• HUD Announces Nationwide Smoke-Free Policy in Public Housing

The most talked about HUD development this week has been Secretary Castro’s announcement on Wednesday, November 30th that HUD will require all public housing developments to be smoke-free environments. By early February, public housing agencies (PHAs) must implement smoke-free policies that ban listed prohibited tobacco products from public housing living units, indoor common areas, PHA administrative office buildings, and outdoor areas within 25 feet of these spaces. This rule will apply to all public housing, with the exception of Section 8 dwelling units in mixed-finance buildings.

HUD’s Final Rule can be accessed here.

  • HUD Soliciting Comments on HOTMA Public Housing Income Limit Provisions

This week, HUD also published a Federal Register notice that it is soliciting comments on the implementation of the public housing income provisions of the Housing Opportunities through Modernization Act (HOTMA). HOTMA mandates that once a family’s income exceeds 120 percent of the area median income for two consecutive years, the PHA must either terminate the tenancy or charge the family a higher monthly rent. HUD maintains the authority to adjust the 120 percent threshold if the HUD Secretary finds such adjustment necessary.

HUD requests that comments address:

  1.  whether HUD’s current proposed method of determining income limits (as stated in the notice) adequately considers local housing costs and makes appropriate adjustments for higher housing costs, and
  2. other factors HUD should consider when determining whether to make adjustments to the income limit (with specific examples of circumstances not currently captured in HUD’s proposed methodology).

Ballard Spahr’s Housing Group previously commented on HUD’s Advance Notice of Proposed Rulemaking on public housing income limits in March, before HOTMA’s passage.

  • HUD Interim Final Rule on HOME Program Commitment Requirement Changes

By statute, participating HOME Investment Partnership (HOME) jurisdictions must place grant funds under binding commitments within 24 months from the month in which the grant agreement was executed. On December 2, 2016, HUD published an Interim Final Rule changing the way the agency will determine compliance with the commitment requirement. The Rule revises HUD’s longstanding cumulative commitment methodology with a grant specific one that allows participating jurisdictions to select the year HOME grant funds will be committed to a specific project or activity. The Rule also eliminates the 5-year deadline for expenditures of HOME funds appropriated for FY 2015 and following years to better align with recent appropriations statutes and existing HUD deadlines for completing projects assisted with HOME funds.

This Rule affects HOME grants from Fiscal Year 2015 and beyond, and is scheduled to take effect on January 31, 2017. HUD is accepting comments to the interim rule until January 3, 2017 by mail or electronic submission through www.regulations.gov.

 

HUD has issued a Federal Register Notice offering initial implementation guidance for the Housing Opportunities through Modernization Act of 2016 (HOTMA) (Pub. L. 114-201). The notice highlighted both the HOTMA provisions that are self-implementing or otherwise already in effect, and outlined certain key HOTMA provisions that will require further action by HUD.

In addition to the five self-implementing HOTMA provisions noted in our previous blog post, the following HOTMA provisions are also currently in effect due to prior HUD rulemaking or notices:

  • Section 402: Inclusion of Public Housing Agencies (PHAs) and Local Development Authorities in Emergency Solutions Grants (ESG)
  • Section 501: Inclusion of Disaster Housing Assistance Program in Certain Fraud and Abuse Prevention Measures
  • Section 502: Energy Efficiency Requirements under the Self-Help Homeownership Opportunity Program
  • Section 701: Formula and Terms for Allocations to Prevent Homelessness for Individuals Living with HIV or AIDS

In addition to clarifying which HOTMA sections are immediately applicable, the notice also highlights guidance that PHAs and other housing providers can expect from HUD in the future. This guidance includes, but is not limited to, the following topics:

  • PHA discretion in applying different payment standards for family subsidy calculations when fair market rents have decreased
  • Improving coordination between PHAs and public child welfare agencies to carry out the Family Unification Program
  • Conditions and requirements for subawarding ESG funds to PHAs and local redevelopment authorities
  • Changes to the allocation formula for the Housing Opportunities for Persons with AIDS (HOPWA) program, and forthcoming HUD regulations on the reallocation of HOPWA funds to alternative grantees
  • Annual adjusted income caps for public housing tenancy, and regulations outlining subsidy calculations for over-income families remaining in their units
  • Funding Capital Fund Replacement Reserves, caps for capital improvements, plus accounting and reporting requirements for replacement reserve funds
  • Forthcoming Mortgagee Letter to establish specific percentages of owner-occupied units in FHA-insured condominiums

Part IV of the notice also discusses the type of implementation action HUD is considering for the HOTMA sections that require further rulemaking or guidance.  We will continue to monitor HOTMA’s implementation across various HUD programs.

RoadEffective September 21, amendments to HUD’s Housing Choice Voucher (HCV) Program – the government’s largest program for assisting low-income, elderly, and disabled populations in the private housing market – will change the portability process. Portability enables a voucher holder to use the voucher assistance to move outside of the jurisdiction of the public housing authority (HA) that initially issued it. Unfortunately, the current portability regulations and guidance are often unwieldy for many HAs, and in some cases have led to disputes, delayed payments, and other unintended consquences.  HUD indicates that the amendments seek to better define the roles between HAs if the family moves into another PHA’s jurisdiction, improve billing arrangements in portability cases, and allow families to more easily lease and rent homes in their favored locations.  Hopefully, the new regulations will achieve HUD’s intended results.

The new regulatory provisions include the following changes:

  • Mandatory absorption (when HAs absorb the HCV into their own portfolio rather than bill the initial HA) requirements are removed; mandatory voucher suspension notifications are clarified.
  • HAs must notify local HUD offices within 10 days of any portability moves that were denied due to lack of funding.
  • Vouchers issued by the receiving HA to the family must be given expiration dates no less than 30 calendar days from the expiration of the initial HA voucher.
  • All parties involved in portability must be briefed on how portability works and the benefits of living in low-poverty areas.
  • Families are allowed to choose the receiving HA if they use portability.

Additional information, detailed regulations, and comments on HUD’s final rule is available.

The Office of Inspector General (OIG) recently released an audit report of HUD examining the extent to which over-income families have been residing in public housing units. “Over-income” means the families were eligible low- income families at the time they were admitted to public housing but their incomes have increased above 80% of area median income during their tenants in public housing. Such occupancy is permitted by HUD regulations and is a discretionary policy that housing authorities may implement. The OIG conducted the review per the request of Congressman David P. Roe.

The OIG stated that as many as 25,226 over-income families have been receiving public housing assistance, according to HUD’s 2014 eligibility income limits. The report concludes with recommendations that HUD direct housing authority policy to better serve and provide opportunity for low-income individuals and families.

While the OIG report provides interesting income-based statistics for the over-income segment of the public housing population, the criticism against HUD is troubling since HUD regulations explicitly give public housing authorities discretion to determine whether to terminate over-income families in public housing. Policies that allow for over-income tenancy may support self-sufficiency goals, and address local housing market conditions. Additionally, families that are identified as over-income help deconcentrate subsidized housing.

Construction WorkerAs an update to our blog of last week, HUD published a new notice that updates the interim regulation at 24 CFR Part 135, which provides for compliance with Section 3 of the Housing and Urban Development Act of 1968 (Section 3).

HUD published the notice on March 27th in the Federal Register. Interested persons are invited to submit comments on the notice no later than May 26, 2015. The notice identifies certain key areas for which HUD is most interested in receiving comments. Comments may be submitted: 1) by mail to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW, Room 10276, Washington, DC 20410-0500 or 2) by electronic submission at www.regulations.gov.

For more in depth coverage on the notice, please see Ballard Spahr’s alert.