Comment Submitted by Betty Markey, Oregon Housing and Community Services

Request for Comments on Ending “Hold Harmless” Policy in Calculating Income Limits Under Section 8 of the United States Housing Act of 1937 Docket No. FR‐5323‐N‐01 TO: Regulations Division, Office of General Counsel FROM: Oregon Housing and Community Services On September 14, 2009, HUD issued a proposal to end the “hold harmless” policy of maintaining Section 8 income limits at the previously published level in cases where they would otherwise decrease. In FY 2010, it is likely, under the current economic climate, that Section 8 income limits will decrease in many areas across the country, including Oregon. Oregon Housing and Community Services is very concerned about the effect of HUD’s proposed policy on properties we fund and monitor. Suspension of the “hold harmless” policy for Section 8 income levels could negatively impact properties developed using federal and state grants, loans and tax credit programs which are tied to Section 8 limits, such as state Housing Trust Fund, HOME, CDBG, and HUD insured properties. Repeal (Suspension) of the hold “hold harmless” policy would have several negative consequences: • A decrease in rental income will result in insufficient cash flow to pay for on-going operations. As a result, an owner may defer maintenance and other expense items with the result of diminished, livability, occupancy, and viability of the housing. In addition, there would be no assurance that debt coverage ratios could be met thus increasing the risk of foreclosure. Without the assurance of stable rental income, banks and investors will no longer be willing to invest in the affordable housing industry. Loss of these investment partners would drastically reduce the ability to leverage state and federal housing resources and would result in far fewer units developed. • A decrease in Section 8 income limits will also decrease the number of low income families that qualify for the Section 8 program and increase the subsidy HUD will pay for a qualifying family. This will affect current and future residents. This policy change will negatively affect households with minimum wage earners, commonly referred to as the working poor. • Compliance with the individual program regulations costs approximately 10 percent of a project’s budget and takes approximately 25 percent of the project staff’s time. Implementing separate Section 8 income limits for tax credit and bond financed projects would place administrative burdens on project owners and all involved. Many projects are viable only because they are able to layer multiple funding sources, therefore it is feasible if the 'hold harmless' policy is suspended, one project could have multiple income/rent levels. Oregon, as many states are doing, is working diligently with its partners to streamline compliance, while meeting the regulatory requirements and ensuring the public benefits and long-term financial viability of the project. To achieve our goal of developing and sustaining affordable housing, Oregon Housing & Community Services would like simplify program regulation complexity. Complex rules and regulations reduce the sponsor's ability to serve residents and help them to achieve independence. In conclusion, it is essential that HUD avoid a potential affordable housing crisis and continue the hold harmless policy for all programs, including HOME and CDBG and also consider simplifying program administration by limiting the number of sets of income limits that apply to federal housing programs Thank you for your consideration.