Bill Introduced to Reform Small PHAs

On March 21, Representative Steven Palazzo (R-MS) introduced the “Small Public Housing Agency Opportunity Act of 2016” (H.R. 4816). The bill allows for greater flexibility and some changes in oversight requirements for small public housing agencies (PHAs), defined as those that administer 550 or fewer public housing units and Housing Choice Vouchers combined.

Among other things, the bill would:

  • Limit HUD inspections of housing and voucher units to once every three years, unless the PHA has been classified as “troubled;”
  • Allow up to 50% of the PHA’s voucher allocation to be project-based, up from 20%;
  • Allow for public housing operating funds, public housing capital funds, and voucher funds to be combined and used for any activity eligible under the public housing or voucher programs as long as the PHA assists the same number of households as in the previous year and maintains a comparable mix of families by family size; and
  • Allow the minimum rent, now $50, to increase annually for PHA residents based on the percentage increase in the Consumer Price Index for all urban consumers for the year.

The bill also includes a rent reform demonstration in which up to 20% of small PHAs may be selected by HUD to choose one of the following methods for establishing a household’s rent contribution for a public housing unit:

  • Tiered rent system, in which an initial rent is set and adjusted annually based on changes in area median incomes (AMI). There would be four initial rent tiers:
    • For extremely low income households, a fixed amount equal to 30% of 10% of AMI.
    • For very low income households, an amount equal to 30% of 30% of AMI.
    • For low income households, an amount equal to 30% of 50% of AMI.
    • Households whose income exceeds 80% of AMI must pay rent equal to the higher of 30% of 80% of AMI or the market rent.
  • Gross income-based rents, in which an initial rent is set at an amount between 26% and 28% of a household’s income, adjusted annually based on factors selected by the PHA. PHAs are allowed to set a minimum rent.
  • Existing rent mechanisms, in which a PHA may use any of the above mechanisms in conjunction with the mechanism currently in the law.

NLIHC is concerned about some provisions in the bill that would weaken key regulations protecting the rights and security of tenants. Problematic provisions include the rent reform demonstration that does not include sufficient protections for tenants or evaluation components, weakening Section 3 requirements, weakening performance measures for both public housing and voucher program administration, authorizing the comingling of all public housing and voucher funding, and decreasing reporting requirements.

H.R. 4816 has been referred to the House Committee on Financial Services. The bill, which has garnered bipartisan support, currently has ten cosponsors. A similar bill (S. 2292) was introduced by Senator Jon Tester (D-MT) last November.

Learn more about the bill at: