HUD Posts Streamlined Regulations for Public Housing, Voucher, and Other Multifamily Programs

HUD has posted an advance review copy of a new set of regulations intended to streamline many requirements for the Public Housing and Housing Choice Voucher programs, as well as for most programs administered by HUD’s Office of Multifamily Housing Programs. It will be published in the Federal Register on March 8.

The FY14 Appropriations Act made several changes to the Housing Act of 1937, five of which were implemented through a Federal Register notice on June 25, 2014 (see Memo, 6/27/14). On January 6, 2015 HUD issued a proposed rule codifying these changes and proposing additional changes to streamline existing regulatory requirements (see Memo, 1/12/15). Some of the many changes that will be in the final rule are summarized here.

Definition of Annual Income. Current regulations define “annual income” to be income projected for the upcoming 12 months. The proposed rule allowed public housing agencies (PHAs) and private multifamily property owners to define annual income as either actual past income or projected income, requiring them to apply the option they chose to all families. Based on comments received, HUD has decided not to adopt the use of actual past income because it would provide little or no streamlining benefit.

Reexamination of Income for Fixed Incomes. HUD had proposed allowing PHAs and owners of private multifamily housing the option of conducting streamlined annual reexaminations of income for households when 100% of a household’s income consists of fixed sources, such as Social Security. The final rule will be substantially revised, allowing PHAs the option of conducting a streamlined income determination for any family member who has a fixed source of income, even if that person or family also has a non-fixed source of income. Upon admission to a program, a third-party verification of all income amounts will be required for all family members. A full income reexamination and redetermination must be performed every three years. In the intervening years, a streamlined income determination must be conducted by applying a verified cost of living adjustment (COLA) or current rate of interest to the previously verified or adjusted income amount.

Earned Income Disregard (EID). Current regulations provide for an earned income disregard (EID) that permits certain tenants of public housing and persons with disabilities participating in the voucher program to accept a job without having their rent increased immediately due to their increased income. The EID is available for a total of 24 months, but those months may be spread across 48 months to account for intermittent job losses. PHAs are required to fully exclude income for the first 12 months of an EID, and to exclude at least 50% for the last 12 months.

HUD had proposed eliminating the 48-month timeframe, requiring families to maintain continuous employment in order to obtain an EID limited to a straight 24-month period. For the second 12 months HUD had proposed allowing PHAs the discretion of phasing in a rent increase, excluding at least 50% of income.

The final rule eliminates the 48-month timeframe, limiting an EID to a 24-month period. However, the final rule will also eliminate the continuous employment requirement. Residents will be able to start and stop employment and still retain the EID, but the EID will only be available for up to 24 consecutive months from the date of the initial increase in annual income. For example, if someone becomes eligible for an EID, the 24-month period will not stop if employment ends or income declines. However, if employment is subsequently regained or income increases, the EID would again be available during the remainder of the 24-month period. After the 24-month period ends, an individual will no longer be eligible for an EID in the future.

Utility Reimbursements. The proposed rule offered PHAs the option of providing utility reimbursements on a quarterly basis to residents of public housing and residents with vouchers if the amounts owed were $20 or less. PHAs could continue to provide utility reimbursements monthly if they chose to. The final rule will retain the quarterly option, but raise the amount to $45 or less per quarter. If a PHA opts to make payments on a quarterly basis, the PHA must establish a hardship policy if less frequent reimbursements will create a financial hardship for tenants.

Community Service Requirement. Currently, PHAs are required to review and determine annually whether public housing residents comply with the community service requirements. The proposed rule allowed a tenant to self-certify compliance with the requirement. The final rule retains the self-certification option and adds a requirement that PHAs review a sample of self-certifications and validate their accuracy with third-party verification procedures currently in place.

Public Housing Grievance Procedures. In the preamble to the proposed rule, HUD had claimed that many portions of the tenant grievance process are repetitive or overly prescriptive for PHAs. Therefore, HUD had proposed streamlining procedures relating to informal settlements, grievance procedures for failure to request a hearing and requiring escrow deposits, and matters relating to transcripts, copies, and the conduct of a hearing.

The preamble to the final rule notes that commenters expressed concern that the proposed rule would eliminate the requirement for PHAs to consult with residents regarding the appointment of hearing officers. HUD responded that consultation with residents is a burden for PHAs, and the final rule does not require resident consultation about hearing officer appointments. The final rule does state that, because tenant input into the hearing officer selection process can be valuable, PHAs are required to include their policies for selecting hearing officers in resident leases.

Commenters urged HUD to continue to require PHAs to provide summaries of informal settlements, and that requirement is included in the final rule. Commenters also urged HUD to continue to require PHAs to allow residents to record a meeting and have transcripts made at their own expense, and the final rule includes that requirement.

Biennial Inspections and Use of Alternative Inspection Methods. The FY14 Appropriations Act authorized PHAs to inspect voucher units every other year, rather than annually, and to use inspections conducted for other programs such as the Low Income Housing Tax Credit (LIHTC) program. This option was maintained in the proposed rule and is in the final rule. The final rule also requires alternative inspection methods that are not conducted under LIHTC or HOME program protocols to submit the protocol to HUD’s Real Estate Assessment Center (REAC) and to demonstrate that the protocol meets Housing Quality Standards. The final rule adds that if an alternative method uses sampling, voucher units must be included in the population of units forming the sample.

Exception Payment Standards. Voucher regulations currently require a PHA to request a waiver from the HUD Field Office for a voucher exception payment standard above 110% of the fair market rent (FMR). HUD had proposed to allow PHAs to approve a payment standard of no more than 120% of the FMR without HUD approval if it is required as a reasonable accommodation for a family that includes a person with a disability. The final rule includes this provision.

Utility Payment Schedule. Current voucher regulations require PHAs to establish utility allowances based on unit size (number of bedrooms) or family size, whichever results in a lesser allowance, and on the type of unit (apartment, row house, town house, single-family, detached, manufactured home). HUD had proposed that utility allowances continue to be based on unit size or family size, but also on a newly defined “unit type,” which would be a HUD-determined “attached” or “detached” unit value. Many commenters objected to the proposed change that limited the definition of “unit types” to “attached” and “detached,” and the final rule removes that change.

The advance review copy of the final rule is at