NAHRO Shares Preview of HOME Proposed Rule Comments, Due End of July

By: Steven Molinari, Policy Analyst

Comments for the HOME Investment Partnerships (HOME) Program proposed rule are due Monday, July 29, 2024.

In preparing for the deadline, NAHRO has highlighted some of the key takeaways of the proposed rule titled “HOME Investment Partnerships Program: Program Updates and Streamlining” published in the Federal Register on May 29, 2024.  This preview is meant to provide some of the main points and feedback NAHRO will be incorporating in our comments. It also serves as a resource for NAHRO members and affiliated partners in finalizing their own comments before the deadline.

The proposed rule would make a number of changes to the HOME program that in some ways are beneficial to participating jurisdictions (PJs), owners and their residents, but in other ways lack clarity and may have unintended consequences. The following takeaways provide perspective on changes pertaining to tenant protections, utility allowance, rent limits, and income determinations for small-scale housing.   

Below are four key takeaways from the proposed rule that may be worth highlighting: 

1. Increasing the notice of termination of tenancy to 60 days for nonpayment of rent is harmful to owners and current/prospective tenants;  

2. Refusal to renew or terminate tenancy for “good cause” is vague, confusing, and does not fully account for safety;  

3. Aligning HOME rent limits with changes made to the Section 8 programs is beneficial to stakeholders;   

4. Reducing the frequency of income determinations and recertifications for small rental projects will be less burdensome on owners and PJs.  

Takeaway #1 

The Department’s proposal to require owners to provide 60 days’ notice instead of 30 days before the termination of tenancy for nonpayment of rent ignores factors that not only impact the owner but may also impact current and prospective tenants. Although housing providers will try to avoid eviction whenever possible, increasing the timeline for nonpayment of rent to 60 days increases the financial burden on owners who need rent to sustain property operations. In many cases, owners provide tenants with ample opportunity and additional time to pay rent before an eviction notice is provided. Enforcement of a longer notice period may incentivize owners to file for evictions sooner due to the slow pace of the court process and the costs it will incur. The eviction process in general can be very lengthy, so increasing this timeline only slows down the process and availability of units for prospective low-income tenants.  This unintended consequence may harm tenants instead of helping them since they would be less likely to be provided additional chances or time to reconcile.   

Takeaway #2 

The proposed rule states several reasons why an owner of HOME assisted rental housing may or may not terminate or refuse to renew a lease. As it pertains to a tenant with a criminal background, the text states that, “for an owner to establish good cause for a violation of applicable Federal, state, or local law, there must be a record of conviction for a crime during the tenancy period that has a direct bearing on the tenant’s continued tenancy in the HOME rental housing project, such as a violation of law that affects the safety of persons or property.” This is concerning because a criminal conviction requires a “beyond a reasonable doubt” evidentiary standard, which is an excessively high standard to terminate a tenancy or refuse to renew a lease. The rule should require a more reasonable “preponderance of the evidence” standard.  

Similarly, the rule also states, “that an owner shall not use a record of arrest, parole or probation, or current indictment to establish a violation of applicable Federal, state, or local law.” This is concerning as this language only gives power to owners in cases where a tenant has a record of conviction. As noted previously, convictions require excessively high evidentiary standards not appropriate for the civil context. The text of the rule should be amended to allow for other evidence to be used besides just a conviction in cases where the owner believes the tenant or prospective tenant is a threat to the safety of residents, staff, or property.  

Additionally, while the rule states that “[a]n owner may establish good cause for a violation of an applicable Federal, State, or local law through a record of conviction of a crime that bears directly on the tenant’s continued tenancy . . .” it does not clarify what a potential look back period should be for a “crime that bears directly on the tenant’s continued tenancy.” 

Finally, the proposed rule also does not lay out specific types of criminal activity that would qualify as affecting the safety of persons or property, nor does it consider the potential risks to tenant and staff safety in cases where an arrest or current indictment is due to violent actions of the tenant. While the proposed rule mentions allowing evictions for safety concerns of persons or property, it does not provide protections that allow owners and PJs to evict individuals that may pose a substantial safety threat prior to a conviction. There must be more guidelines set in place that clearly specify specific types of criminal activity that would be cause for eviction and other actions outside of a conviction that may be relevant.   

Takeaway #3 and #4  

The alignment of HOME rent limit requirements with changes made to the Section 8 programs by the Housing and Economic Recovery Act of 2008 (HERA) would be greatly beneficial in that it would permit project owners to receive Housing Choice Voucher (HCV) rent even if the rent exceeds HOME rent limits. In addition, allowing PJs to permit owners of small rental properties to make income determinations or recertifications for existing tenants every three years as opposed to every year during the period of affordability will decrease the amount of income determinations and recertifications that need to be made. This will decrease the burden on PJs and owners.   

HUD’s efforts to improve aspects of the HOME program through this proposed rule is noticed and appreciated.  These comments make clear that HUD must provide further clarification as it relates to evictions and refusal of tenancy, specifically as it would relate to affecting the safety of persons or property. 

NAHRO will be submitting comments on the proposed rule by the deadline.

To submit comments on the HOME proposed rule see here.