Housing Groups Dispute HUD's Electronic Notification Methods

In late 2008, housing groups and industry professionals met with former HUD Secretary James Preston to urge greater transparency about HUD activities. High on their agenda was discussing how HUD has discarded previous, more formal methods of notifying the public about new policies and regulations. Instead, HUD has been relying increasingly on electronic methods, including emails to the field, to communicate policy changes.

“Because these electronic communications are not shared with housing industry professionals, we don't have the ability to challenge policy or guidance during its formulation, nor do our members have an ability to comply with policy that they don't know exists,” says Denise Muha, executive director of the National Leased Housing Association (NLHA).

Housing groups are concerned about HUD communicating a new requirement through a Listserv, especially when an owner who does not meet the requirement may face sanctions, a management review finding, or a 2350 “flag.”

Listserv Notice Sparks Outrage

Muha cites HUD's recent use of a Listserv to notify the housing industry that HUD model leases were “revised” to include an Office of Management and Budget (OMB) approval number and expiration date. Among other requirements, the notification included a warning from HUD that owners were required to provide new residents with the “revised” lease immediately and to existing residents starting with recertifications in January 2009.

The Listserv announcement raised a furor among owners who did not see the necessity of revising leases based on a trifling change in format. HUD responded to owners' objections by posting a “frequently-asked-question” (FAQ) on its RHIIP Web site, but did not issue a formal notice or announcement about the issue. (See “Reissuance Not Necessary for Leases without OMB Approval Number,” in the Insider, January 2009, p. 5.)

The addition of an OMB number to existing leases is one example of HUD's use of a Listserv to notify the housing industry about changes that mean complying with substantial administrative burdens. The main problem with HUD's approach is that only those owners and industry professionals who had signed up to receive HUD's Listservs were made aware of the change. But all owners would face sanctions by HUD for not complying with the change, according to HUD. Owners, housing advocates, and industry professionals contacted HUD with their objections, indicating that to use a Listserv for communicating policies that involve sanctions for noncompliance is not acceptable.

HUD Hears This—and Other—Complaints

Secretary Preston was responsive to the criticism. He convened a meeting with Muha and another dozen representatives of advocacy groups, owners, and housing industry professionals, seeking to address those problems that wouldn't require long lead times or large financial expenditures to resolve.

Housing groups raised the following issues:

Moving to Work program. Housing groups would like to see an expansion of, including additional funding for, the Moving to Work program.

Mortgaging of PHA sites. In response to requests by housing groups about this issue, HUD indicated that it is entertaining new applications, having already approved seven PHA transactions to mortgage public housing sites.

PHA affiliates. Housing advocates want HUD to encourage the creation of PHA affiliates and to ensure their uniform treatment across geographic regions. They argue that the potential of leveraging public housing assets (estimated to be $100 billion in assets nationwide) will permit PHAs to better fund their operations and to become more entrepreneurial.

VMS data. Housing groups want HUD to release its VMS data more rapidly to PHAs and to advocacy groups that analyze HUD budget proposals.

Promoting teamwork at HUD. Housing groups expressed concern that because separate divisions at HUD have different policies, they may be working against each other. Secretary Preston indicated that he had inaugurated monthly meetings with field office heads to be sure that HUD policy and program guidance is being communicated uniformly to all regions.

OIG and PHA financial audits. In response to questions about current Office of Inspector General (OIG) and HUD policies, the director of the Real Estate Assessment Center (REAC), Elizabeth Hanson, indicated that 70 percent of PHA financial audits were deficient in 2007, putting $500,000 in HUD funds at risk. Hanson also claimed that many PHA independent auditors are not using Generally Accepted Accounting Principles (GAAP), and some are not even licensed as accountants in the states in which they are practicing. Consequently, HUD proposed an independent public accountant (IPA) list from which PHAs must contract to perform their annual financial audit, Hanson says.

According to REAC data, although 7,000 auditors are registered with HUD, approximately 34 accounting firms are performing about three quarters of all PHA audits.

PHAs and HUD have been critical of OIG personnel for a variety of reasons, Hanson says. They claim that, for example, the OID does not understand HUD program rules and will substitute its own judgment. Or the OIG will extrapolate from the small sample provided by a single PHA's data to draw conclusions about the entire universe of the PHA's records and sites, Muha says.

Public housing demolition and site disposition. Housing groups noted the proposal made to HUD by Reps. Barney Frank (D-MA) and Maxine Waters (D-CA) to declare a moratorium on future public housing demolitions. If this comes to pass, there would be a general halt to ongoing HOPE VI and mixed-income redevelopments nationally. Legislators' concerns arose out of the imminent demolition and redevelopment of four PHAs in New Orleans, which has led to a conflict between HUD and local Louisiana housing advocates.

Noting that HUD has already approved the demolition of 99,000 public housing units, which were replaced with 67,000 units and 125,000 vouchers, housing groups are concerned about units being unaffordable to extremely low-income persons. They fear that “vouchering” the poor out of public housing means that higher income individuals will be served at the expense of extremely low-income residents, Muha says.

Insider Source

Denise B. Muha: Executive Director, National Leased Housing Association, 1900 L St. NW, Ste. 300, Washington, DC 20036; (202) 785-8888; dmuha@hudnlha.com.

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