HUD PIH Notice § 2026-23
Demolition and/or Disposition of Public Housing Property, Eligibility for Tenant Protection Vouchers, and Associated Requirements (HUD PIH Notices)
HUD guidance — not codified law
In Force
Verified 10/26/2026 · Next check 11/2/2026
effective 9/28/2026FederalAffordable Housing ProgramsOperative Text
HUD PIH Notice § 2026-23
Special Attention of: Notice PIH 2026-23
Public Housing Agencies
Public Housing Directors Issued: August 28, 2026
Regional Public Housing Directors
Expires: The notice remains in effect until
amended, superseded, or rescinded.
Amends: Notice PIH 2024-40
Cross References: 24 CFR 8.6, part 35, part
50, part 58, part 970, part 982, part 983; 28
CFR 35.160-163; 49 CFR part 24; Notices
PIH 2016-22, 2019-13, 2020-23, 2022-18,
2023-07, and 2026-16; Notices H-2016-
17/PIH 2016-17, H-2019-09/PIH 2019-23,
H-2023-08/PIH 2023-19, and H-2025-
01/PIH 2025-03
Subject: Demolition and/or Disposition of Public Housing Property, Eligibility for Tenant-
Protection Vouchers, and Associated Requirements
I. PURPOSE
Section 18 of the United States Housing Act of 1937 (42 U.S.C. 1437p) (“1937 act”)
permits a public housing agency (PHA) to demolish or dispose of public housing
property that is subject to a Declaration of Trust (DOT) or Declaration of Restrictive
Covenants (DORC) with approval by HUD. HUD may only approve a PHA’s application
if it determines that the statutory and regulatory requirements have been satisfied. This
notice clarifies guidance for submitting a Section 18 Demolition and/or Disposition
application pursuant to 24 CFR part 970 to release the project from Public Housing
Program requirements.
PHAs may request to remove property from their public housing portfolios if they have
followed the required public input process described below to determine whether the
reduction is in the public interest and consistent with the PHA’s mission. However, given
the national need for affordable housing, most PHAs make the determination to preserve,
renovate, or replace public housing and use the authority provided by section 18 of the
1937 act to facilitate the project’s repositioning and improvement.
For the purposes of this notice, “public housing” uses the definition at 24 CFR part
905.108, and the definition includes all dwelling property, including units in mixed-
finance transactions and non-dwelling property (e.g., vacant land, administrative
www.hud.gov
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buildings, community buildings) acquired, developed, modernized, operated, or
maintained with 1937 act funds (e.g., capital funds and operating funds). This notice does
not apply to PHA-owned Section 8 housing.
Changes from the prior demolition/disposition notice (PIH 2024-40):
Adjusted the size of a PHA in the definition of “very small PHA” (section III.A.3.c.)
Increased the maximum number of units allowed to qualify as a scattered site project
(section III.A.3.e.)
Clarified how Section 18 demolition/disposition guidance applies to mixed-finance
developments (section III.A.3.f.)
Clarified when functional obsolescence may be used as a justification for demolition
under 24 CFR part 970.15 or as an example that retention is not in the best interest of
the tenants or the PHA under 24 CFR part 970.17(c) (section VI.B.)
Removed barriers to consolidation of very small PHAs with larger PHAs (section
III.A.3.c.)
Guidance for discontinuance of a Special Application Center (SAC) application
pursuant to 24 CFR 970.7 submission requirements (section V.A.)
Clarified when buildings designated as severely distressed in an approved Choice
Neighborhoods Planning Grant qualify for the physical obsolescence justification
II. SAC APPLICATION REQUIREMENTS
Demolition and disposition applications are reviewed by SAC in accordance with the
requirements of 24 CFR part 970. SAC will only process applications that include all
components in this section. PHAs wishing to demolish or dispose of public housing must
submit their application through HUD’s Inventory Management System/Public and
Indian Housing (PIH) Information Center (IMS/PIC). The same required supporting
documentation (e.g., board resolution, resident consultation, government consultation,
environmental review) may be submitted in support of multiple phases.
A complete Section 18 application includes the following components, as applicable:
A. PHA Plan Certification
The PHA must certify that the proposed demolition or disposition of a public housing
property is included in its most recent HUD-approved PHA Annual Plan (including
any significant amendment to the PHA Plan) or Moving to Work (MTW) Annual
Plan. All PHAs must discuss the demolition or disposition at a public hearing, as
required by 24 CFR 903.7(h)(1). The PHA must comply with the resident
consultation requirements for the PHA Plan, including discussing with its Resident
Advisory Board (RAB) the proposed repositioning or redevelopment option,
including demolition/disposition.
B. Property Description
A description of all identifiable property by development, including land, buildings,
dwelling units, and other improvements, involved in the proposed demolition or
disposition.
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C. Removal Description
A description of the specific action proposed. The PHA should indicate whether the
application is for demolition, disposition, or demolition with disposition. If
disposition is involved, the PHA should describe the method of sale. If demolition
occurs after disposition, the transaction requires only a disposition application.
D. Timetable
A general timetable for the proposed action(s), including the initial contract for
demolition, the actual demolition, and, if applicable, the closing of sale or other form
of disposition. Deviation from the proposed estimate time schedule may have
negative effects on funding eligibility (e.g., Asset Repositioning Fee (ARF), Tenant
Protection Vouchers (TPV)), and transaction requirements.
E. Justification
A statement justifying the proposed demolition or disposition under 24 CFR part 970.
Descriptions of potential justifications for disposition are included in section III and
for demolition in section IV.
F. Relocation Plan
If applicable, a plan for the relocation of tenants who would be displaced by the
proposed demolition or disposition (including persons with disabilities requiring
reasonable accommodations and a relocation timetable as prescribed in 24 CFR part
970.21). The plan should include an estimate of costs for any required relocation
housing, moving costs, and counseling. Relocation includes signing a new lease, even
if no physical move occurs.
G. Resident Consultation
A description with supporting evidence of the PHA's consultations with affected
residents, any resident organizations, and the RAB, as required under 24 CFR part
970.9(a). Affected residents include public housing residents living in other units not
proposed for removal at the same development as the property proposed for removal
(units or vacant land). If the public housing property is removed in multiple phases,
and the PHA submits more than one SAC application, then consultation with the
affected residents is required for each phase.
The PHA must ensure communications and materials are accessible to individuals
with disabilities and take reasonable steps to provide meaningful access to persons
with limited English proficiency, pursuant to 24 CFR part 8.6 and 24 CFR part 35,
subpart E.
Along with a narrative of its consultation process, the PHA must attach evidence of
consultation (i.e., sign-in sheets, dates, and agenda for meetings). The PHA must
allow residents and their representatives to submit written comments regarding the
PHA’s proposed Section 18 plan and must consider these comments when
determining whether and how to proceed with a proposed demolition or disposition,
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including vacant land. If the PHA proposes a demolition-only application, the PHA
must conduct a new consultation with residents if it later submits a disposition-only
application for the same vacant land post-building demolition.
As a best practice regarding resident consultation, SAC encourages the PHA to
follow the Rental Assistance Demonstration (RAD) resident consultation
requirements in Sections 3.3 and 4 of Notice H-2016-17/PIH 2016-17, or successor
notices. All meetings must be made accessible to people with disabilities and provide
language assistance for all residents. The PHA should conduct two meetings with
residents before submitting the application, two meetings with residents after HUD
accepts the public housing repositioning action, and one meeting before the final
removal action occurs.
H. Offer of Sale to Resident Organizations (Disposition Only)
Evidence that the PHA offered to sell a property that is subject to a disposition
application to residents unless covered by an exception under 24 CFR part
970.9(b)(3). A PHA requesting consideration of exceptions to 24 CFR part
970.9(b)(1) must follow the process stated at 24 CFR part 970.9(b)(4). A resident
entity with an interest in purchasing the property must make the request in writing to
the PHA no later than 30 days after having received the notification of sale. For its
purchase offer to be considered, the resident entity must demonstrate that it obtained a
commitment for the necessary financing within 60 days of serving its written notice
of interest under 24 CFR part 970.9(b)(1).
I. Fair Market Value (Disposition Only)
PHAs must receive fair market value (FMV) for all dispositions unless a below FMV
transaction meets the criteria in section V.J. A FMV estimate of the property must be
provided, established on the basis of one independent appraisal (conducted within the
last 12 months), unless otherwise determined by HUD. HUD generally requires that
appraisals are made for the highest and best use of the Property as-is, and discounts
(e.g., cost of demolition that occurs after disposition) should not be included. FMV
cannot include seller credits or other seller discounts. Exceptions can be made
regarding the cost of remediation required by HUD.
J. Gross and Net Proceeds (Disposition Only)
In the case of disposition, estimates of the gross and net proceeds to be realized, with
an itemization of estimated disposition costs to be paid out of gross proceeds and the
proposed use of any net proceeds. All proceeds shall be used in accordance with 24
CFR part 970.19(e) and Notice PIH 2020-23.
K. Board Resolution
The PHA must obtain a signed resolution from its board of commissioners
authorizing the PHA to submit the SAC application. The signed board resolution
must be dated after all initial resident and local government consultation dates. The
board must be consulted and approve all material parts of the SAC application
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including the justification, method of disposition (if applicable), use of proceeds,
results of resident and local government consultation, and relocation plan.
L. Government Consultation
Evidence that the application was developed in consultation with appropriate
government officials as defined in 24 CFR part 970.5, including:
1. Consultation Process
A description of the process of consultation with local government officials,
which summarizes dates, meetings, and issues raised by the local government
officials and the PHA's responses to those issues;
2. Letter of Support
A signed and dated letter in support of the application from the highest elected
official or chief executive officer of the unit of local government that
demonstrates that the PHA has consulted with the appropriate local government
officials on the proposed demolition or disposition;
3. Documentation
Where the local government consistently fails to respond to the PHA's attempts at
consultation, including letters, requests for meetings, public notices, and other
reasonable efforts, documentation of those attempts; and
4. Multiple Jurisdictions
Where the PHA covers multiple jurisdictions (such as a regional housing
authority), the PHA must meet the previous requirements (1-3) for each
jurisdiction where the PHA is proposing demolition or disposition of PHA
property.
M. Environmental Requirements
An approved environmental review of the proposed demolition or disposition is
required. Proposed demolitions and disposition activities are subject to HUD
environmental regulations in accordance with 24 CFR 970.13. The environmental
review is conducted by HUD under 24 CFR part 50 or by a Responsible Entity under
24 CFR part 58. Notice PIH 2016-22 provides environmental review guidance and
requirements for PHAs. The PHA is responsible for providing the Responsible Entity
or HUD reviewer with a full description of the activities, and any supporting
materials to complete the environmental review.
The environmental review covers the demolition and/or disposition and any known
future use. Project aggregation requirements are explained in 24 CFR 50.21 and 24
CFR 58.32; refer to 24 CFR 970.13(b) for factors in determining what constitutes a
known future use. The environmental review may be valid for up to 5 years; however,
the environmental review must be re-evaluated and updated when the basis for the
original environmental or compliance findings is affected by a major change in the
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nature, magnitude or extent of a project and the project is not yet complete per 24
CFR 58.47 or 24 CFR 50.36 and as clarified in Notice PIH 2016-22.
N. Civil Rights Certification
A certification that the demolition or disposition application does not violate any
remedial civil rights order or agreement, voluntary compliance agreement, final
judgment, consent decree, settlement agreement, or other court order or agreement.
O. Partial Removal
To qualify for removal of only a portion of a public housing project, the PHA must
certify that the removal will help to ensure the viability of the remaining portion of
the project. If evidence is required, HUD may request the PHA submit future use
plans after disposition and/or building plans demonstrating how the demolition will
facilitate the renovation or reconfiguration of the remaining project units.
P. Required Forms for Section 18 Removals
Form HUD-52860 (required for all inventory removals)
Form HUD-52860-A (required for all Section 18 applications)
Form HUD-52860-B (required only for physical obsolescence applications)
Form HUD-5837 (required only for close out of Annual Contributions Contract
(ACC) and future development)
III. DISPOSITION JUSTIFICATION
In addition to other applicable requirements, HUD will approve a request for disposition
by sale or other transfer of a public housing project or other real property if the PHA
certifies that the retention of the property is not in the best interests of the residents or the
PHA for one of the following justification criteria.
A. Justification Criteria for Dwelling Units
HUD approves SAC applications for dwelling unit dispositions based on one of the
following three reasons:
1. Surrounding Area (24 CFR 970.17(a))
The PHA certifies that the conditions in the area surrounding the project (e.g.,
density, industrial or commercial development) adversely affect the health or
safety of the residents or the feasible operation of the project by the PHA. The
PHA must support its application with at least one of the following:
a. Health or Safety
The PHA demonstrates conditions that present serious obstacles in
maintaining the units as healthy or safe housing, and that the PHA cannot cure
or mitigate those conditions in a cost-effective manner. HUD encourages the
PHA to submit supporting documentation, which may include environmental
reviews. HUD may consider other available information including but not
limited to the analyses of land development, community facilities and
services, and natural features; or
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b. Infeasible Operation
The PHA demonstrates a lack of demand for the units with supporting
documentation that may include evidence that the units have long-term
vacancy issues (e.g., census tract data on declining population in the
jurisdiction, units located in an isolated area with limited access to
transportation and infrastructure, high turnover rates). On a case-by-case
basis, HUD may require a PHA to submit a market analysis or HUD may
perform one.
2. Development of Off-Site Property That Will Be More Efficiently or Effectively
Operated as Low-Income Housing (24 CFR 970.17(b))
The PHA certifies that the disposition allows the acquisition, development or
rehabilitation of other properties that will be more efficiently or effectively
operated as low-income housing projects. The PHA must demonstrate to the
satisfaction of HUD that sufficient replacement low-income housing units will be
provided in connection with the disposition of the property. Low-income housing
may include, but is not limited to, public housing, project-based Section 8
housing, and housing developed with LIHTC. The disposition application should
be submitted concurrently with the application for acquisition or development of
the new units in the case of public housing or MTW local non-traditional housing
or with the notice of proposal or project selection per 24 CFR 983.51(f) in the
case of project-based vouchers (PBV).
3. Disposition is in the Best Interest of Residents or the PHA (24 CFR 970.17(c))
The PHA certifies that it has determined the disposition is appropriate for reasons
that are in the best interests of the residents or the PHA, consistent with the PHA
goals and plans, and otherwise consistent with the 1937 act. In making such a
certification, a PHA must consider the needs of its jurisdiction for public housing
units, the goals and obligations of the PHA to operate, maintain, and provide
decent and safe housing in accordance with its ACC, and other tools available to
the PHA to preserve and reposition its public housing stock. Below are examples
of circumstances where a disposition may be appropriate under best interest:
a. Physical Obsolescence
A PHA demonstrates that the units or buildings are obsolete as to physical
condition in accordance with applicable criteria described in section VI.A.
Physical Obsolescence looks at the immediate repairs needed over the next 3
years as compared to the total development cost (TDC).
b. Functional Obsolescence
A PHA demonstrates that the development is functionally obsolete in
accordance with applicable criteria described at section VI.B. A PHA must
demonstrate that there are building and site design flaws that can only be
addressed through the reconstruction of the property. The cost to address
obsolete building features must exceed 57.14 percent of TDC for non-elevator
buildings or 62.5 percent of TDC for elevator buildings. The PHA may not
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place PBVs at an existing structure that has been approved under section 18
pursuant to the functional obsolescence justification.
c. Very Small PHAs
The PHA owns and operates 75 or fewer public housing units under its ACC
and demonstrates that it is in the best interests of the residents and PHA to
close out its Section 9 Public Housing program in accordance with Notice PIH
2019-13, or subsequent notice. For the purposes of this notice, such a PHA is
referred to as a “very small PHA.” Following any voluntary transfer of a
public housing program from a very small PHA to another PHA, the
transferred units will remain eligible for repositioning under the very small
PHA justification.
d. Development of On-Site Property That Will Be More Efficiently or Effectively
Operated as Low-Income Housing (24 CFR 970.17(b))
A PHA demonstrates that it can redevelop property to better meet the
affordable housing needs of the community. The requirements of section
III.A.2. apply except that the replacement low-income housing units will be
located on-site. Low-income housing units may be rehabbed or replaced with
newly constructed units. If the PHA is proposing to dispose of public housing
units and rehabilitate those same units under the mixed-finance units in the
Public Housing Program (24 CFR part 905), the PHA should submit the SAC
application under the “MF-MOD” disposition application type in IMS/PIC.
This ensures the PHA will continue to receive Capital Fund and Operating
Fund subsidies for the units throughout the modernization period.
e. Scattered-Site Units
A PHA demonstrates that the distance between units and lack of uniformity of
systems (e.g., HVAC, utilities) makes it challenging to continue to operate
and/or maintain the units as public housing. For purposes of this notice,
scattered-site units are defined as six or fewer total units in contiguous or
noncontiguous buildings on one side of a block.
f. Mixed-Finance Units
A PHA demonstrates that the long-term viability of ACC units within a
mixed-finance development is at risk as demonstrated by i) the expiration of
the applicable Low-Income Housing Tax Credit (LIHTC) compliance period
or passage of 15 years since the last major recapitalization event, and ii)
documentation of capital needs and financial modeling indicating inadequate
financial resources to address the underlying operational and capital needs. In
such case, the PHA must provide a plan to ensure the property’s long-term
financial and physical stability. HUD recommends that the new owner entity
have a PHA, a PHA affiliate, or an instrumentality of a PHA as a holder of an
interest in a general partner or managing member. For the purposes of this
notice, mixed-finance units are those units developed as public housing under
24 CFR 905.604 or its predecessor regulations.
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When requesting disposition of a mixed-finance development, the PHA would
apply on behalf of, and with the consent of, the mixed-finance owner entity.
Procedures for requesting a waiver of 24 CFR 970.3(a) will be published in
subsequent guidance. HUD will assess whether a non-PHA mixed-finance
owner is eligible to apply under the regulations or whether the owner must
request a waiver of 24 CFR 970.3(a) so that the public housing development
may be processed under section 18. PHAs seeking to project-base the TPVs
resulting from the disposition hereunder should consider any restrictions or
conditions on rehabilitation of an occupied structure under the PBV
regulations and secure a waiver if such restrictions or conditions are
inconsistent with their preferred implementation strategy. For guidance, email
PIH’s Office of Urban Revitalization at OUR@hud.gov.
B. Justification Criteria of Non-Dwelling Buildings and Vacant Land
(24 CFR 970.17(d))
The PHA certifies and provides supporting documentation to demonstrate that
disposition of non-dwelling buildings or vacant land meets one of the following
criteria:
1. 24 CFR 970.17(d)(1)
The property exceeds the needs of the project after the date of full availability
(DOFA); or
2. 24 CFR 970.17(d)(2)
The disposition of the property is incidental to, or does not interfere with,
continued operation of the remaining portion of the development.
C. Blending Section 18 Disposition Approvals with RAD Conversion
(24 CFR 970.17(c))
Provided that a project meets the criteria outlined below, a PHA converting a portion
of the public housing units within a converting project and is replacing the units
proposed for disposition with project-based Section 8 assistance within the covered
project may be subject to the provisions governing RAD/Section 18 blends, as the
terms “converting project” and “covered project,” and “RAD/Section 18 blends” are
defined in the RAD implementation notice and supplementary notices (Notices H-
2019-09/PIH 2019-23, H-2023-08/PIH 2023-19, and H-2025-01/PIH 2025-03), as
amended (“RAD notice”). The aggregate number of replacement units under project-
based Section 8 must meet the RAD “substantial conversion of assistance”
requirements as established in the RAD notice. All residents shall be treated
uniformly and in accordance with RAD requirements, including the civil rights
requirements and reviews described in the RAD fair housing, civil rights, and
relocation notice (H-2016-17/PIH 2016-17). RAD/Section 18 blends are primarily
processed by HUD’s Office of Recapitalization and are subject to RAD notice
requirements and processes related to Financing Plan submission requirements,
underwriting, DOT releases, terms of the disposition (e.g., treatment of proceeds),
and placement of a long-term use agreement at the covered project.
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With the exception of a sequenced blend, described in paragraph 3 below, a PHA
seeking a RAD/Section 18 blend must have submitted a RAD application in
accordance with the RAD notice. To satisfy the applicable Section 18 regulations, the
PHA must submit with the RAD Financing Plan the items described in this notice’s
sections II.A., II.B., II.K., and II.L. In addition, when the assistance will be
transferred off-site through the RAD/Section 18 blend, the PHA must also submit
with the RAD Financing Plan the item described in section II.H. The item described
in section II.H. is not applicable to an on-site RAD/Section 18 blend conversion
pursuant to the exceptions set forth in 24 CFR part 970.9(b)(3). The items described
in sections II.I. and II.J. are not applicable to RAD/Section 18 blends. The PHA does
not need to separately submit the remaining items in section II of this notice as they
are duplicative of RAD requirements, and the RAD requirements satisfy the Section
18 statutory and regulatory requirements.
1. RAD/Section 18 Construction Blend
The percentage of units eligible for disposition under Section 18 within the
converting project is based on the following: 1) whether that project will be
demolished and redeveloped; 2) whether the assistance will be transferred to a
new site under RAD; and 3) the ratio of a proposed transaction’s hard
construction costs (including general requirements, overhead and profit, and
payment and performance bonds) to the Housing Construction Costs (HCC)
published by HUD for the given market area. A PHA seeking a RAD/Section 18
Construction Blend must first submit a RAD application in accordance with the
RAD guidance. The following table sets forth the eligibility criteria and unit mix
for a RAD/Section 18 construction blend and, for each criteria, the maximum
percentage of units eligible for Section 18 and the minimum number of units that
will convert under RAD within the converting project:
Table: RAD/Section 18 Construction Blend Eligibility Criteria Unit Mix
Unit Mix Percentage
Eligibility
(Section 18/RAD)
Proposed rehab where hard construction costs exceed 90% of the Up to 90% Section 18
HCC for the given market area OR and at least 10% RAD
Demolition and redevelopment of the project OR
Transfer of Assistance OR
Developments designated as severely distressed housing in an
approved Choice Neighborhoods Planning Grant OR
Developments which meet the eligibility requirements set forth
in the first sentence of section III.A.3.f. regarding mixed finance
units
Proposed rehab where hard construction costs exceed 60% of the Up to 60% Section 18
HCC for the given market area and at least 40% RAD
Proposed rehab where hard construction costs exceed 30% of the Up to 30% Section 18
HCC for the given market area and at least 70% RAD
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In limited circumstances, prior to closing construction financing for the
replacement units, HUD may approve a PHA’s request to demolish or dispose of
public housing that is covered under a RAD Commitment to Enter into a Housing
Assistance Payments (HAP) (CHAP) Contract. In such cases, the units may be
eligible for a construction blend as long as proposed plans meet the above criteria.
HUD will enter into a RAD/Section 18 Converted Awaiting Transfer (CAT)
Agreement that will convert both the public housing assistance and the TPV
assistance resulting from the Section 18 approval, allowing a HAP contract to be
placed at a future date.
2. RAD/Section 18 Small PHA Blend
For any PHA with 250 or fewer public housing ACC units, at the PHA’s
discretion, up to 90 percent of the units in a converting project may be disposed of
under Section 18 and at least 10 percent of the units must be converted under
RAD. The PHA is not required to remove all its remaining public housing units
through a small PHA blend transaction. However, to be eligible for the Small
PHA blend, the PHA must submit a Repositioning Plan to HUD. The PHA’s
board of commissioners must approve the PHA’s Repositioning Plan, and it must
be acceptable to HUD. The Repositioning Plan must explain how the PHA will
remove all remaining public housing assets and close out the PHA’s Section 9
ACC consistent with Notice PIH 2019-13 and subsequent guidance.
Any units under a PHA’s ACC that resulted from a voluntary transfer of a public
housing program from a very small PHA (as defined in section III.A.3.c.) to
another PHA, are also eligible for the RAD/Section 18 small PHA blend. A
Repositioning Plan is not required to convert these units under the RAD/Section
18 small PHA blend.
3. Sequenced Blends
A PHA making a RAD application that has first received approval for a property
under a Section 18 Disposition application under another justification under
section III.A. (except for under section III.A.2. and section III.A.3.c. shall be
subject to the provisions governing RAD/Section 18 blends provided they request
and receive SAC approval to conditionally rescind the Section 18 approval for
some portion of RAD eligible units and convert the public housing assistance of
at least 10 percent of units under RAD.
IV. DEMOLITION JUSTIFICATION
In accordance with the ACC and the 1937 act, public housing property may not be
demolished without prior HUD approval. In carrying out approved demolitions under
Section 18 of the 1937 act, the PHA must comply with all applicable public housing
requirements (e.g., procurement, Davis-Bacon wages, fair housing requirements). If the
PHA uses capital funds to pay for the demolition, it must comply with all applicable 5-
Year Annual Plan and other Capital Fund Program requirements.
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If a PHA’s proposed demolition occurs after an approved and executed disposition of
public housing units or property under this notice and 24 CFR part 970, HUD approval is
not required for that demolition. However, the PHA cannot use Section 9 funds to
demolish the property.
A. Justification Criteria (24 CFR 970.15)
HUD approves demolition requests meeting the following criteria: (1) the project or
portion of a project is obsolete as to physical condition, location, or other factors,
making it unsuitable for housing purposes; and no reasonable program of
modifications is cost-effective to return the public housing project or portion of the
project to useful life; or (2) in the case of an application for demolition of a portion of
a project, the demolition will help to ensure the viability of the remaining portion of
the project. These criteria may be satisfied in the following ways:
1. Physical Condition (24 CFR 970.15(b)(1)(i) and (b)(2))
The PHA certifies and demonstrates substantial physical conditions issues of the
buildings/units that cannot be corrected in a cost-effective manner. See section
VI.A. for more information on physical obsolescence criteria and required
submission documents.
2. Location (24 CFR 970.15(b)(1)(ii) and (b)(2))
The PHA certifies and demonstrates that the location of the units causes
obsolescence, including physical deterioration of the neighborhood; the
neighborhood has substantially changed from residential to industrial or
commercial; or environmental conditions are present which jeopardize the
suitability of the site or a portion of the site and its housing structures for
residential use. The cost test for location obsolescence includes the PHA’s cost to
cure the obsolescence (e.g., buffering nearby industrial or commercial
development; mitigating environmental conditions) and whether these costs
exceed the TDC percentages for physical obsolescence. In some cases, there may
be no way to cure obsolescence, regardless of cost (e.g., project is in a Federal
Emergency Management Agency (FEMA) designated floodway). In other cases,
obsolescence may be curable with a mitigation cost (e.g., floodproofing and flood
insurance for designated floodplains).
3. Other Factors (24 CFR 970.15(b)(1)(iii) and (b)(2))
The PHA certifies and demonstrates factors impacting the marketability,
usefulness, or management of the units that seriously impede operations for
residential use with third party documentation. The cost test for obsolescence
based on other factors includes the PHA’s cost to cure the cause and whether
these costs exceed applicable TDC percentages. In some cases, curing
obsolescence is not possible regardless of costs. In cases where obsolescence may
be curable, the cost of due diligence in marketing and cost to cure obsolete factors
(e.g., cost to add a second bathroom to units with a high number of bedrooms)
may be included in the TDC test.
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B. Functional Obsolescence Functional Obsolescence (24 CFR 970.15(b)(1)(iii)
Public housing units with a construction completion date of 1950 or older may be
functionally obsolete and appropriate for demolition in accordance with applicable
criteria described in section VI.B. A PHA must demonstrate that there are design
flaws that can only be addressed through the demolition of existing units and
construction of new units.
C. De Minimis Demolition (24 CFR 970.27)
In any 5-year period, a PHA may demolish the lesser of five dwelling units or five
percent of its total public housing dwelling units without the need to obtain HUD
approval under 24 CFR part 970. De minimis demolition is available only where the
resulting space is used to meet the service or other needs of the residents, or the PHA
determines the unit(s) are beyond repair. Prior to demolishing units under this
authority, the PHA must provide information to HUD via IMS/PIC, including a
description of the units to be demolished and other items required by 24 CFR
970.7(a)(1), (2), (12), (13), and (14), environmental review under part 50 or 58, and
required resident consultation pursuant to 24 CFR 970.9.
V. OTHER REQUIREMENTS
A. Discontinued Review
Pursuant to 24 CFR part 970, substantially incomplete applications or otherwise
deficient on material items will not be processed beyond the initial determining
review. If the SAC determines that the PHA cannot provide the application
submission requirements pursuant to 24 CFR 970.7 as requested within 30 days, the
SAC will discontinue review of the application.
B. Disapproval Criteria
SAC reviews Section 18 applications in accordance with the requirements of 24 CFR
part 970. Pursuant to 24 CFR 970.29, HUD will disapprove a SAC application if
HUD determines: (1) a certification made by the PHA under 42 U.S.C. 1437p is
clearly inconsistent with the PHA Plan or any information and data available to or
requested by HUD; or (2) the application was not developed in consultation with
residents, resident groups, and local government officials. It should be emphasized
and recognized that a reason for disapproval is if the information presented is “clearly
inconsistent” as presented in the PHA plan and in the application.
C. Existing Financial Transactions
A PHA with an approved transaction through the Capital Fund Financing Program,
Section 30 (including PHA Mortgaged Transaction), Energy Performance
Contracting (EPC), or Operating Fund Financing program must comply with
additional instructions provided by HUD regarding such financing and may not take
any steps to implement a SAC-approved application without receiving confirmation
from HUD that all applicable requirements of the financing are satisfied. The PHA
must certify an existing financial agreement is not at risk because of the proposed
demolition or disposition action.
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D. Operating Fund Accuracy and Relocation Timeline
As part of the SAC application, a PHA includes an estimated number of days from a
SAC-approved application that it plans to start relocation. Per 24 CFR 970.21(e)(1),
the PHA is responsible for notifying each family residing in the development of the
proposed demolition or disposition 90 days prior to the displacement date, except in
cases of imminent threat to health and safety. Although relocation plans sometimes
change, the PHA is responsible for ensuring the relocation information remains
reasonably accurate because HUD relies on relocation information to determine
operating funds. If days to relocation in a SAC application is not reasonably accurate,
ARF payments under 24 CFR 990.190 will be affected. See Notice PIH 2026-16 or
successor guidance on how to update relocation dates. The PHA shall not
preemptively relocate residents from the proposed public housing units prior to
receiving signed SAC application approval. Resident relocation shall follow the
timeline approved in a PHA’s SAC application.
E. Re-Occupying Units Proposed for Removal
24 CFR 970.25(a) requires that a PHA should not re-rent units at turnover while HUD
is considering a SAC application. However, due to community needs or for other
reasons consistent with its PHA Plan, a PHA may decide it is in the best interests of
the PHA, its residents, and the community to re-occupy vacated units that are under
SAC review. If the PHA proposes demolition or disposition because units are
structurally unsound, located in a floodway, or otherwise uninhabitable, the PHA may
not reoccupy the units. The PHA cannot re-occupy units after issuance of the 90-day
relocation notice.
F. Reporting Requirements
Within 7 days of completion of the public housing property removal action (e.g.,
disposition by execution of the sale or lease contract/recorded release of DOT, final
payment of demolition contract), the PHA must report the action in IMS/PIC, or as
directed in any successor system as required under 24 CFR 970.35. HUD may require
other reporting information. Such requirements will appear in the SAC approval
letter.
G. False Certifications and HUD Enforcement
Anyone who knowingly submits a false claim or makes a false statement in a Section
18 Demolition/Disposition application is subject to criminal and/or civil penalties,
including confinement for up to 5 years, fines, and civil and administrative penalties.
(18 U.S.C. 287, 1001, 1010, 1012, 1014; 31 U.S.C. 3729, 3802).
H. Civil Rights and Labor Standards Requirements
This notice does not modify a PHA’s fair housing, civil rights, or accessible housing
obligations. It does clarify those obligations with respect to public housing
demolition/disposition under Section 18.
The PHA must carry out the removal action in compliance with all applicable civil
rights requirements, including title VI of the Civil Rights Act of 1964, the Fair
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Housing Act, section 504 of the Rehabilitation Act of 1973, title II of the Americans
with Disabilities Act of 1990, all regulations implementing these authorities, and
other applicable Federal, State, and local civil rights laws.
The PHA is always responsible for understanding and implementing the requirements
of HUD fair housing regulations and policies including the 1968 Fair Housing Act,
the Housing and Community Development Act of 1974, The Cranston-Gonzalez
National Affordable Housing Act, and the Quality Housing and Work Responsibility
Act of 1998. (See 42 U.S.C. 3608, 5304(b)(2), 5306(d)(7)(B), 12705(b)(15), and
1437C-1(d)(16).)
1. HUD Civil Rights Review
HUD’s Office of Fair Housing and Equal Opportunity (FHEO) may conduct a
civil rights review of certain SAC applications based on the removal justification,
which may include applications for non-dwelling property. Pursuant to 24 CFR
970.7(a)(17), HUD may request additional information, including information
about the PHA’s compliance with nondiscrimination requirements in relocations
under 24 CFR 970.21(a) and the PHA’s Annual Plan fair housing certification
under 24 CFR 903.7(o).
2. Disclosure of Remedial Orders and Compliance Agreements
In its SAC application, the PHA provides a certification that the demolition or
disposition does not violate any remedial civil rights order or agreement,
voluntary compliance agreement, final judgment, consent decree, settlement
agreement, or other court order or agreement (per 24 CFR 970.7(a)(16)). In
addition, the PHA states whether it is operating under any Federal, State, or local
remedial order, compliance agreement, final judgment, consent decree, settlement
agreement or other court order or agreement, including but not limited to those
related to fair housing or other civil rights finding of noncompliance. If the PHA
is operating under such a document, it must provide a citation to the document
and attach a narrative describing how the proposed demolition or disposition is
consistent with such document.
3. Federal Labor Standards and Economic Opportunity
A PHA using HUD funds for demolition or disposition must comply with all
applicable Federal labor standards of section 12 of the 1937 act (42 U.S.C. 1437j)
(Davis-Bacon) and requirements of section 3 of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701u), as amended. Activities include but
are not limited to demolition and resident relocation. Under Section 3 and 24 CFR
part 75, recipients of certain HUD financial assistance must provide employment,
training, and economic opportunities to the greatest extent feasible to Section 3
residents or business concerns. Recipients of HUD funds have Section 3
obligations regardless of the amount of funds (see 24 CFR 75.3).
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4. Resident Consultation for Persons with Disabilities and Persons with Limited
English Proficiency (LEP)
To ensure individuals with disabilities have reasonable opportunities to consult on
the SAC application, the PHA must ensure communications and materials are
accessible and in compliance with section 504 of the Rehabilitation Act of 1973,
24 CFR 8.6, the Americans with Disabilities Act of 1990, and 28 CFR 35.160-
163. This includes ensuring that written and oral communications, including
resident meetings, are provided in appropriate alternative formats as needed (e.g.,
Braille, audio, large type, accessible electronic communications, assistive
listening devices, sign language interpreters, computer-assisted real time
transcription of meetings, large print documents, and accessible web-based and
email communications).
A PHA must provide equal access for persons with disabilities by conducting
sessions at locations that are physically accessible to those persons, including
individuals who use wheelchairs. Individuals with disabilities must receive
services in the most integrated setting appropriate to their needs, meeting the
needs of qualified individuals with disabilities that fully enable interactions. The
PHA should be guided by the goal of maximizing participation in an integrated
setting so that residents with disabilities and residents without disabilities may
hear and consider each other’s views. Priority shall be given to on-site accessible
locations (e.g., TV rooms or informal gathering places) even if this requires
multiple sessions with smaller groups of residents.
Title VI of the Civil Rights Act of 1964, HUD’s guidance on title VI and LEP
discrimination (72 FR 2732), and regulations at 24 CFR part 1 require the PHA to
take reasonable steps to ensure meaningful access to their programs and activities
for persons who have limited ability to read, speak, or understand English (i.e.,
individuals who have limited English proficiency or LEP persons). Written
materials provided in English are to be provided in regularly encountered
languages among the residents. The PHA may need to provide interpreters to
communicate between different languages to ensure LEP persons have
meaningful access. The PHA may hold meetings in languages other than English
to provide direct communication and participation.
I. Lease Dispositions
When redeveloping public housing sites, PHAs may transfer the right to develop the
property to another party but maintain control through a ground lease, air rights,
easement, or other encumbrances. A PHA may prefer to dispose through a lease
instead of fee simple sale because it allows the PHA to retain long-term ownership,
maintain real estate tax benefits, and control how the property is used during the
lease. A ground lease, air rights lease, or easement requires a disposition application
if the lease term is more than 1 year and does not qualify for an exception under 24
CFR 970.3(b). The PHA must describe the terms of the lease in their Section 18
application, including terms, payments (upfront or annual), and legal entity of
proposed lessee. A lease is considered a negotiated disposition (vs. fee simple sale);
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and HUD will approve leases that satisfy all the relevant regulatory requirements
found in part 970.
J. Below Fair Market Value Transactions
A PHA must receive FMV when it disposes of public housing property to a non-
affiliated entity. However, a sale for below FMV is permitted if HUD authorizes a
negotiated sale for reasons found to be in the best interest of the PHA or the Federal
government or determines that the transaction provides a commensurate public
benefit to the community, the PHA, or the Federal government. HUD makes this
determination on a case-by-case basis. HUD will generally find a commensurate
public benefit if the disposed property will serve an affordable housing purpose that is
roughly proportional to the fair market value of the public housing project and
primarily serves low-income families (i.e., individuals earning at or below 80 percent
of area median income (AMI)). Below FMV transactions will be subject to a 30-year
use restriction with a low-income housing or other affordable housing purposes. Low-
income housing may include, but is not limited to, public housing, project-based
Section 8 housing, and housing developed with LIHTC. HUD encourages the PHA to
give public housing residents priority for occupancy of the affordable housing units.
Public buildings and infrastructure (including streets, bridges, schools, police and fire
stations, and other public improvements) do not qualify as a commensurate public
benefit.
As part of the SAC application, a PHA may propose a preferred form of use
restriction (e.g., LIHTC extended use agreement, HOME agreement, provision in
ground lease, separate use agreement) and proposed minimum term, but the final
form and term of use restriction must satisfy the requirement for commensurate
public benefit. The PHA and the proposed acquiring entity shall be parties to the use
restriction.
Each affordable housing use restriction that satisfies the requirement for
commensurate public benefit must meet the following requirements:
1. Covenants Run with the Land
All use restriction benefits and burdens must touch, concern, and run with the
land, and are binding upon successors and assigns of the parties, including any
HUD-approved transferee;
2. Written Use Restriction Document
The use restriction covenants must be evidenced by a written use restriction
document that will be recorded against the Property in the first-priority position.
The recordation must occur immediately after the release of the DOT and before
the recordation of any ground lease. Any foreclosure, bankruptcy, or mortgage
liens must be subject and subordinate to the use restriction document.
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3. Use Restriction Survives Foreclosure
The affordable housing use restriction must survive foreclosure of mortgages and
other liens and be recorded in public land records. Any foreclosure, bankruptcy,
or mortgage liens must be subject and subordinate to the use restriction document.
4. Use Restriction Document For RAD/Section 18 Blends
The RAD Use Agreement or RAD Transfer of Assistance Restrictive Covenant
satisfies the requirements for a use restriction document to be recorded.
5. Use Restrictions to Which HUD is a Party
Any use restriction to which HUD is a party shall meet the following
requirements and be subject to the following conditions:
i. Conveyance and Other Transfers. Prior written HUD approval is required to
convey, assign, transfer, lease, sublease, or otherwise dispose of the property
or any interest therein or permit such a voluntary conveyance or transfer.
Certain involuntary transfers of the property (e.g., to a secured lender upon
default under the security documents or foreclosure) must be subject to the
Use Restriction Document.
ii. Mortgages, Encumbrances, Liens. Prior written HUD approval is required to
mortgage or otherwise encumber the property. Notwithstanding this
requirement, HUD approval is not required for: (a) the conveyance or
dedication of land for use as streets, alleys or other public rights-of-way, (b)
the granting of easements for the establishment, operation and maintenance of
public utilities, and/or (c) the documentation of residential leases or other
occupancy arrangements in the normal course of operation of the property.
iii. Releases and/or Amendments Prior to Expiration of Term. Though HUD
generally will not agree to release use restrictions, it will consider releases due
to extraordinary circumstances on a case-by-case basis.
iv. Expiration. Upon the expiration of the term, the use restriction shall cease and
terminate, and the property shall be deemed automatically released of the use
restriction and the covenants without the requirement of any further writing
between the parties. Upon expiration of the use restriction, HUD will execute
and deliver such documents that the owner shall reasonably request to release
the use restrictions from the property title, thereby clearing the property.
v. Events of Default and Notices. The PHA shall be primarily responsible for
enforcing and monitoring the Acquiring Entity’s compliance with the use
restriction. Further, the PHA and/or HUD may take whatever investigative
steps necessary to ensure compliance with the Use Restriction Document upon
an event of default. HUD will be notified if the property defaults by the
monitoring agent of the affordable housing property.
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Records and Reporting. For the duration of the Use Restriction Term, the
PHA shall retain records and annually report to its board of directors to
confirm that the property is in compliance with the Use Restriction Document.
The PHA shall provide such records to HUD whenever HUD approval is
needed.
Release of Declaration of Trust/Declaration of Restrictive Covenants. HUD
will not release the DOT/DORC (Form HUD-52190) until it approves the
final form of use restriction. HUD encourages the PHA to annually report
compliance with the Use Restriction Document to its board of commissioners.
K. Changes After SAC Application Approval
The PHA must comply with all terms of the SAC approval. Minor technical
corrections to SAC approval letters (i.e., non-substantial changes to acreage,
correcting building addresses, change in acquiring entity name, reduction in the
number of units approved for removal, or future unit mix corrections that do not
affect the commensurate public benefit) may be requested by emailing
SACTA@hud.gov. If a PHA wishes to modify a removal into multiple phases, each
future phase will need to be reviewed on a phase-by-phase basis and the
commensurate public benefit must be met for each individual phase. Absent
modification of a removal into multiple phases, no material changes may be made to
the SAC approval letter. No units may be added or substituted after the SAC approval
that were not part of the original application. Any material changes require a new
SAC application submission.
Material changes include, but are not limited to:
Method of disposition modifications;
Change in future use proposed at the property no longer matches the conducted
environmental review;
Change in the use restriction after recording;
Public bid sale for less than 80 percent of the appraised FMV (the PHA must
describe its due diligence in offering the public housing property for sale on the
open and competitive market and its rationale for accepting an offer that is below
80 percent of appraised FMV; alternatively, the PHA may submit an updated
appraisal); and
Revised terms of commensurate public benefit for below FMV disposition (the
PHA must describe the revised future use of the property so HUD can confirm the
commensurate public benefit). This includes a substantial reduction in the number
of units to be developed.
A PHA may request a new SAC application for material changes by emailing
SACTA@hud.gov with evidence that the PHA consulted the residents, the RAB, and
resident groups about the change as well as the board resolution approving the
change. Only updated or amended portions of the original application require
resubmission, however, the SAC may determine that a change in future use is so
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significant as to require a supplemental or new environmental review by the
responsible entity or HUD (see section II.M.). Modification requests made more than
5 years after approval under the part 50 or 58 environmental review process will
require re-evaluation by the responsible entity or HUD and will require a
supplemental or new environmental review. Once a request for material changes has
been approved, portions of the prior approval letter will be rescinded.
VI. OBSOLESCENCE CRITERIA
Buildings and units that are obsolete (physically or functionally) may be justified for
removal as a demolition under 24 CFR part 970.15 or an example of conditions that
justify a PHA’s certification that retention of the property is not in the best interest of the
PHA or tenants for a disposition under 24 CFR part 970.17(c).
If a project’s rehabilitation costs are 57.14 to 90 percent in a non-elevator building or
62.5 to 90 percent in an elevator building of TDC, the PHA may voluntarily pursue a
removal action for the project under: 1) physical obsolescence via demolition or
disposition, or 2) functional obsolescence via disposition; or the PHA may choose to
retain and rehabilitate the project with capital funds.
If rehabilitation costs for a project exceed 90 percent of TDC, the PHA’s only choice is to
pursue a demolition, pursue disposition, or use funds other than capital funds to address
the project’s capital needs.
A. Physical Obsolescence
Physical obsolescence demolitions fall under 24 CFR 970.15(b)(1)(i) and (b)(2))
physical condition. Physical obsolescence dispositions fall under 24 CFR 970.17(c)
where the PHA certifies that retention is not in the best interest of the PHA and
residents. Physical obsolescence issues may include, but are not limited to, critical
structural issues, deficiencies in major systems, or deterioration due to prolonged
deferred maintenance that needs to be addressed in the next 0 to 3 years. The PHA
may submit Physical Needs Assessments (PNAs), government inspections (including
condemnation orders), and/or independent architect or engineer’s reports as
supporting documentation of physical conditions issues. HUD may also consider
other available information, including Real Estate Assessment Center scores, Capital
Fund program 5-Year Action Plans, EPC information, and/or on-site inspections by
HUD staff.
If a PHA has an approved Choice Neighborhoods Planning Grant that classifies
certain developments or buildings as distressed, those units are eligible for removal
under this section. The PHA must provide proof that the proposed units are included
in a Choice Neighborhood distressed unit certification of an approved Choice
Neighborhood Planning Grant.
1. Submission Requirements
Submission requirements to certify physical obsolescence:
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Form HUD-52860-B or successor form;
Scope of Work Report. This includes a list of specific and detailed work items
that require rehabilitation or repair, preferably prepared by an outside engineer
or architect (see section VI.A.2.); and
Microsoft Excel or other compatible editable table form document of scope of
work rehab cost estimates (including allowable soft costs, see below); or
Approved Choice Neighborhoods Planning Grant. For developments
designated as severely distressed housing in an approved Choice
Neighborhoods Planning Grant, the PHA shall submit a copy of that Choice
Neighborhoods distressed unit certification in lieu of Form HUD-52860-B,
Scope of Work Report, and Rehab Cost Estimate.
2. Scope of Work
The scope of work should include the following:
Estimates based on the standards outlined in the most recent International
Building Code and National Fire Protection Association 5000 standards. The
PHA may include local code requirements in choosing to include items in the
scope of work (e.g., fire codes; requirements for natural disasters such as
flooding or wildfires).
Building systems (e.g., HVAC, plumbing, electric), external amenities (e.g.,
roofs, doors, windows), and internal amenities (e.g., kitchens, bathrooms,
flooring) limited to those that address immediate capital needs for a maximum
of 3 years. Replacement costs are restricted to items evidenced to be in poor
condition that require immediate replacement or with a remaining useful life
of 3 years or less. Actual service life may depend on initial quality of the item,
local environmental factors, use/abuse, and levels of routine maintenance. The
age of an item alone is not evidence of need to repair or replace. Each item is
individually estimated and may reference life cycle values per the RSMeans
Facilities Maintenance and Repair Cost Data book.
Underground utilities (e.g., sewer, water, gas, electric), regardless of
distances, provided the PHA owns the utility and evidences the need for
replacement.
Mitigation costs of asbestos, lead-based paint, or other environmental issues
supported by reports submitted with the SAC application.
Structural defects when supported by reports from a licensed professional
engineer.
Accessibility improvements for persons with mobility, vision, hearing or other
disabilities, provided improvements are consistent with standards, regulations,
and other requirements under Section 504 of the Rehabilitation Act of 1973
(including the Uniform Federal Accessibility Standards (UFAS)); Fair
Housing Act; Americans with Disabilities Act (ADA); other applicable
Federal authorities, State, or local requirements that exceed Federal baseline
requirements; and accessibility requirements in remedial agreements or
orders.
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Imminent or ongoing health and/or safety issues, even if such costs are
otherwise not eligible, provided the PHA provides supporting documentation
from an independent party evidencing the occurrence and resulting health
and/or safety risks. Due to extreme weather events the cost of installing air
conditioning or heating systems (where previously non-existent) may be
included.
Site access work or construction that is essential to completing items included
in the building physical obsolescence mitigation, beyond 5 feet of a building
exterior (e.g., retaining walls, required ADA compliance).
a. Items Generally Not Allowed in the Scope of Work
HUD reserves the right to disallow items in a scope of work if HUD
determines there are more cost-effective alternatives to address the
rehabilitation or replacement needs. If the PHA completes major capital work
after the scope of work is prepared, the PHA must include a description of that
work in the SAC application. HUD generally does not allow the following
costs to be included in a rehabilitation scope of work:
Work associated with enhancements or improvements of working systems
or fixtures at the project, including energy efficiency “green”
improvements.
Amenities not currently existing at the project (e.g., tankless water heaters,
trash enclosures, washer/dryer hook-ups, garbage disposals, central air
conditioning, new porches). HUD makes an exception for window air
conditioning units if not pre-existing and meets local building code.
Work items that address a project’s needs beyond immediate 3 years.
Local code compliance if the building code requirements are otherwise not
triggered by the rehabilitation/repair.
Landscaping or other site work beyond 5 feet of the exterior walls of a
building not related to mitigating physical obsolescence.
Upgrading on-site utility lines that are otherwise in working condition.
Work items associated with site improvements and appurtenances (e.g.,
parking lots, security cameras, playgrounds, community centers), even if
those site improvements or appurtenances exist and are in need of repairs.
Replacing PHA personal property (e.g., appliances or other removable
fixtures such as refrigerators, ovens, and window treatments).
Generally, any work item listed in “Fair” or “Good Condition.”
b. Cost Estimates
The following should be used for estimates of the eligible scope of work
items:
TDC comparisons per HUD-posted costs for the same year as the
rehabilitation estimate is made (see 24 CFR 905.314).
RSMeans cost index, Marshall and Swift cost index, or other accurate and
reliable cost estimates (e.g., actual and competitive bids).
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HCC as defined in 24 CFR part 905, including existing items inside a
building or within 5 feet of the exterior walls and costs to repair
landscaping damaged due to rehabilitation.
c. Physical Needs Assessment (PNA)
If a PNA is used to establish the TDC, the PHA should describe the
methodology used to prepare the PNA report including the number of units
inspected and the ratio of vacant to occupied units inspected. An occupied
building should inspect vacant and occupied units in a ratio representing the
property’s vacancy rate.
The PHA may not include additional costs attributable to inflation or “cost
escalation.” For example, if a PNA completed in 2025 indicates a roof
replacement is necessary in 2027, the PHA must use current estimated costs
without any escalation, cost adjustments, or other means of adjusting for
inflation for work projected to be undertaken/completed in 2027. Instead, the
PHA should use 2025 cost index information.
d. Allowable Soft Costs
The maximum amounts for rehabilitation soft costs as a percentage of hard
costs are available in the Mixed Finance Cost Control and Safe Harbor
Standards or successor guidance.
B. Functional Obsolescence
Functional obsolescence demolitions may fall under 24 CFR 970.15(b)(1)(iii) other
factors, and dispositions may fall under 24 CFR 970.17(c) best interests of the PHA
and residents. The PHA may demonstrate that the removal is in the best interest of
residents in order to address building and site design flaws that can only be addressed
through reconstruction of the property. The PHA may not place PBVs at an existing
structure that has been approved under section 18 pursuant to the functional
obsolescence justification.
HUD considers the following criteria in evaluating a PHA’s request for disposition or
demolition on the basis of functional obsolescence: whether (1) the property
construction date was completed in 1950 or earlier; (2) the building is functionally
obsolete as to interior utility, configuration, size, or absence of reasonable modern
amenities or other factors, making it unsuitable for housing purposes without
modification; (3) the site (in addition to dwelling units present) is functionally
obsolete as to unit density, environmental hazards, 504 site accessibility, or absence
of reasonable modern amenities or other factors; and (4) potential demolition and
redevelopment will not result in the net loss of affordable housing for families
earning 80 percent of AMI or less, considering both replacement units and issuance of
TPVs, as the issuance of TPVs may satisfy the requirement that affordable housing is
not lost. Displacement of residents or a net loss of affordable housing may indicate
that the transaction is not in the best interest of residents.
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Submission requirements to certify functional obsolescence:
1. Construction Completion Eligibility Date
PHA must demonstrate that the proposed units have a construction completion
date on or before 1950. PHA must provide documentary evidence of construction
completion date. PHAs can use the HUD’s IMS/PIC as supporting documentation
if the construction date meets the construction completion eligibility date.
2. Functional Obsolescence Documentation
The PHA must provide documentation describing the functional deficiencies
within the building (e.g., ADA noncompliance; the unit configurations no longer
meet current living standards, for example only 1 bathroom for units with 3 or
more bedrooms, bedrooms that lack closets, bedrooms smaller than 70 square
feet for 1 occupant, or 50 square feet per occupant for bedrooms with multiple
occupants) that have seriously affected the marketability, usefulness, or
management of the property. A PHA wishing to address a functionally obsolete
property site must describe the site design flaws (e.g., insufficient affordable
housing density, challenges meeting Section 504 accessibility requirements) that
cannot be corrected in a cost-effective manner. This can be provided in the
application as a summary report with images and cost estimates evidencing
design flaws. The cost to address obsolete building features must exceed 57.14
percent of TDC for non-elevator buildings or 62.5 percent of TDC for elevator
buildings. The same allowable soft costs apply for functional obsolescence
rehabilitation as for physical obsolescence.
VII. RELOCATION OF RESIDENTS
A. Relocation Requirements
When residents will be displaced from their public housing units or lose public
housing assistance due to a demolition and/or disposition, the PHA must follow the
relocation requirements at 24 CFR 970.21 (as opposed to the relocation requirements
at 49 CFR part 24, which implements the Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970 (URA), as amended). 24 CFR 970.21
requires that a PHA must offer each displaced household comparable housing that
meets housing quality standards (HQS) and that is located in an area that is generally
not less desirable than the location of the demolished/ disposed housing. The housing
must be offered on a nondiscriminatory basis, without regard to race, color, religion,
creed, national origin, disability, age, familial status, or gender, in compliance with
applicable Federal and State laws. For persons with disabilities displaced from a unit
with reasonable accommodations, comparable housing should include similar
accommodations. The PHA is required to provide for the payment of the actual and
reasonable relocation expenses of each displaced resident, including residents
requiring reasonable accommodations because of disabilities.
However, if the proposed acquisition, rehabilitation, or demolition is to be carried out
with HUD funds subject to URA requirements or is to be carried out with other HUD-
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funded activities subject to URA requirements, the URA may apply to tenant
relocations. Additionally, if HUD Community Development Block Grant or HOME
funds are used in the demolition or when property is converted to a use other than
lower-income dwelling units, the project may be subject to Section 104(d) of the
Housing and Community Development Act of 1974, including relocation assistance
and one-for-one replacement provisions under 24 CFR part 42 subpart C.
B. Quality of Relocation Units
In accordance with 24 CFR 970.21, PHAs must offer each family displaced by
demolition or disposition comparable housing that meets HQS1. In addition, in
accordance with 24 CFR 982.404 and 24 CFR 983.208, if the comparable housing
offered is housing choice voucher (HCV) assistance under 24 CFR part 982 or PBV
under 24 CFR part 983, the owner must maintain the unit or units (with respect to
PBV) in accordance with HQS. If the owner fails to maintain a dwelling unit in
accordance with HQS, the PHA must take enforcement action in accordance with 24
CFR 982.404 with respect to HCV and 24 CFR part 983.208 with respect to PBV.
C. Relocation Considerations
If residents are relocated from the public housing units due to demolition or
disposition activity and the PHA intends to build or otherwise provide affordable
replacement housing for the public housing units proposed for removal, the PHA
must comply with all relevant statutes and regulations relating to the residents' first
right to return and occupy the new replacement units.
D. Housing Search
In accordance with 24 CFR 970.21, PHAs must provide any necessary counseling for
residents that are displaced. When the PHA is relocating families with HCV
assistance (including TPVs), HUD encourages the PHA to provide families with
mobility counseling and utilize the HCV program and the HUD Exchange Housing
Mobility Toolkit. See Notice PIH 2022-18 for guidance on the use of HCV
administrative fees to assist HCV families to lease units.
VIII. ELIGIBILITY AND APPLICATION PROCESS FOR TPV
A. TPV Eligibility
Upon approval of a SAC application, a PHA may be eligible to receive tenant
protection vouchers to assist in meeting relocation or ongoing housing requirements
for the residents of the former public housing project. The issuance of TPVs to a PHA
does not occur automatically with SAC approval of an application. Instead, the PHA
must apply separately for TPVs in accordance with HUD’s annual notice
1
With the National Standards for Physical Inspection of Real Estate (NSPIRE) standards, available in HUD’s website, HUD has consolidated the
minimum standards of housing quality across its programs (and, therefore, replaced pre-NSPIRE HQS inspection standards). Yet, the regulations
at 24 CFR parts 982 and 983 governing the HCV and PBV Programs will continue to use the terms “HQS” and “housing quality standards” rather
than NSPIRE. This is because the definition of HQS at 24 CFR 982.4 and 24 CFR 983.3 means the minimum quality standards developed by
HUD in accordance with 24 CFR 5.703 for the HCV and PBV Programs, including any variations approved by HUD for the PHA under 24 CFR
5.705(a)(3).
26
implementing HCV appropriations act funding provisions (HCV funding notice) and
any additional HUD guidance after the SAC application is approved.
HUD determines a PHA’s TPV award based on annual appropriations, the HCV
funding notice, and other HUD-issued guidance. HUD’s approval of the SAC
application may indicate the maximum number of both relocation and replacement
TPVs that a PHA may be eligible to receive.
Based on limited availability of TPV funding, HUD limits the maximum TPV awards
to 25 percent of the occupied units at the development for dispositions under the
improved efficiency or effectiveness (section III.A.2. for off-site development or
section III.A.3.d. for on-site development). Units previously occupied but now vacant
may also qualify for TPV funding. For more information, please refer to the most
recent notice establishing funding provisions for the HCV Program. A PHA must
comply with relocation requirements of 24 CFR 970.21 regardless of the size of any
voucher award.
B. TPV Application Process
Refer to the SAC approval letter for the TPV application process.
IX. PRESIDENTIAL ACTIONS AFFECTING FEDERAL FINANCIAL ASSISTANCE
All recipients of Federal financial assistance are responsible for making sure activities
funded by Federal awards comply with applicable existing and future executive orders
and other Presidential actions, whether the recipients carry out those activities directly or
use contractors or subrecipients. Review these directives on the White House’s
Presidential Actions webpage.
X. PAPERWORK REDUCTION ACT
The information collection requirements contained in this notice are approved by the
Office of Management and Budget (OMB) under the Paperwork Reduction Act (PRA) of
1995 (44 U.S.C. 3501, et. seq.). In accordance with the PRA, HUD may not conduct or
sponsor, and a person is not required to respond to a collection of information unless the
collection displays a currently valid OMB Control Number. The active information
collections in this notice include OMB Control Number 2577-0075 and 2577-0029. HUD
is in the process of updating OMB Control Number 2502-0612.
XI. CONTACT
Direct questions about this notice to SACTA@hud.gov or your local field office.
Benjamin Hobbs
Assistant Secretary
for Public and Indian Housing
Source: Legislative text reproduced verbatim
Plain English
PIH Notice 2026-23 establishes the federal framework under which public housing agencies (PHAs) may demolish or dispose of public housing property under Section 18 of the 1937 Housing Act, subject to HUD approval through the Special Application Center (SAC). The notice sets out required application components—including resident consultation, environmental review, relocation planning, and government consultation—and defines justification criteria for both demolition and disposition. It also governs eligibility for Tenant Protection Vouchers (TPVs) and outlines civil rights, relocation, and labor standards obligations that accompany any approved removal action.
Written by anthropic/claude-sonnet-4.6 · Reviewed on September 28, 2026
Plain English — not legal advice.
For Property Managers
Under PIH Notice 2026-23, compliant PHAs submit complete SAC applications through IMS/PIC, including board resolutions, resident and government consultation documentation, environmental reviews, and a relocation plan meeting 24 CFR 970.21 standards. Operators ensure communications are accessible to persons with disabilities and those with limited English proficiency per 24 CFR 8.6. PHAs also maintain accurate relocation timelines, report completed removal actions within 7 days in IMS/PIC, and comply with all civil rights and Davis-Bacon labor standards throughout the process.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
For Tenants
PIH Notice 2026-23 requires PHAs to consult with affected residents—including RAB members—before submitting a demolition or disposition application, and to provide at least 90 days' notice before any displacement. Residents have the right to submit written comments on proposed Section 18 plans, receive comparable replacement housing meeting HQS, and may be eligible for Tenant Protection Vouchers. Tenants who believe a PHA has not followed required consultation or relocation procedures may contact HUD or a local tenant-rights organization for guidance on available options.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated September 28, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
Effective Timeline
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Related Rules
§ 574.605
§ 574.605 Applicability of uniform administrative requirements, cost principles, and audit requirements for Federal awards.
§ 574.625
§ 574.625 Conflict of interest.
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