Federal Regulation

HUD Posts Proposed Changes to Methodology for Calculating Section 8 Income Limits

~ Tushar Gurjal ~ Leave a comment

On January 9, HUD posted a pre-publication copy of a notice in the Federal Register titled “Changes to the Methodology Used for Calculating Section 8 Income Limits under the United States Housing Act of 1937.” Since Fiscal Year (FY) 2010, in calculating the thresholds for “low-income families” and “very low-income families,” HUD has limited the increase from one year to the next as the higher of either five percent or twice the percentage change in the national median family income. The Department also does not allow income limits to decrease by more than five percent from the previous year. This notice proposes adding an additional requirement that the annual income limits never increase by more than 10 percent per year and also proposes changes to the definition of national median family income.

The Department has identified two rationales for limiting income limit increases and decreases. The first is that the American Community Survey (ACS)–which is used to calculate area median family income estimates–is subject to error and may fluctuate despite the underlying median income staying the same. The second reason is that certain programs, such as the Low-Income Housing Tax Credit (LIHTC), use the income limits to determine rent for low-income families and by limiting decreases, HUD helps to ensure that certain properties remain financially viable. Similarly, by limiting increases, HUD helps to ensure that low-income families do not face large rent increases very quickly.

The Department would also like to calculate the national median family income by using “the most recent unadjusted estimates of median family income provided by the Census Bureau via the ACS.” The Department states that “[b]y continuing to remove inflation adjustments from its cap calculation, HUD is keeping the calculation in line with its purpose of capturing trends in median family income data addressing survey volatility rather than volatility introduced by accelerating or decelerating inflation.”

Comments on the proposed changes will be due 30 days after the notice is published.

The full pre-publication copy of the notice, including questions to which HUD is looking for responses, can be found here.

HUD Institutes Cash Management Practices for the EHV program

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On Dec. 19, HUD published a notice titled “Cash Management and Closeout Procedures for the Emergency Housing Vouchers (EHV) Program funds, and Supplemental Information Regarding EHV Contract Renewal Calculation.” The notice establishes cash management procedures for PHAs with EHVs. These vouchers are for households that are homeless; at risk of homelessness; fleeing or attempting to flee domestic violence, dating violence, sexual assault, stalking or human trafficking; or recent homeless or have a high risk of housing instability.

The Department will distribute EHV funds in accordance with Treasury cash management procedures. It will make monthly or multi-month disbursements based on the most recent month of validated EHV Housing Assistance Payments (HAP). Excess HAP will be held in HUD-held reserve accounts. Undisbursed amounts will likely be offset in the next year. Moving to Work agencies will be subject to these cash management processes.

The full notice can be found here.

HUD Publishes 2024 OCAFs

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On Nov. 30, HUD published a notice in the Federal Register titled “Notice of Certain Operating Cost Adjustment Factors for 2024.” 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.

The notice lists the specific data sources for each category of data and alternative sources where a region may not have specific data available.

The full notice with the 2024 OCAFs listed as an appendix can be found here.

New Small Area FMR Guidance

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On November 15, HUD released a notice titled “Small Area Fair Market Rent Implementation Guidance for FY2024 Designated Metropolitan Areas” (Notice PIH 2023-32). The guidance provides certain implementation details for the recent expansion of the mandatory use of Small Area FMRs. The Department has designated 41 new metropolitan areas where PHAs will be required to use Small Area FMRs for the Housing Choice Voucher program. Small Area FMRs will be required in those areas on October 1, 2024, but payment standards based on those small area FMRs will not be required to be updated until January 1, 2025. Housing agencies in those areas may choose to use the small area FMRs for their project-based vouchers.

The notice also provides additional information on the implementation of small area FMRs. First, small area FMR designations are permanent. Second, those PHAs that must mandatorily implement small area FMRs in the new areas will receive $10,000 to cover the administrative costs of transitioning to small area FMRs. These funds will be disbursed automatically, and no PHA will have to apply for them. Third, those PHAs, in the mandatorily designated areas, that wish to begin using small area FMRs immediately may do so under the current “opt-in” procedures. Finally, moving to work (MTW) agencies, in mandatorily designated areas, are required to use small area FMRs, unless they have an alternative payment standards policy in their HUD-approved annual MTW plans.

The full notice can be read here.

HUD Posts New Form 50058 Draft Instruction Manual

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The U.S. Department of Housing and Urban Development (HUD or the Department) has posted additional documents on its Public and Indian Housing (PIH) Housing Opportunity Through Modernization Act of 2016 (HOTMA) Resources page. These documents have, in the past, included revised HUD-50058 forms for non-Moving To Work (MTW), MTW, and MTW expansion programs. These forms provide information on the families that participate in programs like Public Housing or the Housing Choice Voucher program. These forms include the following:

In addition to these forms, the Department has posted a draft Form HUD-50058 Instruction Booklet. The booklet explains the fields in the forms and the information collected for each of the items. The booklet is important because it begins to document the changes made in the forms due to the changes required by HOTMA.

The draft booklet can be found here.

HUD to Expand Mandatory Use of Small Area FMRs

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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:

Continue reading →

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

~ Tushar Gurjal ~ Leave a comment

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 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.