PROM : Robert B. Kenison, Associate General Counsel
Office of Assisted Housing and Community Development,

BUBJECT: Section 8 Moderate Rehabilitation: Procedure for
Central Office Selection of PHAS

ac

You have asked for our analysis of the process for selection of PHAs who will receive section 8 moderate rehabilitation funding in FY 84 and FY' 85.

In FY 84, all moderate rehabilitation funding decisions were made in Headquarters. Field Offices were asked to invite PHAS administering a section 8 moderate rehabilitation program to submit requests for funds "based upon either projects submitted this Fiscal Year or a pre-existing pipeline" memorandum of March 1, 1984 to Field Offices from Mr. Barksdale). After receiving the letters requesting funds, a Central Office committee decided what PHAs would be invited to submit applications. Following the Headquarters decision, the Pield Office asked the selected PHAS to submit formal applications for funding for the amount decided by the Central Office committee. In FY 85, Housing would like to distribute moderate

rehabilitation funds to the "pipeline" of PHAs which have already requested additional unita.

The program regulations state (. 882.501(a)) that the HUD Field Office Invites PHA applications for the moderate rehabilitation program. If there is not enough contract authority to fund all approvable applications, HUD ranks the applications in accordance with a set of factors stated in the rule (. 882.501(b)). The Central Office selection process in FY 1984 was apparently not based on any explicit examination of the regulatory selection factors.

It is our view that the centralized selection procedure used this year, or the use of the FY 84 pipeline to select moderate rehabilitation PHAs in FY 85, is consistent with the regulatory requirements for distribution of moderate rehabilitation funds and processing of PHA applications. First, the regulatory procedures deal with invitation of applications and selection Among applications by a Field Office, but do not control or preclude procedure for determine what PHAS are to

Fagulation lets the Field
fifa 8}tion by Headquarters. Second,145430

be invited to submit applications for available funding; the regulatory Field Office competitive selection criteria come into play when and if the Field Office has decided to invite

applications from a number of PIIAS, and the available contract authority is not sufficient to fund all applications received in response to an invitation.

..

In FY 84 (and prospectively also in FY 85), the funding decisions are made by Headquarters before the Field Office invites application from a selected PHA for the amount of funding available, and there is not, at that stage, a competition between. PILAS for the funding.

A centralized selection process is legally acceptable if there is a reasonable and reasonably systematic administrative processs for decision on the PHA requests. The character of the selection process should be documented by an administrative record of the factors considered and the basis for the HUD decisions.

1454309

MEMORANDUM FOR: Samuel R. Pierce, Jr.

Secretary, S

FROM: Thomas T. Demery, Assistant Secretary for Bousing-
Federal Eousing Commissioner, i

SUBJECT: Section 8 Moderate Rehabilitation Program

Per your request, attached is information on the legal requirements
of the Section 8 Moderate Rehabilitation Program. Included in this overview
of the program is information on: 1) How an owner borrows funds to do the
rehabilitation, 2) How the owner pays back the funds borrowed and 3) the
minigun and maximum rehabilitation costs.

In addition to the Program Description, the following attachments are provided for your review:

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, D.C. 20410-8000

September 25, 1987

Exhibit 4

OFFICE OF THE ASSISTANT SECRETARY FOR

HOUSING FEDERAL HOUSING COMMISSIONER

SEP 25 1987

MEMORANDUM FOR: All Regional Administrators-Regional Housing Commissioners
All Division Directors, Office of Housing

FROM:

All Field Office Managers

All Field Office Directors, Housing Development Division

Thoma T. Demery, Assistant Secretary for Housing-Federal
Housing Commissioner, H

SUBJECT: Fiscal Year 1988 Section 8 Moderate Rehabilitation Funds

For Fiscal Year 1988, the House of Representatives has proposed
appropriating funds for 6,000 Moderate Rehabilitation units nationwide. The
Senate has not taken any action at this time. However, we anticipate that
there will be funding for the Moderate Rehabilitation Program next fiscal
year. In the event that continued funding is made available, decisions on
the Fiscal Year 1988 allocations of Moderate Rehabilitation units to Public
Housing Agencies (PHAS) will be made in Headquarters, as in recent years.

Please immediately notify every PHA administering the Section 8
Moderate Rehabilitation Program that PHAS interested in receiving Section 8)
Moderate Rehabilitation funds during Fiscal Year 1988 must submit a letter
request (not an application) to the Field Office within 45 days of the date
of this memorandum. (Unfunded requests for units received by Headquarters
for previous Fiscal Years will not be carried over for consideration in
Fiscal Year 1988.) PHAs must comply with the requirements of 24 CFR 882.503
and 504 regarding competitive selection of owner proposals. In addition,
PHAS should be advised that the available funding is quite limited and that
funding decisions will be made in Headquarters based on (1) PHA administra-
tive capability, ((2) previous underfunding of assisted housing in relation
to other localities, and (3) special purposes as delineated in Section
213(d)(4) of the Housing and Community Development (HCD) Act of 1974:

(a) unforeseeable housing needs, especially those brought on by
natural disasters or special relocation requirements;

(b) support for the needs of the handicapped or for minority
enterprise;

(c) providing for assisted housing as a result of the settlement of
litigation;

(d) small research and demonstration projects;

(1119/87

38-928 - 91 - 14