucher may be used in other properties financed by Rural Development, but it cannot be used in combination with the Rural Development Rental Assistance Program. Tenants with a USDA Rural Development voucher that apply for housing in a Rural Development-financed property must choose between using the voucher or Rental Assistance (RA). If the tenant relinquishes the USDA Rural Development voucher in favor of RA, the tenant is not eligible to receive another USDA Rural Development voucher.

7. Term of Funding for Rural Development Vouchers

The USDA Rural Development Voucher Program provides voucher assistance for 12 monthly payments, subject to the availability of appropriations to the USDA.

8. Non-Discrimination Statement

“The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, age, disability, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or a part of an individual's income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA's TARGET Center at [phone] (voice and TDD). To file a complaint of discrimination write to USDA, Director, Office of Civil Rights, 1400 Independence Avenue, S.W., Washington, D.C. 20250-9410 or call [phone] (voice) or [phone] (TDD). USDA is an equal opportunity provider, employer, and lender.”

9. Paperwork Reduction Act

The information collection requirements contained in this document are those of the Housing Choice Voucher Program, which have been approved by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB control number 2577-0169. In accordance with the Paperwork Reduction Act, HUD may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a currently valid OMB control number.

Dated: March 14, 2008.

Russell T. Davis,

Administrator, Rural Housing Service.