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###### Department of Housing and Urban Development

          - [Docket No. FR-6057-N-05]
          - RIN 2577-AD03

# AGENCY:

Office of the Assistant Secretary for Community Planning and Development, U.S. Department of Housing and Urban Development (HUD).

# ACTION:

Notice.

# SUMMARY:

This notice extends the compliance date for HUD's final rule entitled “Housing Opportunity Through Modernization Act of 2016: Implementation of Section 102, 103, and 104” (“HOTMA final rule”) for Community Planning and Development (“CPD”) programs. Specifically, HUD is extending the compliance date for the HOME Investment Partnerships Program (“HOME”), HOME-American Rescue Plan program, Housing Trust Fund (“HTF”), Housing Opportunities for Persons With AIDS (“HOPWA”), Community Development Block Grant Program (“CDBG”), Emergency Solution Grants (ESG), Continuum of Care (CoC) programs, and CPD programs funded through competitive process (“CPD programs”) until January 1, 2025. HUD is taking this action to allow jurisdictions, participants, and grantees additional time to incorporate HUD's income and asset requirements into their own programs and the flexibility to transition implementing HOTMA requirements under their own timelines.

# DATES:

*Compliance Date:*                         CPD participating jurisdictions, participants, and grantees (“CPD grantees”) subject to 24 CFR parts 5, 92, 93, 570, 574, 576, and 578, or who apply the income requirements in 24 CFR part 5 pursuant to Notices of Funding Opportunity are not required to comply with the changes to these parts in the HOTMA final rule until January 1, 2025.                    

# FOR FURTHER INFORMATION CONTACT:

                        For the HOME Investment Partnerships Program and the Housing Trust Fund Program, Milagro Fisher, Senior Affordable Housing Specialist, Office of Affordable Housing Programs, at telephone (202) 708-2684, Room 7160; for the Housing Opportunities for Persons With AIDS program, Lisa Steinhauer, Senior Program Specialist, Office of HIV/AIDS Housing, at telephone (215) 861-7651, room 7248; for the Community Block Grant Program, B. Cory Schwartz, Deputy Director, State & Small Cities Division, at telephone (202) 402-4105, room 7282. The mailing address for each office contact is Department of Housing and Urban Development, 451 Seventh Street SW, Washington, DC 20410-7000. HUD welcomes and is prepared to receive calls from individuals who are deaf or hard of hearing, as well as individuals with speech or communication disabilities. To learn more about how to make an accessible telephone call, please visit:                         *https://www.fcc.gov/​consumers/​guides/​telecommunications-relay-service-trs.*

# SUPPLEMENTARY INFORMATION:

## I. Background

The HOTMA final rule was published on February 14, 2023 (88 FR 9600). The HOTMA final rule revises HUD's 24 CFR part 5 income regulations for Section 8, public housing, and other HUD programs. The HOTMA final rule included amendments to 24 CFR parts 92, 93, 570, and 574 to align income requirements to implement sections 102 and 104 of the Housing Opportunity Through Modernization Act of 2016 (HOTMA) (Pub. L. 114-201, 130 Stat. 782). Additionally, the HOTMA final rule changed the income requirements for programs subject to 24 CFR parts 576 and 578, as well as competitive programs using Notices of Funding Opportunity (“NOFOs”) that reference the regulations in 24 CFR part 5. The final rule established an effective date for these amendments of January 1, 2024.

                    On September 29, 2023, HUD's Office of Public and Indian Housing (“PIH”) and Office of Housing announced that HUD would allow for a later compliance date than the effective date of the HOTMA final rule in Section 6 of Notice H 2023-10/PIH 2023-27 (“HOTMA Notice”). This was in response to requests from PHAs, owners, and related housing partners for additional time to prepare for HOTMA final rule implementation. Through the HOTMA Notice, HUD allowed PHAs the flexibility to establish their own compliance date for sections 102 and 104 of HOTMA as early as January 1, 2024, and no later than January 1, 2025.[1]                                          HUD has determined that CPD grantees receiving assistance through CPD programs must be provided similar flexibilities as PHAs and is communicating these flexibilities through this notice.                

## II. Delay of Compliance Date

CPD programs serve a broad group of beneficiaries through a range of activities not generally authorized under other HUD programs, including but not limited to downpayment assistance, homeowner rehabilitation, rental assistance for tenants, emergency shelter, homeless prevention activities, public services, construction of public facilities and improvements, and installation of infrastructure. CPD funds used for housing development are often layered in the same projects or units that also receive funding under HUD's PIH and Housing programs, including the Section 8 voucher and rental assistance programs. Moreover, rental units developed with CPD funds may be occupied by families who also receive Federal tenant-based rental assistance (“TBRA”), including CPD-funded TBRA.

                    Under the HOTMA final rule, CPD programs that reference or use 24 CFR 5.603, 24 CFR 5.609, 24 CFR 5.611, 24 CFR 5.617, or 24 CFR 5.618 are subject to new or different requirements on January 1, 2024.[2]                                          Additionally, HUD issued conforming regulations to 24 CFR parts 92, 93, 570, and 574 that are also effective January 1, 2024. To fully implement and comply with the HOTMA final rule no later than January 1, 2025, CPD program administrators must develop and/or update program guidelines, including policies, procedures, and internal systems, and conduct software updates to incorporate the new income and asset requirements prior to implementing these requirements for their programs. CPD program administrators must also identify ways in which CPD grantees can obtain income determinations from other HUD programs in order to implement program flexibilities that were built into the HOTMA final rule for those programs.                

                    HUD recognizes that until HUD has provided the guidance and performed the software updates necessary for CPD                           ( print page 85649)                        grantees to implement the HOTMA final rule, CPD grantees may not be able to comply with the requirements of the HOTMA final rule. Even after the necessary guidance and system updates are made, CPD grantees will still need additional time to incorporate this information into their program policies and procedures and update their systems and software. In recognition of these operational issues and challenges, HUD will allow CPD grantees to set their own compliance date for the applicable HOTMA final rule provisions. This compliance date may be as early as January 1, 2024, and no later than January 1, 2025. CPD grantees may continue to implement the requirements of the prior version of their program regulations and regulations in 24 CFR 5.603, 24 CFR 5.609, 24 CFR 5.611, and 24 CFR 5.617, as applicable, until the CPD grantee's compliance date.                

## III. Instructions for CPD Programs

HUD provides the below instructions and guidance for CPD programs. Before implementing the HOTMA final rule, CPD grantees must comply with all applicable HOTMA requirements to establish policies and procedures, including establishing hardship policies for programs implementing the hardship provisions contained in 24 CFR 5.611(c)-(e), policies prescribing when and under what conditions a family must report a change in family income or composition in accordance with 24 CFR 574.310(e)(4)(iv), and/or policies describing income verification when using the safe harbor provisions in 24 CFR 5.609(c). In addition, CPD grantees must perform the following, as applicable, to implement the HOTMA final rule:
    - Conduct any public process necessary to comply with the consolidated plan requirements.
    - Update program guidelines, policies and procedures, templates, income and asset forms, and applications.
    - Conduct internal and external system and software updates.
    - Update income and asset regulatory citations and requirements in written agreement templates.
    - Require owners to send notices to tenants of any expected changes to leases or rents required by the HOTMA final rule.
    - Train staff, subrecipients, and contractors on the new income requirements and perform outreach to housing partners ( e.g.,                      project owners) to implement the HOTMA final rule.                

                    To assist CPD grantees in implementing these requirements, HUD intends to issue supplemental guidance to HOME participating jurisdictions and HTF grantees, including guidance on obtaining income eligibility determinations made by PHAs, owners, and providers of HUD rental assistance or subsidy programs. HUD also intends to publish, through a                     **Federal Register**                     notice, guidance on implementing HOTMA standards applicable to the HOPWA program.                

## IV. Conclusion

Accordingly, HUD revises the January 1, 2024 compliance date for the changes made to 24 CFR parts 5, 92, 93, 570, and 574 for the CPD programs described in this notice to January 1, 2025, at which time CPD grantees subject to these parts must comply with the HOTMA final rule. Until January 1, 2025, CPD grantees subject to these parts may instead choose to comply with these parts as they existed prior to January 1, 2024.

Marion McFadden,

Principal Deputy Assistant Secretary for Community Planning and Development.

# Footnotes

1.                             See Section 6.1 of Section 6 of Notice H 2023-10/PIH 2023-27.                    
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2.                             When a grantee in CPD programs has a choice in applying a definition of annual income under their program regulations and the grantee chooses the definition in 24 CFR 5.609, then the grantee is subject to the applicable requirements in 24 CFR 5.609, as revised by the HOTMA final rule and applied in accordance with this Notice.                    
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[FR Doc. 2023-27026 Filed 12-7-23; 8:45 am]

BILLING CODE 4210-67-P