What's in store? Learn from HUD Secretary Mel Martinez and other policy makers what topics they believe will be important to the multifamily housing industry in 2002. (Capitol Conference Preview).

Whether it's HUD (U.S. Department of Housing and Urban Development), the Environmental Protection Agency (EPA) or the Department of Labor, property owners and managers interact on multiple levels with government agencies. Susan L. Fitzgerald spoke with Mel Martinez, HUD's Secretary of Housing and Urban Development; Secretary of Labor Elaine Chao; and Mary Smith, Director of the Office of Indoor Environments at the EPA, on what to expect for 2002. Issues range from balanced housing to mold, to Section 8 to ergonomics.

Fitzgerald: How important are renter issues to you in your position as HUD Secretary? How will you work to promote balanced housing policies to serve residents as well as homeowners?

Martinez: Homeownership is not for every family. According to 3rd Quarter 2001 statistics, 68.1 percent of American households enjoy homeownership--a new record. But as important as encouraging homeownership is what the Federal government can do to encourage and incentivize affordable rental housing. With the recent enactment of the FY2001 VA, HUD and Independent Agencies Appropriations Act, the Department can move forward to implement the 25 percent increase in Federal Housing Administration(FHA) multifamily mortgage loan limits as proposed by the President. This increase, the first since 1992, reflects the increase in construction costs and will allow FHA to provide multifamily mortgage insurance in many high cost cities where it had otherwise not been possible.

Coupled with the loan limit increase is the transition of the FHA 221(d)(4) multifamily mortgage insurance program to a self-sustaining level. This program accounts for the largest volume of FHA's multifamily mortgage insurance activity. Effective Oct. 1, 2001, the mortgage insurance premium for this program was increased to 80 basis points and a self-sustaining level that will not require credit subsidy appropriated by Congress. This allows the program to respond to market demand and will end the program shutdowns caused by the limited availability of credit subsidy. During October 2001 alone, FHA issued commitments for almost $600 million in multifamily mortgages to provide almost 9,000 apartments.

Fitzgerald: What role do you think the federal government, and HUD specifically, plays in minimizing local barriers to providing affordable, decent and safe multifamily housing? Barriers such as local development policies, escalating land costs, not-in-my-back-yard attitudes and exclusionary zoning policies.

Martinez: Above all, we do not believe that the Department should be a Federal zoning board. HUD cannot tell local governments what they should or should not be doing regarding community zoning issues. However, the Department does have a responsibility to look at regulatory barriers at all levels that impact housing to ensure we are doing all we can to encourage affordable rental housing and homeownership.

Section 8 Housing Choice Voucher Program

Fitzgerald: What plans--if any--does HUD have to make the Section 8 housing choice voucher program more "transparent" and to increase participation and reduce the negative impact an apartment community may suffer when it enters into the program?

Martinez: In the last couple of years, HUD implemented major changes to streamline program administration and to increase owner participation in the tenant-based programs. These changes resulted from the Quality Housing and Work Responsibility Act of 1998 that consolidated two existing tenant-based programs (the rental certificate program and the rental voucher program) into a single new tenant-based program, the housing choice voucher program.

Reforms to increase owner participation included the removal of the endless lease provision, the 90-day notice requirement, and the "take-one, take all" requirement for multifamily owners. The elimination of the endless lease provision ensures that housing choice voucher owners have the option to terminate lease agreements without cause at the end of the term of the lease or at the end of any successive definitive term, provided such termination is in accordance with state or local law. Elimination of the 90-day notice requirement allows owners to terminate program participation in accordance with the notification requirements stated in the owner's lease. Finally, elimination of the "take one, take all" provision provides multifamily owners the flexibility to regulate the number of voucher assisted families in a particular property to ensure a preferable income mix is maintained at the project.

While HUD believes the reforms brought about by the new law have greatly improved the tenant-based program's ability to attract apartment owners, there is more to be done in this area. For example, HUD is currently working on a proposed rule that will greatly simplify the way the reasonableness of an owner's proposed rent is determined by the Public Housing Agency (PHA).

HUD is also moving toward full implementation of the new project-based component of the housing choice voucher program recently established in statute. HUD issued initial guidance in January 2001 to implement the new project-based option and is currently working on a proposed regulation that will be published for public comment. One of HUD's goals is to simplify and streamline the process and provide for more flexibility to the public housing agencies in administering their programs.

The project-based initiative allows a PHA to project-base up to 20 percent of its tenant-based vouchers. Project-basing means the public housing agency attaches the subsidy to a particular unit for a period of time (not to exceed ten years) and refers eligible families to the owner. A PHA may use project-based vouchers in support of new construction and rehabilitation activities or may simply attach the vouchers to existing housing. The new project-based component gives the PHA added flexibility in attracting potential owners and increasing the supply of affordable housing for program participants.

Fitzgerald: Is HUD planning any improvements for the FHA multifamily insurance program?

Martinez: The Department continues its work to place HUD multifamily mortgage insurance programs on a sound fiscal basis. We initiated an increase in the mortgage insurance premium for those FHA multifamily mortgage insurance programs, which required an annual appropriation from Congress for operation. This increase to 80 basis points for the popular Section 221(d)(4) program for the insurance for new construction and substantial rehabilitation of apartments eliminates the need for appropriations for this program in fiscal year 2002. It also eliminates program interruptions, which had occurred in the last two fiscal years. We now have made the major HUD multifamily mortgage insurance programs self-sustaining, not reliant on annual appropriations from Congress.

The Department is eliminating barriers for use of its multifamily insurance programs. We sponsored and Congress passed legislation, which increased by 25 percent, the statutory per unit mortgage limits in the National Housing Act for FHA multifamily mortgage insurance programs. This increase, the first in nine years, will enable FHA to provide mortgage insurance in certain high-cost areas including our inner cities, and for special high-cost projects which require scattered sites, historic preservation or correction of problems associated with brownfield sites.

We intend to continue our concentrated effort to make our multifamily mortgage insurance programs more readily available to underserved areas of the country including rural states and inner cities. This effort includes active outreach by HUD field offices to housing providers for the purpose of forming business relationships for the production of rental housing. It also includes the creation of business plans with systematic follow-up for the success of these plans.

MAP Implementation and Improvements

Fitzgerald: Will you work to better implement the programmatic changes made through the Multifamily Accelerate Processing (MAP) system? How?

Martinez: MAP has been both popular and successful because it establishes national underwriting standards and enables a much faster processing time than traditional HUD multifamily mortgage insurance processing. In the first year of operation nearly 1,000 applications for multifamily projects were filed with the Department through these modernized procedures. While we are constantly reviewing and implementing changes to improve the MAP procedures, we also plan to make major improvements to the system in the coming year.

The MAP process is being utilized for HUD's major multifamily mortgage insurance programs including the Section 221(d) programs for construction of apartments, the Section 223(f) program for the refinancing or purchase of existing apartments, and the Section 232 program for the finance of health care facilities. The less utilized HUD multifamily mortgage insurance programs are to be brought into the MAP process.

Within the HUD-insured and HUD--financed multifamily portfolio there are a large number of older multifamily projects occupied by low and moderate-income residents. It is the Department's intention to keep these projects in the affordable multifamily housing stock. We are developing new finance techniques for inclusion in the MAP system for refinancing and modernizing these projects. These refinancings will preserve hundreds of thousands of affordable communities.

MAP is facilitated by a state of the art computer system for tracking the status of pipeline business and for underwriting of HUD multifamily mortgage insurance applications submissions. This system is a featured part of the Department's effort to bring e-government to many of its business practices. The implementation of MAP through technology allows more predictable outcomes across offices and reduces processing time by minimizing the number of recalculations. It also provides an expeditious means to communicate processing conclusions between MAP lenders and HUD staff. It complements MAP with a standardized electronic process for underwriting reviews. Currently we are working on refinements to this system including a new component for electronic closings.

Fitzgerald: For 2002, what should rental property owners and managers expect from HUD in terms of lead paint issues?

Martinez: HUD will be issuing a Notice of Funding Availability for its Lead Hazard Control Grant program totaling $80 million, up from $59 million last year. The funds are awarded to local governments to eliminate lead-based paint hazards in low-income privately owned dwellings built before 1978, where the risks to children are greatest. HUD will also continue its training program for maintenance and rehab workers so they can do their jobs in a lead-safe manner. Already, over 20,000 workers have been enrolled in these free courses. HUD will begin reimbursing the cost of lead-based paint clearance testing in certain CDBG and HOME housing rehabilitation programs, up to $150 per unit. HUD will also continue to conduct free lead paint inspections and risk assessments in section 8 project-based housing. All this will enable property owners of low-income housing units to keep them affordable and safe for children.

EPA Delivers Practical Tools

New resources covering asthma, mold and overall air quality will come from the Environmental Protection Agency (EPA) in 2002. The agency is continuing to work on several initiatives started over the last several years, explains Mary Smith, Director of the Office of Indoor Environments. These areas should be of special interest to the multifamily housing industry.

Apartment owners deal with asthma triggers residents may find in their apartments, says Smith. One such trigger is second hand smoke, last October, EPA Administrator Christie Whitman unveiled a new environmental health campaign--the Smoke, Free Home Pledge Initiative--designed to protect America's children from the risks of secondhand smoke in their own homes. Whitman announced a national television and print media campaign and a major outreach effort co-sponsored by key medical, consumer and community organizations, and released a new brochure and other outreach materials to help families protect their children. One of the program's goals is to motivate parents to keep their home smoke-free.

Smith suggests that multifamily housing owners and managers might find EPA's materials useful for their residents. These resources can be found at www.epa.gov/iaq/ets/ publications.html.

Moving on to mold, Smith directs apartment owners to the agency's March 2001 publication, Mold Remediation in Schools and Commercial Buildings. Again, it's not a new resource for 2002, but she says its guidance remains sound. The document offers guidelines for the remediation/cleanup of mold and moisture problems in schools and commercial buildings. It includes measures designed to protect the health of building occupants and remediators.

Smith adds that in the first quarter of 2002, EPA will produce a small pamphlet for residential owners on mold. Again, she says this document may be helpful to apartment associations as an educational tool.

Aiming to improve indoor air quality (IAQ) in commercial buildings, the agency has developed I-BEAM--computer software for use by building professionals, I-BEAM helps manage IAQ in commercial buildings. The software enables users to: conduct an indoor air quality (IAQ) building audit; diagnose and resolve IAQ related health problems; establish an IAQ management and maintenance program to reduce IAQ risks; plan IAQ compatible energy projects; protect occupants from exposures to construction/renovation contaminants; and calculate the cost, revenue, and productivity impacts of planned IAQ activities.

Users can download or install I-BEAM by visiting www.epa.gov/iaq/largebldgs/ download.htm. A CD ROM version is available by calling the IAQ INFO Clearinghouse at 800/431-4318 or via e-mail at [e-mail].

Labor Department Postpones Ergonomics Announcement

Secretary of Labor Elaine Chao announced in September 2001 that the Labor Department's decision regarding ergonomics was postponed due to the attention the Occupational Health and Safety Administration (OSHA) needed to focus on the issues following the Sept. 11, 2001, attack. Since that time, OSHA has devoted considerable time and attention to the anthrax threat in the workplace.

The Department expects a decision in the near future regarding the best course to pursue in ergonomics. For more general information on ergonomics, including best practices, log on to www.osha-slc.gov/SLTC/ergonomics/ index.html.

Susan L. Fitzgerald is a freelance writer who lives in Herndon, Va. She is the former Editor of Assisted Living Today.