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Legal Compliance and Funding for 202/811 Supportive Housing Projects

Explore legal issues, eligibility, sponsor requirements, site control, and prohibited relationships in Section 202 and 811 projects. Find relevant legal documents and understand the implications for project funding.

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Legal Compliance and Funding for 202/811 Supportive Housing Projects

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  1. Part II FY 2010 Sec 202/811 NOFA

  2. Discussion ofLegal Related Issues

  3. Legal Authorities What about the Section 202 Supportive Housing for the Elderly Act of 2010 and the Frank Melville Supportive Housing Investment Act of 2010 ? • Statutory, Regulatory, HUD Notices • HUD Notice of Funding Availability • HUD 202 / 811 Handbooks

  4. Legal Issues Where to find all this information ? http://www.hud.gov/offices/adm/hudclips/index.cfm http://www.gpoaccess.gov

  5. Legal Issues Eligible Applicant Who can be a sponsor of a Section 202 and 811 project ? 5 PRONG TEST

  6. Legal IssuesEligible Applicant 1) for 202: must have 501(c)(3) or 501(c)(4), for 811: must be 501(c)(3); 2) No part of the net earnings of which inures to the benefit of any member, founder, contributor or individual; 3) Must not be controlled by, or under the direction of, persons or firms seeking to derive profit or gain there- from; 4) Must have a governing board; and 5) approved by HUD as to administrative and financial responsibility.

  7. Legal Issues 202 Sponsor cannot be a public body or instrumentality of a public body can be a consumer cooperative cannot be an Indian Housing Authority, tribe, instrumentality or agency of a tribe or IHA** what about nonprofits associated with PHAs, IHAs or tribes ?**

  8. Legal Issues EXHIBIT 2: LEGAL STATUS • Articles of Incorporation, Constitution or other organizational documents (b) By-laws (c) IRS tax exemption

  9. Legal Issues EXHIBIT 2: Legal Status * Co-sponsors * Begin and End dates * IRS tax Exemption Ruling

  10. Legal Issues Exhibit 2: What is Legal Review looking for? Whether sponsor has the legal authority to sponsor the project, to assist the owner and to apply for the capital advance. Whether there are inconsistencies between sponsor’s legal documents and HUD’s statutory, regulatory and NOFA requirements.

  11. Legal Issues EXHIBIT 2: Legal Status there is nothing in the Sponsor’s by- laws or other legal documents that allows any part of their net earnings to inure to the benefit of any private party, including member, founder, contributor or individual

  12. Legal Issues Exhibit 4(d): Site Control 202 vs. 811 202: Insufficient evidence of site control. Rejection. 811: Insufficient evidence of site control. Category B.

  13. Legal Issues 1. Deed or long-term leasehold • Title or leasehold interest must commence prior to the application deadline date 2. Contract of sale • Cannot require closing earlier than 12 month following application deadline date

  14. Legal Issues 3. Option to purchase or for a long-term leasehold • Must state a firm price • Be in effect for a minimum of six months and must be renewable for a minimum of an additional six-month term • Refer to NOFA for additional details

  15. Legal Issues 4. Site covered by a HUD mortgage. 5. Sites acquired from a public body • If PHA applied for HUD permission, approval must be received prior to Hub’s selection recommendation to HQ

  16. Legal Issues Title to the site • Must provide current title report or title policy is mandatory • Legal opinions acceptable. See NOFA for specific requirements • Mortgage liens that will be satisfied by initial closing are not considered limitations. See NOFA for specific requirements

  17. Prohibited Relationships 24 CFR 891.130 Conflict of Interest versus Identity of Interest

  18. Permissible Relationships Conflict of Interest: Describes in what circumstances a contract between X and Y is not permissible Describes in what circumstances a contract between X and Y is permissible Sponsor must sign HUD-92041, Sponsor Conflict of Interest Resolution

  19. Permissible Relationships Identity of interest: In the simplest terms, describes when one person can’t wear two hats. “An identity of interest between the Sponsor or Owner and any development team member or between development team members is prohibited until two years after final closing.”

  20. Economic and MarketDiscussion

  21. FY2010 Section 202 Allocation Formula One-person Very Low-Income Renter Households Age 62+ With Housing Conditions Incomes at or below the 1 person Section 8 Income Limit (Very Low-Income Limit)

  22. FY2010 Section 202 Allocation Formula With Housing Conditions: - Living in a unit lacking plumbing or kitchen facilities - Overcrowded - Excess Rent Burden: More than 30% of income for rent Data Source: 2000 Census Special Tabulations of Households

  23. FY2010 Section 202 Allocation Formula Eighty-five percent of the capital advance funds are allocated to metropolitan areas and 15 percent to nonmetropolitan areas Each HUB jurisdiction is allocated funds for a metropolitan share and a non-metropolitan share.

  24. FY2010 Section 202Evidence of Need Sponsor’s evidence of need should include: • Estimate of demand • Market conditions in existing supply (Pub. Hsg., RHS, LIHTC, Sec. 8, & 202) • Assisted housing under construction

  25. FY2010 Section 202Evidence of Possible Lack of Demand Projected long-term decline in age-cohorts for target population Slow absorption in newer units Persistently high vacancies Widespread use of Age-waivers Evidence of new projects filling at the expense of existing ones

  26. FY2010 Section 202EMAD Points Awarded for Market Need Only projects in market areas with sufficient demand will be rated. Projects will receive 0 to 10 points based upon the unmet needs ratio: proposed project units divided by the unmet need (expressed as a percent)

  27. FY2010 Section 202EMAD Points Awarded for Market Need Unmet need is the number of one-person renter households age 75 and older with very-low incomes and with housing conditions, minus any rental assistance provided since 1999

  28. FY2010 Section 202EMAD Points Awarded for Market Need

  29. FY2010 Section 811 EMAD will not conduct market reviews of Section 811 applications and will not assign rating points EMAD will provide assistance to the field Housing staff in cases where there is a concern about market conditions

  30. FY2010 Section 202 Special Tabulations of Households for 1990 and 2000 http://www.huduser.org/portal/datasets/spectabs.html

  31. Questions? Please contact your local field economist with any questions regarding the data, metropolitan definitions, or evidence of need.

  32. Fair Housing and Equal Opportunity (FHEO)

  33. FHEO Legal OverviewFHEO’s Role • FHEO implements and enforces: • The Fair Housing Act (Title VIII of the Civil Rights Act of 1968); • Title VI of the Civil Rights Act of 1964 (“Title VI”); • Section 504 of the Rehabilitation Act of 1973 (“Section 504”); and • Other applicable civil rights and nondiscrimination laws.

  34. FHEO Legal OverviewLegal Requirements Incorporated into 202/811 NOFAs Obligations stemming from these statutes, their implementing regulations, and 202/811 program regulations (24 CFR 891.155) are incorporated into each NOFA in the program requirements and rating factor sections.

  35. FHEO Legal OverviewLegal Requirements Incorporated into 202/811 NOFAs Cont’d • Some of the fair housing/nondiscrimination requirements are also found in the 202/811 FY 2010 NOFA rating factors: • Providing meaningful access to persons with limited English Proficiency (LEP); • Affirmative Fair Housing Marketing (AFHM); and • Site and Neighborhoods Standards (SNS)

  36. FHEO Legal OverviewLimited English Proficiency (LEP) • Sources of legal authority for LEP: 1) Title VI (prohibition against national origin discrimination) 2) 24 CFR Part 1 (Title VI implementing regs.); 3) Executive Order 13166 (2001); and 4) HUD’s LEP Final Guidance (72 FR 2732, January 22, 2007) • LEP persons: persons for whom English is not their primary language; limited ability to read, write, speak, or understand English.

  37. FHEO Legal OverviewLEP Cont’d Recipients of federal financial assistance, including recipients of 202/811 funds, must take reasonable steps to ensure meaningful access to their programs and activities by LEP persons. Both the 202 and 811 FY 2010 NOFAs incorporate LEP requirements within the rating factors (section 3.b).

  38. Legal OverviewLEP Cont’d Applicants should consult HUD’s Final LEP Guidance when determining how to prepare their narrative responses to earn this point. LEP Guidance available at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp/promotingfh/lep

  39. Legal OverviewAffirmatively Furthering Fair Housing (AFFH) Sources of Legal Authority for AFFH generally: 1) Fair Housing Act Section 808 (e)(5) of the Fair Housing Act requires HUD to “administer the programs and activities related to housing and urban development in a manner affirmatively to further the policies of [the Fair Housing Act].” 42 U.S.C. § 3608(e)(5).

  40. Legal OverviewAFFH Cont’d Sources of Legal Authority for AFFH generally: 2) Executive Order 11063 (Nov. 20, 1962) Executive Order 11063 directs agencies that provide housing, including HUD, to “take all action necessary and appropriate to prevent discrimination because of race, color, creed, or national origin.”

  41. Legal OverviewAFFH Cont’d The Fair Housing Act and EO 11063 impose a duty on HUD to affirmatively further fair housing. HUD discharges this duty by requiring NOFA funding recipients to affirmatively further fair housing.

  42. Legal OverviewAFFH Cont’d AFFH: implementing a range of standards, policies, and procedures that not only refrain from discriminating, but also actively promote integration and fair housing choice.

  43. Legal OverviewAffirmative Fair Housing Marketing (AFHM) Sources of legal authority for AFHM: 1) Fair Housing Act 2) EO 11063 (Nov. 20, 1962) 3) 24 CFR 891.155 (incorporating by reference Part 200 AFHM regs.) 4) 24 CFR 200.600 et. seq. (AFHM regs.) Engaging in AFHM is generally one way NOFA recipients can work toward satisfying AFFH obligations/requirements.

  44. Legal OverviewAFHM Cont’d AFHM process: comparing demographic data of the project and the housing market area and, based on the results, developing a marketing plan that will reach those applicants that are least likely to apply.

  45. Legal OverviewAFHM Cont’d Goal: to target such marketing so as to “achieve a condition in which individuals of similar income levels in the same market housing area have a like range of housing choices available to them regardless of race, color, religion, sex, handicap, familial status or national origin.” 24 CFR 200.600

  46. Legal OverviewAFHM Cont’d 202 and 811 NOFAs incorporate AFHM requirements within the rating factors (section 3.b).

  47. Legal OverviewSite and Neighborhood Standards (SNS) General Sources of legal authority: 1) Title VI and implementing regs. (24 CFR 1.4(b)(3)) • prohibiting site selection that discriminates based on race, color, or national origin); and 2) Section 504 and implementing regs. (24 CFR 8.4(b)(5)) • prohibiting site selection that discriminates based on disability).

  48. Legal OverviewSNS Cont’d Section 202 and 811-specific (programmatic) sources of legal authority: 24 CFR 891.125 (202 and 811); and 2) 24 CFR 891.320 (disability-specific SNS for 811 only)

  49. Legal OverviewSNS Cont’d SNS: 202 and 811 recipients must select a site that will promote greater choice of housing opportunities for minority elderly (202) and minority persons with disabilities (811). The concept is related to AFFH. 202 and 811 NOFAs incorporate SNS within rating factors (section 3.b).

  50. Fair Housing and Civil Rights Rating Factors Office of Fair Housing and Equal Opportunity

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