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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.

Last week HUD’s Office of Public and Indian Housing (PIH) published two Federal Register notices concerning the Rental Assistance Demonstration (RAD) program. Both notices implement program changes under the fiscal year (FY) 2018 appropriations act.

The first notice, titled “Rental Assistance Demonstration: Implementation of Certain Fiscal Year (FY) 2018 Appropriations Act Provisions,” describes the following changes to RAD’s first and second components.

RAD First Component (Public Housing Conversions)

The 2018 appropriations act authorized an increase in the cap on public housing conversions to 455,000. Properties currently on the waiting list that receive awards will have rents based on modified FY 2016 public housing levels.

At the end of the calendar year, HUD will calculate RAD rents based on FY 2018 operating fund, capital fund, and tenant rent levels (“FY 18 RAD rents”) and any new awards made after January 1, 2019, will use these rent levels.

Any PHAs that submitted “letters of interest” to reserve their position on the waiting list have 60 days to submit a complete RAD application, portfolio award request, or multi-phase award requested for the number of units included in their letter of interest. HUD has sent an email to these PHAs notifying them of this deadline.

HUD is establishing a simpler process for PHAs to withdraw and reapply for RAD in order to receive more current rent levels.

RAD Second Component (Rent Supp, RAP, Mod Rehab, SRO)

Conversion of properties assisted by Section 202 supportive housing for the elderly (202 PRACs) will be addressed in a later notice.

Conversions of Rent Supp and RAP projects in high-cost areas shall have initial rents set at comparable market rents for the market area.

Second component conversions may not be the basis for re-screening or termination of assistance or eviction of any tenant family, and such families will not be considered new admissions for any purpose.

The PIH office also published a Federal Register notice titled “Rental Assistance Demonstration: Supplemental Guidance on Final Notice.” The notice announces revisions to Notice PIH 2012-32/H-2017-03 (the “RAD notice”) pursuant to yesterday’s release of Notice PIH 2018-11. The RAD statute requires that all changes to the RAD notice must be published in the Federal Register at least 10 days prior to implementation. The new guidance makes five changes to the Revision 3 notice:

• It authorizes a streamlined conversion option for some small PHAs with 50 or fewer public housing units.
• It expands “rent bundling” flexibility to allow PHAs to blend the subsidy between RAD project-based voucher (PBV) and non-RAD PBV contracts.
• PHAs will be permitted to establish project-specific utility allowances, allowing for increased rents due to reductions in utility costs.
• A higher developer fee will be allowed for owners who adopt a waiting list preference for households exiting homelessness or permanent supportive housing.
• It preserves resident relocation rights under demolition/disposition actions.

This week the Department of Housing and Urban Development (HUD) announced via RADBlast! that it has archived a Q&A webinar on these new notices. Both the recording of the webinar and the slide deck are available on the RAD Resource Desk.

The RADBlast! also announced that due to technical issues, some of those who originally had registered for the webinar were unable to participate. As a result, HUD is hosting another session for additional Q&A on the two notices this Friday, July 13, at 2:30 p.m. eastern time. To register for tomorrow's webinar, click here. To join the RADBlast! mailing list, click here.

HUD’s Office of Public and Indian Housing (PIH) posted the 2018 administrative fee tables for the voucher program. As a document accompanying the tables explains, there are two fee rates for each PHA, Column A and Column B. As usual, the Column A rate applies to the first 7,200 unit months leased in calendar year (CY) 2018, and the Column B rate applies to all remaining unit months leased. These fees apply to PHA-owned units as well as to non-PHA-owned units. As the document also explains:

• PIH will once again follow a “hold harmless” rule. So PHAs that would otherwise have seen their fee rates go down in 2018 will receive the 2017 rates instead.
• The fee rates for each PHA are those rates covering the areas in which each PHA has the greatest proportion of its participants. A PHA with participants in more than one fee area may request that the PIH office establish a blended fee rate schedule that will consider proportionately all areas in which participants are located. Once a blended rate schedule is calculated, it will be used to determine the PHA’s fee eligibility for all quarters of CY 2018. A PHA that received a blended fee rate schedule for 2017 will not receive it automatically for 2018. Instructions for applying and the deadline date for submitting requests will be detailed in the 2018 HCV funding implementation notice.
• A PHA that operates over multiple counties may request higher administrative fees. To request higher fees, a PHA must submit specific financial documents to the Financial Management Center (FMC). Documents, submission requirements, and the deadline date for submitting requests will be detailed in the upcoming implementation notice.
• Current administrative fee disbursements are based on the most recent leasing data available and an estimated proration. PHAs should not assume that the fees actually earned for CY 2018 will match the funds being disbursed. Each PHA’s fee eligibility will be calculated after the Voucher Management System (VMS) data for each quarter is available. Each PHA’s fees will be prorated if necessary to ensure that fees granted do not exceed appropriated funds.
• Due to the new billing requirements under the final portability rule, receiving PHAs must calculate the lesser of 80% of the initial PHA’s column B administrative fee rate (then prorated to the national proration level) or 100% of their own column B administrative fee rate (then prorated to the national proration level). The PHA may use a national proration rate of 77% for CY 2018 billings. Going forward, although the national proration level will change, the “lesser of” calculation provided in the final portability rule will continue. An example of the prorated calculation is provided.
• In addition to the voucher program, the 2018 administrative fee rates apply to the Moderate Rehabilitation program and the Five-Year Mainstream program.

You’ll find links to the 2018 administrative fee tables and the document that accompanies them on the HCV home page.

On Friday in the Federal Register, HUD’s Office of Public and Indian Housing (PIH) published several technical corrections and clarifications to the Housing Choice Voucher (HCV) provisions of the Housing Opportunity Through Modernization Act (HOTMA) it had issued on January 18. These changes are in part based on public comments from the first notice. In brief, the corrections and clarifications are as follows:

• The original notice used the phrase ‘‘50 percent or more’’ to define a level of control that constitutes a controlling interest and would thus indicate PHA ownership. The threshold for control should be ‘‘more than 50 percent’’ rather than ‘‘50 percent or more.’’
• The original notice inadvertently excluded from the list of excepted units those units that have received assistance under Section 201 of the Housing and Community Development Amendments of 1978. Today’s notice adds the Flexible Subsidy program in both lists.
• The original document inadvertently referred to the ‘‘site of the original public housing development’’ instead of ‘‘site of the original development.’’ To avoid any indication that this requirement is only applicable to former public housing units as opposed to all the covered forms of HUD assistance, ‘‘public housing’’ is removed from this part.
• The original guidance states that ‘‘if the FSS family fails to successfully complete the FSS contract of participation or supportive services objective and consequently is no longer eligible for the supportive services, the family must vacate the unit…and the PHA shall cease paying housing assistance payments on behalf of the ineligible family.’’ To avoid misinterpretation that could imply that a PHA could, under HOTMA, establish a supportive services exception based exclusively on participation in FSS, rather than in combination with another supportive services option where participation is voluntary, and to avoid being misconstrued that this conflicts with current FSS requirements, which do not allow termination from the housing assistance program for failure to complete the FSS contract of participation, HUD has amended this language to eliminate the ambiguities.
• The definition of new construction units was previously inconsistent in the January 18 guidance, and has been updated to be both correct and consistent in sections referring to project-based voucher (PBV) assistance.
• HUD stated in the original document that in order to avail itself of the exemption of the competitive award of PBVs, the PHA must “be planning rehabilitation or construction on the project with a minimum of $25,000 per unit in hard costs.” However, because this would not be applicable in a situation where the PHA is replacing a public housing site or property, or a site with PHA-owned or controlled existing housing, several corrections to Section H of the notice have been made.
• Other typographical errors have also been corrected, as specified in today’s notice.

In a separate correction entry for the January 18 notice, PIH also noted that the original document had been published in the Proposed Rules section of the Federal Register, when it should have appeared in the Rules section. The effective date for the original notice—April 18, 2017—remains unchanged.

Got questions about HOTMA? All of NMA's HCV classes have been updated for the new payment standard rules. Register at least 45 days in advance for most seminars and you’ll receive a 10 percent discount. (The discount does not apply to seminars hosted by housing authorities or associations.)