In response to Section 8 rent setting policy changes proposed by HUD, LeadingAge has pushed back strongly to preserve the federal government’s investments in non-shelter services at HUD-assisted senior housing communities. Earlier this year, HUD proposed revisions to Chapter 9 of the Section 8 Renewal Policy Guidebook to adjust the process for Rent Comparability Study appraisals. 

“With staggering waitlists and growing housing cost burdens among older adults, preserving the affordable housing stock is critical to the Administration’s goal of addressing housing unaffordability, and critical to allowing older adults to age in community,” LeadingAge wrote in a June 6 letter to HUD. “Like HUD, we envision a revised Chapter 9 of the Section 8 Renewal Policy Guidebook that leads to a stronger, clearer, and more consistent rent setting policy across HUD’s project-based portfolio and a good use of HUD resources.”

In comments to HUD, LeadingAge also urged the agency to strengthen the process for transparency and appeals in Rent Comparability Studies, to reduce administrative cost and workload on both HUD and the housing provider, and to implement a feasible method for valuing – and investing in – internet access at senior housing communities.

LeadingAge is grateful for the member input received to compile our comments to HUD on the proposed changes to the Section 8 Renewal Policy Guidebook, which impact project-based Section 8 properties, including Section 202/8s:

Administrative Costs

In the new draft Chapter 9, HUD has proposed changes to provide a more attractive and more viable option for owners to avoid an RCS, which can be costly and time-consuming, while still keeping rents market-competitive. LeadingAge supports these proposed revisions by HUD to reduce costs and ease administrative workloads, especially for smaller properties. These changes include replacing the prior rent cap of 75% of Fair Market Rent with a 90% cap of Small Area Fair Market Rent for properties opting out of an RCS. Another proposed change would allow a streamlined mechanism for owners to revalidate an aged-out RCS.

Non-Shelter Services: Reliable vs. Incidental Services

One of the most critical components of the Rent Comparability Study process is to recognize, and financially incentivize, non-shelter services in HUD-assisted housing serving older adults with low incomes to improve resident wellbeing. HUD’s proposed revisions to the Renewal Guidebook make problematic adjustments to how a service is defined (reliable vs. at-will), which could result in misclassifications or otherwise result in the undervaluation of critical services at senior housing communities.

In the letter, LeadingAge strongly urges the agency to adjust their proposed language and to allow appraisers to use a breadth of strategies to assign “reliability” to a service provided for older adults aging in community.

Non-Shelter Services: Market Value for Specialized Services

Another proposed change to the Renewal Guidebook is to emphasize the availability of similar services and amenities in the surrounding community when establishing a market value for the HUD-assisted senior housing community. However, many of these services are not available in market rate housing, and LeadingAge’s letter to HUD argues that the predictable lack of market comparables should not result in less HUD investment in these non-shelter services, but rather result in clearer HUD guidance for the appraisal process.

Selecting Rent-Controlled Properties as Comparables

While LeadingAge is aware of and concerned with the challenge of establishing market value in areas without adequate or appropriate comparables, creating the opportunity for more comparables is only effective if the comparables create an accurate picture of market value; this may not be the case if the properties are rent controlled or otherwise have an artificial cap placed on especially the non-shelter components of the rent. In the letter, LeadingAge recommends that HUD implement safe harbors or more clearly define proposed changes allowing appraisers to use properties subject to rent control as comparables.

Appeals, Reviews, and Transparency

Transparent policies, and processes that allow for review and appeal, are important elements of Rent Comparability Studies. HUD’s proposed revisions to the appeals process limit the appeals process and miss opportunities to strengthen transparency in reviews. For example, despite wide-ranging changes to the Renewal Guide, owners would still not be able to appeal the choice of comparables in an appraisal; HUD’s proposed revisions also limit the owner’s ability to appeal a HUD-commissioned RCS.

Internet Service

LeadingAge strongly supports HUD efforts in the chapter revisions to promote internet connectivity in HUD-assisted housing, including by allowing the inclusion of internet service in rent comparability analyses. However, we urge HUD to adjust language used in the proposed revisions that would limit an appraiser’s ability to properly value the availability or the provision of internet as an amenity, for example by setting up alternative methods to value what is once again a predictable lack of market comparables for internet valuation (market rate properties are far less likely to provide free, building-wide internet service).

Implementation

LeadingAge looks forward to working with HUD to improve the Section 8 rent setting policies, including through the Renewal Guidebook revisions; however, HUD proposed to make the policy changes effective within 30 days of publication. LeadingAge’s letter argues for at least 120 days to give owners and appraisers a chance to adapt and adjust.

Read LeadingAge’s letter to HUD on the RCS changes here.