January 25, 2006

Mr. Orlando Cabrera
Deputy Assistant Secretary for Public and Indian Housing
U.S. Department of Housing and Urban Development
401 7th Street, SW, Room 4100
Washington, DC  20410


Re: New Regulation for Project-Based Voucher Rents in Certain Tax Credit Units

Dear Assistant Secretary Cabrera:

On behalf of the National Housing Conference (NHC), I am writing to express my concern with a provision in the Section 8 Project-Based Voucher (“PBV”) rule that was published in the Federal Register on October 13, 2005. NHC is particularly concerned that the rule has made a major change in HUD policy with respect to section 8 rent limits in Low Income Housing Tax Credit (LIHTC) projects without meeting public notice and comment requirements applicable to such policy changes. We urge HUD to reverse this last-minute imposition of limitations on rents in project-based vouchers assigned to LIHTC units.

The National Housing Conference is a nonprofit 501(c) (3) membership association dedicated to advancing affordable housing and community development causes. A membership drawn from every industry segment forms the foundation for NHC’s broad, nonpartisan advocacy for national policies and legislation that promote suitable housing in a safe, decent environment across the nation.

The Project-Based Voucher program is an effective program that has been used by private developers in partnership with local housing authorities to create more than 1,000 high quality, privately owned and managed apartments in California.  This recent change will not save HUD or the Federal Government any funds and will instead significantly reduce the number of private developers interested in participating in the PBV program. Furthermore, this will reduce the opportunities for participants in the Voucher program to live in high quality housing. Because of this, we ask that HUD change the new language of 24 C.F.R. § 983.304 that HUD issued on October 13th back to the language it had proposed for that section on March 18, 2004. 
      
   The following are more detailed reasons for our request:

• Section 983.304 is in conflict with §983.301(b) which correctly sets the rent level at the lowest of the reasonable rent, the rent that the owner requests or 110 percent of the HUD Fair Market Rent (FMR) or higher HUD-approved exception rent. 

• The new rule also appears to conflict with both the Section 8 statute and the LTHTC statute, 26 U.S.C. § 42(g)(2)(B)(i), which do not appear to permit HUD to impose such additional restrictions on the maximum rent.  The statutory purpose is to encourage private owners of LIHTC units to accept PBVs and to spur tax credit investment.  The new rule weakens those incentives.  It also produces the anomalous result of allowing tenant-based voucher rents to exceed those of PBVs in the same building –  all without saving HUD any money. 

• Furthermore, the new rule, issued without the opportunity for public comment, repudiates HUD’s long-standing policy on the same issue.  It rejects the rent formulation in HUD’s Initial Guidance at 66 Fed. Reg. 3609 (January 16, 2001).  HUD confirmed this initial formulation at PIH Notice 2002-22 (HA), Section 3(D)(November 1, 2002).  HUD reconfirmed this formulation recently at PIH Notice 2005-20 (June 22, 2005).  More significantly, HUD retained this formulation when it issued its proposed regulation for public comment in March 2004.

We ask that you take our concerns into consideration and immediately withdraw the new language in 983.304 and restore the prior version.  If not, we ask that you at least withdraw the final version pending a comment period, as required by law prior to making such a substantive change in the regulations.  NHC believes that this is a reasonable for a new rule that, without public notice and comment, changes a long-standing interpretation upon which, at HUD’s invitation, many Californians have relied. I urge you to reverse this harmful new rule before it undermines HUD’s prior success with the PBV program in California.

The National Housing Conference appreciates the opportunity to submit these comments and hopes that HUD takes into consideration the consequences at stake. If further information would be helpful, please feel free to contact me.

Sincerely,


Conrad E. Egan
President and CEO