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NEW YORK CITY HOUSING AUTHORITY

250 BROADWAY NEW YORK, NY 10007


TEL: (212) 306-3000 http://nyc.gov/nycha

SHOLA OLATOYE
CHAIR & CHIEF EXECUTIVE OFFICER

June 14, 2017

Regulations Division
Office of General Counsel
Department of Housing and Urban Development
451 7th Street SW, Room 10276
Washington, DC 20410-0500

RE: FR-6030-N-01 Reducing Regulatory Burden; Enforcing the Regulatory Reform Agenda
Under Executive Order 13777

To whom it may concern:

The New York City Housing Authority (NYCHA) appreciates the opportunity to offer comments
on the U.S. Department of Housing and Urban Developments (HUD) notice on Reducing
Regulatory Burden and Enforcing the Regulatory Reform Agenda. As the nations largest public
housing authority (PHA), NYCHA administers a Public Housing program serving 177,000
households, nearly triple the size of the next largest agency, and a Housing Choice Voucher
(HCV) program, rated by HUD in 2016 as high-performing. 1

NYCHA appreciates that HUD is examining its regulations to identify if HUD practice is
outdated, compliance costs for PHAs are excessive, and if program administration can be more
effective by modifying regulations. NYCHA is among the few large PHAs administering both
the public housing and HCV programs that is not part of HUDs Moving to Work demonstration,
thus the agencys regulatory requirements are unique amongst most peer agencies. While
modifying regulations may increase efficiencies, it cannot drastically change the need for a base
level of funding for PHAs. NYCHA also believes that many of HUDs regulations are essential
for the federal government to provide safe, quality housing for low-income households.

Nonetheless, NYCHA believes that through regulatory modifications HUD can increase the
effectiveness of PHAs core functions, including property management, contracting and
procurement, and private landlord management. NYCHA offers the following framework for

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NYCHA administers 85,000 vouchers, nearly double the size of the next largest voucher program in the country.
improving regulations related to the Public Housing, Housing Choice Voucher, and other
programmatic areas for HUDs consideration:

Align with private housing industry practices to increase efficiency and further public-
private partnerships;

Utilize state and local data and knowledge to ensure HUD is responsive to market
changes and to increase accuracy of HUD expenditures; and

Reduce duplicative requirements, simplify approval processes, and increase flexibility to


increase PHA efficiency, shift decision-making to the local level, and reduce HUDs
monitoring.

Align with Private Housing Industry Practices


HUD should align with the private housing industry to better equip PHAs to operate efficiently.
PHAs are not able to take advantage of the private affordable housing industrys methods of
procuring contractual services, leveraging private market financial tools, and using technological
tools and innovations. The following HUD requirements should be aligned with private industry
to increase efficiency, modernization of building processes, and maximize funding.

Procurement and Contracting


24 CFR 905.316 - Procurement and contract requirements;
24 CFR 200.201(b) - Use of grant agreements (including fixed amount awards), cooperative
agreements, and contracts: Fixed Amount Awards;
2 CFR 200.67.
To increase the quality of services procured, allow PHAs flexibility to adopt alternative
procurement rules that allow the agency to incorporate the rules of its local jurisdiction,
attain additional employment goals, and increase speed in contracting and expenditure of
federal funding. Specifically, HUD should allow PHAs to:
o Utilize the best value procurement consistent with the New York State
methodology (see New York State General Municipal Law Section 103),
including the use of evaluation criteria in best value procurements that take
Minority and Women-Owned Business Enterprises (M/WBE) and Section 3
Business Concern utilization into consideration;
o Increase the micro purchase limit to $35,000 for construction services contracts;
and
o Increase the micro purchase limit to $20,000 for all other contracts.
Provide PHAs greater flexibility in construction procurement and contracting by allowing
practices such as design-build, contracting for both design and building services in a

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single contract to increase efficiency and consistency of work for capital projects and cost
plus contracts. Other federal agencies are allowed to use a specific design-build process
for capital work. Currently HUD allows a two-step sealed bidding process but does not
explicitly allow PHAs the flexibilities of design-build.

Technological Advances
Relating to CFR 5.801 Subpart H- Uniform financial reporting standards;
CFR 24 982.516 (a) Family income and composition: Annual and interim examinations.
Move HUD to fully electronic reporting systems to increase PHA staff efficiency and increase
access to national data. PHAs are expected to access national data and to submit data
electronically, when there are not national electronic databases available or even when HUDs
own electronic tools are not available. The following reporting requirements should be relaxed if
HUD cannot provide access to the technology needed for PHAs to comply.
Financial Tools- Eliminate the requirement to submit unaudited data through HUDs
online tool for the Financial Data Schedule (FDS). HUDs tool is frequently non-
functional which requires PHA staff to manually enter data instead of uploading it.
Instead, HUD should continue to require that PHAs maintain this data in-house and
provide to HUD upon request.
Income Certifications- Expedite and increase the accuracy of public housing and Section
8 income certifications by providing PHAs with electronic access to real-time data
sources and national data sources. HUD requires PHAs to make assessments of
eligibility based on information that is either not accessible online or, if it is available
online, is not current. It takes many staff hours for PHAs to access HUDs required
information, which is not an efficient process. Currently, PHAs are required to verify
various income sources, such as welfare benefits, supplemental security income, and
child support, as well as homeownership status without proper access to technological
tools.

Access to Private Financing


24 CFR 982 Section 8 Tenant-Based Assistance;
24 CFR 972.109 (d) - Conversion of developments.
Explicitly allow PHAs to project-base Tenant Protection Vouchers (TPVs) provided for
redevelopment and preservation without first offering tenant-based rental assistance in order to
maximize the private financing available. The project-based Housing Assistance Payment (HAP)
contract and specific terms can be underwritten against and collateralized in a way that is not
feasible with tenant-based assistance. Direct conversion to project-based vouchers will allow
PHAs to leverage more private financing and access financing with fewer steps than is currently
feasible with tenant-based vouchers. HUDs current regulations do not make this explicit, which
makes the conversion process more time-consuming and does not allow PHAs to maximize
financial opportunity.

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24 CFR 965.308 - Energy performance contracts.
Streamline reviews for HUDs Energy Performance Contracts (EPCs) and bring financing
mechanisms in line with the private housing industry.
Apply EPC incentives after operating fund proration so that PHAs can cover debt service
on fixed-rate debt;
Use marginal rates rather than average utility rates in calculating the dollar value of
consumption savings (per FEMP Guidelines: M&V for Federal Energy Projects, v3.0,
April 2008);
Allow IPMVP Option A point of use verification rather than Option C whole facility
method for any LED lighting upgrades, regardless of the magnitude of projected savings
(per FEMP M&V Guide dated Nov 2015); and
In the event that a fuel change is concurrent with an EPC, allow a baseline to be
established based on historic heating loads, rather than requiring a new 12-month post-
fuel change baseline.

Notice PIH-2012-32 (HA), REV-2.


Allow use of other funding sources to bolster Rental Assistance Demonstration (RAD) rents in
line with current market conditions, taking advantage of HUDs public-private partnership
model. For example, allow other HUD funds to be dedicated to a project and then prorated
throughout the term of the Housing Assistance Payment contract to provide a modest adjustment
to rents, similarly to the use of Replacement Housing Factor funds from the Public Housing
Capital Fund. The same method could be applied to other HUD funding sources, such as the
Community Development Block Grant and the Housing Trust Fund, thus allowing PHAs to
increase Net Operating Income in high cost areas.

Capital Planning Processes


24 CFR 9; HUD Notice 81 FR 54818: Energy Performance and Information Center;
24 CFR 905.300 (b)(1)(i,iv) Capital fund submission requirements CFP 5-Year Action Plan:
Content, Submission.
HUDs current capital planning process allows a PHA the flexibility to determine the capital
projects in its five-year capital plan throughout the planning process. This allows PHAs to
determine greatest needs of properties in real time and employ a responsive investment planning
process. HUDs new Energy and Performance Information Center (EPIC) system, currently
being tested by PHAs including NYCHA, would require that projects be determined at the
beginning of the planning process and not allow for responsive changes. HUD should continue to
allow PHAs to revised its capital planning throughout the five-year period. The ability to
reevaluate and prioritize capital needs is consistent with private industry practice.

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Utilize State and Local Data and Knowledge
NYCHA has submitted comments to HUD in recent years outlining the discrepancies between
the cost estimates that HUD produces and the reality of the private market in New York City.
The City of New Yorks Department of Housing Preservation and Development produces data
that more accurately reflects the costs and variations of markets in New York City including
incorporating impacts of state and local market restrictions that are not incorporated into HUDs
data. While New York City produces this more sensitive and accurate market data, there is not
currently an opportunity for HUD to utilize this data, nor for PHAs to operate using this data.
The following are modifications that HUD should make to take advantage of state and local
expertise and data in order to increase accuracy and effectiveness of its programs.

Fair Market Rents (FMRs)


24 CFR 888.113 (e) Fair market rents: Methodology Data Sources.
Increase accuracy of data on local rent levels by incorporating into HUDs FMR calculation local
data submitted by PHAs that may be more current and nuanced than the last American
Community Survey two-year report. Incorporating local data would increase HUDs accuracy of
current market conditions while not increasing data collection for the agency. Additionally, as
both New York City housing authorities have requested, HUD should modify its implementation
of the provisions in the Housing Opportunity Through Modernization Act (HOTMA) of 2016 to
allow PHAs:
A time period of at least 60 days to make a reevaluation request of HUD after FMR
determinations are issued; and
The ability to use either the current year FMR or operate under the new FMR while
preparing an agencys reevaluation request and while this request is under consideration
by HUD.

Section 8 Rent Levels


24 CFR 982.503 - Payment standard amount and schedule;
24 CFR 983.301 - Determining the rent to owner.
Allow PHAs to determine and use their own Section 8 exception payment standards
without requiring HUD Field Office or Headquarters approvals. This would allow PHAs
to be responsive to market conditions in a timely manner and ultimately make the Section
8 program more attractive to private landlords that are considering participation in the
program.
Allow PHAs to use local or state government policies under rent control/stabilization or
other regulated rent policies to determine rent increases. This would consolidate multiple

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rent setting processes into a single process and allow for rent setting consistent with state
and local laws.

Public Housing Evaluation


24 CFR 902.20 - Physical condition assessment;
24 CFR 5.703 (g) - Physical condition standards: Compliance with State and local codes.
Modernize the Physical Housing Assessment System (PHAS) to allow alignment with local
building codes in key areas such as blocked egress, and definition of a building. The current
conflict between local building codes and HUD definitions results in additional PHA staff time
to request reevaluations from the Field Office and ultimately penalizes PHAs with local housing
codes that are not reflected in HUDs standards.

Public Housing Asset Management


24 CFR 990.290 - Compliance with asset management requirements;
24 CFR 990.165 (d), (h) - Computation of project expense level (PEL). (d) Annual inflation
factor. (h) Calculation of PELs when data are inadequate or unavailable.
Align the Asset Management Property Management Fee to better reflect local market costs.
Currently, the fees determined as reasonable by HUD are significantly lower than market rates in
some regions, including the New York City area.

Public Housing Administration


24 CFR 990, Part H.
Allow PHAs to reclassify Central Office Cost Center (COCC) staff if the PHA has moved
positions to its property management function and those positions are no longer central office
staff. Currently, certain staff positions continued to be considered central office staff and count
towards the COCC even after a role shift. This results in a misrepresentation of PHA costs and
inefficient staff allocation.

Reduce Duplicative Requirements, Simplify Approval Processes, Increase Flexibility


NYCHA recommends that HUD streamline its approval processes and delegate decision making
to PHAs where appropriate. Currently, some of HUDs approval processes regarding similar
program decisions are not uniform, and yet other approval processes are uniform for decisions
where HUD should provide a more nuanced and simplified process. The following are areas
where HUD should simplify its processes and requirements of PHAs.

Section 18
24 CFR Part 970.
Create a simplified approval process for actions that are currently defined as dispositions of
property, but which are not dispositions in the traditional sense. One example is permission to

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use property for an additional function. Certain transfers relating to cell towers and transfer of
development rights (TDRs or air rights) that do not propose significant alteration to the
composition of a building should not involve the same process as required for the sale of
property. A simplified process for these types of dispositions would reduce HUD and PHA
administrative time and costs and increase a PHAs ability to raise revenue from these increased
property functions by not having to engage in an extensive administrative process.

Unit Inspections
24 CFR 983.3 (definition of PHA-owned unit, as revised per the Housing Opportunity
Through Modernization Act of 2016);
24 CFR 983.59 (prohibiting PHA from performing inspection of PHA-owned units).
Allow PHAs with an ownership interest in a development to perform Housing Quality
Standard (HQS) inspections when the PHA does not perform day-to-day management
functions at the development. The definition of PHA owned units as defined by the
Housing Opportunity Through Modernization Act of 2016 for the purposes of HQS and
rent reasonableness should be 51% or more of the majority interest. For units such as
those owned by a Limited Liability Corporation, HUD should allow HQS inspections to
be performed by the PHA when PHAs are not the managers. Currently PHAs have to pay
a third party to perform inspections at such developments, increasing procurement and
contracting work, creating an unnecessary duplicative inspection team, and significantly
increasing costs for inspections.

Section 8 Evaluation and Cost Analysis for Conversion


24 CFR 985;
Notices PIH 2011-62 and PIH 2008-35 (HA).
Streamline the Section Eight Management Assessment Program (SEMAP) to only four
critical indicators reflecting the core elements of Housing Choice Voucher program
administration: a) selection from waiting list, b) determination of adjusted income, c)
Housing Quality Standards inspections, and d) annual reexaminations. The other factors
are administrative requirements that should be completed by a PHA but do not need to be
scored because they are one of the following: duplicative of other HUD reporting
requirements, voluntary programs, or part of program administration represented in the
four core program elements. These administrative requirements are also redundant
because they are represented in a PHAs Administrative Plan that is submitted to HUD
annually.
Simplify the methodology used to compare the costs of operating public housing
developments to the cost of providing Tenant-Based Rental Assistance for voluntary
conversions of public housing to a Section 8 subsidy. The current cost methodology is
overly complex and requires significant administrative time.

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Additionally, NYCHA recommends modifying current regulations and issuing new regulations
based on the comments that NYCHA has submitted to HUD, specifically guidance related to
Section 3 and the revised Housing Choice Voucher Administrative Fee formula. Issuing final
guidance will allow HUD to update out of date standards and allow NYCHA to increase
efficiencies, save money, and operate more effectively.

Lastly, NYCHA agrees with some specific recommendations that have been submitted to HUD
in recent months by organizations with technical expertise including the National Association of
Housing and Redevelopment Officials, the Council of Large Public Housing Authorities, and the
Public Housing Authorities Directors Association on the following subject matter including:
Reversing HUDs re-interpretation of the 2016 changes to the Central Office Cost Center
and asset management practices;
Suspending non-statutory PHAS and SEMAP compliance to simplify PHA operations
while adhering to the core principles and making such scores advisory; and
Allowing blanket suspensions and waivers for regulations that HUD finds, through
demonstrations or review of outcomes based upon waivers granted to other PHAs, are
beneficial to reaching PHA operational goals.

HUDs Specific Questions

Below are NYCHAs responses to HUDs specific questions.

Combined answer to Questions 1 and 2.


1. Are there any regulations that should be repealed, replaced, or modified? 2. For each
regulation identified in question number 1, please identify whether the regulation:
(a) Results in the elimination of jobs, or inhibits job creation;
(b) Is outdated, unnecessary, or ineffective;
(c) Imposes costs that exceed benefits; or
(d) Creates a serious inconsistency or otherwise interferes with regulatory reform
initiatives and policies.

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Recommended HUD Regulatory Modifications

Regulation proposed to be modified HUD reason for modification


24 CFR 905.316 - Procurement and contract requirements; (b) Is less effective than with
24 CFR 200.201(b) - Use of grant agreements modification.
2 CFR 200.67.
Provide PHAs greater flexibility in construction procurement
and contracting such as design-build.

24 CFR 200.201(b) - Use of grant agreements (including fixed (a) Inhibits job creation; (b) Is
amount awards), cooperative agreements, and contracts: unnecessary to achieve quality
Fixed Amount Awards. contracting goals.
Allow PHAs flexibility to adopt alternative procurement rules
to increase the quality of services procured, attain additional
employment goals, and increase speed in contracting and
expenditure of federal funding.

24 CFR 5.801 Subpart H- Uniform financial reporting (b) Is ineffective through current
standards. system.
Eliminate the requirement to submit unaudited data through
HUDs online tool for the Financial Data Schedule (FDS).

24 CFR 982.516 (a) Family income and composition: Annual (c) Imposes costs in form of
and interim examinations. administrative efforts that exceed
Provide PHAs with electronic access to an expanded group of benefits.
income sources.

24 CFR 965.308 - Energy performance contracts. (b) Is not effectively maximizing


Streamline reviews for HUDs Energy Performance Contracts resources.
(EPCs) and bring financing mechanisms in line with the private
housing industry.

24 CFR 905. (d) Creates inconsistency with policies.


Maintain the flexibility that PHAs currently have to designate
specific capital planning projects in their portfolio throughout
the planning process rather than only at the beginning.

24 CFR 888.113 (e) Fair market rents: Methodology Data (b) Does not capture the most updated
Sources. information.

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Increase accuracy of data on local rent levels by incorporating
into HUDs FMR calculation local data submitted by PHAs that
may be more current and nuanced than federal level data.

24 CFR 902.20 - Physical condition assessment; (d) Creates inconsistency with policies.
24 CFR 5.703(g) - Compliance with State and local codes.
Modernize the Physical Housing Assessment System (PHAS) to
allow alignment with local building codes in key areas.

24 CFR 990.290 Compliance with asset management; (d) Creates inconsistency with local
24 CFR 990.165 policies.
Align the Asset Management Property Management Fee to
better reflect local market costs.

24 CFR 990, Part H. (c) Imposes costs that exceed benefits.


Allow PHAs to reclassify Central Office Cost Center (COCC)
staff.

24 CFR 982 - Section 8 Tenant-Based Assistance; (d) Creates inconsistency with policies.
24 CFR 972.109 (d) - Conversion of developments.
Explicitly allow PHAs to project-base Tenant Protection
Vouchers (TPVs) provided for redevelopment and
preservation.

24 CFR 982.503 - Payment standard amount and schedule; (b) Is unnecessary.


Allow PHAs to determine and use their own Section 8
exception payment standards without requiring both HUD
Field Office and Headquarters approvals.

24 CFR 983.301 - Determining the rent to owner. (b) Is less effective than local
Shift Section 8 rent determinations to PHAs and allow PHAs to determinations.
use local or state government policies to determine rent
increases.

24 CFR 985; (b) Is unnecessary.


Notices PIH 2011-62 and PIH 2008-35 (HA).
Streamline the Section Eight Management Assessment
Program to only four critical indicators reflecting the core
elements of Housing Choice Voucher program administration.

24 CFR 983.3 (definition of PHA-owned unit, as revised per (a) Results in job duplication.

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the Housing Opportunity Through Modernization Act of 2016);
24 CFR 983.59 (prohibiting PHA from performing inspection
of PHA-owned units).
Allow PHAs with an ownership interest in a development to
perform Housing Quality Standard (HQS) inspections when the
PHA does not perform day-to-day management functions at
the development.

Notice PIH-2012-32 (HA), REV-2. (d) Creates inconsistency with policies.


Allow other funding sources to be used to bolster Rental
Assistance Demonstration (RAD) rents in line with current
market conditions.

24 CFR Part 970. (b) Is unnecessary for corresponding


Create a simplified approval process for actions that are action.
currently defined as dispositions of property, but which are
not dispositions in the traditional sense.

3. What factors should HUD use when considering how to prioritize rules when implementing
the regulatory offsets required by Executive Order 13771?

For public housing, NYCHA recommends that HUD prioritize modification or elimination of
rules that are both a) costly to implement and b) do not result in increased efficiency of program
operations.

For the Housing Choice Voucher program, NYCHA recommends that HUD prioritize
modification or elimination of rules that are a) costly to implement and b) direct PHAs staff and
financial resources to goals other than core administration of vouchers.

4. Are there any HUD regulatory requirements that have been overtaken by technological
developments? Can new technologies be used to modify, streamline, or do away with these
requirements?

As referenced in recommendations on Aligning with Private Industry, NYCHA recommends


that HUDs program requirements be aligned with access to technological tools that PHAs can
access. HUD should align its regulatory requirements with current technological capacity.

Another specific area referenced in Reducing Duplication is one that requires PHAs to
independently secure data from various local, state, and federal sources in order to complete
eligibility certifications for Section 8 and public housing. This process does not take advantage

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of HUDs ability to coordinate data collection from other federal agencies, nor offer this
information to PHAs electronically. The result is an inefficient process and inconsistent access to
data sources to achieve HUDs goal in certifying household eligibility for its programs.

Thank you for considering these comments. NYCHA looks forward to engaging with the
Regulatory Task Force to further discuss the unique circumstances under which NYCHA
operates. If you have any questions, please do not hesitate to contact NYCHAs Special
Assistant for Federal Policy and Legislative Affairs, Melissa Quirk at 212-306-3069 or
Melissa.Quirk@nycha.nyc.gov.

Respectfully submitted,

Shola Olatoye
Chair & CEO
New York City Housing Authority

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