HUD Issues Regulatory Waivers to Help with Hurricane Sandy Aftermath

On Nov. 30, HUD issued a new set of regulatory waivers to help site owners and displaced families deal with the aftermath of Hurricane Sandy. After Hurricane Sandy hit the East Coast of the United States causing significant damage to property, loss of life, and displacement of individuals and families from their homes and communities, President Obama called upon all federal agencies to do everything in their power to assist the victims of the storm and to eliminate or reduce “red tape” that will impede the delivery of federal financial assistance and other needed benefits.

     As a result, HUD issued a notice regarding regulations and other administrative requirements governing HUD’s project-based Section 8 programs that may be waived, temporarily suspended, or deferred in an area declared by the president to be a federal disaster area as a result of Hurricane Sandy. This notice isn’t applicable to the Rent Supplemental (Rent Supp) and RAP programs.

     Owners of HUD project-based Section 8 properties located in an area declared by the president to be a federal disaster area as a result of Sandy may defer compliance with the regulations listed in the notice for a period up to 60 days (December 2012 and January 2013). Owners must provide notice of their decision to HUD.

     Request to exercise option to receive vacancy claims. Multifamily Hub Directors in the Sandy disaster areas may defer or suspend compliance with the regulations or other administrative requirements upon the effective date of the notice. An owner who wishes to exercise his or her option to receive vacancy claims in accordance with the requirements listed in the notice must contact the Hub Director in writing (email communication is encouraged) with that request. If an owner wishes to receive vacancy claims for both December 2012 and January 2013, two separate written requests, one for each month, must be made to the Hub Director. The Hub Director will then verify that the units are uninhabitable based on phone and physical assessment (if available) and, once verified, approve the request. Hub Directors will provide the owner’s request form to HUD Headquarters for tracking.

     Business interruption insurance. In many cases, an owner may have insurance to protect against a loss of profits during a period of total or partial suspension of business activity. Owners who have such insurance must decide whether to exercise the option to receive vacancy claims as described in the notice or to receive insurance payments.

     Pass-through payments. Residents under a project-based Section 8 contract whose unit was rendered uninhabitable can temporarily lease a unit in another building that’s habitable under Uniform Physical Condition Standards. The owner can sign a temporary lease on behalf of the displaced Section 8 resident and begin a voucher for the contract rent for that temporary unit. The owner will then pay the contract rent on the temporary dwelling until the resident’s permanent rental unit has been restored to a habitable condition and the owner notifies the resident that he or she may resume occupancy of the unit. The resident is still responsible for the resident’s share for the temporary unit.

     Once the original unit is fully repaired and ready for occupancy, all Section 8 provisions apply. This arrangement calls for close contact and cooperation between the owner and the resident as the displaced resident has first right of refusal for the unit. Further information relating to pass-through payments can be found in HUD Handbook 4350.1, Chapter 38.