If a PHA's property sustains substantial destruction due to a casualty loss or natural disaster (e.g., fire, tornado, hurricane, flooding), the PHA may need to submit an after the fact Section 18 application to ensure HUD records are accurate. A PHA may also need to submit a Section 18 demolition and/or disposition application in conjunction with demolishing, restoring, rebuilding, or repositioning Public Housing property damaged by casualty loss or natural disaster. The SAC application is subject to all Section 18 application requirements when submitting documentation to HUD.

Application exceptions, not required to submit include:

• Resident Consultation
• Board Resolution
• Local government consultation
• Letter of support from local government 
• FHEO review

Possible accidental loss justifications include: 24 CFR 970.15(a)(1) for demolition OR 24 CFR § 970.17(a) for disposition .  Learn more >

To evidence physical obsolescence for the demolition (24 CFR § 970.15) OR disposition (24 CFR § 970.17(c)) of a project, PHAs must show that the necessary modification and/or rehabilitation to a project is not cost-effective. i.e., costs exceed the HUD Total Development Cost (TDC) Limit threshold (62.5% of TDC for elevator structures and 57.14% for non-elevator structures)).
 

PHAs should use the TDC information associated with the year the rehabilitation cost estimate was generated. TDC estimates are released annually. For instance, if a rehabilitation cost estimate was generated in November 2022, but the PHA did not submit the application until March 2023, the PHA should use HUD’s 2022 TDC information. Learn more about HUD’s TDC calculations 24 CFR 905.314.

The disposition allows for the development of other properties that will be more efficiently or effectively operated as low-income housing projects. Repositioning applications that apply under more efficient and effective for off-site development (24 CFR § 970.17(b)) OR on-site development (24 CFR § 970.17(c)) will only be eligible to receive up to 25% of the TPVs requested by the PHA. For example, if 80 units were occupied in the last 24 months at time of application submission under efficient and effective, the PHA can only receive up to 20 TPVs or (25% of 80 units).

In accordance with Section 18(f) of the U.S. Housing Act of 1937 (1937 Act), the PHA may demolish not more than the lesser of 5 dwelling units or 5% of a PHA’s total public housing dwelling units in a 5-year period, see 24 CFR 970.27(b). Also, determine if the unit(s) meet criteria under 24 CFR 970.27(c). Note: There is a submission protocol to notify SAC via the Public Housing Information Center/Inventory Management System (PIC/IMS) prior to the de minimis demolition, but HUD approval and application is not required. PHAs should check that De Minimis Demolition exception is the only option for them. PHAs should verify whether a different SAC application type may be more suitable and not use up the limited De Minimis Demolition capacity the PHA has available. Learn more >

PHAs demonstrate conditions (density, or industrial or commercial development) present serious obstacles in maintaining the units as healthy or safe housing and why the PHA cannot cure or mitigate those conditions in a cost-effective manner. 24 CFR § 970.17(a) is a possible application justification.

PHAs demonstrate a lack of demand for the units. Supporting documentation includes evidence the units have long-term vacancy issues, notwithstanding due diligence in marketing (e.g., census tract data on declining population in the jurisdiction; units located in an isolated area with limited access to transportation and infrastructure; high turnover rates). On a case-by-case basis, HUD may require a PHA to submit a market analysis or HUD may perform one. 24 CFR § 970.17(a) is a possible application justification.

The PHA owns and operates 50 or fewer public housing units under its ACC and has determined that it is in the best interests of the residents and PHA to closeout its Section 9 public housing program in accordance with Notice PIH 2016-23. 24 CFR § 970.17(c) is a possible application justification.

Must submit a HUD-5837 form. Learn More Closeout FAQs >

Due to distance between units and lack of uniformity of systems (e.g. HVAC, utilities), the PHA demonstrates an unsustainability to operate and/or maintain the units as public housing. For purposes of this notice, scattered site units generally mean units in non-contiguous buildings with four or fewer total units. 24 CFR § 970.17(c) is a possible application justification.

The PHA certifies, by narrative statement and supporting documentation, that disposition of non-dwelling buildings or vacant land meets the criteria because the property either:

• Exceeds the needs of the project after the date of full availability (DOFA) (24 CFR 970.17(d)(1)); OR
• The disposition of the property is incidental to, or does not interfere with, continued operation of the remaining portion of the project (24 CFR 970.17(d)(2)).

PHAs should only use one of the justifications under 24 CFR § 970.17(d) for the disposition of vacant land and/or non-dwelling structures.

A land swap between a PHA and another entity will be pursuant to 24 CFR 905.608, which requires PHAs to get HUD approval to acquire property. The land swap will be an exchange of public housing property for another property that is of equal or greater value. Generally, land swap transactions will fall under 24 CFR 970.17(d) and include vacant land.

Two kinds of RAD/Section 18 Blends:

• Construction Blend 
• Small PHA Blend

These RAD/Blends allow for:

• Higher contract rents support greater financing;
• Robust resident rights;
• RAD one-for-one replacement requirements apply (with de minimis);
• Public housing funds can be used in project conversion;
• HUD underwriting of entire project to ensure project viability.

Learn more >

Transactions with a Seller/Promissory Note (typically in tax credit deals) are seen as a below FMV transaction by the SAC. The SAC sees this as a below FMV transaction because the seller note is typically subject to cash flow and may not be paid back in full to the PHA by the acquiring entity. The PHA may consider this a FMV transaction for the purposes of their tax credit underwriting, as the PHA would receive a seller's note that is the appraised “FMV of the property”.

The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (URA) does not apply to Section 18 actions. However, Section 18 of the Act and 24 CFR Part 970 contain similar, but distinct, requirements for the relocation of residents. 104(d) of the Housing and Community Development Act of 1974 applicable, the notice requirements at 24 CFR 970.21(e) apply. Such notice must also explain to the tenant the assistance available under section 104(d) (which includes offering the choice of assistance calculated at section 104(d) or URA levels).

See Appendix 33 of HUD Handbook 1378.

PHAs may realize proceeds when they sell, transfer, ground lease or otherwise dispose of public housing property. PHAs retain flexibility to determine the use of proceeds, provided the use is consistent with the 1937 Act which requires that proceeds be used for the provision of low-income housing or to benefit the residents of the public housing agency; or leveraging amounts for securing commercial enterprises, onsite in public housing projects of the PHA appropriate to serve the needs of the residents. A PHA’s use of proceeds is subject to HUD (SAC) approval pursuant to 24 CFR part 970.19. See PIH Notice 2020-23 for allowable use of proceeds.

• Proceeds Training Video >
• PIH Notice 2020-23 (Use of Proceeds under Section 18 Disposition or Section 22 Voluntary Conversion) >
• Memo: Proceeds for SAC Letter Disposition Approvals >

In accordance with 24 CFR 970.35 and SAC's approval letter, PHAs must ensure the Public Housing property is in “Removed from Inventory” (“RMI”) status in IMS/PIC within 7 days of making the final payment to the demolition contractor (demolition) or execution of sales or lease contract (disposition).

Specific instructions are as follows:

1. Select the "Development Number", then select "Add Transaction”
2. Select the appropriate "Application (DDA) Number" from the drop-down menu;
3. Select the "Development Number", then select "Add Transaction”
4. Select the appropriate "Application (DDA) Number" from the drop-down menu;
5. In the "Action/Closing Date" box, enter the removal (demolition) date If the properties in a DDA application were demolished/disposed of (phased) on multiple dates, a separate transaction is needed for each action date;
6. Use “Remove Residential Inventory by Building” section, select the appropriate building(s) available in the "Complete Buildings Available" box and transfer them to the "Proposed Buildings" box
7. Save the information using the "Save" button. The status of this information is then displayed as "Draft”;
8. SPHA supervisory staff submits the information to the PHA Executive Director, or the designated final reviewer at PHA, using the Submission sub tab. The status becomes "Submitted for Review”;
9. PHA Executive Director or designee uses the Review sub tab to reject the transaction, which places it in a "Rejected" status, or approves, which places it in a "Submitted for Approval" status;
10. The Field Office reviews the request, and once the Field Office approves it, the status of the units in IMS/PIC permanently changes to RMI.