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Q&A
Process of signing leases with PACT partners and HUD approval
3:01:36
·
163 sec
Council Member Banks raises concerns about tenants being asked to sign leases with PACT partners prior to HUD approval. Jonathan Gouveia from NYCHA explains the lease signing process and HUD's involvement.
- Leases need to be signed before the conversion can happen, but they only become effective on the date of conversion.
- HUD is involved in multiple steps of approval throughout the process, including initial plans, financing plans, and scopes of work.
- Signing leases early helps ensure an orderly transition at closing, but there's no risk to residents as the lease doesn't take effect until the conversion date.
Chris Banks
3:01:36
Okay.
3:01:37
We've heard reports that tenants at some developments have been asked to sign leases with the PACT partners prior to HUD approval.
3:01:46
Have you heard of this happening?
Jonathan Gouveia
3:01:49
Well I'm not sure what's meant by HUD approval because there's actually a couple layers of approval.
3:01:55
I think what is meant by that, and I don't mean you and folks that have relayed this to you, is that leases need to be signed before the conversion can happen.
3:02:05
So that is absolutely true.
3:02:08
HUD is very much aware of our projects well before we even do a conversion.
3:02:13
We have to submit initial plans.
3:02:15
We have to go through a number of steps with them and demonstrate that we've done engagement.
3:02:18
We have to submit the financing plan, we have to submit the scopes of work.
3:02:22
So HUD gives us various approvals along the way.
3:02:25
And so again, it is true though that these leases need to be signed before the actual conversion takes place because that is what allows legally, you know, the subsidy to flow and all of the rights and protections that we've been talking about in this conversation to actually be in effect.
Chris Banks
3:02:41
So is your testimony that the once the conversion the early process has started, the transferrin over from Section nine to Section there's no approval, direct approval that's needed from HUD or the early cause it seems as though residents are saying that the there's a move, an early move to try to rush folks to sign over to on onto the section eight section eight lease.
Jonathan Gouveia
3:03:14
They signed the lease but it's not in effect the day they sign it.
3:03:18
The lease becomes effective of the date of the conversion.
Chris Banks
3:03:22
Okay.
3:03:25
How do how do PAC partners have authority to how do PAC partners have authority to send out leases?
3:03:35
And if they don't yet have HUD approval to take over the management of a development, how do they begin that process if there's no approval to take over a particular development?
Jonathan Gouveia
3:03:47
Well again the leases are not in effect unless and until the conversion actually happens.
3:03:54
So so that's thing number one, right?
3:03:56
The fact that they if you have a conversion happening in March and a resident signed it in December, it doesn't matter because it takes effect in March.
3:04:04
So there's no risk, there's no downside to the resident signing it prior to the closing.
3:04:09
The benefit is that we need to get these things in order so that it is an orderly transition at the closing, so that everyone is on the rent roll, we know what's going on at the conversion.