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Working with sequestration in the HCV program: Part IV

Posted by NMA on Apr 22, 2013 10:12:34 AM

Teri RobertsonSequester or no sequester, housing authorities have a business to run. And a complicated business it is! The HCV and public housing programs have so many moving parts — and so many regulatory requirements — that it has to be one of the most demanding businesses to be in. Reduced funding simply makes a challenging job that much more challenging.

One of the challenges in working at a housing authority is finding the balance: How large should caseload sizes be to ensure efficiency without sacrificing effectiveness? How often should we purge our waiting list to offset the cost of the work with the benefit of having only people still interested in the program at the top of the waiting list? And, critical in these times, how do we maintain a healthy program size while dealing with reduced administrative fees?

Adjusting payment standards

Some PHAs have language in their administrative plan that states their payment standards will always be set at 100 percent of the HUD-published fair market rent (FMR). As we have the authority to establish payment standards from 90 percent to 110 percent of the published FMRs, our policy language really should allow us the flexibility to decide what percentage of the FMR our payment standards will be each year. The best policy language states that we will consider rent burdens, local rents, and the agency's funding when setting our payment standards.

When HUD publishes the proposed FMRs each April, we should first conduct an analysis to determine whether we wish to request that HUD revise our proposed FMRs because they are too high or too low (see 24 CFR 888.115). We should also determine how — or if — we will adjust our payment standards in response to the final FMRs. In order to do this, we'll project our anticipated HAP expenditures through the remainder of the calendar year.

First, determine whether you need to change your standards at all. If the current payment standards are within the 90 percent to 110 percent "basic range" of proposed FMRs, and the HAP expenditure projections reflect that leaving the payment standards at the current level will maintain a healthy spending rate for your agency, then there's no reason to change them.

If money is tight, conduct deeper analysis. Here are a few ways to gather facts that will help you make your determination:

Step #1: Run a rent burden report from your housing software.

By bedroom size, what percentage of families are paying more than 30 percent of their monthly adjusted income towards rent and utilities?

  • Exclude from your analysis those families who have selected units with more bedrooms than their voucher unit size.
  • What is acceptable to your PHA as far as the percentage of of families paying more than 30 percent of their monthly adjusted income? HUD has its own threshold of acceptability before approving any waivers to allow PHAs to establish their payment standards lower than within the basic range. Unless you request a waiver from HUD headquarters, your HUD field office will not approve lower payment standards if more than 40 percent of families in a given bedroom size are paying more than 30 percent of their monthly adjusted income towards rent and utilities.

Step #2: Are families having difficulty leasing units with your current payment standards? Before you say "yes," be certain that this is fact, not perception.

Require families to maintain a housing search log that lists the units they attempted to lease and the reason they ultimately did not rent them. Pull some of the logs that state the reason the family did not lease reasonable units was because the rent was too high. Make some calls to the owners and verify that the information on the logs is correct before you accept that rents are too high in your area to lower payment standards.

As payment standards represent the maximum subsidy we

will pay on behalf of a family, managing them within required

guidelines is critical to the financial well-being of our agency.

As we all know, reduced payment standards apply immediately to new admissions, movers, and those families for whom you enter into a new HAP contract. For other families, the reduced payment standard is not applied until the second annual reexamination after the payment standard reduction (unless the family's voucher size also changed).

If your agency will experience a shortfall, do remember that you can request a waiver of this "payment standard protection" to allow the new, lower payment standard to be applied at the first annual reexamination. A few other things to remember:

  • Your payment standards don't have to be set at the same percentage of the FMR. For example, you might have justification for establishing the one-bedroom payment standard at 92 percent of the FMR, while setting the two-bedroom payment standard at 90 percent of the FMR.
  • You don't have to wait until HUD posts either the proposed or the final FMRs to change your payment standards. They can be changed at any time (with public notice and opportunity to comment, and with board approval).
  • If your current payment standard is within the basic range of the proposed payment standards, you don't have to change your payment standards at all.

This concludes our four-part series on sequestration in the housing choice voucher program. NMA senior consultant Teri Robertson is nationally recognized as a leading expert in HCV/Section 8 and public housing. She has previously written for the NMA blog about HCV administrative fees and how to maximize your agency’s performance rating.

If you find that you need staffing help during sequestration, NMA can assist your agency with recertifications (done remotely), quality control, hearing officer staff, HQS inspections, and more. Email sales@nanmckay.com for more information.

Topics: Budget Cuts, FMR, Recertification, Rent Reasonableness, Sequestration, Utilities

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