HUD published an extensive notice in the Federal Register on January 18 that implements many provisions of the “Housing Opportunity Through Modernization Act of 2016” (HOTMA) that pertain to the Housing Choice Voucher (HCV) tenant-based and project-based voucher (PBV) programs. HOTMA made changes to the inspection requirements affecting both HCV tenant-based and PBV assistance and to the PBV program in general. The notice also provides guidance regarding changes to HCV housing assistance payment (HAP) calculations for owners of manufactured homes who rent the space on which their home sits.
Unchanged is the requirement that a public housing agency (PHA) must inspect a unit to determining that it meets HUD’s Housing Quality Standards (HQS) before the PHA may make a housing assistance payment. However, HOTMA provides an exception to this requirement that allows a PHA to approve a voucher-assisted tenancy and begin making housing assistance payments on a unit that fails an initial HQS inspection if the deficiencies are not life-threatening.
If a PHA makes payments under this exception, the PHA must withhold assistance payments if the non-life-threatening deficiencies are not corrected within 30 days of the PHA notifying the owner of a unit’s failure to comply with the HQS. A PHA may establish a maximum amount of time that it will withhold payments before terminating a HAP contract, but a HAP contract may not continue more than 180 days. Once a unit is in compliance, a PHA may reimburse the owner for the period during which payments were withheld.
The notice defines ten life-threatening conditions, including various gas leaks and electrical hazards, inoperable or missing smoke detectors or carbon monoxide detectors, lack of alternative means of exit in case of a fire, and deteriorated paint in a unit built before 1978 that is to be occupied by a family with a child under six years of age. If a PHA chooses to implement the inspection exception allowed by HOTMA, its administrative plan must list the specific life-threatening conditions to be considered during HQS inspections. The PHA must also use those specific life-threatening conditions when conducting ongoing HQS inspections, not just initial inspections.
If an initial inspection identifies non-life-threatening deficiencies, a PHA must provide a list of the deficiencies to the household and offer the household an opportunity to decline a lease without jeopardizing its voucher. If the owner fails to correct the non-life-threatening deficiencies within the time period specified by the PHA, the PHA must notify the household that the PHA will terminate the HAP contract and the family will have to move to another unit.
HOTMA also allows a unit to be occupied prior to completion of an inspection if the unit passed an alternative inspection method within the previous 24 months. A PHA must still inspect the unit within 15 days of receiving a Request for Tenancy Approval. Once the unit passes an HQS, a PHA may make retroactive assistance payments. A PHA may rely on inspections of housing assisted under the HOME Investment Partnerships (HOME) program or Low Income Housing Tax Credits (LIHTC) program, as well as another HUD-approved method proposed by the PHA.
Provisions Specific to Project-Based Vouchers (PBVs)
There are a number of HOTMA provisions that pertain to the PBV program.
Limit to Project Basing of Vouchers
Prior to HOTMA, a PHA could choose to use up to 20% of its HCV funding to project-base vouchers. HOTMA changed the limit to 20% of a PHA’s authorized number of vouchers. The statute also allows PHAs to project-base an additional 10% of its authorized number of vouchers (above the 20% base limit) if these PBVs are tied to units that serve households who are homeless or include a veteran, provide supportive housing for persons who have a disability or who are elderly, or are in a census tract with a poverty rate of 20% or less.
HOTMA does not count toward the 20% limit PBVs attached to units that were previously subject to rent restrictions or that received another type of long-term HUD housing subsidy. Examples of such exceptions include public housing, Section 8 project-based rental assistance, Section 202 elderly housing, Section 811 housing for persons with disabilities, Section 236, Section 221(d)(3) Below Market Interest Rate, Rental Assistance Demonstration (RAD), and HUD-VASH PBV Set-aside vouchers, among others.
Income Mixing Requirement
Prior to HOTMA, no more than 25% of the units in a project could be assisted with PBVs. Exceptions to this cap included units occupied by someone who was elderly, disabled, or receiving a qualifying supportive service.
HOTMA changes the cap to the greater of 25 units or 25% of the units in a project. The statute also amended the exception criteria by:
- Eliminating the separate provision for people with disabilities.
- Modifying the supportive services provision by eliminating the requirement that someone in the household actually receives supportive services, and requiring instead that supportive services be available to all assisted households without an obligation by a household to accept services. Households eligible for supportive services could include someone with a disability.
- Adding as a new exception projects in a census tract with a poverty rate of 20% or less.
The cap does not apply to PBVs attached to units that were previously subject to rent restrictions or that received another type of long-term HUD housing subsidy.
The notice makes clear that supportive services need not be provided by the owner on-site but must be reasonably available. Also, a PHA may not require participation in supportive services as a condition of living in an excepted unit.
PBV Contract Terms
HOTMA extended the initial HAP contract for PBV units from 15 to 20 years. In addition, a PHA may agree to extend a HAP contract for an additional 20 years, for a maximum of 40 years.
HAP contracts must specify that upon termination or expiration, a household is entitled to receive a tenant-based voucher (the voucher that was previously tied to the property). In addition, the household must have the option to remain in their home with the tenant-based voucher, and the owner may not terminate the household’s tenancy.
Prior HOTMA, voucher assistance payments on behalf of owners of manufactured housing could only be made to assist the manufactured home owner with the rent for the space on which the manufactured home is located. HOTMA expanded the definition of rent for manufactured home owners receiving voucher assistance to include monthly payments made by the household to amortize the cost of purchasing the manufactured home (including any required insurance and property taxes) and tenant-paid utilities.
The January 18 Federal Register notice is at http://bit.ly/2k4VnmI.