E9-9828. Notice of Funding Availability: Rural Development Voucher Program

AGENCY:

Rural Housing Service, USDA.

ACTION:

Notice of Rural Development Voucher Program Availability.

SUMMARY:

This notice informs the public that the U.S. Department of Agriculture (USDA) has established a demonstration 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 USDA. This notice informs the public that funding is now available for the Rural Development voucher program. The notice also sets forth the general policies and procedures for use of these vouchers. Rural Development Vouchers are only available to tenants of Rural Development-financed multifamily properties where the owner pays off the loan, either through prepayment or a foreclosure action prior to the loan's maturity date.

DATES:

April 29, 2009.

FOR FURTHER INFORMATION CONTACT:

Stephanie B.M. White, Director, Multi-Family Housing Portfolio Management Division, Rural Development, U.S. 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:

Background

Section 106 of the Consolidated Security, Disaster Assistance and Continuing Appropriations Act, 2009 (Pub. L. 110-329) (September 30, 2008) (Consolidated Appropriations Act, 2009) continued the level of funding and conditions until the earlier of an applicable appropriation act for fiscal year 2009 or March 6, 2009. Subsequently, the Omnibus Appropriations Act, 2009 (Pub. L. 111-8) was enacted on March 11, 2009, and appropriated $4,965,000 to 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 Omnibus Appropriations Act, 2009 provided that the Secretary of the U.S. Department of Agriculture shall carry out the Rural Development Voucher Program as follows:

That of the funds made available under this heading, $4,965,000 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 (HUD) (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.

Design Features of the Rural Development Voucher Program

This section sets forth the design features of the 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 this Notice of Funds Availability (NOFA) and further explained 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 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 prior to the loan's maturity date (either through prepayment or foreclosure action), the Rural Development affordable housing requirements and rental assistance subsidies generally cease to exist. Rents may increase, thereby making the housing unaffordable to tenants. When a prepayment occurs, whether or not the rent increases, the tenant will be responsible for the full payment of rent. The Rural Development Voucher Program applies to any 515 property where the mortgage is paid off prior to the maturity date in the promissory note and the payment occurs 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 an annual rental subsidy, renewable on the terms and conditions set forth herein and subject to the availability of funds, that will supplement the tenant's rent payment. This program 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.

There are some general limitations on the use of a voucher. For instance, the rental unit must pass a Rural Development health and safety inspection, and the owner must be willing to accept a Rural Development voucher. Also, Rural Development vouchers will not be used for units in subsidized housing like Section 8 and public housing where two housing subsidies would result. The Rural Development voucher may be used for rental units in other properties financed by Rural Development, but it will not be used in combination with the Rural Development Rental Assistance program. The Rural Development voucher may not be used for the purchase of a home.

1. Family Eligibility

In order to be eligible for the Rural Development voucher under this notice, a family must (a) be residing in the Section 515 project on the date of the prepayment of the Section 515 loan or upon foreclosure by Rural Development; (b) the date of the prepayment or foreclosure must be after September 30, 2005; (c) as required by 42 U.S.C. 1436a the tenant must be a citizen, United States non-citizen national or qualified alien and will so provide proof of citizenship to Rural Development using one of the following:

Copy of U.S. Passport (unexpired or expired).

Copy of U.S. Military ID card (unexpired).

Copy of U.S. Military dependent's ID card (unexpired).

Copy of a birth certificate issued by a state, county, municipal authority, or outlying possession of the United States bearing an official seal.

Copy of Certificate of U.S. Citizenship (Form N-560 or N-561).

Copy of Certificate of Naturalization (Form N-550 or N-570).

Copy of U.S. Citizen ID card (Form 1-197).

Copy of ID card for use of Resident Citizen in the United States (Form I-179).

Copy of Permanent Resident Card or Alien Registration Receipt Card with photograph (Form I-151 or I-1551).

Copy of Certification of Birth Abroad issued by the Department of State (Form FS-545 or Form DS-1350), and; (d) the family must be a low-income family on the date of the prepayment or foreclosure. A low-income family is a family whose annual income does not exceed 80 percent of the family median income for the area as defined by HUD. HUD's definition of median income can be found at http://www.huduser.org/​datasets/​il/​FY2008index_​mfi.html.

During the prepayment or foreclosure process, Rural Development will evaluate every tenant family to determine if it is low income. If Rural Development determines a family is low-income, immediately prior to the foreclosure or prepayment Rural Development will send the primary tenant a letter offering the family a voucher and will enclose a Voucher Obligation Request Form. If the family wants to participate in the Rural Development Voucher Program, the tenant has 10 months from the date of prepayment or foreclosure to return the Voucher Obligation Request Form to the local Rural Development office.

If Rural Development makes a determination that the tenant is ineligible for any reason, Rural Development will provide administrative appeal rights pursuant to 7 CFR part 11.

2. Obtaining a Voucher

Rural Development will monitor the prepayment request process or foreclosure process. During the prepayment request process or foreclosure process, Rural Development will send all tenants letters notifying them of the voucher program. As part of prepayment or foreclosure Rural Development will obtain a rent comparability study for the property ninety days 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 if they are eligible and their voucher calculations by Rural Development immediately prior to the date of prepayment or foreclosure. As previously stated, such notice will include a description of the Rural Development Voucher Program, a Voucher Obligation Request Form, and letter from Rural Development offering the tenant participation in Rural Development Voucher Program and Form HUD 52517, “Request for Tenancy Approval.” Once the primary tenant returns the Voucher Obligation Request Form and proof of citizenship to Rural Development office, a voucher will be issued within 30 days. 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 the time the voucher Obligation Form and proof of citizenship is received.

The family receiving a Rural Development voucher has an initial search period of 60 calendar days from receipt of the voucher to find a housing unit. At its discretion, Rural Development 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 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, Rural Development will extend the voucher search period. If the Rural Development voucher remains unused after a period of 150 days from original issuance, the Rural Development voucher will become void, any funding will be cancelled, and the tenant will no longer be eligible to receive a Rural Development voucher.

3. Initial Lease Term

The initial lease term for the housing unit where the family wishes to use the Rural Development voucher must be for 1 year.

4. Inspection of Units and Unit Approval

Rural Development will inspect and determine if the housing standard is acceptable within 30 days of Rural Development receipt of the HUD Form 52517. The inspection standards currently in effect for the Rural Development Section 515 Multi-Family Housing Program apply to the 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, 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. A copy of the HUD Tenancy Addendum will be provided when the tenant is informed he/she is eligible for a voucher.

Once the conditions in the above paragraph 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 Rural Development voucher payments can be made. Rural Development will use its best efforts to execute the HAP contract on behalf of the family before the beginning of the lease term. In the event that this does not occur, 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 assistance payments contract that is effective prior to the Section 515 loan prepayment.

5. Subsidy Calculations for Rural Development Vouchers

As stated earlier, if eligible the tenant will be notified of the voucher amount immediately prior to prepayment or foreclosure. The monthly housing assistance payment for the Rural Development Voucher Program is the difference between the comparable market rent for the family's former Section 515 unit and the tenant's rent 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, see 7 CFR part 11. The 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 the tenant chooses to stay in-place. Also, in no event may the Rural Development voucher payment exceed the actual tenant lease rent. The amount of the voucher does not change over time or if the tenant chooses to move to a more expensive location.

6. Mobility and Portability of Rural Development Vouchers

An eligible family that is issued a Rural Development voucher may elect to use the assistance in the same project or may choose to move from the property. The 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, where the owner will accept a Rural Development voucher and execute a Form HUD 52641. HUD Section 8 and Federally-assisted public housing, however, is excluded from the Rural Development Voucher Program because these units are already Federally subsidized. Tenants with a Rural Development voucher would have to give up the Rural Development voucher to accept the assistance at those properties. The Rural Development voucher may be used in other properties financed by Rural Development, but it cannot be used in combination with the Rural Development RA program. Tenants with a Rural Development voucher that apply for housing in a Rural Development-financed property must choose between using the voucher or RA. If the tenant relinquishes the Rural Development voucher in favor of RA, the tenant is not eligible to receive another Rural Development voucher.

7. Term of Funding for Rural Development Vouchers

The Rural Development Voucher Program provides voucher assistance for 12 monthly payments. 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, after Rural Development receives notice of the death, the use of the voucher passes to the co-tenant.

The voucher is renewable subject to the availability of appropriations to the USDA. In order to renew a voucher a tenant must return a signed Voucher Obligation Form which will be sent to the tenant within 60-90 days before the current voucher is exhausted. Renewal requests will have no preference and will be processed as a new application as described in this NOFA.

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, SW., Washington, DC 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 USC 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: April 22, 2009.

James C. Alsop,

Acting Administrator, Rural Housing Service.