HUD Invites PHAs to Apply for “Rent Reform” Moving-to-Work Cohort

HUD posted Notice PIH-2019-04 inviting public housing agencies (PHAs) to apply to participate in the second cohort of the Moving to Work (MTW) Demonstration Program expansion. This cohort will test “rent reform” ideas designed to “increase resident self-sufficiency and reduce PHA administrative burdens.” Only PHAs with a combination of at least 1,000 non-elderly and non-disabled public housing residents and voucher households will be eligible. Each PHA will implement one alternative rent policy:

  1. Income-based tiered rents
  2. 5% stepped rents not tied to income
  3. 3% stepped rents not tied to income (a shallow subsidy option)
  4. An alternative tiered or stepped rent proposed by a PHA

PHAs in the rent reform cohort will not be allowed to use the term limit or work requirement “MTW Waivers” (see Memo, 10/15/18).

The “Consolidated Appropriations Act of 2016” authorized HUD to expand the MTW Demonstration Program to an additional 100 high-performing PHAs over a seven-year period. PHAs will be added to the MTW demonstration in annual cohorts, each of which will be overseen by a research advisory committee to ensure the demonstrations are evaluated with rigorous research protocols, quantitative analysis, and comparisons to control groups. Each year’s cohort of MTW sites will be directed by HUD to test one specific policy change.

Only non-elderly and non-disabled public housing or voucher households will be subject to an alternative rent policy. HUD is reducing the age threshold for “elderly” to age 56 or older because over the course of the six-year MTW evaluation period a person would exceed the age 62 elderly threshold. An independent research team will evaluate the impact of the rent policies on currently assisted households and those newly admitted during the demonstration period. Residents will be randomly assigned to an alternative rent scheme or to a control group paying rent according to the PHA’s regular rent policy.

PHAs must implement a “full hardship policy” that would exempt a household if:

  • The household experiences a decrease in income due to loss or reduction of employment, reduction in or loss of earnings or other assistance, or death in the family;
  • The household experiences increased expenses such as medical, child care, transportation, education, or similar costs; or
  • The household experiences other situations determined by the PHA to be appropriate.

It is not obvious that requiring residents to pay more rent or causing them to lose their HUD assistance (especially in high-rent markets) will increase resident self-sufficiency. Augmented funding for the Family Self-Sufficiency and the Jobs Plus programs, rigorous implementation of Section 3 obligations, better coordination with educational institutions, assistance with child care, and access to affordable transportation are more likely to result in enhanced self-sufficiency.

MTW Test Rent #1: Income-Based Tiered Rents

HUD has set tiered rents at $2,500 increments. Within each tier a household’s rent is fixed, based on 30% of income at the midpoint of the tier. All households in a tier will pay the same rent. Household income will be recertified every three years. A household’s rent will not change in between the triennial recertification even if their income increased to a point that would place them in the next tier; that household would not pay the next tier’s higher rent until after the triennial income recertification. The minimum rent will be $50.

The tiered rent table in the Notice has 13 tiers. The amount of rent-increase from tier to tier is $62 or $63. It is notable that the rent increases are regressive. For example, a household moving from tier 5 (income between $10,000 and $12,499) to tier 6 (income between $12,500 and $14,999) will pay $63 more a month – a 22% rent increase. A household moving from tier 10 (income between $22,500 and $24,999) to tier 11 (income between $25,000 and $27,499) will pay $62 more a month – a 10% rent increase.

MTW Test Rent #2: 5% Stepped Rent Not Tied to Income

HUD has a rent schedule of 18 steps beginning at a rent based on 15% of the Fair Market Rent (FMR) and increasing in 5% increments until the rent reaches 100% of FMR at step 18. The rents on this table are fixed – they are not tied to a household’s income after the first year. At the beginning, a household will be placed in a tier that matches the rent they paid the year before the MTW scheme started. A household’s rent will then increase each year even if their income does not increase. Any time a household reaches step 18 (100% FMR) they will no longer receive HUD assistance.

Household income will be reexamined every three years, not to determine rent but to determine whether the household remained eligible for public housing or voucher assistance. If at a triennial recertification 30% of a household’s monthly income is greater than the FMR for the household/unit size, they will be required to exit the public housing or voucher program.   

If a household meets the “full hardship” criteria, their rent is reset at the household’s step level based on their actual income. A “limited hardship” is also possible if a household does not meet the “full hardship” criteria but still struggles to pay rent. The PHA will conduct an interim income recertification, and if the rent burden is greater than 50% at the next step, a one-year pause in the stepped rent schedule could be approved. Only one limited hardship will be allowed over the course of a household’s tenure.

MTW Test Rent #3: 3% Stepped Rent Not Tied to Income

HUD has a rent schedule of 25 steps beginning at a rent based on 8% of FMR and increasing in 3% increments until the rent reaches 80% of FMR at step 25. The rents on this table are fixed – they are not tied to a household’s income after the first year. At the beginning, a household will be placed in a tier that matches the rent they paid the year before the MTW scheme started. A household’s rent will then increase each year even if their income does not increase. Most of the provisions in this option are the same as those for the 5% FMR stepped rent option. HUD characterizes this option as a shallow subsidy option because once a household reaches step 25 they will continue to pay rent at 80% FMR and receive a small subsidy. A household in this option will be allowed to have two limited hardships over the course of their tenure.

MTW Test Rent #4: PHA Proposed Alternative

A PHA could choose to develop its own tiered rent policy or stepped rent policy. To be eligible the PHA will have to have at least 4,000 existing non-elderly or non-disabled households. If it does not, it could partner with one or more other PHAs (all of which would be counted toward the 100 PHA expansion cap). The Notice prescribes “boundaries” for both options. For example, an alternative tiered rent policy could have tiers no smaller than $2,000 and no larger than $10,000. Rents could not be set at a level that would result in more than 10% of affected households paying more than 40% of their incomes for rent.

Notice PIH-2019-04 is at:

NLIHC prepared an initial assessment of HUD’s October 11, 2018 proposed MTW Operations Notice describing concerns about the safe harbors and inadequacies of the hardship policies and impact analyses HUD proposed. The assessment reviews concerns regarding “program-wide” evaluations, instead of “rigorous” evaluations, that MTW Waivers not required by a PHA’s specific cohort will undergo. NLIHC’s comment letter regarding the Operations Notice is at: