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HUD Issues Affirmatively Furthering Fair Housing Final Rule

Published on July 9, 2015 by Jennifer Schwartz
HUD Issues Affirmatively Furthering Fair Housing Final Rule

On July 8, HUD published its much-anticipated Affirmatively Furthering Fair Housing (AFFH) final rule, which replaces the current Analysis of Impediments (AI) requirement with a new Assessment of Fair Housing (AFH) requirement for HUD program participants.  HUD originally issued the AFFH proposed rule in July, 2013 in response to criticism by the Government Accountability Office (GAO), program participants, and fair housing advocates who felt that the AI process was ineffective.

Program participants required to complete the AFH are states and local governments receiving Community Development Block Grant, HOME Investment Partnerships, Emergency Solutions Grants, and Housing Opportunities for Persons with AIDS formula funding and Public Housing Agencies (PHA).  The AFH is intended to be more data-driven to better inform HUD program participants’ fair housing planning processes and assist them in fulfilling HUD’s statutory obligation under the Fair Housing Act to affirmatively further fair housing.  Each AFH will include a summary of fair housing issues and capacity, analysis of data, assessment of fair housing issues, identification of fair housing priorities and goals, strategies and actions to implement those priorities and goals, a summary of community participation, and a review of progress achieved since the submission prior to the current AFH.

The initial AFH submission deadline for states will be no later than 270 calendar days prior to the start of the program year beginning January 1, 2018 for which a new consolidated plan is due.  This is one year later than the initial submission deadline for local program participants.  Program participants must submit an updated AFH at least once every five years thereafter.  The final rule says that until the submission deadline for their first AFH, program participants should continue to conduct their AIs as required on their current schedule.

Upon receiving an AFH from a program participant, HUD will review the AFH to determine that the program participant has met the requirements of AFFH.  The AFH will be considered accepted 60 days after HUD receives it, unless HUD notifies the participant prior to that deadline that the AFH is not accepted.  If HUD does not accept an AFH, it will explain its reasoning and the actions the program participant must take to resolve the nonacceptance.

HUD is currently developing the Assessment Tools that the program participants will use to complete their AFH.  The Assessment Tools will provide program participants with local and regional data on integrated and segregated living patterns, racially or ethnically concentrated areas of poverty, the location of publicly supported housing, key community assets, and housing need and lead them through the process by which they will develop and submit their AFHs.

Consistent with NCSHA’s request, HUD will develop a different Assessment Tool for states than the Assessment Tools it is developing for local governments, PHAs, and other types of program participants.  HUD plans first to develop the Assessment Tool for local governments, followed by Assessment Tools for states, Insular Areas, CDBG grantees of $500,000 or less, and PHAs.  HUD will publish the state Assessment Tool as a proposed rule with a full notice and comment process (a 60-day initial comment period, followed at a later date by an additional 30-day comment period).

Program participants will be required to supplement the HUD-provided data in the Assessment Tool with additional local data when available, subject to HUD’s determination of statistical validity.  In our comments on the AFFH proposed rule, NCSHA argued that additional data should be optional and HUD should not require program participants to supplement the HUD-provided data due to our concern that such data might difficult and/or costly to obtain.  In response, HUD indicated that it will require program participants to supplement HUD data only with additional local data that is readily available at little or no cost, including in terms of staff time.  The rule does not require data to be compiled or obtained if it does not exist, but where useful data exists, is relevant to the program participant’s geographic area of analysis, and is readily available at little or no cost, the rule requires its consideration.

It is important to note that while the rule does not apply directly to the Housing Credit, HUD responded to comments suggesting that it require coordination between state Qualified Allocation Plans (QAP) and the AFH by stating that, if HUD program participants are involved in any other planning effort, including the QAP, they must address these planning processes in their AFHs.  Specifically, HUD says, “Program participants, including states, will be required in the Assessment Tool to analyze data on the location and occupancy of affordable LIHTC units and to consider the impact of a QAP on fair housing issues in their jurisdiction.  HUD welcomes innovative approaches by states to encourage state Housing Finance Agencies to affirmatively further fair housing through benefits and incentives.”

Another issue of note raised in numerous comments on the proposed rule was the concern that the proposal lacked a balanced approach to investment of federal resources and appeared to emphasize mobility at the expense of making strategic investment in neighborhoods with racially and ethnically concentrated areas of poverty.  In its response to these comments, HUD maintained that “the duty to affirmatively further fair housing does not dictate or preclude particular investment strategies.”  However, it later notes that “There could be issues, however, with strategies that rely solely on investment in areas with high racial or ethnic concentrations of low-income residents to the exclusion of providing access to affordable housing outside those areas.”

HUD maintains that it does not expect a large aggregate change in compliance costs for program participants as a result of the AFFH rule.  It claims that program participants who have been diligent in complying with the current planning process and complete rigorous AIs now may actually experience a net decrease in administrative burden.  However, we expect we will have a better understanding of actual compliance costs for states once HUD releases the state Assessment Tool, which will provide more detailed information about how the process will work for states and what HUD will require of them.

More information on the Final Rule, including a fact sheet, the press release announcing the rule, and a summary of the rule can be found here.  Contact NCSHA’s Jennifer Schwartz with questions.

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