The U.S. Department of Housing and Urban Development (HUD) requests public feedback on its latest Section 8 contract bifurcation policy draft. The chapter specifically relates to Project-Based Rental Assistance (PBRA) Housing Assistance Payments (HAP) contracts. This proposed policy outlines the standards and conditions owners must meet for HUD approval to bifurcate their HAP contracts. The draft is updated to Notice 2024-03 and reflects HUD’s evolving approach to managing multifamily properties under the Section 8 program.

Public comment is crucial to ensuring that the policy supports affordable housing preservation and efficient asset management. The deadline for public comment is November 18, 2024.

What is Section 8 contract bifurcation?

Bifurcation refers to dividing a single HAP contract into two or more contracts. Property owners may pursue this option for various reasons, such as managing multiple properties more effectively, accommodating tax credit allocations, or addressing issues with a portion of a project, such as a disaster-affected area. The bifurcation policy applies to all project-based Section 8 programs administered by HUD’s Office of Multifamily Housing.

This draft Section 8 contract bifurcation policy intends to make the bifurcation process more transparent and accessible for property owners. It aims to maintain HUD’s commitment to civil rights compliance, asset management, and long-term housing preservation​.

Key Points of the Section 8 Contract Bifurcation Draft Policy

1. Asset Management and Preservation
   The Section 8 contract bifurcation draft policy emphasizes that bifurcation must facilitate better asset management or contribute to the preservation of project-based assistance. For instance, splitting a contract might allow owners to manage properties as individual assets or attract capital investment needed for redevelopment​.
2. Standards for Approval
   To receive HUD approval for bifurcation, property owners must meet the following conditions:
   • Facilitation of Asset Management or Preservation: Owners must demonstrate how bifurcation will improve asset management or help preserve the affordability of the housing units.
   • Good Standing with HUD: The owner must not have unresolved issues with HUD, such as overdue financial reports or unresolved civil rights matters.
   • Civil Rights Compliance: All civil rights obligations, including fair housing laws and nondiscrimination requirements, must be met. HUD’s Office of Fair Housing and Equal Opportunity (FHEO) will review bifurcation requests to ensure compliance​.
3. Conditions for Approval
   Once the standards are met, additional conditions apply based on the type of contract being bifurcated. These include maintaining the same number and configuration of units, ensuring contract renewal under applicable terms, and maintaining compliance with existing use agreements or funding arrangements​.
4. Processing Steps
   After HUD approval, owners will follow a series of steps to bifurcate their contracts, including duplicating the original HAP contract and obtaining new contract numbers for the resulting contracts. HUD will also update rent schedules and ensure the new contracts reflect necessary adjustments.

Why Public Comment is Important

Public comment is essential in shaping HUD’s policies. Property owners, tenants, advocates, and other stakeholders in the affordable housing sector are encouraged to provide input. Feedback on the Section 8 contract bifurcation policy draft can highlight potential issues. You can suggest improvements or affirm that the proposed changes will meet the community’s needs. By participating in this process, you can help ensure that the bifurcation policy effectively balances the interests of property owners, tenants, and HUD’s goals for affordable housing preservation.

What HUD is Looking For:

• Practical insights from owners who have or plan to use bifurcation.
• Input on the civil rights compliance aspects of the policy.
• Suggestions for additional conditions or considerations that should be included in the final policy.

How to Submit Your Comments

Comments must be submitted on HUD’s Response Worksheet, which is available for download in the draft notice. Once completed, email the worksheet to AssetManagementPolicy@hud.gov by Monday, November 18, 2024. HUD will review all feedback received by the deadline and use it to refine the final version of the policy​.

Accessing the Draft and Submitting Feedback

To review the full Section 8 contract bifurcation draft chapter and access the necessary documents, visit the HUD Multifamily Asset Management page or refer to the chart below for details:

Your input influences how HUD will manage Section 8 contract bifurcation requests for PBRA HAP contracts. Whether you are a property owner, housing advocate, or tenant representative, your voice is essential in shaping policies that will affect affordable housing nationwide. Be sure to submit your feedback before the November 18, 2024 deadline.