Author: Tushar Gurjal

HUD to Expand Mandatory Use of Small Area FMRs

~ Tushar Gurjal ~ Leave a comment

On October 23, a pre-publication copy of a notice titled “Small Area Fair Market Rents in the Housing Choice Voucher Program Metropolitan Areas Subject to Small Area Fair Market Rents” was made publicly available. The notice would add additional metropolitan areas to the list of areas in which PHAs are required to adopt the use of Small Area Fair Market Rents (FMRs). Small Area FMRs are Fair Market Rents calculated over a zip code, instead of a larger geography. The Department’s regulations require that HUD update the list of areas that must adopt Small Area FMRs every 5 years. The designation is permanent. These designations will take effect on October 1, 2024, but affected PHAs have until January 1, 2025 to update their payment standards.

In deciding which areas must use Small Area FMRs, HUD considers the following factors:

  • at least 2,500 vouchers must be under lease in the metropolitan FMR area;
  • at least 20% of the standard quality rental stock within the metropolitan FMR area is in zip codes where the Small Area FMR is more than 110% of the metropolitan FMR;
  • the percentage of voucher families living in within low-income areas within the area must be at least 25%;
  • the percentage of voucher holders living in low-income areas relative to all renters within these areas over the entire metropolitan area exceeds 155%; and
  • the vacancy rate for the metropolitan area is higher than 4 percent.

Through recent research, HUD has found that “[n]ew voucher recipients were more likely to move to low-poverty neighborhoods after [Small Area FMRs] were implemented . . . [though] the magnitude of these positive effects is modest.” The research also found that Small Area FMRs “did not affect the success of households with vouchers in leasing up (i.e., the number of households leasing up within 180 days), even for high-barrier households or those living in zip codes where [Small Area FMRs] were lower than FMRs.” Additionally, HUD staff analysis found “little discernable difference in the annual change in [per unit cost] in [Small Area FMR areas].”

In implementing Small Area FMRs, HUD has committed to providing the following: “adequate technical assistance, opportunities for peer-to-peer training, additional program materials, and additional training for HUD field office staff.”

The full pre-publication notice can be found here.

The new mandatory Small Area FMRs designations are the following:

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Reallocation of EHVs for Calendar Year 2024

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On October 13, HUD published a notice titled “Revocation and Reallocation of Emergency Housing Voucher Awards CY2024” [Notice PIH 2023-31 (HA)]. The notice explains the process by which HUD intends to revoke EHVs from certain PHAs and reallocate them to other PHAs.

The Department will target housing agencies that have 10 or more Emergency Housing Vouchers (EHVs) and less than 75% utilization according to data in IMS/PIC or the Housing Information Portal (HIP) as of February 15, 2024. After that date, HUD will identify PHAs with this criteria and revoke the EHVs, though HUD will not revoke vouchers in cases where voucher holders are searching for a unit. When notified that vouchers will be revoked, PHAs must verify that its voucher issuance numbers are correct as of February 15, 2024. HUD will take into account the number of voucher issuances when deciding on the number of EHVs to revoke. HUD estimates there are currently 104 PHAs that may be subject to this revocation. Housing agencies should return any funds associated with EHVs including ongoing administrative fees and unspent fees.

The Department will then reallocate the vouchers to PHAs with “a demonstrated capacity to administer an EHV program.” To reallocate vouchers, HUD will identify PHAs that have reported EHV utilization of at least 75% or greater and award them vouchers. If there are multiple PHAs in states that have a 75% or higher utilization, the vouchers will be allocated on a “prorate basis according to the the number of EHV awards that PHAs have reported leased . . . .” There will be a minimum award of 5 vouchers. If there are states that have no PHAs with at least 75% utilization of EHVs or if some PHAs do not want additional EHVs, the Department will distribute the award nationally.

Housing agencies that receive additional EHVs will also receive issuance reporting fees ($100 per new EHV that is leased if the PHA reported it within 14 days of issuance); additional ongoing administrative fees; and service fees ($3,500 per EHV to be used for eligible services). After September 30, 2023, PHAs may not reissue the EHV when assistance for a family ends.

The full notice can be found here.

HUD Implements HCV Exception Payment Standard Waivers for 2024

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On October 12, HUD published a notice titled “Certain Regulatory Waivers for the Housing Choice Voucher (including Mainstream) Program and Streamlined Review Process” (Notice PIH 2023-29). The notice would allow PHAs to use an expedited process to receive waivers from HUD to use a higher payment standard and to apply the payment standard during the Housing Assistance Payment (HAP) contract term. Waiver requests must be received by HUD by midnight on June 3, 2024.

Exception Payment Standards

The notice allows PHAs to request three different payment standard waivers. The first would allow for PHAs to use exception payment standards up to 120% of the Small Area Fair Market Rents (FMRs) for PHAs that have voluntarily or mandatorily adopted Small Area FMRs. The second waiver would allow PHAs to adopt exception payment standards up to 120% of the FMR. The third waiver would allow for a PHA to adopt exception payment standards up to 120% of the Small Area FMRs for PHAs that are currently approved for exception payment standard Small Area FMRs.

In order to request one of the above three waivers, PHAs must meet certain criteria. Either one of the two following criteria must be true. Either the PHA must have a success rate under 80% for the most recent 12-month period for which there is data or more than 40% of the families in the program must be cost-burdened (i.e., pay more than 30% of adjusted income as the family share). In determining these numbers, the PHA should include special purpose vouchers.

Increases to the Payment Standard during the HAP Contract Term

The notice also allows PHAs to apply for a waiver that will allow for PHAs to increase their payment standards for a family at any time after the effective date of the increase (as opposed to the next recertification for the family). To apply for the waiver, the PHA must have “good cause.” Examples of “good cause” include, but are not limited to, instances were the PHA has experienced an increase in family rent burdens or instances where the PHA anticipates potential negative impacts to tenants or the onset of housing instability.

Requesting a Waiver

To request a waiver through the streamlined process, PHAs should email PIH_Expedited_Waivers@hud.gov. Each request should state the following in the subject line: “Streamlined Regulatory Waiver Request, [PHA name and code].” The body of the email should include the PHA business address and a point of contact’s email address; the name of the requested waiver; a justification of the waiver that shows good cause (the justification should include why the PHA needs the waiver and the impact on PHA operations or applicants, if the waiver is not provided); and the requested duration of the waiver (up until December 31, 2024). PHAs should ensure they have the budgetary authority to enact the waiver.

The full notice can be read here.

HUD Verifies Allowing the Use of HQS for an Additional Year

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On September 5, HUD sent an email to Executive Directors discussing the National Standards for the Physical Inspection of Real Estate for the Housing Choice Voucher program (NSPIRE-V). The new NSPIRE-V protocol is currently scheduled to be implemented for the voucher program beginning on October 1, 2023. These standards will be applicable to all PHAs with voucher programs, including Moving to Work (MTW) agencies.

The email discusses several key points about NSPIRE-V implementation. First, HUD still intends to publish an administrative notice to implement NSPIRE-V. The Department is still aiming to publish that notice before October 1, 2023. Second, the email states that the new notice will “announce additional time for PHAs to retain the Housing Quality Standards (HQS) as their inspection standard until October 1, 2024.” This is the first time that HUD has confirmed in writing that PHAs will have the option to retain the use of HQS for an additional year. Third, agencies with “approvals for acceptability criteria variations will need [those] approvals reviewed by HUD.” These criteria variations allow for the use of local standards in certain areas depending on geographic conditions, but only if they are more stringent than the NSPIRE-V standard. Finally, the email states that HUD has developed technical assistance materials, which can be accessed on HUD’s NSPIRE website.

The full email can be read here.

HUD Publishes FY 2024 FMRs

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On Aug. 31, HUD published a notice in the Federal Register titled “Fair Market Rents for the Housing Choice Voucher Program, Moderate Rehabilitation Single Room Occupancy Program, and Other Programs; Fiscal Year 2024.” The notice describes the methodology for calculating the fiscal year (FY) 2024 fair market rents (FMRs) and states the process by which housing agencies can request reevaluations of their FMRs.

Housing agencies that wish to request reevaluations of their FMR(s) should submit reevaluation requests through http://www.regulations.gov by the end of the notice’s 30-day comment period or submit the request directly to HUD. The area’s PHA (or PHAs in multi-jurisdictional areas that represent at least half the voucher program participants in an area) must agree that the reevaluation is necessary. Those requesting reevaluation must supply HUD with data more recent than the 2021 American Community Survey (ACS). Those geographies that have submitted valid reevaluation requests may use either 2023 FMRs or 2024 FMRs during the reevaluation period. Data for the reevaluation must be submitted by Jan. 5, 2024. Revised FMRs will be posted in April, 2024. Small metropolitan areas without one-year ACS data and non-metropolitan counties may use mail surveys.

The FY 2024 FMRs can be found here.

The full notice on calculating the FMRs and the reevaluation procedures can be found here.

HUD Expands Uses of EHV Services Fees

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On Aug. 29, HUD published a notice titled “Emergency Housing Vouchers (EHV): Expanded Use of the EHV Services Fee” [PIH 2023-23 (HA)]. Emergency housing vouchers are vouchers for families who are experiencing homelessness; at risk of experiencing homelessness; fleeing, or attempting to flee, domestic violence, dating violence, sexual assault, stalking, or human trafficking; or were recently homeless and for whom providing rental assistance will prevent the family’s homelessness or having high risk of housing instability. This notice expands the scope of eligible activities for which EHV services fees may be used.

New activities for which EHV services fees may be used include the following:

  • Housing search assistance – funds may be used to provide housing mobility services to encourage moves to high opportunity neighborhoods;
  • Rental arrears – a PHA may provide applicants funding for some or all of an applicant’s rental arrears to a private landlord if the rental arrear is a barrier to leasing an EHV unit;
  • Owner incentive payments – funds may be used for owners that have accessible units or will make units accessible for a person with disabilities;
  • Moving expenses – funds may now be used for storage expenses and lock change fees;
  • Services that support EHV families in fulfilling their family obligations under the EHV program – PHAs may use funds to mitigate barriers that a family may face in maintaining occupancy of an EHV units; Examples include the following:
    • case-management;
    • wrap-around services;
    • life skills training (e.g., balancing a budget, paying bills on time, opening a savings account, maintaining a living space, securing a credit card, and paying off debt, etc.);
    • financial stability training;
    • mental health care (e.g., travel costs to counseling, co-pay charges, etc.);
    • providing a stability counselor;
    • remedying a lease violation;
    • preventing an eviction (e.g., rectifying unsanitary living conditions, property damage);
    • Paying fees to obtain vital documents to establish program eligibility or documents required by a landlord (application fees and costs for birth certifications, reasonable transportation costs for social security cards or other eligibility documentation, etc.);
  • Essential household items – funds may be used for furniture, toiletries, and cleaning supplies; the PHA may also provide a pre-paid gift card to the family, if the PHA verifies that family purchased essential household items through appropriate supporting documentation.

The full notice notes certain restrictions (e.g., services and training must be voluntary) and can be read here.

HUD Allocates New Vouchers and Administrative Fees

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On August 2, HUD published a notice titled “Allocation of New Incremental Housing Choice Vouchers and Special Administrative Fees” (Notice PIH 2023-21 (HA)). The notice explains the process for awarding approximately four thousand new general purpose vouchers to PHAs and also explains how administrative fees related to these vouchers will be distributed. To be eligible for these vouchers, an entity must be a PHA that administers the Housing Choice Voucher (HCV) program through an existing Consolidated Annual Contributions Contract.

The Department will notify PHAs of their allocation. The notification will specify the number of vouchers allocated and provide instructions for declining the vouchers. Agencies may decline a voucher by replying to NewHCVs@hud.gov by the deadline indicated in the notice.

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HUD Publishes MTW Flexibility II Cohort Request for Applications

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On July 31, HUD published a notice titled “Request for Applications under the Moving to Work Demonstration Program: Overall Impact of Moving to Work Flexibility and Administrative Efficiencies” (Notice PIH 2023-20). The notice discusses the fifth cohort of the Moving to Work (MTW) expansion demonstration program. The MTW demonstration allows PHAs certain flexibilities in how they use their public housing and housing choice voucher program funding to best serve their families. Each PHA in each cohort in the MTW expansion receives flexibilities and also has to participate in a research evaluation. For this cohort, the research evaluation is on the overall effects of the MTW flexibilities bundle on the PHA and the residents it serves.

The notice discusses certain requirements for PHAs to apply to participate in this cohort. This cohort will be open to PHAs with 1,000 or fewer aggregate public housing and housing choice voucher (HCV) units. To apply, PHAs must follow the instructions in this notice and submit their applications by Dec. 8, 2023.

NAHRO members will receive additional information about this cohort and the application process in the coming weeks.

The full notice can be found here.

HUD Sends Update on HOTMA Implementation (Sections 102, 103, and 104)

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On July 18, HUD sent an email to Executive Directors of PHAs providing additional information on the implementation of certain provisions of the Housing Opportunity Through the Modernization Act of 2016 (HOTMA). Specifically, the email provides information on the over-income provisions (section 103), the income review provisions (section 102), and the asset limitation provisions (section 104) of HOTMA.

Over-income Provisions (Section 103) – All PHAs with public housing should have taken appropriate steps to implement the over-income provisions of HOTMA. The Department published Notice PIH 2023-03 (HA), which details the exact requirements and steps to implement the provisions.

Income Review and Asset Limitation Provisions (Sections 102 and 104 respectively) – These provisions will still take effect on Jan. 1, 2024, but PHAs will have additional time to bring their systems into compliance as quickly as possible, but no later than Jan. 1, 2025. This compliance date will be established by HUD via a notice. Despite the later compliance date, PHAs must have updated their Admissions and Continued Occupancy Policies (ACOPs) and Administrative Plans to reflect the changes made by these HOTMA provisions by Jan. 1, 2024. Once a PHA is ready to transition to the HOTMA rules, it must do so in all affected areas of operations. Once the new Housing Information Portal (HIP) is in place, HUD will monitor HIP submissions and reach out to PHAs that are not submitting through HIP to check on their status.

The full email can be found here.

New Small Area FMR Dashboard

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On July 6, HUD sent an email to Executive Directors announcing the posting of a new Small Area Fair Market Rent (FMR) dashboard. The Dashboard lists PHAs that have either adopted the use of Small Area FMRs or the use of an exception payment standard that allows a PHA to raise its payment standard up to 110% of the small area FMR. The dashboard also lists the number of units under small area FMRs, the number of PHAs that use small area FMRs or exception payment standards that can be raised up to 110% of small area FMRs, and the total number of units categorized by Small Area FMR type.

Additionally, the website containing the dashboard also contains links to resources about Small Area FMRs.

The website can be found here.