Legal Alert

Recent HUD COVID-19 Guidance Affecting PHAs and Multifamily Owners

March 23, 2020

As public housing authorities (PHAs) and multifamily housing owners grapple with protecting their residents, employees and stakeholders amidst the COVID-19 outbreak, HUD has issued several pieces of guidance in recent days that impact public housing, Section 8 and multifamily housing. Among the current guidance is the following:

  1. Resident Health and Safety of Resident Communities. While HUD acknowledges that PHAs, multifamily owners, and management agents have a number of concerns about protecting their resident communities, they mostly defer to the CDC and local health organizations for guidance on quarantines and other measures that may be taken. HUD does direct multifamily stakeholders to Chapter 38 of Handbook 4350.1, Multifamily Asset Management and Project Servicing, which covers Multifamily emergency and disaster guidance. HUD also urges PHAs and others to create a clear plan for managing situations of resident COVID-19 infection or if local quarantine directives are issued, and recommends a number of considerations that could be included in those plans.

  2. RAD Transactions and Closings. HUD has indicated that current Rental Assistance Demonstration (RAD) transaction processing is not anticipated to change as staff move to telework. Deadline extensions may be requested if capital needs assessments cannot be conducted due to the pandemic. For RAD closings, HUD anticipates that it will be able to execute and notarize documents that need to be recorded in public records. HUD will distribute documents electronically or by mail to the extent practicable. Ballard Spahr will keep clients updated if HUD changes its requirements for RAD closings.

  3. HUD Competitive Procurement Requirements. For PHAs and other recipients using HUD funds, competitive procurement requirements typically apply. HUD reminds PHAs that existing regulations at 2 CFR Part 200.320 already authorize sole-source, noncompetitive proposals in emergency situations.  PHAs that use this authorization for appropriate situations will want to ensure that they follow (and document following) all sole-source procurement requirements. Ballard Spahr also reminds HUD recipients that the small purchase thresholds for purchase are now $250,000 (subject to state or local law limitations). If recipients have implemented these thresholds, many procurement needs may also be covered using the small purchase procedures.

  4. Suspension of HUD Inspections and Certain Reviews
    • All HUD Real Estate Assessment Center (REAC) inspections for public housing and multifamily housing programs are suspended. However, HUD may still conduct inspections in the event of exigent circumstances impacting health and safety. 
    • All Management and Occupancy Reviews (MOR) for multifamily housing are suspended until the applicable performance based contract administrator can determine that local conditions do not limit or prevent the safe completion of an MOR.

  5. Housing Quality Standards (HQS) Inspections under the Housing Choice Voucher Program. Because PHAs are required to inspect tenant units in connection with the Section 8 Housing Choice Voucher program (Housing Quality Standards or “HQS” inspections), HUD has suggested that PHAs take advantage of existing flexibilities under the Housing Opportunity Through Modernization Act to implement biennial inspections See Notice PIH 2016-05 and Notice PIH 2017-20 for more information on current flexibilities. HUD indicates that Notice 2016-05 does not require an update to Section 8 Administrative Plans to implement biennial inspections but, if one were required, HUD will consider waiving the requirement for a PHA board formal action to modify its Administrative Plan. We note that Notice 2017-20 does require Section 8 Administrative Plan modifications for implementation of certain provisions in that notice; HUD has not provided specific guidance for additional HQS-related waivers. See discussion of waivers below.

  6. Specific Policy Changes for PHAs. HUD has not preemptively issued any waivers of regulations governing PHA operations or programs. However, HUD has encouraged PHAs in their COVID-19 planning efforts to determine what functions can be performed remotely and to prioritize activities that can be performed in a manner that minimizes infection risk.

  7. Regulatory Waivers. HUD acknowledges that PHAs and multifamily housing providers impacted by COVID-19 may need regulatory relief to address issues that arise as a result of COVID-19. Ballard Spahr has assisted a number of clients over the years with regulatory waiver requests, and stands ready to provide clients with assistance as needed. HUD has authority to waive regulations, handbooks and guidance but cannot waive statutory requirements absent additional authorization from Congress. HUD does have such authority to waive certain statutes under the RAD program but not the public housing or Section 8 programs. HUD indicates that all requests for waivers will be processed on an expedited basis. Waiver requests from PHAs should all be submitted to HUD has not provided a specific contact for waiver requests from Section 8 owners and other multifamily housing providers. HUD has, however, indicated that audited financials for multifamily owners are being given automatic 30-day extensions for March or April 2020 due dates.

  8. Foreclosures and Evictions. President Donald Trump announced last week that HUD will be suspending foreclosures and evictions for mortgages insured by the FHA until the end of April. The FHA later clarified that this suspension would last for 60 days and only applied to single-family FHA-insured homes. It does not apply to other FHA-insured mortgages or other HUD programs at this point. Even though the announced policy does not appear to directly apply to other HUD programs, we note that HUD has otherwise encouraged PHAs to try to avoid evictions and related displacements during this time.

Copyright © 2020 by Ballard Spahr LLP.
(No claim to original U.S. government material.)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.

This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

Subscribe to Ballard Spahr Mailing Lists

Get the latest significant legal alerts, news, webinars, and insights that affect your industry.