Attachment

Set forth below are direct quotes from the report along with HUD's clarification and/or correction:

SECTION 8 ANALYSIS REPORT: HUD's first point regarding reduction of vouchers was that they would not seriously consider a reduction of voucher levels while the City maintains a local preference for Middletown residents. Said another way, it 's hard to argue that you want less vouchers when you specifically target giving new vouchers to people living in the City. HUD stated that the local preference for Middletown residents must be removed before any further discussion about reduction of vouchers would occur.

When we discussed the possibility of partial voucher transfers, HUD referred us to HUD Notice PIH 2007-06 (HA), issued on March 7, 2007. Although this Notice lists a 2009 expiration date, HUD still operates under this Notice. In Paragraph 3: Eligibility, the Notice states that "All transfers of vouchers must be total permanent divestitures of one PHA's HCV program to one or more receiving PHA's. The Department will not approve voluntary partial transfers unless there is a substantiated compelling reason. (Emphasis added) The transfer must be between PHA's within the same metropolitan area, within the same non-metropolitan county, or within the same state where HCV program administration is voluntarily shifted from a city or county PHA to its state PHA or from a state PHA to one or more of its county or city PHA 's."

HUD's reliance upon a "substantiated compelling reason " started the staff process that lead to the creation of this report. If a substantiated compelling reason is required to transfer vouchers and HUD won't permit partial transfers while the City remains high in poverty, what else could be used as a compelling reason to gain HUD approval?

HUD RESPONSE: At no time did HUD officials make statements concerning reduction of vouchers relative to the City's local preference for Middletown residents. HUD's discussion with city staff centered upon deconcentrating poverty by expanding MPHA's jurisdictional boundaries from its current city limits (if legally pennissible) to include all of Butler County, reconsidering local preferences, consideration of higher payment standards in non-impacted areas in Butler County and reviewing the rent reasonableness system to ensure rental rates are accurately measured. It was suggested that this be reviewed in consultation with the Butler Metropolitan Housing Authority ("BMHA"). MPHA currently administers the program in the City of Middletown and families are ported to BMHA should the families choose to move outside of the city but within Butler County. An expansion of MPHA's boundaries would end the current portability arrangement and result in BMHA and MPHA co-existing within the county. This arrangement exists with Panna MHA and Cuyahoga MHA and fonnerly existed with Hamilton and Cincinnati MHA.

HUD Notice 2007-6, "Process for Public Housing Agency Voluntary Transfers of Housing Choice Vouchers, Project-Based Vouchers and Project-Based Certificates" issued March 7, 2007 does spell out the process for the pennanent transfer of a Housing Choice Voucher Program to another PHA. As noted in the report the transfer must be between PHA's within the same 7 metropolitan area, within the same non-metropolitan county, or within the same state where HCV program administration is voluntarily shifted. The Notice goes on to state that "The Department will not approve voluntary partial transfers unless there is a substantiated compelling reason". The Notice does not define substantiated compelling reason but in its limited use thus far, it has not been the intent to reduce the number of vouchers that serve a community's needy households.

Middletown should not act in anticipation that such a transfer request would be granted when the sole purpose is to reduce housing assistance to those in need in Middletown. Currently MPHA has around 1,500 families being served by the program as well as a lengthy waiting list. A partial or total transfer of the program to another PHA would not necessarily result in a reduction in the families served by the program but rather a change in administration of the program to another PHA.

SECTION 8 ANALYSIS REPORT: HUD's next point was that if we operated our program similar to the Parma program, we would keep all vouchers active, provide service to over 1600 low income families, be compliant with HUD program requirements, retain administrative income from the vouchers, execute the Master Plan objectives, and still achieve the reduction of vouchers within the City that we seek. Parma has 57 active vouchers within the City limits for 80,000 residents. HUD stated that until we utilize the regulations to reduce vouchers being used within the City, they would not seriously consider a reduction in voucher levels. Said another way, HUD stated that we must "help ourselves with all of the regulatory tools available, and then if you still have problems, come talk to us again. "

HUD RESPONSE: HUD's discussion about Parma operating within a larger jurisdiction with the ability of its participants to lease throughout the County was not in the context of HUD agreeing that Middletown should seek to reduce voucher holders, but rather that poverty deconcentration might be furthered by broadening jurisdiction and choice. In addition, statements in the report seem to indicate that Parma is typical of city programs and is one of the only other city programs in the nation. Parma is not typical -it was created by a federal desegregation court order. Many hundreds of municipal housing agencies are in operation across the nation. Michigan, for example, is one state with predominantly municipal housing agencies, and most vouchers are used within the City's boundaries.

SECTION 8 ANALYSIS REPORT: Staff recommends reducing the payment standard to 90% of FMR within the City of Middletown and setting the payment standard at 100% outside of the City ofMiddletown.

HUD RESPONSE: MPHA's payment standards are currently set at 100% of the FMR. In accordance with 24 CFR 982.505 9(c) (3) when the payment standard amount is decreased during the term of the HAP contract, the lower payment standard amount generally must be used to calculate the monthly housing assistance payment for the family beginning at the effective date of the family's second regular reexamination following the effective date of the decrease in the payment standard amount. Movers and new admissions within the city would be effected 8 immediately; however, payment standard amounts for families under HAP contracts cannot be reduced until the second reexamination.

HUD does monitor rent burdens of families assisted by the program and can require a PHA to increase payment standard amounts within the basic range when 40% or more of families occupying a particular unit size pay more than 30% of monthly adjusted income as the family share. It may well be that one payment standard within Middletown is not appropriate particularly if it is reduced. A geographic payment standard for different parts of Middletown can be set to tailor it to the market areas of the City. But if the City is lowering the payment standard for the sole purpose of eliminating the ability of units to be leased in Middletown, as seems to be the case, this would be directly counter to the program's intent and HUD this will closely monitor rent burden and success rates and will direct the City to increase the payment standard if appropriate.

In addition, if use of vouchers outside Middletown is done through portability, then Middletown's payment standard is not used; the receiving PHA's payment standards are used. For example, if a Middletown participant ports to Warren County, Warren MHA's payment standard is used. If Middletown continues to administer its program only in the City and a Middletown participant ports to an area within Butler County then BMHA's payment standard is used. Middletown cannot set a payment standard for an area outside of which it does not execute HAP contracts. If Middletown chose to operate throughout Butler County, then it could set a payment standard for that area.

SECTION 8 ANALYSIS REPORT: Under the MPHA Current Administrative Plan, Section XVI/(d): The dwelling unit shall be in compliance with HUD lead based paint regulations, 24 CFR, Part 35, issued pursuant to the Lead Based Paint Poisoning Prevention Act, 42 USC 28001, and owner shall provide a certification that the dwelling is in accordance with such HUD regulations. Recommended Changes:

The current plan language does little to document compliance with HUD regulations and/or Ohio lead based paint law. From a compliance standpoint and a policy standpoint, MPHA should expand the requirements for lead based paint compliance. As discussed above, this issue impacts almost 19000 housing units in Middletown, occupied primarily by low income families. We document compliance with all of our other HUD programs, and we need do so here as well. MPHA will require that a lead based paint risk assessment be completed for any housing units constructed prior to 1978 before HQS inspections are scheduled. Iflead based paint is discovered on assessment, the owner must abate each lead based paint suiface before commencement of assistance. If the unit is already occupied, the abatement must be completed within 30 days of notification to the owner. If the owner does not complete the abatement, the unit is in violation of HQS standards until the reduction is complete and no HAP payments will be made until the abatement is complete and a passing lead based paint clearance is submitted to the PHA.

HUD RESPONSE: The Housing Choice Voucher Program is subject to the following subparts of 24 CPR Part 35: Subpart A, Disclosure; Subpart B, General Lead-Based Paint Requirements 9 and Definitions for All Programs; Subpart M, Tenant-Based Rental Assistance; and Subpart R, Methods and Standards for Performing Lead Hazard Evaluation and Reduction Activities. Lead based paint performance requirements are included as part of the Housing Quality Standards ("HQS") inspections and must be met before a unit can be assisted or continue to be assisted where the unit and family are subjected to these requirements.

MPHA is proposing to require a risk assessment for any housing unit constructed prior to 1978 before the HQS inspection. If lead based paint is discovered on assessment, the owner must abate each lead based paint surface before commencement of assistance.

The changes to the HQS inspection process and HUD lead based paint requirements that MPHA is proposing to implement far exceed the requirements required by the regulations. HUD regulations exempt certain units from lead based paint requirements. Exempt units include units where a child under the age of six does not reside or is not expected to reside as well as efficiency units and Single Room Occupancy ("SRO") units. In addition, in the HCY program, risk assessments are only required where a child has been identified as having an environmental intervention blood lead level. To implement the changes that MPHA is proposing to require as part of HQS inspections would involve a variation to the HQS acceptability criteria and require HUD approval as provided in 24 CFR 982.401 (a) (4) (i).

Be advised that this office would not entertain such a proposal as it would severely restrict housing choice. Roughly 75% of rental occupied housing in Middletown would be impacted by such a change.

SECTION 8 ANALYSIS REPORT: For units constructed prior to 1978, owners must complete and submit the MPHA Lead Paint Owner's Certification, Housing Choice Voucher Program as part of the Request for Tenancy Approval (RTA). The lead based paint inspector must be licensed by the State of Ohio, and failure to supply the inspectors credentials and the completed Certification will be considered an incomplete RTA for purposes of review. Staff recommends that the following Certification be adopted by MPHA as part of the Request for Tenancy Approval process to fully document lead based paint compliance.

HUD RESPONSE: The form being proposed for use would incorporate standards that exceed HQS, as stated above, which this office will not consider. The referenced forms in the HUD Guidebook are only for units where a risk assessment is required, i.e. where a child is determined to have had an elevated blood lead level -not for all units.

SECTION 8 ANALYSIS REPORT: While the City does not employ a rental registration ordinance to regulate rental units, having a City Building Inspector perform initial inspections is advantageous in three ways. First, the timing, paperwork and other problems being experienced with initial inspections would be alleviated by direct scheduling between Consoc and the City on these inspections. Second, the inspector is a certified lead based paint risk assessor by the State of Ohio and this serves as a quality control check that proper lead based paint inspections are being performed and paperwork is being turned in with the Request for Tenancy Approval for 10 new units. Finally, the inspector is also trained on inspecting to the standards in the International Property Maintenance Code, the local property code. Under 24 CFR § 982.306(c)(6), the PHA may deny approval of an assisted tenancy when the owner has a history or practice of renting units that fail to meet State or local housing codes. Utilizing the City's code enforcement software, the inspector can run a report of prior violations by any owner or address to determine if such a history or practice exists. Where appropriate, documentation and reporting would be submitted to the program administrator for potential denial of the owner based on past practices.

HUD RESPONSE: MPHA is proposing to use the International Property Maintenance Code in conducting its HQS inspections. As noted above, this change to the inspection process would involve a variation to the HQS acceptability criteria and require HUD approval as provided in 24 CFR 982.401 (a) (4) (i).

A modification to MPHA's HQS inspections using portions of the International Property Maintenance Code was approved by this office in 2002. Any further modifications would require HUD approval.

SECTION 8 ANALYSIS REPORT: Local Preferences [24 CFR 982.207; HCVp. 4-16J

The PHA is permitted to establish local preferences and to give priority to serving families that meet those criteria. HUD specifically authorizes and places restrictions on certain types of local preferences. HUD also permits the PHA to establish other local preferences, at its discretion. Any local preferences established must be consistent with the PHA plan and the consolidated plan, and must be based on local housing needs and priorities that can be documented by generally accepted data sources.

HUD RESPONSE: Changes to the occupancy policies and preferences will require a modification to the 2010 PHA Plan submitted to this office. MPHA may not adopt the modification until a meeting of the Board of Commissioners/City Council is held and the meeting at which the modification is adopted is open to the public. Additionally, the modifications cannot be implemented until notification of the modification is provided to HUD and approved by HUD in accordance with the review procedures provided in 24 CFR 903.23 .

SECTION 8 ANALYSIS REPORT: The City has supported Hope House for years. We are utilizing HOME funds in 2010 to assist with $80,000 in renovations for the new Women's Shelter on Girard. The shelter will be a transitional shelter for 3-6 months to allow victims of domestic violence the opportunity to safely get away from their abuser and to rebuild their lives. We have recommended a local preference for victims of domestic violence. We have also recommended a large reduction in vouchers operating within the City. If it would be appropriate, expanding the number of vouchers in the SRO program would use more of the City of Middletown vouchers in support of victims of domestic violence. It would also mean that fewer vouchers are being used as regular rentals throughout the City. J J

HUD RESPONSE: The SRO Program is funded by HUD through the Office of Community and Planning Development. The ACC is separate and apart from the ACC for the Housing Choice Voucher Program. The subsidy is project based and has nothing to do with the Housing Choice Voucher Program. Vouchers are not used in SRO projects