Take Advantage of Flexibility for Vacancy Claims During COVID

Under normal circumstances, when an assisted unit becomes vacant, a new household doesn’t usually move in right away. It takes time to find an eligible household. And even if you have a waiting list, you may need time to complete the applicant household’s eligibility review and certification, and a new household may need time to arrange its move-in.

HUD gives you a break in this situation. For Section 8, Section 202/8, Section 202 PAC, Section 202 PRAC, and Section 811 PRAC sites, you can submit a vacancy claim to HUD. According to HUD’s Special Claims Processing Guide, you can ask HUD to pay 80 percent of the vacant unit’s daily contract rent from the date the unit was available for occupancy until the date a new household moves in—for a period of up to 60 days [HSG-06-01, Sec. 3-3(F)(1)].

It’s important to note, however, that for vacancies at Section 8 Property Disposition Set-Aside or Section 202 PRAC or Section 811 PRAC sites, the amounts you may bill HUD differs. A claim for a unit under a Section 202 PRAC or Section 811 PRAC may not exceed 50 percent of the operating rent for up to 60 calendar days for each unit vacancy [HSG-06-01, Sec. 3-3(F)(2)].

And a claim for a unit under Section 8 Property Disposition Set Aside may not exceed the housing assistance payment for the number of days between the date the resident vacated and the last day of the month plus 80 percent of contract cost for any days the unit remains vacant in the following month [HSG-06-01, Sec. 3-3(F)(1)(a-b)].

Pandemic’s Effect on Vacancies

For many owners, with the pandemic, the time frame to bring a unit online after it becomes vacant has become much longer. HUD’s Multifamily COVID-19 Q&A advised that if an owner isn’t able to interview and fill vacancies due to restrictions based on guidance from their local or state jurisdiction regarding COVID-19, then the owner should submit information to their contract administrator or HUD office documenting why the filling of any vacancies were considered infeasible. The Q&A also stated that HUD wasn’t considering expanding the current vacancy payment procedures.

Fortunately, HUD recently sent out a memorandum regarding the processing of special claims for vacancy during the COVID-19 pandemic. It instructs owners on how to process special claims for vacancy during the COVID-19 pandemic from March 27, 2020, to Sept. 30, 2020.

Modified Start Date

HUD has temporarily modified the start date for vacancy claims to accommodate for delays in filling vacant units as a result of impediments caused by COVID-19. According to the memo, impediments resulting from state and local “stay-at-home” orders include, but are not limited to, delays in units being prepared for occupancy, staff being able to show units to prospective residents, or meeting eligible applicants to process move-in documentation.

Now, HUD will accept vacancy claims for 60 days starting from the prior tenant’s move-out date as opposed to the ready-for-occupancy date, in instances where preparation of the unit for occupancy was prevented due to the impact of COVID-19.

Amended Document Submission Requirements

HUD has also amended the requirements for certain documentation submission. HUD gives you a limited time to submit your claim. Typically, the completed claim form and documentation must be received by the local HUD office or the contract administrator within 180 calendar days from the date the unit is available for occupancy [HSG-06-01, Sec. 3-4(A)]. Now, the claim must be received by HUD or the contract administrator within 180 days from the date the unit was vacated by a former tenant. Also, multiple claims for HUD funding can’t be paid on a unit for the same period.

Owners must submit Form HUD-52670-A Part 2, Special Claims Schedule. This form summarizes the types and amounts of all claims you may be making, if you’re making multiple claims at once. But even if you’re making just one claim, you must submit this form. A signature is required.

In addition, owners must submit Form HUD- 52671-C, Special Claims for Regular Vacancies. This form shows how you calculated the amount you’re claiming in vacancy payments. The memo advises that you use the day after the prior tenant’s move-out date to calculate the vacancy loss payment, not to exceed 60 days. And for claims submitted under this memo, you would mark the top of the form with “COVID-19.”

For supporting documentation, you would submit documents typical for vacancy claims, such as those showing attempts to fill the vacancy except with documentation with respect to unit readiness. Under normal circumstances, you must show that you’re billing HUD only for vacant units that were in good condition and available for vacancy by submitting a log or other maintenance records showing the move-out date, the start and finish date of each unit repair, the date the unit was available for occupancy, and the date the unit was re-rented. As a result of the modified start date, this documentation requirement doesn’t apply.

You must also submit: (1) an owner certification that COVID-19 has impeded your efforts to fill the vacancy; (2) justification for all units explaining why the units remain vacant as a result of the COVID-19 pandemic; and (3) certification that site marketing is compliant under the Affirmative Fair Housing Marketing Plan (AFHMP).

Process for Claims Filed Before Memo

If a site owner has submitted a vacancy claim prior to July 6, when the memorandum was issued, and the special claim has been processed for payment, HUD says the owner may submit a supplemental vacancy claim for the gap period from the prior tenant’s move-out date to the unit’s ready-for-occupancy date. The gap period of days added to the days claimed on the prior claim submission mustn’t exceed 60 days. And no overlap in days can be claimed for payment.

TAKEAWAYS

• A vacancy claim can start from a resident’s move-out date instead of the ready-for-occupancy date as result of COVID.
• Staff can avoid unnecessary health risks while preparing a newly vacant unit with the additional compensation window.
• The total coverage period for a vacancy claim still can’t exceed 60 days.