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;
- Fuel Oil;
- Natural Gas;
- National-level data;
- Employee Benefits;
- Employee Wages;
- Goods, Supplies, and Equipment;
- Property Taxes; and
- Water, Sewer, and Trash.
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 Sept. 26, HUD published a notice titled “Extension of Certain Regulatory Waivers for the Housing Choice Voucher (including Mainstream) Program and Streamlined Review Process” (Notice PIH 2022-30). The notice would extend two waivers that were previously made available for the Housing Choice Voucher (HCV) program.
The waivers that would be extended are the following:
- Increase in Payment Standard During HAP [Housing Assistance Payment] Contract Term – this waiver would allow PHAs to increase the payment standard for a family at any time after the effective date of the increase instead of at the next regular reexamination.
- Voucher Tenancy: New Payment Standard Amount – this waiver would allow PHAs to establish payment standards up to 120% of the FMR, instead of 110%, which is the maximum usually allowed in most scenarios.
Extending a Waiver
If a PHA already is using one of these waivers, it need only extend the waiver. Agencies that are using these waivers may continue to use them, without taking additional steps, until Dec. 31, 2022 and may extend them until Dec. 31, 2023. To extend the waivers, PHAs must email PIH_Expedited_Waivers@hud.gov, while copying their local field office. The notice provides details on the contents of the email to be sent. Waiver extensions may be requested until Dec. 31, 2022.
Requesting a Waiver
Agencies that wish to apply for one or both of the waivers, if they do not currently implement them, or agencies that have not extended their waiver before the deadline, may request the use of the waiver through a streamlined approval process. Requests for waiver usage under this process must be submitted to HUD before the end of Sept. 30, 2023.
Agencies that request a waiver through this process must provide a good cause justification. The good cause justification must include all of the following:
- Why the PHA needs the waiver;
- The impact on PHA operations or applicants if the waiver is not provided; and
- The proposed waiver duration (this should be limited to the time the PHA needs the waiver, but should not exceed Dec. 31, 2023).
Examples of good cause for each of the waivers can be found below:
- Increase in Payment Standard During HAP Contract Term;
- Increases in family rent burdens;
- Potential negative impacts to tenants or the onset of housing instability;
- Voucher Tenancy: New Payment Standard Amount;
- Rental Market Fluctuations – The PHA is in an area that HUD has determined has significant rental market fluctuations (a list of those areas is listed at the end of the notice);
- Utilization Rate – The PHA has a lower than 98% utilization rate for the current year or more than a 5% utilization drop between 2019 and 2021; The utilization rate for this purpose is the higher of the unit utilization rate or the budget utilization rate; and
- Timely Leasing of Vouchers – the PHA has leased less than 85% of the vouchers that it has issued in the last six months.
A PHA may request a waiver by emailing PIH_Expedited_Waivers@hud.gov, while copying their local field office. The notice provides details on the contents of the email to be sent.
As always, a PHA may use the regular waiver request process for any additional waiver it may require, but those requests will not be subject to a streamlined approval process.
The full notice may be found here.
Earlier today, HUD published a press release announcing that it had selected PHAs for the fourth cohort of the Moving to Work (MTW) program. The MTW program allows PHAs that have received MTW status certain additional flexibilities in how they use their funds and greater freedom in how they operate. The program allows PHAs to innovate in how they provide housing.
The current expansion of the MTW program requires PHAs to commit to research on a particular policy topic. In addition to the regulatory and operational flexibility afforded by the program, PHAs selected in this cohort have committed to research asset building policies. Housing agencies in this cohort will have to pick, implement, and track one of the three following options for asset building policies:
- Opt-Out Savings Account Option – PHAs must deposit a certain amount of funds per month into an escrow account on behalf of an assisted household.
- Credit Building Option – PHAs must report public housing rent payments to credit bureaus.
- PHA-Designed Asset Building Option – PHAs must design their own local asset building program.
Currently, HUD has selected 87 of the 100 agencies, including 16 in this cohort, to which it is statutorily mandated to award an MTW designation. According to HUD, “MTW agencies are now in 40 states and the District of Columbia.”
HUD’s press release on the MTW fourth cohort can be found here.
The Request for Applications for the MTW fourth cohort (Notice PIH 2022-11) can be found here.
NAHRO congratulates all of the selected PHAs that were selected in this cohort. The complete list can be found below.
On Sept. 1, HUD published in the Federal Register a notice announcing the new Fair Market Rents for 2023. Fair Market Rents (FMRs) are used by the Housing Choice Voucher (HCV) program to determine the payment standard, which is used to calculate the amount of rental assistance a family in the program may receive in a certain area. Certain other programs also use FMRs. In calculating these FMRs, HUD altered their methodology to use additional private-sector data. The Department previously asked for comment on their new methodology and NAHRO responded with comments.
Housing agencies that are interested in reevaluating their area’s Fiscal Year (FY) 2023 FMRs must submit a reevaluation request to HUD by Oct. 3, 2022. The requestor must also submit data to HUD more recent than the 2019 American Community Survey (ACS) data used in calculating the FY 2023 FMRs. The Department requires data on “gross rents paid in the FMR area for occupied standard quality rental housing units” and the data “must be sufficient for HUD to calculate a 40th and 50th percentile two-bedroom gross rent.” Requestors may also gather this data through the use of surveys. This data must be submitted by Jan. 6, 2023.
The FMRs are effective on Oct. 1, 2022.
The FY 2023 FMRs along with other FMR-related information can be found here.
The Federal Register notice can be found here.
HUD’s Press Release on the new FMRs can be found here.
On Aug. 26, the U.S. Department of Housing and Urban Development (HUD or the Department) published a new notice detailing how new incremental general-purpose vouchers would be distributed and describing certain other operational provisions of the vouchers. The notice is titled “Allocation and Special Administrative Fee for New Incremental Housing Choice Vouchers” [PIH 2022-29 (HA)]. This $200 million in additional funding for vouchers was appropriated by the Consolidated Appropriations Act, 2022. The notices states that there will be 19,700 new Housing Choice Vouchers (HCVs) distributed to PHAs.
NAHRO thanks its members for educating decisionmakers in DC on the need and importance of new vouchers. In addition, in implementing the vouchers, NAHRO sent a letter to HUD urging the Department not to add additional terms or conditions to the vouchers, which may have made them harder to use. NAHRO is pleased that HUD has listened to NAHRO’s suggestion.
The National Housing Law Project (NHLP) and the Poverty & Race Research Action Council (PRRAC) have written a document titled “New Options to Increase Housing Choice Voucher Payment Standards.” Typically, a PHA can set its payment standard at between 90% to 110% of the Fair Market Rent (FMR). This document provides information on instances where PHAs can set payment standards up to 120% (or use 50th percentile FMRs, which are set higher than normal FMRs).
The document provides the following summarized information on payment standards and FMRs (see the full document for details):
- PHAs can establish payment standards higher than 110% when implementing a reasonable accommodation for a family that includes a person with a disability. The PHA may establish an exception payment standard up to 120%.
- By request of a PHA, HUD may approve an exception payment start for a designated part of an FMR area (i.e., an exception area) where the total population of the HUD-approved exception area does not exceed 50% of the population of the area.
- PHAs may request FMRs be calculated at the 50th percentile rent (normally FMRs are calculated at the 40th percentile rent–i.e., they are set so that about 40% of the available housing stock in a given geography is accessible to renters) to establish a higher success rate for their voucher program. The PHA will be able to set the payment standard at 90% to 110% of the 50th percentile rent.
- In instances where the PHA previously had a 50th percentile FMR and now has a 40th percentile FMR, HUD may approve a payment standard amount based on the 50th percentile rent, if the PHA scored well on the SEMAP (Section Eight Management Assessment Program) deconcentration bonus indicator.
- PHAs may be able to set payment standards up to 120% through the use of waivers in the Notice PIH 2022-09.
- PHAs that voluntarily use Small Area FMRs can set a payment standard up to 120% of the Small Area FMR using Notice PIH 2022-09.
- PHAs that mandatorily use Small Area FMRs can set a payment standard up to 120% of the Small Area FMR using Notice PIH 2022-09.
- PHAs with Moving to Work (MTW) status can use their MTW flexibilities to set higher payment standards.
The document provides additional information and citations to the appropriate regulatory provisions and guidance documents.
The full document can be found here.
On August 3, HUD published a notice titled “CARES Act Funding Reconciliation and Closeout – Housing Choice Voucher Program, Mainstream Vouchers, and Moderate Rehabilitation Program.” The notice describes the closeout procedures for funds received from the Coronavirus Aid, Relief, and Economic Security (CARES) Act for the Housing Choice Voucher (HCV), the Mainstream, and the Moderate Rehabilitation (MR) programs. The period of availability for CARES Act funds ended on Dec. 31, 2021, but PHAs had 120 calendar days to “liquidate/disburse unliquidated obligations.” That 120 day period ended on April 30, 2022.
Housing agencies will receive a form SF-425 shortly and should follow instructions found in the appendix of the notice to fill out the form to report CARES Act related financial activity. The form is due Sept. 6, 2022 and should be emailed to HCVCARESActReconciliation@HUD.gov. Submitting this form will not remit amounts owed, which will be completed by the Housing Voucher Financial Management Division.
In certain scenarios, where there are unliquidated obligations that were disbursed after April 30, 2022, the PHA may issue a special request to HUD for an extension not later than Sept. 6, 2022.
Housing agencies should expect CARES Act closeout statements after they have submitted the required form.
The full notice may be found here.
Earlier today, HUD published in the Federal Register proposed changes to the methodology for calculating fair market rents (FMRs). The notice is titled “Proposed Changes to the Methodology Used for Calculating Fair Market Rents.” Fair market rents are used to determine payment standards for the Housing Choice Voucher (HCV) program and also impact certain other federal programs.
Currently, HUD calculates FMRs through a seven-step process. First, HUD establishes a two-bedroom base rent from American Community Survey (ACS) 5-year data. HUD then updates this base rent with a “recent mover adjustment factor” based on one-year ACS data. This adjusted data is then inflated by a “gross rent adjustment factor” and then trended forward through the use of a “trend factor.” HUD then adjusts the rents for other unit sizes by applying “bedroom ratios” calculated from the relationships between different size units in the five-year ACS data. There is also a regulatory limit to how much HUD will allow an FMR to decline from one year to the next (i.e., an FMR cannot fall below this percentage “floor” in the span of one year). Finally, HUD also calculates minimum FMRs for each state based on the median FMR for non-metropolitan portions of each state.
The Department is proposing certain changes to the calculation of FMRs—primarily the use of private sector data in two steps during the calculation process in certain instances. First, due to the pandemic, there is a lack of ACS 1-year data. To correct for this, there is a special tabulation of the five-year ACS data for 2020 of rents paid by people who moved in 2020 or 2019. This special tabulation will be updated by private data sources in certain situations where the data sources are accurate and there are three private data sources. HUD would like to estimate the “recent mover adjustment factor” from these sources. When one-year ACS data becomes available again, HUD would like to use it again, while still considering augmenting it with private sector data. Second, HUD would like to use private data sources along with its standard Consumer Price Index (CPI) data in calculating the average gross rent inflation factor in certain instances. These changes would impact the calculation of Small Area FMRs also.
The Department is seeking comment on the appropriateness of using these private sector data sources. Additionally, HUD is seeking comment on whether HUD should continue to use these private rent data sources for FMR calculation after fiscal year 2023.
Comments are due Aug. 12, 2022.
The full Federal Register notice 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;
- accounting and payroll;
- information technology;
- 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.
Join NAHRO–tomorrow, June 9th at 2 pm ET–for this webinar focused on HUD voucher utilization resources. HUD staff have been invited to share some of the resources available to PHAs on HUD’s website to help increase voucher utilization. Learn about the various resources available and how they can be used to help your PHA optimize its voucher utilization strategy!
Registration can be found here.