HUD Publishes Technical Corrections to HOTMA Implementation Notice

HUD’s Office of Public and Indian Housing (PIH) published a notice in the Federal Register on July 14 making technical corrections to a notice published on January 18 (see Memo, 1/23) that implemented some Housing Choice Voucher provisions of the Housing Opportunity Through Modernization Act of 2016 (HOTMA). Of the nine corrections, two are substantial; both pertain to exceptions to the cap on the number of units in a project that could be assisted with project-based vouchers (PBVs).

Prior to HOTMA, under the so-called “income mixing” cap, no more than 25% of the units in a project could be assisted with PBVs. Exceptions to this cap prior to HOTMA included units occupied by someone who was elderly, disabled, or receiving a qualifying supportive service. HOTMA amended the exception criteria by eliminating the separate provision for people with disabilities and modifying the supportive services provision by eliminating the requirement that someone in the household actually receive supportive services. Instead, HOTMA merely requires that the unit be exclusively available to households eligible for supportive services that are made available to assisted residents at the project. HOTMA also created a new exception to the cap for projects in a census tract with a poverty rate of 20% or less.

Regarding the “income mixing” cap on the number of PBVs in a project, the January 18 notice stated “a PHA [public housing agency] may not require participation in the supportive services as a condition of living in an accepted unit, although such services may be offered.” The notice continues with a description of a unit excepted from the PBV income-mixing cap because a household participated in HUD’s Family Self-Sufficiency (FSS) program and received associated supportive services.

The July 14 notice clarifies that “HOTMA merely requires households to be eligible for the supportive services, rather than be receiving the supportive services.” The new notice also makes clear: “Therefore, a PHA may not rely solely on a supportive services program that would require a family to engage in supportive services once the family enrolls in the program, such as Family Self-Sufficiency (FSS), for the unit to meet the supportive services exception.” The former FSS description is replaced by general text about a family that chooses to participate in available supportive services.

The January 18 notice also states that “if a the FSS family fails to successfully complete the FSS contract of participation or supportive services objective and consequently is no longer eligible for the supportive services, the family must vacate the unit…and the PHA shall cease paying housing assistance payments on behalf of the ineligible family.” In formal comments to HUD, NLIHC urged HUD to withdraw this text because FSS is a voluntary program; therefore, a family should not be required to move out of their home if they do not succeed in completing their FSS contract, and the unit should remain exempt from the project PBV cap.

July 14 notice removed the text regarding failure to complete an FSS contract, stating HUD was concerned that the text could be misinterpreted to imply that a PHA could establish a supportive services exception based exclusively on required (instead of voluntary) participation in FSS. In addition, HUD determined that this provision could be misinterpreted in a way that conflicts with current FSS requirements, which do not allow termination for failure to complete the FSS contract.

While the July 14 notice removes the FSS text, it still requires removing a unit from the exception category if a family becomes ineligible for supportive services (for reasons other than successfully completing the supportive services objective). If a PHA does not want to reduce the number of excepted units, new notice provides that a PHA could temporarily remove the unit from the PBV housing assistance payment contract and provide the family with a tenant-based voucher or substitute the excepted unit for a non-excepted unit, if possible.

Regarding the new HOTMA provision excepting the number of PBVs in a project located in a census tract with a poverty rate of 20% or less, the January 18 notice implied that there was no limit to the number of PBVs that could be in such a project. The July 14 notice clarifies that HOTMA sets the cap at 40% of the units.

The Federal Register notice is at: