Affordable and Public Housing News

Insight from Mark Livanec

By Leah Etling on Apr 2, 2012 in News

Mark Livanec, Vice President of Affordable Housing and PHA Sales at Yardi Systems, is an active advocate for Yardi clients when it comes to state and federal legislation affecting affordable and public housing.

Mark serves as secretary of the Board of Directors of the National Affordable Housing Management’s Educational Foundation, which raises scholarship funds for residents in affordable housing developments; he is also a member of the NAA’s Affordable Housing Task Force.

Mark was recently in Washington, D.C. to participate in NAHMA’s winter meeting and the NAA Capitol Conference. We asked him to brief us on the latest developments

Federal budget – Widespread concern about funding

There’s substantial concern about the 2013 federal budget, especially the fact that it has not authorized all affordable housing and public housing programs. SEVRA – the Section Eight Voucher Reform Act – that’s been in place for the last year – is looking at the way housing choice vouchers are being budgeted and reported on. It really has got a many people concerned, especially in the public housing sector as well affordable housing owner-agents, those organizations who are using the housing choice voucher dollars to help pay for resident rent. We are concerned those programs will be cut dramatically.

The 2013 budget isn’t even authorizing all of the funds being requested. It’s  expected to authorize funds covering only a partial year.  There’s a lot of concern about ‘are owners going to be paid on time for voucher payments?’, and ‘are Housing Authorities going to see cuts in the funding and the availability to deliver vouchers?’ Everybody is concerned on the owner-agent side that they will to be able to meet their deliverables.

Technology – HUD  TRACS 202D update postponed

HUD has been working on the TRACS 202D update.    This is a large effort involving HUD/TRACS staff, Contract Administrators, Owner Agents and a number of software  vendors.  The project was originally scheduled to be deployed in July of this year.  Due to recent changes and contracting issues, the project has been delayed to March of 2013. Most vendors have been working on a 202D-compliant version of their software for some time and expected HUD to be ready in July. Yardi was prepared to deliver in mid –April to meet the July go live date.  We expected that the TRACS software would be completed, and we would start testing in April. 

HUD has also announced that they are considering the addition of three new subsidy types to the TRACS specification;  this has also served to impact the go-live date. As a result, we will not be releasing TRACS 202D compliant software until the end of this year on in early 2013.

The good news for our customers is that  there are no compliance based upgrades expected this year meaning you are free to concentrate on other elements of your operations.  For many, this is the best possible news.

Performance Based Contract Administrators

The project-based side of HUD uses a program called Performance Based Contract Administrators; basically using third party contractors to perform the day-to-day work of monitoring Contracts for performance and compliance. These Contract Administrators serve as HUD’s eyes and ears for almost all the Section 8 contracts within HUD’s Multi Family Housing Program.  Last year HUD put most of the contracts up for re-bid and  quite a few of the awards were granted to new vendors. Many of the current contractors were upset and have contested the awards.  As a result a large number of these contracts need to be re-bid.

In essence, the award of the contract will be in dispute and HUD has about five months to make those decisions. Where we all expected new contract administrators would be in place going into 2012, it’s very unlikely we’re going to know who finally wins the contract for project-based contract administrator in about 12 different states until later in 2012, maybe 2013.

The concern that we have on the affordable side is: are inspections taking place, what’s going to happen with renewing contracts, what’s going to happen with owner payments, and if there is a new contract administrator, what will  be the transition processes?

Low Income Housing Tax Credit Program status

At NAA we heard an interesting statement about government policy. That was that while the low income tax credit program is really the only subsidy program that’s significantly producing dollars for affordable housing for new project development, there are some in Congress that believe it’s a very expensive program and it isn’t the best program. I was surprised to hear one of the insight organizational people who has been meeting with Congress say that there is an undercurrent of Congressional opinion that the Low Income Housing Tax Credit Program should be cancelled. The question in our minds is: If that’s the only program that’s developing new housing, and we know there’s a dramatic gap in housing, how are we going to fill the gap? The government’s being very tight lipped and saying the Low Income Housing Tax Credit is the best program we have, but really is the future and how is that going to affect us.

Layered financing: Subsidy challenges for affordable managers

When we look at an affordable property that has project-based Section 8, low income housing tax credit, bond funding, home, funding, they could have up to 10 layers of funding from federal and state sources to try to meet the needs of that property. The impact on that property for asset management, inspections, regulatory reviews, the cost is increasing on a regular basis. There’s an interesting dilemma that’s happening in the industry today.

If you manage a market rate property and you have a Section 8 or Housing Choice voucher holder, who comes to you and says, ‘I would like to rent a unit in your property,’ you start conversation with that resident. The Housing Authority has the right to come over and inspect that unit, and in fact inspect that property, to make sure it’s up their levels. If they come back to you after the inspection and say ‘well, you have all this work to do, you have to paint the property, you have to repair these violations,’ the market rate property has the right to say ‘well, we’re just not going to accept that resident.” The dilemma is, if a property that’s affordable receives 5059 subsidy or tax credit subsidy they can’t turn that resident away.

In essence, for the same residents and the same programs, affordable managers are being treated differently than market rate managers. They have to go through a series of inspections, and that inspection is from inspector to inspector, inconsistent. The rules that Housing Authorities are inflicting are inconsistent. If they’re applying for a tax credit unit that would accept housing choice vouchers, they may be involved in one building in a tax credit project, the inspector could come in and say I’m not saying you have to paint one building, I’m saying you have to repaint the entire project. The cost burden on an affordable manager is dramatic, and in today’s environment it is extremely prohibitive to make major renovations like that. Owners of tax credit properties, especially in the South and the Southwest, are starting to see more and more of these inconsistencies coming in and they’re looking for ways for the legislative organizations and the associations to help. It’s really a significant problem.

The NAA Affordable Housing Committee plans a white paper on industry best practices to try to address the problem.