FOR YOUR INFORMATION
I consult with owners and managers on the full range of 515 issues:
— appeals related to OIG audits;
— Workout Plans;
— appeals of adverse RHS decisions;
— processing and servicing issues; and,
— prepayment as part of an acquisition strategy.
I have the following comments on the state of the program.
* OIG. OIG has scheduled a major audit effort in FY 98 to address financial integrity, safety and health in 515 projects. It is hard to predict an outcome, but the process will put OIG auditors in many of your offices and projects. Any negative findings may result in demands on owners and managers, and recommendations for program changes and improvements.
* MANAGEMENT FEES. We might think long and hard before accepting the approach that the National Office will establish Management Fees and publish the amounts in a Handbook without any public notice and hearings. The Agency may not have the authority to set such fees administratively without publication in the Federal Register.
And the Administrative Procedures Act [Title 5 U.S.C.] requires that rules be published in the Federal Register. A rule [Section 551] is:
the whole or part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency and includes the approval or prescription for the future of rates, wages . . . prices . . . services or allowances therefore or of valuations, costs or accounting, or
practices. . . .
Thus, it is an open question if the Agency can indeed set Management Fees in a Handbook.
* MANAGEMENT FEES # 2. I recently won appeals of Management Fees where the State Office had put out an AN in an attempt to set fees. Call me to discuss doing the same for you.
* CAPITAL IMPROVEMENT PLANS. I have posted on my Homepage a discussion of the usefulness of, approach to, and pitfalls of completing a Capital Improvement Plan.
* SOCIAL PROGRAMS IN FAMILY PROJECTS. The Agency has a point about the social environment in family projects and the opportunities for enhancing the quality of life. Without a funding source, it could become an unfunded mandate on owners and managers.
* MARKET COMPARABILITY OF BASIC RENTS. Before the Agency actively adopts a market comparability test for Basic Rents, it needs to establish a process to account for the costs of professional management, Reserve requirements, and required housing standards. If a mobile home rents for the same amount as the Basic Rent in a 100% RA project, is the rent comparable?
* 515 IS AN $11.9 BILLION PORTFOLIO. With new construction funding at $100 million for this Fiscal Year, any focus on preserving the portfolio should be paramount in the Agency’s and the industry’s approach. Preservation is not just retaining projects which can prepay their loans and operate outside the program — preservation includes dealing with 20 year old projects in truly rural areas.
* CHUCK WEHRWEIN. He contributed to the reinvention of the Agency as an asset manager, but the transformation is not complete. His successor has an excellent opportunity to continue the work.
* PREPAYMENT LEGISLATION. If you agree with the idea that further legislation is needed on prepayment, let CARH and the Rural Housing Council know.
* APPEAL COSTS AND THE EQUAL ACCESS TO JUSTICE ACT: As I see it, when you prevail in an appeal (such as the denial of a rent increase), you now can ask the Agency to pay for the costs of the appeal where you paid a professional to conduct the appeal. The last word is not in yet on how to do this, but stay tuned. See an excellent discussion of this by Coan and Lyons.
I have worked with and advised owners, developers and managers on 515 program issues and problems since 1988. If you have an issue with the Agency or on your projects, or don’t have the expertise on your staff, contact me.