NMA Blog

In a notice published Friday in the Federal Register, HUD announced that it has published fair market rents (FMRs) for federal fiscal year (FFY) 2019 (October 1, 2018 through September 30, 2019). As explained in the notice:

Section 8(c)(1) of the United States Housing Act of 1937 (USHA), as amended by the Housing Opportunity Through Modernization Act of 2016 (HOTMA), requires the Secretary to publish FMRs not less than annually, adjusted to be effective on October 1 of each year. This notice describes the methods used to calculate the FY 2019 FMRs and enumerates the procedures for public housing agencies (PHAs) and other interested parties to request reevaluations of their FMRs, as required by HOTMA.

The deadline date for comments on the 2019 FMRs is October 1, 2018. The revised FMRs will be effective on October 1, 2018 (unless HUD receives a request for reevaluation of specific area FMRs).

Materials posted today on PD&R’s FMR page include the FFY 2019 FMRs for all areas (see Schedule B) and the FFY 2019 small area FMRs (SAFMRs) for metropolitan FMR areas (see Schedule B addendum).

HUD has also posted a schedule of unadjusted rents, which are used for setting public housing flat rents in non-metropolitan areas. The accompanying county-level data set was also posted to the FMR page. HUD no longer publishes exception FMRs for manufactured home spaces in the HCV program since PHAs now use their regular FMRs/SAFMRs for subsidy determinations.

On July 26, 2018, HUD published Housing Opportunity Through Modernization Act of 2016: Final Implementation of Public Housing Income Limits in the Federal Register, which placed an income limitation on public housing tenancy. The rule requires that after a family’s income has exceeded 120 percent of area median income (AMI), or a different limitation established by the Secretary based on local housing costs, for two consecutive years, the PHA must either:

• Terminate the family’s tenancy within 6 months of the second income determination; or
• Charge the family a rent equal to the greater of the:
• Applicable fair market rent
• Amount of monthly subsidy for the unit, including amounts from the operating and capital fund

For annual or interim recertifications performed on or after the applicable date of the notice (September 24, 2018), the PHA must determine whether the family’s income exceeds the applicable HUD-published over-income limit. If so, the PHA must document the family’s file. If, 12 consecutive months from the annual or interim recertification, the family’s income continues to exceed the over-income limit, the PHA must notify the family in writing that their income has exceeded the over-income limit for one year, and that if the family’s income continues to exceed the over-income limit for the next 12 consecutive months, the family will be subject to the PHA’s over-income policies. The PHA may not exempt any public housing families from the over-income limitation.

If the family’s income continues to exceed the over-income limit for another 12 consecutive months, the family will either experience an increase in rent or be subject to termination after 6 months, depending on PHA policy. HUD will issue a notice detailing how these new rent policies will be implemented.

Note, the time period is two consecutive years. If the family’s income is reduced below the over-income limit at any time, these policies no longer apply. If the family subsequently experiences an increase that again causes their income to be at or above the over-income limit, the 2-year period starts over.

This notice does not apply to PHAs operating fewer than 250 public housing units that are renting to families with income exceeding the over-income limit, if the PHA is renting to those families because no income-eligible families are on the PHA’s waiting list.

Important things to note from the notice include:

• HUD will publish the over-income limits. The PHA does not have to calculate them.
• PHAs must complete changes to the PHA Plan (if applicable) and the ACOP no later than six months from the effective date of the notice.
• The PHA will need to develop a tracking system for over-income families to monitor the one and two-year time periods.
• Increases in the over-income limit may cause a previously over-income family to be under the over-income limit.
• Over-income policies apply to both annual and interim recertifications.

HUD will issue additional guidance on the following:

• The calculation of a unit’s monthly subsidy
• Whether utility allowances apply to the calculation of rent under these options
• The requirement to report the number of over-income families and the number of families on the waiting list
• How PHAs are supposed to track over-income families
• How to notify families

Today in the Federal Register, HUD’s Office of Public and Indian Housing (PIH) published a notice titled “Housing Opportunity Through Modernization Act of 2016: Final Implementation of Public Housing Income Limit.” The 5-page notice’s “applicable date” is September 24, 2018.

As explained in the notice, the Housing Opportunity Through Modernization Act of 2016 (HOTMA) imposes an income limit on public housing residents. The law applies to families whose income has exceeded 120 percent of the area median income (AMI) for two consecutive years. PHAs must either terminate the tenancies of such families within six months of the second income determination or must charge the family a monthly rent equal to the greater of (1) the applicable fair market rent, or (2) the amount of monthly subsidy for the unit including amounts from the operating and capital fund, as determined by regulations.

For purposes of the notice, the income limit established by HOTMA will be referred to as the ‘‘over-income limit.’’ HUD may adjust the applicable percentage of AMI above or below 120 percent based on housing costs in the PHA’s jurisdiction.

Highlights of the notice include:

• The over-income limit does not apply to PHAs operating fewer than 250 public housing units that are renting to families with income exceeding the over-income limit, if the PHAs are renting to those families because there are no income-eligible families on the PHA’s waiting list.
• Each PHA must submit a report annually to HUD about the number of families residing in public housing with incomes exceeding the over-income limit and the number of families on the waiting lists for admission to public housing projects. Such reports must be publicly available.
• The existing regulation at 24 Code of Federal Regulations 960.261, which authorizes discretionary termination of tenancies of families whose incomes exceed the applicable income limits for admission to the program, remains in effect.
• HUD intends to provide guidance on how to notify families, track over-income families, and report into HUD systems.

PHAs must revise their admissions and continued occupancy policies (ACOPs) to comply with today’s notice. Revisions to the PHA’s annual plan may be required if implementation of the rule constitutes a significant amendment. Policies must include the imposition of an over-income limit in the program, all instances of when the two-year timeframe begins, and notification requirements. Policy and plan revisions must be completed no later than six months after the effective date of the notice (by March 24, 2019).

Finally, the notice describes implementation steps as follows:

• When the PHA becomes aware, through an annual reexamination or an interim reexamination for an increase in income, that a family’s income exceeds the applicable income limit, the PHA must document that the family exceeds the threshold to compare with the family’s income a year later.
• If, one year after the initial determination by the PHA that a family’s income exceeds the over-income limit, the family’s income continues to exceed the over-income limit, the PHA must provide written notification to the family that their income has exceeded the over-income limit for one year, and that if the family’s income continues to exceed the over-income limit for the next 12 consecutive months, the family will be subject to either a higher rent or termination of tenancy based on the PHA’s policies.
• If, however, a PHA discovers through an annual or interim reexamination that a previously over-income family has income that is now below the over-income limit, the family is no longer subject to these provisions. The family is entitled to a new two-year grace period if the family’s income once again exceeds the over-income limit.

Today’s notice does not address the following issues, which will be covered in subsequent notices:

• PHA determination of the amount of monthly subsidy for a unit
• The requirement to submit an annual report on the number of over-income families and the number of families on the public housing waiting lists

Questions may be directed to HUD program analyst Todd Thomas or to HOTMAquestions@hud.gov.

Our writing team has been working hard to make our policy updates available immediately, so our revision services customers don't have to wait to receive a CD with updates in the mail. (And a lot of our customers don't even have CD drives anymore to access the files with!)

With that in mind, we've created a new site where agencies who have signed up for policy updates can access the files as soon as we upload them. If you're a subscriber, you should have received an email with your login information. If you haven't, please contact revisions@nanmckay.com.

The new site will include policy updates for the following products:

• NMA Model Admin Plan and Guide
• NMA Model ACOP and Guide
• NMA Model Tenant Selection Plan (TSP) and Guide

It will also provide:

• Our searchable and updated CFRs as a free service for all revisions subscribers
• Two years of back policies for subscribers who may need to catch up
• A hands-on video to help you step-by-step through the download process

If you're a subscriber to our model admin plan updates, you can get on the site now and download the brand-new 2018 revision! The model plan has been brought current with all recent HUD requirements and guidance, including the following:

• Changes to account for the updated administrative guidance for the effective and mandated use of the EIV system, as outlined in Notice PIH 2017-12
• Updates concerning Notice PIH 2017-13, which discusses the Lead Safe Housing Rule as it relates to elevated blood lead levels (EBLLs) in the Housing Choice Voucher (HCV) and Project-Based Voucher (PBV) programs
• Revisions for the implementation guidance on the Housing Opportunity Through Modernization Act of 2016 (HOTMA) HCV and PBV provisions described in Notice PIH 2017-21
• Modifications pertaining to the interim final rule published December 12, 2017, which implemented the Fixing America’s Surface Transportation (FAST) Act, slightly revising some of the streamlining options allowable under the streamlining final rule from March 2016
• Changes for guidance set forth in Notice PIH 2018-01 on recent changes in Fair Market Rent (FMR) payment standard, and rent reasonableness requirements

The 2018 model ACOP revisions will be posted in a few weeks.

QUESTION     An applicant for assisted housing receives a pension from the VA. In addition to his pension he receives VA “aid and attendance” benefits. The veteran’s representative states that these payments are excluded federally but we cannot find an applicable reference in the HUD regulations. Are we supposed to include this income in the family’s annual income?

ANSWER     HUD has issued written guidance on the treatment of aid and attendance funding from the Department of Veterans Affairs. There is also a pending regulatory change which has not yet been implemented.

The current guidance is found in the FAQs for the HUD-Veterans Affairs Supportive Housing (HUD-VASH) program:

4. Should VA Aid and Attendance and VA Housebound allowances be counted as income?

VA Aid and Attendance and VA Housebound allowances may be excluded under 24 CFR § 5.609(c)(4), which excludes amounts received by a family “specifically for, or in reimbursement of, the cost of medical expenses for any family member.” Live-in or periodic medical assistance and services of doctors and health care professionals are among the services that can be counted as medical expenses. The PHA should verify with the VA the amount received by the Veteran for Aid and Attendance or Housebound benefits. The portion of the total benefit amount that the Veteran uses for medical expenses must be excluded from income. Any portion of the allowance not going towards such expenses would continue to be counted as income by the PHA when computing the family’s share of the rent.

A new exclusion is awaiting implementation under the Housing Opportunity Through Modernization Act of 2016 (HOTMA). Aid and attendance benefits will be excluded in their entirety when HOTMA is implemented, and this may be the basis of the applicant’s belief that the benefits are “federally excluded.” However, this and other HOTMA changes to income and rent determinations cannot be implemented until HUD has completed the formal rulemaking process. HUD has declined to estimate an effective date for the HOTMA changes. Here is an excerpt from a letter to executive directors dated September 26, 2016:

All of the other sections in HOTMA that impact the HCV and public housing programs require that HUD first issue a notice or regulation for the provision to become effective. Until HUD issues the applicable notices or regulations, your PHA may not implement those additional sections. This information will also be transmitted in the near future via a Federal Register notice.

We realize that many PHAs are eager to implement the flexibilities and other statutory changes provided under HOTMA, so please be assured that HUD is working diligently to develop and provide the necessary implementation guidance in a timely manner. If you have any questions, please send them to HOTMAquestions@hud.gov.

Are you a PIH Alert subscriber? Every Friday, the PIH Alert includes one frequently asked question (FAQ) submitted by our readers. Sign up today for a free 30-day trial subscription! Email sales@nanmckay.com to get started. To submit your question, email Annie Stevenson at annie@nanmckay.com with the subject line "FAQ Friday."