HUD PIH Publishes Moving to Work (MTW) Expansion Operations Notice

HUD’s Office of Public and Indian Housing (PIH) posted the final “Operations Notice for the Expansion of the Moving to Work (MTW) Demonstration Program” in the Federal Register on August 28. This version of the Operations Notice establishes requirements for implementing the MTW demonstration for public housing agencies (PHAs) applying for one of 100 new MTW slots. The original Operations Notice was published on January 23, 2017 (see Memo, 1/23/17, 5/8/17). The final notice is effective immediately. Next week’s Memo will provide a thorough analysis of the final notice, including a comparison with the previous version (see Memo, 10/9/18, 10/15/18, 10/22/18, 10/29/18, and 12/3/18).

Background on MTW and the Expansion

In 1996, Congress established MTW initially authorizing HUD to admit up to 30 agencies. Congress later increased that limit to 39 by 2011. The “Consolidated Appropriations Act of 2016” authorized HUD to expand the MTW demonstration to an additional 100 high performing PHAs over a seven-year period ending in 2022. PHAs will be added to the MTW demonstration in groups (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. MTW agencies may use additional MTW waivers as long as they do not conflict or interfere with their cohort study.

For each cohort, separate PIH notices are planned. Notice PIH-2018-17 invited PHAs to apply for a slot in Cohort #1 “MTW Flexibilities on Small PHAs.” Cohort 1 is limited to PHAs with a combination of 1,000 or fewer public housing units and vouchers (see Memo, 10/22/18). Notice PIH-2019-04 offered PHAs an opportunity to express interest in Cohort 2, “Rent Reform” and Notice PIH-2020-21 posted on August 28, 2020 invites PHAs to apply for a slot in Cohort 2. The “Rent Reform” Cohort is limited to PHAs with a combination of at least 1,000 non-elderly and non-disabled public housing residents and voucher households (see Memo, 3/18/19). PIH has not yet selected PHAs for Cohorts 1 and 2. Cohort 3 will test work requirements and Cohort #4 will test landlord incentives for participating in the voucher program.

Under MTW, HUD can waive nearly all provisions of the “United States Housing Act of 1937” and the accompanying regulations. This includes most of the main rules and standards governing Housing Choice Vouchers (HCV) and public housing, with some exceptions such as civil rights, labor, and environmental laws. MTW agencies are also allowed to shift public housing Capital and Operating Funds and HCV assistance (including Administrative Fees as well as Housing Assistance Payment, HAP) to purposes other than those for which they were originally appropriated – referred to as “fungibility.” No matter how funds are mixed, they will now be called “MTW Funding.”

There are three MTW statutory goals: reducing costs and increasing cost-effectiveness, providing incentives for self-sufficiency, and increasing housing choices for low-income families. PHA’s granted MTW status (“MTW agencies”) must meet five statutory requirements:

  • Ensuring that 75% of the families they assist have income at or below 50% of area median income;
  • Establishing a reasonable rent policy;
  • Assisting substantially the same number of low-income families as they would without MTW funding flexibility;
  • Assisting a mix of families by size comparable to the mix they would have served if they were not in MTW; and
  • Ensuring that assisted units meet housing quality standards.

In practice, HUD’s enforcement of these requirements for the original 39 MTW agencies has been highly permissive.

The Final Operations Notice Appendices

The most important components of the final Operations Notice for advocates to read are the three appendices. Appendix I “MTW Waivers” charts “MTW activities” that MTW agencies may implement without HUD approval, as long as they are implemented with the “safe harbors” tied to the specific allowed MTW activity. Appendix II has instructions for any required written impact analyses and hardship policies. Impact analyses are required for certain activities, such as work requirements, term-limited assistance, and stepped rent. Written financial and other hardship policies must be developed for most MTW activities. Appendix III explains the method for calculating the requirement that MTW agencies house substantially the same number of families as they would have absent MTW.

General Description of Waivers in Final Notice

There are four basic categories of waivers: “MTW Waivers,” “Safe Harbor Waivers,” “Agency-Specific Waivers,” and “Cohort-Specific Waivers.”

MTW Waivers: MTW agencies may conduct any activity/policy in Appendix I without PIH review and approval. However, each specific eligible activity/policy has specific “safe harbor” requirements/limitations that an MTW agency must follow, for example requiring a hardship policy or not applying an activity/policy to elderly people.

Safe Harbor Waivers: MTW agencies may request PIH approval to expand an MTW Waiver activity/policy in Appendix I in a way inconsistent with the safe harbors for that specific MTW Waiver activity/policy. PIH has not yet provide instructions on how PHAs may justify such requests. However, when submitting a Safe Harbor Waiver, an MTW agency must hold a public meeting to specifically discuss the Safe Harbor Waivers. This meeting is in addition to following the PHA Plan public participation process requirements. The MTW agency must consider, in consultation with the Resident Advisory Board (RAB) and any tenant associations, all of the comments received at the public hearing. The comments received by the public, RABs, and tenant associations must be submitted by the MTW agency, along with the MTW agency’s description of how the comments were considered, as a required attachment to the MTW Supplement (see below).

Agency-Specific Waivers: MTW agencies may seek PIH approval for an Agency-Specific Waiver in order to implement additional activities not among those in the Appendix I. The request must have an analysis of the potential impact on residents as well as a hardship policy. A PHA must follow the same public participation process described above for Safe Harbor Waivers.

Cohort-Specific Waivers: MTW agencies may be provided Cohort-Specific Waivers if additional waivers not included in Appendix I are necessary to allow implementation of the required cohort study. Cohort-Specific Waivers will be detailed in the applicable Selection Notice for that cohort study.

Other Key Features of the Operations Notice

MTW agencies will submit an “MTW Supplement” to the Annual PHA Plan. The MTW Supplement form has not been finalized. The MTW Supplement must go through a public process along with the Annual PHA Plan, following all of the Annual PHA Plan public participation requirements. So-called “Qualified PHAs,” those with fewer than 550 public housing units and vouchers combined will be required to submit an MTW Supplement each year.

An MTW agency must implement one or multiple “reasonable rent policies” during the term of its MTW designation. PIH defines a reasonable rent policy as any change in the regulations on how rent is calculated for a household, such as any Tenant Rent Policies in Appendix I.

MTW PHAs will maintain MTW designation for twenty years, with the MTW waivers expiring at the end of the 20-year term. The previous Operations Notice had a 12-year term.

An MTW agency’s MTW program applies to all of the MTW agency’s public housing units, tenant-based HCV assistance, project-based HCV assistance (PBV), and homeownership units.

An MTW agency may spend up to 10% of its HCV HAP funding on “local, non-traditional activities,” as described in Appendix I, without prior HUD approval. Examples include providing: shallow rent subsidies, rent subsidies to supportive housing programs to help homeless households, services to low-income people who are not public housing or voucher tenants, and gap-financing to develop Low Income Housing Tax Credit (LIHTC) properties. An MTW agency may spend more than 10% by seeking PIH approval through a Safe Harbor Waiver.

The Federal Register version of the Operations Notice is at:

An easier to read version of the Operations Notice is at:

More information about MTW prior to the expansion is on page 4-57 of NLIHC’s 2020 Advocates’ Guide.

More information about public housing is on page 4-30 of NLIHC’s 2020 Advocates’ Guide.

More information about Housing Choice Vouchers is on page 4-1 of NLIHC’s 2020 Advocates’ Guide.

More information about the Annual PHA Plan is on page 7-61 of NLIHC’s 2020 Advocates’ Guide.