Payment Standards

Five HOTMA Self-Implementing Provisions

~ Tushar Gurjal ~ Leave a comment

On September 26, Principal Deputy Assistant Secretary Lourdes Castro Ramirez sent an e-mail to PHA executive directors identifying the self-implementing provisions of the Housing Opportunity Through Modernization Act of 2016 (HOTMA). All the other Housing Choice Voucher or Public Housing provisions will require HUD promulgated notices or regulations.

Five HOTMA Self-Implementing Provisions

  1. Reasonable Accommodation Payment Standards – PHAs may establish, without HUD approval, a payment standard of up to 120 percent of the Fair Market Rent (FMR) as a reasonable accommodation for a person with a disability. The Streamlining Rule already provided this flexibility.
  2. Establishment of Fair Market Rent –
    1. HUD may publish FMRs directly to their website, skipping the Federal Register, but must publish a notice in the Federal Register that they are published. Changes how interested stakeholders comment on FMRs and requests that HUD reevaluate the FMRs in a jurisdiction before those rents become effective.
    2. PHAs will no longer be required to reduce payment standards as a result of a FMR reduction for families continuing to reside in a unit under a housing assistance payment (HAP) contract at the time of the FMR reduction. The regulation at 24 CFR 982.505(c)(3) requiring the new decreased payment standard be applied to program participant families at their second regular reexamination is no longer applicable. PHAs must “adopt policies in their Administrative Plans that further explain this provision.” HUD will issue additional guidance in the future.
  3. Family Unification Program (FUP) for Children Aging out of Foster Care –
    1. FUP-eligible youth may receive FUP assistance up to 36 months. Applies to current as well as new FUP-assisted youth.
    2. Expands eligibility requirements for FUP-eligible youth. Expanded eligibility applies to the following:
      1. Youth aged  18 to 24 that are homeless or at risk of being homeless, and
      2. for those that left foster care at age 16 or older, or those that are within 90 days of leaving foster care.
    3. “At risk of being homeless” is defined at 24 CFR 576.2.
  4. Preference for U.S. Citizens or Nationals in Guam – Only applies to Guam. Establishes a preference for U.S. Citizens or Nationals in receiving financial assistance.
  5. Exception to PHA Resident Board Member Requirement – provides an exception for certain jurisdictions from resident board member requirements. Provision has been in effect through multiple appropriations acts.

SAFMR Demonstration Evaluation and Section 8 Eligibility of Students Guidance

~ Tushar Gurjal ~ Leave a comment

Tomorrow, HUD will publish in the Federal Register two notices dealing with the Housing Choice Voucher (HCV) program. The first is a proposed information collection highlighting a series of interviews for landlords and tenants in areas served by the five PHAs that participated in the Small Area Fair Marker Rents (SAFMR) Demonstration. The second is guidance for the rule that excludes certain individuals enrolled in an institution of higher education from receiving Section 8 funds.

  • Small Area Fair Market Rent Demonstration – HUD is evaluating the SAFMR demonstration. To assist in this evaluation, HUD is looking at how “voucher holders and landlords perceive the shift from traditional area-wide FMRs to SAFMRs.” HUD will interview 70 tenants and 35 landlords in the areas served by the five PHAs in the SAFMR demonstration.
  • Eligibility of Independent Students for Assisted Housing Under Section 8 of the U.S. Housing Act of 1937; Additional Supplementary Guidance – Prior appropriations acts stated that if a college student “is under the age of 24, is not a veteran, is unmarried and does not have dependent child” or is ineligible or has at least one parent that is ineligible for assistance, then no Section 8 assistance can be provided for that student. This notice updates the list of items that PHAs, owners, and managers “are required to verify when determining whether a student’s income alone should be used to determine Section 8 eligibility.” The notice also reduces “barriers for vulnerable youth to receive assistance and continue their education.”

The SAFMR Demonstration pre-publication notice can be found here.

The Eligibility of Independent Students for Section 8 Assistance Guidance pre-publication notice can be found here.

NAHRO Attends Two-Day Research Advisory Committee Meeting on MTW Expansion

~ Tushar Gurjal ~ Leave a comment

NAHRO attended the two day public meeting of the Moving To Work (MTW) Research  Advisory Committee held on September 1, 2016 and September 2, 2016. While a complete summary of the entire two-day meeting is outside the scope of this blog post, the Committee made some preliminary determinations of the policy interventions for the new MTW cohorts.

Each cohort will receive standard MTW flexibilities, except for where those flexibilities may conflict with a policy intervention being tested. The following policy interventions were the ones that the Committee determined HUD should further examine when moving forward with the expansion:

  1. General MTW Flexibilities – Cohort of 30 agencies (possibly two cohorts of 15 agencies each) which would be given all general MTW flexibilities. Would be restricted to only small agencies and would be compared to a control group of small agencies to test the effects of the “standard MTW package.”
  2. Rent Reform – This cohort would test the efficacy and tenant impact of stepped rent and possibly also flat rent and tiered rent.
  3. Project-Based Voucher Caps –  This cohort would test the effects of removing or increasing PBV caps.
  4. Sponsored-Based Housing – A cohort that would test the effect of sponsored-based housing. It is unclear what specific type of sponsor-based housing or the vulnerable population affected would be. The Committee was split on whether to recommend this.
  5. Landlord Incentives – This cohort would test a “satchel” of flexibilities (e.g., increased payment standards, cash to landlords, inspection flexibilities, etc.) to determine their combined effect. Agencies will be able to pick and choose which tools in the “satchel” they utilize.
  6. Place-Based Model – This cohort would try to measure the effects of place-based strategies towards housing. The was discussed very quickly at the end of the two-day long meeting.

These were the Committee’s recommendations to HUD about how it should move forward, but these policy interventions are not necessarily the ones with which HUD will choose to move forward. Everything is subject to change.

This was my recollection of the end of the two-day long meeting, but if you attended the meeting, either in-person or by phone, and want to add something, please feel free to leave a comment on this post.

Additional information will be posted on HUD’s MTW Expansion website located here.

Updated HCV Forecasting Tool and Payment Standard Tool

~ Tushar Gurjal ~ Leave a comment

I received an e-mail from a HUD official asking that I make sure that our membership is aware of the following updates to HUD’s Housing Choice Voucher (HCV) Program Projection Tools:

  • HCV Two-Year Forecasting Tool: According to HUD, “[t]he objective of the Two-Year Tool (TYT) is to analyze a PHA’s utilization situation, which includes running basic leasing and spending scenarios to better inform decisions going forward in an effort to optimize the program over a multi-year period.” The Two-Year Tool has been updated so that it can be accessed by any individual with a HUD Web Access Security System (WASS) username and password. A new feature in this update is that when accessing the tool with WASS credentials, all “PHAs can now populate and create a Two-Year Tool on their own . . . [by entering] their PHA code and [clicking] the ‘Open and Populate Two-Year Tool’ button.” HUD notes that “[s]ome program variables are populated with default values (e.g. success rate, time from issuance to HAP); these should be updated as appropriate.”
  • Payment Standard Tool (new): “[T]he Payment Standard Tool (PST) is [used] to analyze a potential payment standard change of both program participants’ rent burdens and the PHA’s program costs.” Like the Two-Year Forecasting Tool, the Payment Standard tool can be accessed with WASS credentials (i.e., a username and password).

HUD plans to release YouTube videos in the near future to walk users through using these tools.

Descriptions of the tools can be found on the Office of Housing Choice Vouchers webpage here.

Both tools mentioned above (as well as a “HCV Two-Year Tool Guide” and a “Success Rate Guide”) can be accessed here.

FY 2017 FMRs Published

~ Tushar Gurjal ~ Leave a comment

HUD has published its FY 2017 FMRs on its website. While we are still in the process of going through the notice announcing the publication of the FMRs, here are some of the main takeaways:

  • After the passage of the Housing Opportunity Through Modernization Act of 2016 (HOTMA), HUD is no longer required to publish FMRs in the Federal Register, but may now publish them on its website, while announcing the postings in the Federal Register.
  • After HOTMA, FMRs shall be effective no earlier than 30 days after the date of publication of the announcement notice in the Federal Register.
  • HOTMA requires that HUD publish proposed “material changes” to the methodology for comment. The notice asks for public comment on “defining the scope of material changes that will trigger notice and comment in future calculations of FMRs.”
  • The methodology for calculating the FY 2017 FMRs will remain the same as the methodology used to calculate the FY 2016 FMRs, except that updated data will be used.
  • There are no geography changes, but “several areas have been renamed to avoid confusion.”
  • The effective date of the FMRs will be October 1, 2016.
  • HUD has established a procedure “for PHAs and other interested parties to comment on such fair market rentals and to request, within a time specified by [HUD], reevaluation of the fair market rentals in a jurisdiction before such rentals become effective.”

Read the full pre-publication notice here.

[8/26/16 UPDATE: The Federal Register publication can be found here. Comments are due by September 26, 2016.]

The FY 2017 FMRs can be found here (scroll to FY 2017). The PDF tables can be found here.

FMRs, SAFMRs, and Volatility

~ Tushar Gurjal ~ Leave a comment

Our friends at the National Housing Conference (NHC) and the Public Housing Authorities Director’s Association (PHADA) have written a blog post with a series of beautiful maps on historical Small Area Fair Market Rent (SAFMR) volatility on NHC’s Open House Blog. Here’s a map from the blog post on the Washington-Arlington-Alexandria HUD Metro Fair Market Rent (FMR) area.

https://nahropolicyblog.files.wordpress.com/2016/08/d5a51-washington-arlington-alexandria252c2bdc-va-md2bhud2bmetro2bfmr2barea.jpg

I recommend looking at the blog post to read their take on SAFMRs and volatility and to see the other maps.

Here are a couple of points that I would like to note to further this conversation.

The methodology for calculating Fair Market Rents (and SAFMRs) is changing

In calculating the final FY 2016 FMRs HUD switched from a “historical-based annualized change in gross rent trend factor [to] a forward-looking forecast . . . [that] uses a model that forecasts national rent and utility [Consumer Price Index] indices based on economic assumptions used in the formulation of the President’s Budget.”[1] Since the methodology has changed, we need a time horizon of a few years to see if the volatility remains as bad a problem as before the methodological change.

Additionally, Peter Kahn, the Director of HUD PD&R‘s Economic Market Analysis Division, has stated the following:

We are looking at ways throughout the proposed ’17 FMR process of addressing that . . . variability in general. When the proposed ’17 FMRs are out, the . . . you can read that preamble and see that we are trying to take steps to address that variability. (See the YouTube clip where he said that here.)

Will HUD be successful in addressing this volatility? I don’t know, but it’s good that they’re aware of the problem and are taking steps to address the issue.

The passage of the Housing Opportunity Through Modernization Act of 2016 (HOTMA) may give PHAs a tool in managing volatility of payment standards based on both FMRs and SAFMRs

HOTMA has a provision that allows PHAs to hold harmless households that live in areas that receive lower FMRs. Section 107(b) of HOTMA states that “no public housing agency shall be required as a result of a reduction in the fair market rental to reduce the payment standard applied to a family continuing to reside in a unit for which the family was receiving assistance . . . at the time the fair market rental was reduced.” It is NAHRO’s understanding that this provision will apply to payment standards based on FMRs and SAFMRs.

The chart below shows how if a provision allowing for payment standards to be held harmless was in place between 2010 and 2016, then volatility may have been reduced in some instances. The blue line shows the actual Washington-Arlington-Alexandria FMR for 2 Bedroom units. The orange line shows what a payment standard based on that FMR would have been, had it been held harmless.

WashDCHoldharmlessFMRChart-2010-2016

The HOTMA provision has the ability to reduce volatility in certain instances, though holding FMR payment standards harmless may have budget implications. Another point to remember is that when the payment standard starts being held harmless matters. In the chart above, if the payment standard starts being held harmless in 2013, then the volatility that results from increases in the FMR will still occur.

Although the chart above shows a payment standard based on a FMR being held harmless, the same principle would apply to payment standards based on SAFMRs.

[1] – 80 Fed. Reg. 77,124 (December 11, 2015).

NAHRO submits Small Area FMR Comments

~ Tushar Gurjal ~ Leave a comment

NAHRO has submitted comments on HUD’s notice titled “Establishing a More Effective Fair Market Rent System; Using Small Area Fair Market Rents in Housing Choice Voucher Program Instead of the Current 50th Percentile FMRs.”

HUD’s proposed rule would mandatorily impose the use of Small Area Fair Market Rent (SAFMR) areas in 31 metropolitan areas, if it were implemented as currently written.

In NAHRO’s comments, we stated that PHAs should have the discretion to use either SAFMRs or FMRs depending on what made sense in a PHA’s rental housing market. NAHRO’s reasons to oppose the mandatory imposition of SAFMRs in certain areas can be divided into three broad categories: tenant welfare concerns; tenant choice concerns; and administrative burden concerns. NAHRO also noted that additional research needed to be done before mandatorily implementing SAFMRs and responded to specific solicitations about the rule from HUD.

Read NAHRO’s SAFMR comments here.

Read the proposed rule here.

Read NAHRO’s prior post on HUD’s SAFMR proposed rule here.

Voucher Mobility Debate at the Furman Center

~ Tushar Gurjal

The Furman Center has published a discussion on their website about voucher mobility. The discussion centers around HUD’s proposed Small Area Fair Market Rents rule, which would require certain metropolitan areas to use zip code level fair market rents. There are four written pieces, each with a unique viewpoint:

Here’s a quote from Rachel Fee’s essay:

HUD’s proposal is made without a Section 8 budget increase, so housing “opportunity” for some low-income families will come at the expense of others.  Families who choose to stay in their current homes in high poverty areas or those who are unable to move, will literally pay the price of higher rents for families using their voucher in more expensive neighborhoods.

While NAHRO is still in the process of writing its comment letter on the proposed rule, NAHRO’s initial concerns about the Small Area FMR proposed rule include concerns about tenant welfare, limiting the choice of tenants, and administrative burdens. NAHRO also believes that additional research should be done before implementing HUD’s rule and that additional funding is required to properly implement it.