Big Changes to the PBV Program

HOTMA and RAD Changes
On January 18, 2017, HUD published a Federal Register Notice implementing several of the major provisions of the Housing Opportunity Through Modernization Act (HOTMA). Provisions of this notice impact both the standard and RAD project-based voucher (PBV) programs. The important thing to note about this notice is that the effective date was April 18, 2017. This means that whether or not some of the major provisions apply to your project depends on when the project’s PBV HAP contract was signed.

• Both standard and RAD projects with PBV HAP contracts in place prior to 4/18/17 are “pre-HOTMA” projects
• Both standard and RAD projects with PBV HAP contracts executed on or after April 18, 2017 are subject to the new requirements

Further if your PBV units are public housing conversions to RAD PBV, another important notice was released on January 19, 2017. Notice PIH 2012-32, REV-3 revised the existing RAD notice (PIH 2012-32, REV-2) that had been in effect since June 15, 2015.

• All programmatic requirements in REV-3 were effective 1/19/17
• Properties that closed before 1/19/17 are subject to REV-2 of the notice

Taken together, this means that there are some very important dates in PBV program, particularly if your units are RAD PBV:

• For both standard and RAD PBV projects:
  • PHAs with HAP contracts effective prior to 4/18/17 are pre-HOTMA (although the may adopt certain aspects of HOTMA prospectively)
  • PHAs with HAP contracts effective on or after 4/18/17 are post-HOTMA and fall under FR Notice 1/18/17
• For RAD PBV projects only:
  • PHAs who closed their RAD deal prior to 1/19/17 fall under REV-2 of Notice PIH 2012-32
  • PHAs who closed their RAD deal on or after 1/19/17 fall under REV-3 of Notice PIH 2012-32

Cap on Assisted Units
Let’s look at one area that effected by these dates - the number of units in your project that may receive PBV assistance.

For the standard PBV program, HOTMA changes the number of units that may be assisted in a project.

• For pre-HOTMA projects, no more than 25 percent of the units (assisted or unassisted) in the project can receive PBV assistance, unless the project has excepted units
• For projects that fall under HOTMA requirements, HOTMA changed the cap to no more than the greater of 25 units or 25 percent of units in a project, unless the project has excepted units

• Under REV-2 of Notice PIH 2012-32, the cap on the number of PBV units in a project is 50 percent, unless the project has excepted units
• REV-3 of Notice PIH 2012-32 eliminated the cap on the number of PBV units entirely so excepted units no longer apply to these projects since 100 percent of units in a project may now be RAD PBV

Excepted Units
As noted above, HOTMA also changed the definition of excepted units. Pre-HOTMA PBV HAP contracts (both RAD and standard) follow the “old” statutory PBV requirements found at 24 983.56(b)(2)(ii). Projects with HAP contract executed on or after 4/18/17 (in this case just standard PBV projects since the RAD PBV cap was eliminated) follow the new requirements that were implemented as a result of HOTMA.

Under the “old” statutory requirements, for both standard and RAD projects, the cap did not apply to units for:

• Elderly and/or disabled families
• Families receiving supportive services
  • To qualify, the family must have at least one member receiving at least one qualifying supportive service (the PHA may not require participation in medical or disability-related services other than drug and alcohol treatment)

Under the new HOTMA provisions, for standard PBV projects, units that are not subject to the cap include:

• Units that are exclusively for elderly families
• Units that are for households eligible for supportive services available to all families receiving PBV assistance in the project, although the family is not required to accept or receive such services
• Units where the project is located in a census tract with a poverty rate of 20 percent or less, as determined in the most recent American Community Survey Five-Year estimates

Supportive Services
When it comes to excepted units, the big change under HOTMA is that it modified the supportive services component to make it optional. Now, in order to meet this exception, the PHA must make supportive services reasonably available to families at the project, but the PHA may not require participation as a condition of living in an excepted unit. Remember under the pre-HOTMA requirements a family must have at least one member receiving at least one qualifying supportive service to qualify.

Projects under the old pre-HOTMA regulations (PBV HAP contracts executed prior to 4/18/17) may continue to follow the “old” regulations and require families to receive at least one supportive service. However, HOTMA allows the PHA and owner to mutually agree to change the HAP contract and make supportive services optional. The change can only be made if it would not jeopardize an assisted family’s eligibility for continued assistance. So PHAs with projects that have excepted units for supportive services that fall under the old requirements have a decision to make – they can either continue to make supportive services mandatory and monitor families who receive them or they can, by mutual agreement with the owner, make them optional. The PHA cannot eliminate supportive services entirely at these developments.

FSS and PBV Supportive Services
A very popular type of supportive service that many PHAs couple with PBV is the Family Self Sufficiency (FSS) program. Under both the “old” and “new” PBV regulations, if the family enrolls in FSS and does not comply with their contract of participation, the family must vacate the unit.

• Federal Register Notice 1/18/17 states: 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 within a reasonable period of time
• 24 CFR 983.56(b)(2)(ii)(B) states: If a family in an excepted unit fails without good cause to complete its FSS contract of participation or if the family fails to complete the supportive services requirement as outlined in the PHA administrative plan, the PHA will take the actions provided under 983.262(d), and the owner may terminate the lease in accordance with 983.257(c).

While the current termination regulations at 24 CFR 982.552(c)(1)(viii) allow the PHA to adopt a discretionary termination in the administrative plan for failure comply without good cause with the FSS contract of participation, the 12/29/14 Federal Register Notice on FSS waivers and alternative requirements states that "housing assistance may not be terminated or withheld as a consequence of failure to complete the FSS contractor participation.” In the situation where a PBV family participating in FSS does not comply with their FSS contract of participation, the PBV regulations require that the family’s tenancy in the PBV unit is terminated, but the PHA could not terminate the family’s assistance.

Questions about HOTMA implementation? Join senior trainer Samantha Sowards for our upcoming Housing Help Session, Changes to the PBV Program, where she will discuss HUD's HOTMA implementation notice and its affects on the project-based voucher (PBV) program.