January 21, 2022
Demetria McCain
Principal Deputy Assistant Secretary for Fair Housing and Equal Opportunity
U.S. Department of Housing and Urban Development
451 7th Street, S.W.
Washington, DC 20410
RE: The Fair Housing Implications of 8(bb) Transfers
Dear Ms. McCain,
I. Introduction
The undersigned civil rights and fair housing organizations write to follow up regarding our December 14, 2021 meeting with staff from HUD’s Offices of Fair Housing and Equal Opportunity, General Counsel, and Multifamily Housing regarding civil rights issues in the 8(bb) transfer process for Section 8 Project-Based Rental Assistance contracts (“8(bb) transfers”).1 As you know, 8(bb) transfers permit owners of current Project-Based Rental Assistance contracts to apply to HUD to have those contracts moved to other properties. We thank you both for your willingness to meet regarding these critical issues and for the steps that HUD has already taken to advance fair housing during the Biden-Harris Administration under the leadership of Secretary Marcia Fudge, particularly its rulemaking efforts regarding the Fair Housing Act’s discriminatory effects standard and the duty to affirmatively further fair housing.
We agree that 8(bb) provides an important vehicle to preserve federally assisted housing and promote opportunity in keeping with the duty to avoid reinforcing segregation and to further fair housing. We have concerns that the former goal may have higher priority, especially given the demand in the market for Project-Based Rental Assistance contracts, and that the second goal (and AFFH obligation) is being overlooked. This may impair subsidized families’ ability to choose less segregated, lower poverty neighborhoods, which is often related to access to opportunity and quality of life. HUD and the owners who take part in these transactions should be obligated to consider the civil rights implications of their actions and take affirmative steps that protect impacted families and promote integration. This letter outlines key civil rights considerations and recommendations that should inform any new notice that HUD issues regarding 8(bb) transfers.
II. Problems with Notice H-2015-03
a. Siting
HUD Notice H-2015-03 makes explicit that the location of properties on the receiving end of 8(bb) transfers must comport with site and neighborhood standards.2 Site and neighborhood standards are essential to HUD’s own compliance with its statutory duty to affirmatively further fair housing.3 Although this recognition on HUD’s part is helpful, our experience, in practice, has been that enforcement of site and neighborhood standards is inconsistent and that approval of 8(bb) transfers to properties that would not satisfy an objective application of site and neighborhood standards is common. The primary driver of these lapses is an overly expansive interpretation of exceptions to generally applicable site and neighborhood standards in the case of “community revitalization” efforts.
For all transfers, including to already existing properties, HUD Notice H-2015-03 states in relevant part that “[t]he neighborhood must not be one that is seriously detrimental to family life or in which substandard dwellings or other undesirable conditions predominate, unless there is actively in progress a concerted program to remedy the undesirable conditions.”4 For transfers to new construction properties, the notice provides more detail, stating that a receiving property may be located in an area in which the population is predominantly comprised of people of color only if:
“The project is necessary to meet overriding housing needs that cannot be met in that housing market area. Application of the overriding housing needs criterion, for example, permits approval of sites that are an integral part of an overall local strategy for the preservation or restoration of the immediate neighborhood and of sites in a neighborhood experiencing significant private investment that is demonstrably changing the economic character of the area (a “revitalizing area”). An overriding housing need, however, may not serve as the basis for determining that a site is acceptable if the only reason the need cannot otherwise be feasibly met is that discrimination on the basis of race, color, creed, sex, or national origin renders sites outside areas of minority concentration unavailable, or if the use of this standard in recent years has had the effect of circumventing the obligation to provide housing choice.”5
Notwithstanding these provisions, HUD has approved 8(bb) transfers in highly segregated low-income communities of color with numerous adverse conditions despite a lack of significant private investment or concerted revitalization activity occurring in those neighborhoods. HUD typically only obtains a bare written justification concluding that revitalization is occurring in these neighborhoods, but therein lies the problem: local governments, in particular, frequently have place-based plans for the revitalization of disinvested communities that lack funding for implementation or that are too limited in scope to make an impact. At times, HUD appears to have relied upon designations – such as Promise Neighborhoods – that may not even ensure that an unimplemented revitalization plan is in place.
We recommend that HUD undertake two steps to ensure real compliance with site and neighborhood standards in the 8(bb) transfer context. First, the Office of Multifamily Housing should engage staff from HUD’s Office of Fair Housing and Equal Opportunity (FHEO) in the 8(bb) transfer process at the earliest stage possible. By having staff with the expertise and explicit mission to assess compliance with site and neighborhood standards in the conversation early, HUD can avoid a dynamic where FHEO staff feel implicit institutional pressure to water …
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1 Dep’t of Hous. & Urban Dev., Transferring Budget Authority of a Project-Based Section 8 Housing Assistance Payments Contract under Section 8(bb)(1) of the United States Housing Act of 1937, H-2015-03, 2 (Apr. 3, 2015) (stating that the purpose of Section 8(bb) transfers is to preserve remaining Section 8 budget authority where the HAP “…contract is terminated or expires and is not renewed….”)(“Notice H-2015-03”)
2Id. at 13-16; see also 24 C.F.R. § 983.57(d)-(e).
3 See Shannon v. U.S. Dep’t of Hous. & Urb. Dev., 436 F.2d 809, 821-822 (3d Cir. 1970) (listing factors that should guide HUD’s siting determinations in order to ensure compliance with the duty to affirmatively further fair housing).
4 Notice H-2015-03 at 13 (emphasis added).
5 Id. at 15-16 (emphasis added).
