In mid-Feb., HUD sent a letter to PHA executive directors. The letter informed PHAs of their individual inflation factors for the Housing Choice Voucher (HCV) program. While HUD had previously revealed that the national average inflation factor for 2023 would be 10.13%, the new letter provides PHAs with their individual inflation factors (which may differ substantially from the national factor). The inflation factor is used by HUD to calculate funding for voucher programs for the upcoming year (i.e., the inflation factor, as a whole number, is multiplied by the renewal funding to calculate the program’s total funding for the year).

In addition to being provided in the letter, the inflation factor has also been added for each individual PHA that has a voucher program in the Two-Year tool. The Two-Year tool is a spreadsheet created by HUD, pre-populated with individualized program data, that PHAs can use to help plan their voucher programs.

This year’s inflation factor is substantially larger than previous years. Housing agencies should plan for a larger yearly increase in funding than they may typically be used to.

The Two-Year Tool can be found here.

The Department has also created a one-pager with links to tools to help increase utilization that can be found here.

Finally, the Department has created a video that provides an overview of the HCV funding process (see below).

The Department published a notice titled “Notice of Certain Operating Cost Adjustment Factors for 2023.” Operating cost adjustment factors (OCAFs) are annual factors used to adjust certain Section 8 rents. These OCAFs are calculated as “the sum of weighted component cost changes” for certain publicly available cost indices. Some indices reflect data collected at the state level, while some indices reflect data collected at the national level. The nine cost indicators used in calculating OCAFs are the following:

• State-level data;
  • Electricity;
  • Fuel Oil;
  • Natural Gas;
• National-level data;
  • Employee Benefits;
  • Employee Wages;
  • Goods, Supplies, and Equipment;
  • Insurance;
  • Property Taxes; and
  • Water, Sewer, and Trash.

Methodology Changes

The notice states a temporary methodological change. For 2023, due to high levels of inflation, HUD has calculated an inflation factor for each cost component for a time period exceeding a year and used the most recent data available. In the future, HUD will revert to using one-year time periods to calculate levels of inflation for each cost component. NAHRO applauds HUD for recognizing the high levels of inflation that owners are facing and making this change to ensure that cost factors capture the on-the-ground inflationary trends.

In addition to publishing the cost factors, this notice proposes certain permanent technical changes in how OCAFs are calculated in the future. First, in calculating 2024 OCAFs, HUD will begin to use data pulled from August of each year instead of May of each year in order to work with more up-to-date data. Second, HUD will make a change in calculating the insurance component data source inflation factor for the 2023 OCAFs. HUD has used the Bureau of Labor Statistics Consumer Price Index, Tenants and Household Insurance Index in the past, while moving forward for the 2023 OCAFs and beyond, HUD will use data from the Direct property and casualty insurers-Commercial multiple peril insurance series from the Bureau of Labor Statistics, Producer Price Index.

Comments on the methodological changes are due by Dec. 15, 2022.

The full notice with the actual OCAFs by state can be found here.

On June 13th, HUD published a notice [Notice PIH 2022-18 (HA)] expanding the eligible uses of the administrative fee for the Housing Choice Voucher (HCV) program. The notice is titled “Use of Housing Choice Voucher (HCV) and Mainstream Voucher Administrative Fees for Other Expenses to Assist Families and Lease Units.” Earlier this year, NAHRO had written to HUD recommending that it expand the eligible uses of the HCV administrative fee in order to increase voucher utilization. NAHRO wrote that HUD should “[i]mmediately issue guidance in the form of a new PIH notice clarifying that administrative fees may be used for activities and expenses that help a PHA utilize vouchers . . . .” NAHRO is pleased that HUD recognized–after NAHRO’s urging–the importance of allowing administrative fees to be used for these additional purposes, which will have the end effect of helping more families find and lease homes.

The notice clarifies that administrative fees may be used for the following activities:

• Administrative Activities: These activities include–but are not limited to the following:
  • Front-line, day-to-day operational activities:
    • applicant intake;
    • lease-up activities;
    • income determinations and reexaminations;
    • unit inspections;
    • disbursing HAP to landlords;
    • policy and operational planning and implementation;
    • financial management;
    • HCV record-keeping and reporting;
  • Indirect overhead activities associated with operating the HCV program:
    • PHA management;
    • human resources;
    • legal;
    • finance;
    • accounting and payroll;
    • information technology;
    • procurement;
    • quality control;
    • central office cost center HCV program expenses;
  • Housing search assistance activities;
    • pre-move counseling;
    • helping a family identify and visit potentially available units during their housing search;
    • helping a family find a unit that meets the household’s disability-related needs;
    • providing transportation and directions; and
    • assisting with the completion of rental applications;
  • Post-lease up activities related to search assistance:
    • post-move counseling and landlord/tenant mediation;
  • HCV owner recruitment and outreach activities:
    • costs associated with materials or webpages specifically geared to owners;
    • costs of landlord liaison staff;
    • associated expenses;
• Other Eligible Activities (PHAs must change their administrative plans to support these activities; Note: some of these activities have certain restrictions, please see Notice PIH 2022-18 (HA) for specifics on use):
  • Expenses for activities designed to help assist HCV families in leasing units:
    • Owner incentive and/or retention payments;
    • security deposit assistance;
    • utility deposit assistance/utility arrears;
    • application fees/non-refundable administrative or processing fees/refundable application deposit assistance/broker fees;
    • holding fees; and
    • renter’s insurance if required by the lease.

Additionally, administrative fee reserves or outside funding sources may also be used for the listed activities. Similarly, mainstream voucher administrative fees may also be used to assist mainstream voucher families to lease units, though mainstream administrative fees may only be used for mainstream vouchers. The notice also notes that for both regular and mainstream HAP funding may not be used to pay for any of these activities. Finally, the notice provides certain information on reporting the new authorized expenses.

The full notice may be found here.