Final Rule Implementing HOTMA Sections 102, 103, and 104 Published in Federal Register

The final rule implementing all but one of the remaining provisions of the “Housing Opportunity Through Modernization Act of 2016” (HOTMA) was published in the Federal Register on February 14. The publication follows the posting by HUD of a preview version on January 31 (see Memo, 2/6). While other HOTMA provisions had previously been implemented (see Memo, 10/13/20), Sections 102, 103, and 104 still required formal public review and comment prior to implementation. A proposed rule to implement these provisions was published on September 17, 2019 (see Memo, 9/23/19). Most of the provisions will not take effect until January 1, 2024.

Section 102 applies to public housing and Housing Choice Vouchers (HCV) administered by HUD’s Office of Public and Indian Housing (PIH). Section 102 also applies to programs administered by HUD’s Office of Multifamily Programs (Multifamily): Section Eight Project-Based Rental Assistance (PBRA), Section 202 Housing for Low-Income Elderly Persons, and Section 811 Housing for Low-Income Persons with Disabilities. Some of the Section 202 provisions also apply to the HOME Investment Partnerships (HOME), national Housing Trust Fund (HTF), and Housing Opportunities for Persons with AIDS (HOPWA) programs. In short, Section 102 reduces the frequency of income reviews and modifies the definition of income and assets. For example, the HOTMA statute:

  • Created a 10% adjusted income increase or decrease threshold for conducting interim income reexaminations. In most situations, increases in earned income (e.g., wages) will not be processed until a resident’s next annual income reexamination.
  • Increased the standard deduction for households with a head, co-head, or spouse who is elderly or is a person with a disability.
  • Excluded income received from Medicaid or other state or local programs designed to keep at home a household member who has a disability.
  • Increased the allowance for unreimbursed health and medical care expenses from 3% to 10% of annual income (phased in over two years).
  • Provided hardship relief for expense deductions, lessening the impact of the above increased threshold for medical expenses. Public housing agencies (PHAs) may grant hardships for households unable to pay rent due to unanticipated medical or disability expenses, as well as for households no longer eligible for the childcare expense deduction.

Section 104, which applies to public housing, HCV, PBRA, HOME, HTF, and HOPWA, sets maximum asset limits for eligibility and continued occupancy and implements deductions and exceptions for certain investments, such as retirement savings. Retirement accounts and educational savings accounts will not be considered “net family assets.”

Section 103 only applies to public housing, modifying the continued occupancy standards for public housing households whose income exceeds the statutory limit (known as the “over-income” provision). (See Memo, 2/8/16 and NLIHC’s 2016 comment letter.) Section 103 becomes effective on March 16, 2023.

PIH will be hosting a webinar regarding Section 103 on March 2 from 2 to 3:30 pm ET. Webinars covering Sections 102 and 104 will be held on April 6 and April 13. Register for the Section 103 webinar at the HOTMA Income and Assets Training Series page. Multifamily has an Introduction to HOTMA for Multifamily Programs. In addition, Multifamily is developing a series of webinars. Multifamily and PIH will publish comprehensive Section 102 and 104 implementation guidance in late spring.

Read the formal Federal Register version of the final HOTMA rule at: https://bit.ly/3IvkcGG

Read the HUD preview version of the final HOTMA rule at: https://bit.ly/3WZjK7k

PIH’s HOTMA webpage is accessible at: https://bit.ly/3XTanHv

Multifamily’s HOTMA webpage is accessible at: https://bit.ly/3wJI9Dp

More information about HUD programs affected by the proposed rule is available in Chapter 4 of NLIHC’s 2022 Advocates’ Guide.