On February 18, 2016, HUD’s Office of Multifamily Housing issued a set of 16 Frequently Asked Questions (FAQs) regarding the transfer of all or a portion of any remaining budget authority of a project-based Section 8 Housing Assistance Payment (HAP) contract from one property to one or more other properties using Section 8(bb) of the Housing Act of 1937. Section 8(bb) is a tool for preserving Section 8 budget authority.
On October 9, 2014, HUD issued Notice H-2014-14 setting out policies and procedures for making such transfers (see Memo, 10/20/14 and 4/13/15). The Notice applies to situations in which the property owner and the contract administrator (generally HUD) mutually agree to terminate a HAP contract at one project so that the remaining budget authority can be transferred to another multifamily housing project. A contract at the first project can be subdivided so that one or more of the resulting subcontracts can be terminated and their remaining budget authorities transferred to a Section 8 HAP contract on one or more other multifamily housing projects.
The first February 18, 2016 FAQ explains that 8(bb) transfers must be budget neutral, meaning that the annual gross rent potential (GRP) for the property receiving the transfer may not exceed the annual GRP for units at the original property. If the average rents for the properties differ, budget neutrality may result in either an increase or a decrease in units placed on the contract at the receiving property compared to those at the terminating property. The GRP for the original property is determined using the current Project Based Rental Assistance rents for all units being terminated through 8(bb), while the GRP for the receiving property is determined using market rents established by a Rent Comparability Study (RCS).
One FAQ makes clear that an 8(bb) transfer cannot take place if an owner does not want to participate. HUD cannot step in and execute a transfer to another property. Another FAQ explains that HUD Field Economists do not need to know the details about current residents (such as names and ages) in order to demonstrate demand for additional housing at a particular property. A market analysis by the property owner is sufficient. If the property owner does not have a market analysis, full occupancy of current units is sufficient evidence that additional housing is needed.
The 8(bb) FAQs are at http://nlihc.org/sites/default/files/8bb_FAQ.pdf.