The HCV program supports the lowest-income families who struggle to secure safe, affordable housing in the private market. At least 75 percent of new voucher holders must have incomes that are below 30% of their area’s median income. In 2018, the average annual household income among tenants in the program is approximately $14,700.
While targeting the most economically disadvantaged households, the HCV program also serves the most vulnerable. In 2018, 53 percent of HCV households were elderly (29 percent) or disabled (24 percent). Forty percent of HCV households included children under the age of 18. Of those non-disabled, non-elderly HCV households, 75 percent were working, worked recently, or likely were subject to work requirements.
HUD Welcomed IT Working Group Feedback
HUD has rescinded Notice PIH 2024-12 and will issue guidance once it has revised the HIP implementation schedule. The implementation schedule of the new Housing Information Portal (HIP), the replacement for IMS/PIC, will be revised and critical dates will be extended. A new schedule is necessary to ensure that programs do not experience interruptions in service or potential delays. Additionally, HUD is resolving technical issues encountered in the initial testing phase of HIP. To ensure HIP's implementation success, HUD is consulting with PHA software vendors on the new schedule. HUD first shared this news with the IT Working Group, and it will share the revised schedule and updated guidance with us soon.
HUD acknowledges it has heard CLPHA's feedback, particularly through the IT Working Group. HUD is working to revise the HIP implementation schedule and will provide more information on the transition to HIP. Software vendors will be consulted on the new schedule to ensure successful implementation.
Actions PHAs Should Continue
In the meantime, PHAs should continue preparing for the transition to HIP by carrying out the actions listed below:
- PHAs should continue to clean up data and ensure data accuracy.
- PHAs should continue submitting HUD-50058 forms and maintaining their physical inventory as they normally would.
- The Special Applications Center will accept and process inventory removal applications as usual. PHAs should continue to follow submission instructions as provided in Notice PIH 2021-07 and 24 CFR 970.
Applicable Guidance
Though Notice PIH 2024-12 is rescinded, the following HUD guidance remains applicable:
- HUD will adjust the rollout of the Enterprise Management Voucher System (eVMS) based on the revised HIP schedule. There are no changes to Notice PIH 2024-16. For more information on the eVMS implementation and schedule, visit HUD’s eVMS web page.
- HUD will rely on IMS/PIC data as of the reporting date of February 29, 2024, to support the calculation of FY 2025 Capital Fund grants as outlined in HUD’s Office of Capital Improvements web page.
- CY 2025 Operating Fund grants will be determined based on data from IMS/PIC during the normal Operating Fund reporting period of July 1, 2023, through June 30, 2024. See Notice PIH 2023-25.
HOTMA Sections 102 and 104
As stated in Notice PIH 2023-27 entitled “Implementation Guidance: Sections 102 and 104 of the Housing Opportunity Through Modernization Act of 2016 (HOTMA),” PHAs must be able to submit transactions to HIP in order to comply with sections 102 and 104 of HOTMA. HUD will provide future guidance regarding a timeline for compliance with sections 102 and 104 of HOTMA.
Because HOTMA-compliant reexaminations cannot be successfully submitted to IMS/PIC, HUD advises PHAs not to begin conducting reexaminations under HOTMA rules without further information on when the HOTMA-compliant HUD-50058 in HIP will be available.
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HUD announced revised Housing Assistance Payment (HAP) set-aside shortfall funding requirements, superseding the guidelines from Appendix E of PIH Notice 2024-16. Per the announcement in PIH Notice 2024-21, HUD intends to prioritize shortfall funding over other HAP funding categories in order to avoid terminations due to insufficient funds. Depending on the extent of shortfall funding needs, HUD will decline and/or prorate other funding awards. HUD’s Shortfall Prevention Team (SPT) will identify projected shortfalls in a PHA’s Housing Choice Voucher program funding using the Two-Year Forecasting Tool. Upon notification of a potential shortfall by SPT, the PHA must immediately suspend the issuance of vouchers, cease to absorb vouchers under the portability provisions, implement all other cost savings measures determined by the SPT, and apply for the shortfall funding within the specified timeframe. The application window for shortfall set-aside funding will remain open until all PHAs' Shortfalls for Calendar Year (CY) 2024 are reconciled by the SPT. PIH Notice 2024-21 states that PHAs may not issue vouchers to avoid a reduction in leasing due to program attrition, as previously stated in PIH Notice 2024-16. To be eligible to apply for CY 2024 shortfall set-aside funding, all PHAs must be working with the SPT at the time of their application and must have received SPT confirmation of their funding shortfall. Detailed instructions for submitting shortfall funding applications are provided in Section 11 of PIH Notice 2024-16. For specific questions on the determination of shortfalls, PHAs should contact the HUD Shortfall Prevention Team at: [email protected].
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HUD has published the final rule implementing changes to the HCV and PBV programs made by the Housing Opportunity Through Modernization Act of 2016 (HOTMA). CLPHA’s full analysis of the entire final rule is still in-progress; however, we have prepared an interim analysis of key provisions related to Project-Based Vouchers (PBVs).
The general program cap for PBVs that limits the number of units to 20% of the authorized units remains (24 CFR 983.6). In certain instances, there is an exemption where units may be project-based up to 30% (983.6(d)). Units meeting this exemption include:
- units for people experiencing homelessness (983.6(d)(1)(i));
- units for veterans (983.6(d)(1)(ii));
- units providing supportive services for people with disabilities or elderly people (983.6(d)(1)(iii));
- units in areas where vouchers are difficult to use (983.6(d)(1)(iv));
- units that replace units that had previous rental assistance, but are now on a different site (983.6(d)(1)(v)); and
- units for certain eligible youth in the FUP program (983.6(d)(2)).
Further, certain units are excepted & the PBV portfolio cap does not apply to them (983.6(e)). To be excepted, these units must in the previous five years before a PBV RFP have received certain federal assistance (& they should no longer be receiving that assistance). A list of the types of assistance that had to have received assistance can be found at 983.59(b). The new units on that list that the rule allows include:
- former LIHTC units (983.59(b)(2)(i));
- former USDA Section 515 units (983.59(b)(2)(ii));
- and other units selected by HUD though the Federal Register (983.59(b)(2)(iv)).
When you add up these different types of PBV units (regular PBV units (20%) + exempted PBV units (another 10%) + excepted PBV units (no limit)), it is theoretically possible to project-base more than 50%. Because of this, if you are project-basing more than 50%, before additional project-basing, you will have to do an analysis of project-basing 50% or more of your ACC units. 983.58(b). Keeping this in mind, you can project-base varying amounts depending on whether you can fit those units into the categories listed above.
CLPHA is still analyzing the lengthy rule and will publish a full analysis of all HCV and PBV provisions as soon as possible.
PBV Options
To compare the old and new PBV regulations, CLPHA and Reno & Cavanaugh have produced a helpful PBV Options comparisons chart. Historically, the PBV regulation identifies two categories of housing that could receive PBV – “existing housing” and “Rehabilitated and Newly constructed Units. (“Rehab/New”). The upfront review requirements for existing housing are much lower than for Rehab/New. Once a project is selected for PBV, no material work can be done on the units unless the project receives preclosing approvals related to Rehab/New Construction in Subpart D of the regulation.
The new regulations (“New Reg”) overhaul offers more options, but on a delayed basis as HUD needs to issue new forms. The upfront requirements for Rehab/New housing stay in place despite new flexibility. All options except #1 and #3 must also be in the PHA’s Admin Plan before a PHA can use them.
1.Rehabilitated and Newly constructed Units (Rehab/New)
a.983.154 (a) through (d)
b.Obtain SLR and ER approvals, execute AHAP and do Work. When the Work is done, inspect units, and execute HAP (in one or multiple stages) as units are leased up.
c. Pros: regulatorily neatest. No change from current proactive
d. Cons: SLR may take several months. Project will not begin earning income or housing tenants until after SLR approval and then Work are completed.
2.Variation #1 – “Development Agreement” instead of AHAP, then execute HAP
a.983.154(f)
b.As in #1, all rehab/new requirements mut be met before Work can start.
c. Pros: Could cover business issues that AHAP does not
d. Cons:
i. Implementation delayed until HUD issues a form document
ii. HUD would likely review during management review or audit
3.New Definition Existing Housing
a. Units “substantially meet HQS” at selection, which means
i. Repair and replacement with same quality (not improvement) AND
ii. Work can reasonably be done within a 30-day period.
b. Units not reasonably required to require Substantial Improvement within 2 years (see chart for definition)
c. All units must meet HQS before HAP is executed
4.Rehabilitated Housing –Doing Substantial Improvements while HAP in Place
a. Type 1: Execute Existing Housing HAP, Do improvements/rehab in 2+ years.
i. 953.154(6); 983.157
ii. Do portion of Work that is not Substantial Improvement under the New Reg. (see chart). After two years, execute Rider and do Work.
iii. Pros:
1. Project begins producing income and housing tenants immediately. No delays, cost, or hassle due to SLR.
iv. Cons:
1. Implementation delayed until HUD issues a form Substantial Improvements Rider that permits work on PBV Units under HAP.
b.. Type 2: Execute Existing Housing HAP for only the units not requiring Substantial Improvements.
i. 983.157; 983.207(d)
ii. When HUD issues Substantial Improvements Rider, arrange to do Work on the units not covered by the HAP. Note that the non-PBV units could still be leased to HCV holders during this period.
iii. Pros: Project begins producing income and housing tenants immediately.
iv. Cons: Same “rehabilitated housing” limitations as Option 2. See Exhibit B for regulation excerpts related to this idea.
CLPHA will publish a long-format analysis of the entire rule as soon as possible. If you have any questions, email [email protected].