HUD Housing Notice § 2013-21

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


       ASSISTANT SECRETARY FOR HOUSING-
       FEDERAL HOUSING COMMISSIONER




       Special Attention of:                                      NOTICE:       H 2013-21

       Multifamily Hub Directors                                  Issued: July 25, 2013
       Multifamily Program Center Directors
       Rural Housing Services (RHS) Directors                     Expires: This notice remains in effect
       Supervisory Housing Project Managers                                until amended, revoked, or
       Housing Project Managers                                            superseded.
       Contract Administrators
       Multifamily Owners and Management Agents




       Subject: Implementation and approval of owner-adopted admissions preferences for
                 individuals or families experiencing homelessness

  I.       Purpose: This Notice provides guidance to HUD field offices, contract administrators, and
           property owners on the circumstances under which owners of assisted properties may adopt
           admissions preferences. This notice clarifies 24 CFR §5.655(c)(1) - (c)(5) to allow for
           owners to adopt, with HUD approval, admissions preferences not specified there, in
           particular, preferences to house homeless families.

  II.       Background: The Office of Multifamily Housing Programs (Multifamily Housing) had
            strictly interpreted 24 CFR §5.655(c)(1) - (c)(5) Section 8 project-based assistance
            programs: Owner preferences in selection for a project or unit, to mean that owners were
            limited in adopting preferences in the selection of residents to those preferences specifically
            cited in the regulation. That interpretation did not allow for an owner to adopt a preference
            for homeless families, as owners could not adopt preferences outside of 5.655(c)(1) –
            (c)(5). However, in consultation with the Office of General Counsel, Multifamily Housing
            has revisited this issue and has broadened its interpretation to allow that silence within the
            provision does not preclude owners from adopting preferences outside of those cited.


III.       Applicability: All Multifamily rental assistance programs.


IV.        Definition of Homeless: The Homeless Emergency Assistance and Rapid Transition
           to Housing Act of 2009 (HEARTH Act) revised the definition of homeless for HUD’s


                                          www.hud.gov       espanol.hud.gov
     homeless assistance programs, and on December 5, 2011, HUD published its final rule
     implementing this definition. HUD will use this definition to track the number of
     homeless persons served in its programs starting in September 2013, after changes to
     the HUD form 50059 have been completed.

     The definition of homeless under the HEARTH Act, however, does not prohibit an owner
     from establishing an alternative definition of homeless for the purpose of a waiting list
     preference based on local need. Owners may elect to adopt a more narrow definition specific
     to the homeless needs in their community or a broader version that would serve more of the
     population. Because of the specificity of this definition, owners must go to the HUD field
     office for approval. Owners are reminded that any preference must comply with civil rights
     requirements.


V.   Implementing a Homeless Preference: Multifamily Housing owners can significantly
     increase program access for individuals and families experiencing homelessness by
     establishing an owner-adopted preference in admissions policies. Owners must consider the
     following when adopting an admissions preference.

            a. Eligibility and Requirements. Preferences affect only the order in which
               applicants are selected from the waiting list. They do not make anyone eligible
               who was not otherwise eligible, and they do not change an owner’s right to adopt
               and enforce tenant screening criteria. In addition, owners must inform all
               applicants about available preferences and give all applicants an opportunity to
               show that they qualify for available preferences including all applicants currently
               on a waiting list.

            b. Tenant Selection Plan and Affirmative Fair Housing Marketing Plan. All
               owner adopted preferences must be included in the Tenant Selection Plan (TSP)
               and, if required, the Affirmative Fair Housing Marketing Plan for the associated
               property including any referral policy in the preference, if applicable. In addition,
               for preferences other than those specifically cited at 24 CFR §5.655(c), owner-
               adopted preferences must be approved by the local HUD office to confirm
               conformance with applicable regulatory and statutory requirements. Owners may
               remove their owner-adopted preference at any time without HUD approval. Any
               changes in preferences, however, must be updated in the owner’s TSP.

            c. Using a Homelessness Definition. Owners may create a preference for homeless
               families using the HUD definition of homelessness or a definition that better suits
               the property in question. The definition cannot exclude any protected classes,
               e.g., the definition cannot exclude families with children.

            d. Limiting preferences to people referred by a partnering organization.
               Owners may create a preference or limited preference specifically for individuals
               or families who are referred by a partnering homeless service organization or
               consortium of organizations (for example, an organization that refers people
   transitioning out of a shelter or temporary housing program). When partnering
   with a referring agency, an owner may elect to place the preference on the entire
   property or accept a referral for a defined percentage of units. No units may be
   set-aside or held off-line, but owners can fill vacancies by alternating selections
   from the existing project waiting lists with referrals from their partnering
   organization of eligible applicants who meet the preference criteria. For instance,
   in filling the next four vacancies, an owner may select three applicants for
   occupancy from the property waiting list followed by one applicant referred by
   the partnering organization. To allow for maximum flexibility, HUD is not
   prescribing the ratio of admissions. Note: Although a partnering organization
   may refer applicants, owners must screen those applicants in the required manner
   as they would for any other applicants on the waiting list. In addition, the source
   of referrals cannot be limited to an agency, organization, or consortia that
   exclusively provide services restricted to people with specific disabilities or
   diagnoses. Referrals also cannot be limited to an agency, organization, or
   consortia that deny services to members of any Federally protected class under
   fair housing laws, i.e., race, color, religion, national origin, sex, disability, or
   familial status.

e. Use of Alternating Selection. Even if not partnering with a referral agency,
   owners may fill vacancies in the property by alternating their selections of non-
   homeless applicants on the waiting list with applicants who meet the criteria for
   the preference. This method of selection of residents must be clearly defined in
   the Tenant Selection Plan.

f. Identifying preference-qualified applicants currently on the project’s waiting
   list. When adopting a new preference, owners must notify all applicants on the
   current waiting list to determine if any are eligible under the preference (24 CFR
   §5.655(c)). The owner must specify on any public notice of a waiting list opening
   that current waiting list applicants may qualify for the preference. The notice
   must also include any other information new applicants and current applicants on
   the waiting list will need to know about how to successfully apply and establish
   their preference status, including any partnering agencies with whom the owner
   may be working to receive referrals or determine preference eligibility.

g. Verifying preference eligibility. If an owner adopts a preference or limited
   preference for individuals or families experiencing homelessness, the owner may
   require the individual or family to provide documentation to prove that they
   qualify for the preference, or may rely on a partnering homeless service
   organization to verify that the individual or family qualifies for the preference.
   When an owner establishes a partnership for referrals from a homeless service
   organization, he/she may allow the partnering organization to verify the
   individual’s or family’s preference qualification before the individual or family is
   referred to the owner.
             h. Property Designations. If the owner has a property designation of elderly or
                disabled on all or some of HUD assisted units, this designation remains in effect
                despite the adoption of the new preference. For example, if the property is 100
                percent elderly, then the homeless preference would not supersede this
                designation. Any qualified applicants benefiting from the homeless preference
                would need to meet both criteria, i.e. homeless and elderly. If the property has 10
                units properly designated for individuals with disabilities, then an owner could not
                fill any of the 10 units with persons who met the criteria for the homeless
                preference unless they also met the eligibility requirements of the units.

             i. Ensuring Fair Housing compliance. When adopting a preference or limited
                preference for people experiencing homelessness, an owner must ensure that the
                preference would not have the purpose or effect of excluding other eligible
                families from the program on the basis of race, color, national origin, religion,
                sex, disability, or familial status, or would create or perpetuate segregation. An
                owner must comply with all fair housing and civil rights law in the adoption of a
                homeless preference and the opening of the waiting list to homeless families that
                qualify for the preference. For example, an owner adopting a homeless
                preference cannot deny access to families with children. The owner must also
                ensure that programs or activities are administered in the most integrated setting
                appropriate to the needs of qualified individuals with disabilities. The owner
                should analyze demographic data of the waiting list population and of the
                population in the community and compare this to the demographic characteristics
                of those who would qualify for the preference to ensure that the preference does
                not create a disparate impact on a particular protected class from accessing the
                program. In addition, the owner must fully document his/her marketing practices
                in the Affirmative Fair Housing Marketing Plan if the owner chooses to market
                the preference. This HUD-approved plan can include referrals from shelters and
                other organizations that serve the homeless, but should be designed specifically
                for the community in which the property is located.

                 For more guidance on the Affirmative Fair Housing Marketing Plan, please
                 reference the HUD Handbook 4350.3 REV-1, Chapter 4.


VI.   Submission and Approval of Preference Requests: Owners must receive HUD approval in
      order to adopt an admissions preference not specified under 24 CFR §5.655(c)(1) - (c)(5).
      Owners must submit a written request to their local HUD Field Office specifying the type of
      preference with a full description of the preference and how it will be implemented. Criteria
      set forth in this Notice including a description of the notification process for those on the
      waiting list, tenant selection process and any changes to the AFHMP must also be included.
      HUD will approve an owner-adopted preference if it does not result in discrimination, violate
      civil rights or equal opportunity requirements, or conflict with statutory, regulatory, or
      program requirements. Subsequent occupancy reviews will ensure that the property has
      updated its Tenant Selection Plan and, if required, the Affirmative Fair Housing Marketing
       Plan. Please see Chapter 4 of HUD Handbook 4350.3 for more details about the submission
       and approval of preference requests.

VII.   Admissions Policies Regarding Criminal Activity and Substance Use/Abuse: Under
       federal laws and HUD regulations, there are certain policies for admission to a housing
       program which are mandatory for all Multifamily property owners, and others which the
       owners have authority/discretion to adopt, but are not required.

       Owners must establish standards that prohibit admission of:

          1. Any household containing a member(s) who was evicted in the last three years from
             federally assisted housing for drug-related criminal activity. The owner may, but is
             not required to, consider two exceptions to this provision:
                 a. The evicted household member has successfully completed an approved,
                     supervised drug rehabilitation program; or
                 b. The circumstances leading to the eviction no longer exist (e.g., the household
                     member no longer resides with the applicant household)

          2. A household in which any member is currently engaged in illegal use of drugs or for
             which the owner has reasonable cause to believe that a member’s illegal use or
             pattern of illegal use of a drug may interfere with the health, safety, and right to
             peaceful enjoyment of the property by other residents;

          3. Any household member who is subject to a state sex offender lifetime registration
             requirement; and

          4. Any household member if there is reasonable cause to believe that member’s
             behavior from abuse or pattern of abuse of alcohol may interfere with the health,
             safety, and rights to peaceful enjoyment by other residents. The screening standards
             must be based on behavior, not the condition of alcoholism or alcohol abuse.

       Owners may also establish additional screening criteria, as outlined in HUD Handbook
       4350.3. However, owners should bear in mind the length of their waiting lists and the cost to
       applicants for screening when considering additional criteria. In addition, some of these
       criteria can be a barrier for vulnerable populations, including people who are homeless, to
       accessing the programs. For example, an owner may have strict policies related to criminal
       backgrounds, and previous rental housing history which can have the effect of screening out
       the most vulnerable people experiencing homelessness who are more likely to have past
       convictions, past evictions, or previous debts, due to a variety of reasons, including mental
       illness and substance use disorders.

       An owner wishing to serve more people experiencing homelessness should consider
       reviewing his/her discretionary admission policies to determine if any changes can be made
       to remove barriers. It is important to note that all discretionary admission (and program
       termination) policies must be applied to all applicants uniformly. In other words, an owner
       cannot have a certain set of admission/termination policies that apply specifically to a certain
           population, such as the homeless population, which are different from the
           admission/termination policies for all other applicants.


VIII.      Consideration of Circumstances Regarding Admissions and Terminations/Evictions:
           An owner cannot establish separate admissions/termination policies for a certain population,
           such as the homeless population, which are different from the admissions/termination
           policies than for all other applicants.

           In the event of receipt of unfavorable information about an applicant, consideration may be
           given to the time, nature, and extent of the applicant’s conduct (including the seriousness of
           the offense). Consideration may also be given to factors which might indicate a reasonable
           probability of favorable future conduct, including: evidence of rehabilitation, and applicant’s
           willingness to participate in social services.


 IX.       Service Provider as a Resource in Continued Occupancy: Service providers are
           important resources in ensuring that persons and families experiencing homelessness
           admitted to the property (and those in the property but at risk of homelessness) are provided
           the services necessary to remain stably housed and compliant with program requirements.

           HUD field offices, contract administrators, and owners should establish working
           relationships or consider service agreements with the service providers to ensure that all
           parties stay committed to the family through their participation in the program.


   X.       Information Contact: Inquiries about this Notice should be directed to Yvette Viviani at
            Yvette.M.Viviani@hud.gov or Jonathan Kinsey at David.J.Kinsey@hud.gov.


                                                           _____________________________________
                                                            Carol J. Galante
                                                            Assistant Secretary for Housing -
                                                              Federal Housing Commissioner


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