HUD’s Office of Public and Indian Housing (PIH) published a final rule in the Federal Register on May 7 implementing provisions of the “Housing Opportunity Through Modernization Act of 2016” (HOTMA) affecting the Housing Choice Voucher (HCV) tenant-based program and the Project-Based Voucher (PBV) program (see Memo, 5/13). The sprawling final regulations also include non-HOTMA-related provisions. Many of the HOTMA provisions were implemented by Federal Register notices (for example, on January 18, 2017) and PIH Notices (for example, Notice PIH 2017-21). PIH issued a proposed rule on October 8, 2020 (see Memo, 10/13/20). On May 15, PIH Principle Deputy Assistant Secretary Richard Monocchio distributed an email listing notable provisions in the final rule. In last week’s Memo, NLIHC summarized key provisions of the final rule pertaining to the PBV “program” cap – the maximum number of HCVs that a public housing agency (PHA) can choose to project base. The article also listed federal programs at which PBV units are not subject to the PBV program cap. In this week’s Memo, we discuss key provisions regarding the “project” cap – the maximum number of PBVs that may be assigned to a property.
Before HOTMA
Prior to the statutory changes made by HOTMA, the PBV statute and regulations limited the number of units in a project that could be project-based to 25% of all the units in the project (assisted and unassisted). This is called the “project cap” or the “income mixing” requirement. Some units did not count toward the 25% “project cap”; in general, such “exception” units are those made available to elderly and/or disabled households and units made available to households receiving supportive services.
HOTMA
The HOTMA statute changed the project cap to be either 25% of all units or 25 units, whichever is greater. The statute also allowed the project cap to increase to up to 40% of a project’s units if the project is in an area where it is difficult to use a regular tenant-based Housing Choice Voucher – an area defined by the statute as a census tract with a poverty rate of 20% or less. HOTMA also changed “exception” units to be those exclusively made available to elderly households or to households eligible for supportive services. Note the key word change pertaining to the social services exception: “eligible for” instead of “receiving.”
HOTMA also does not count toward the project cap, units that are project based through the PBV program that previously received other forms of HUD project-based rental assistance or that were previously subject to federally required rent restrictions (listed by the final rule).
The Final HOTMA Rule
The final rule follows the statute regarding the basic project cap, allowing a PHA to project base the greater of 25% of all units in a project or 25 units, and the final rule follows the statute allowing the project cap to increase to the greater of 40% of all units in a project or 25 units if the project is located in an area where vouchers are difficult to use. However, the final rule expands the definition of an area where vouchers are difficult to use to include:
- A census tract with a poverty rate of 20% or less;
- A ZIP code where the rental vacancy rate is less than 4%; or
- A ZIP code where 90% of the Small Area Fair Market Rent (SAFMR) is more than 110% of the metropolitan area FMR or county FMR.
The final rule adds to the list of PBV units that are not counted toward the project cap, units exclusively made available to youth assisted through HUD’s Family Unification Program’s (FUP) Foster Youth to Independence (FYI) program (FUP/FYI). Therefore, PBV units are not counted toward the project cap (that is, are “excepted” units) if the units exclusively:
- Serve elderly households.
- Are made available to youth assisted by the FUP/FYI program.
- Are made available to households eligible for supportive services.
If any member of a household is eligible for one or more of the supportive services, the unit qualifies as an exception unit, even if the household chooses not to participate in the services. As previously refined in a January 18, 2017, Federal Register implementation notice:
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- The household in a social service exception unit may not be required to participate in the service(s) as a condition of living in an “excepted” unit.
- The project must make the supportive services available to all PBV-assisted households in the project, not just those in the exception units.
- The supportive services do not have to be provided by the owner or be provided on-site but must be reasonably available to all households receiving PBV assistance at the property. The final rule adds that the supportive services must be made available within a reasonable time frame defined by a PHA, not to exceed 120 calendar days from a household’s request for services.
- The service(s) must be designed to help households in the property live as independently as possible or achieve self-sufficiency.
- A PHA must include in its HCV Administrative Plan the types of services offered and the extent to which services will be provided. (The final rule offers examples, length of time services will be provided, frequency of services, and depth of services.)
- A PHA that manages a Family Self-Sufficiency (FSS) program may offer FSS to meet the exception criterion and make the supportive services used in connection with the FSS program available to non-FSS PBV households in the project. (The February 18, 2017, implementation notice elaborated on households participating in the Family Self-Sufficiency (FSS) program.)
The final rule adds a new clarifying clause stating that a project is not limited to a single exception category; instead, a project may combine any of the above exception categories. For example, some of the units may be designated for elderly households that do not need supportive services and some may be designated for households who are eligible for supportive services but are not elderly.
The final rule lists HUD and other federal housing programs for which PBVs are not counted toward the project cap (and program cap). Units do not count toward a property’s project cap if in the five years prior to requesting PBVs:
- A property’s units previously received assistance from various HUD programs, including public housing, privately owned properties assisted by the Section 8 Project-Based Rental Assistance (PBRA) program, Section 202 Supportive Housing for the Elderly, Section 811 Supportive Housing for Persons with Disabilities, and several “legacy” programs; or
- A property’s units were previously subject to a federally required rent restriction, including the Low-Income Housing Tax Credit (LIHTC), Section 515 Rural Rental Housing (administered by the Rural Housing Service of the U.S. Department of Agriculture), Section 202, Section 811, and several legacy programs. (The final rule added LIHTC and Section 515 to the list previously included in the January 18, 2017, Federal Register notice and the 2020 proposed rule.)
For a unit to be considered an “excepted” unit, it must be occupied by a household that qualifies for an exception.
- For elderly households, a PHA’s HCV Administrative Plan must state whether the PHA will allow a household to continue to live in the unit when an elderly household member no longer lives in the unit due to circumstances beyond the household’s control, such as the death of that elderly member or because the elderly member has moved to nursing care. In this case, the unit may continue to count as an excepted unit as long as the household lives in it.
- For the supportive services exception, a unit is excepted if any member of a household is eligible for one or more of the supportive services even if the household chooses not to participate in the services.
- If any member of a household chooses to participate and successfully completes the supportive services, the unit continues to be excepted for as long as any member of the household lives in the unit, even if the members who continue to live in the units are ineligible for all available supportive services.
- The final rule is confusing because it states that a unit loses its excepted status only if “the entire family becomes ineligible…for all supportive services available to the family,” unless “any member of a [veteran] family has successfully completed the supportive services.” This seems to contradict the previous provision. The preamble to the proposed rule read, “The unit would only lose its excepted status if no member of the family successfully completed supportive services and the entire family becomes ineligible during the tenancy for all supportive services that are made available to the residents of the project.” NLIHC has requested clarity from PIH.
- A household cannot be terminated from the program or evicted from a unit because they become ineligible for all supportive services.
- For the FUP/FYI exception, a youth must vacate a unit once their FUP/FYI assistance has ended. The unit loses its exception status if the youth does not move from the unit.
A potential exception unit PBV household must be selected from a waiting list for the PBV program through an admissions preference established by the PHA. Once a household vacates an exception unit, that unit must be made available to and occupied by a household that qualifies for the type of exception for which the vacated unit originally qualified.
Find the official Federal Register version of the final rule at: https://tinyurl.com/a4c4swbz
Find an easier-to-read version of the final rule at: https://tinyurl.com/389yedj4
Read PDAS Monocchio’s email at: https://tinyurl.com/yu3avjce
Find PIH’s HOTMA Resources page at: https://tinyurl.com/mtv9nnk8
Information about the PBV program prior to publication of the final rule is on page 4-11 of NLIHC’s 2024 Advocates’ Guide.