[Federal Register Volume 87, Number 15 (Monday, January 24, 2022)]
[Notices]
[Pages 3570-3580]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-01285]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6284-N-01]


Implementation of the Fostering Stable Housing Opportunities 
Amendments

AGENCY: Office of the Assistant Secretary for Public and Indian Housing 
(PIH), Department of Housing and Urban Development (HUD).

ACTION: Notice.

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SUMMARY: This notice implements and provides guidance on the provisions 
of the Fostering Stable Housing Opportunities (FSHO) amendments that 
are effective through the publication of this notice. This notice also 
identifies the provisions of FSHO that were effective upon enactment 
(i.e., December 27, 2020) or otherwise already in effect and advises of 
actions that may or must be taken now to comply with the changes. 
Additionally, this notice identifies the provisions of FSHO that 
require further action from HUD to be implemented. Through this notice, 
HUD also seeks public comment on certain provisions of FSHO. However, 
HUD welcomes public comment on any of this notice's provisions.

DATES: 
    Effective date of amendments in Section III of this notice: April 
25, 2022.
    Comment due date: March 25, 2022.

ADDRESSES: Interested persons are invited to submit comments regarding 
this document. All communications must refer to the above docket number 
and title. There are two methods for submitting public comments.
    1. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 7th Street SW, Room 10276, 
Washington, DC 20410-0500.
    2. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
www.regulations.gov. HUD strongly encourages commenters to submit 
comments electronically. Electronic submission of comments allows the 
commenter maximum time to prepare and submit a comment, ensures timely 
receipt by HUD, and enables HUD to make comments immediately available 
to the public. Comments submitted electronically through the 
www.regulations.gov website can be viewed by other commenters and 
interested members of the public. Commenters should follow the 
instructions provided on that site to submit comments electronically.
    No Facsimile Comments. Facsimile (fax) comments are not acceptable.
    Public Inspection of Public Comments. All properly submitted 
comments and communications submitted to HUD will be available for 
public inspection and copying between 8 a.m. and 5 p.m., weekdays, at 
the above address. Due to security measures at the HUD Headquarters 
building, an advance appointment to review the public comments must be 
scheduled by calling the Regulations Division at 202-708-3055 (this is 
not a toll-free number). Copies of all comments submitted are available 
for inspection and downloading at www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Ryan E. Jones, Director, Housing 
Voucher Management and Operations Division, Department of Housing and 
Urban Development, 451 Seventh Street SW, Room 4216, Washington, DC 
20410, telephone number (202) 402-2677. (This is not a toll-free 
number.) HUD encourages submission of questions about this document be 
sent to: <a href="/cdn-cgi/l/email-protection#aaecf3e3eac2dfce84cdc5dc"><span class="__cf_email__" data-cfemail="70362939301805145e171f06">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

I. Background

    The Fostering Stable Housing Opportunities (FSHO) amendments, 
enacted as section 103 of division Q of the Consolidated Appropriations 
Act, 2021 on December 27, 2020 (Pub. L. 116-260), made changes to the 
assistance provided to eligible youth pursuant to the Family 
Unification Program (FUP) authorized under Section 8(x) of the U.S. 
Housing Act of 1937 (42 U.S.C. 1437f(x)). FSHO provides an extension of 
the assistance provided to eligible youth for up to 24 months beyond 
the 36-month time limit of assistance if the youth is participating in 
a Family Self-Sufficiency (FSS) program under section 23 of the U.S. 
Housing Act of 1937 and for youth who are unable to enroll in an FSS 
program who engaged in education, workforce development, or employment 
activities for at least 9 months of the 12-month period preceding the 
extension. FSHO also provides an extension of assistance for up to 24 
months beyond the 36-month time limit of assistance for eligible youth 
who meet one of three statutory exceptions.
    FUP provides Housing Choice Vouchers (HCVs) to two different 
populations: (1) Families for whom the lack of adequate housing is a 
primary factor in the imminent placement of the family's child or 
children in out-of-home care or in the delay of the discharge of the 
child or children to the family from out-of-home care (``FUP 
families''), and (2) eligible youth who are at least 18 years of age 
and not more than 24 years of age who have left foster care, or will 
leave foster care within 90 days, in accordance with a transition plan 
described in section 475(5)(H) of the Social Security Act, and are 
homeless or at risk of becoming homeless at age 16 or older (``FUP 
youth'').
    In 2019, HUD established the Foster Youth to Independence (FYI) 
initiative. Through Notice PIH 2019-20, HUD made available Tenant 
Protection Vouchers (TPVs) targeted to youth eligible under FUP, 
subject to availability. These vouchers are referred

[[Page 3571]]

to as FYI TPVs. The assistance was made available under the 
Consolidated Appropriations Act, 2019, (Pub. L. 116-6), enacted on 
February 15, 2019, that allowed TPV appropriated funds to be used for 
FUP. The notice explained the eligibility and application requirements 
for FYI TPV funding and described how applications will be processed. 
HUD made FYI TPVs available under the notice through the end of Fiscal 
Year (FY) 2020.
    Following the rollout of FYI, Congress provided funding targeted 
for eligible youth under section 8(x) of the U.S. Housing Act of 1937 
in the two most recent appropriations Acts--the Consolidated 
Appropriations Act, 2021, (Pub. L. 116-260), enacted on December 27, 
2020, and the Further Consolidated Appropriations Act, 2020, (Pub. L. 
116-94), enacted on December 20, 2019 (``the Acts''). While the Acts 
allowed that a portion of the appropriated amounts be made available 
without competition, the Acts also required that a minimum amount be 
made available competitively. On October 6, 2020, HUD issued Notice PIH 
2020-28,\1\ making available up to $10 million dollars for youth under 
FUP to be available on a rolling basis without competition. 
Subsequently, HUD issued the Foster Youth to Independence Competitive 
Notice of Funding Availability (FR-6400-N-41) making available $20 
million dollars to assist youth under FUP.\2\ On September 3, 2021, HUD 
issued Notice PIH 2021-26, making available an additional $10 million 
for youth under FUP on a rolling basis without competition. HUD refers 
to vouchers that are funded from these appropriated amounts as FYI 
vouchers, regardless of whether they were awarded competitively or 
noncompetitively.
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    \1\ https://www.hud.gov/sites/dfiles/PIH/documents/pih2020-28.pdf.
    \2\ https://www.hud.gov/sites/dfiles/SPM/documents/Foa_Content_of_FR-6400-N-41.pdf.
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    The assistance made available under FYI, including FYI vouchers and 
FYI TPVs, are collectively referred to in this notice as ``FYI.'' In 
this notice, HUD calls out FYI TPVs only where the operating 
requirements are different from those for the newer FYI vouchers and 
such program requirement distinctions impact the implementation of 
FSHO.
    By statute, there is no time limitation on FUP assistance when used 
to assist FUP-eligible families. However, FUP assistance used to assist 
FUP-eligible youth (FUPY), including FYI vouchers, collectively 
referred to hereafter as ``FUPY/FYI'' assistance, is subject to a 36-
month time limit.
    Public housing agencies (PHAs) administer FUP (including FUPY/FYI) 
in partnership with Public Child Welfare Agencies (PCWAs), who are 
responsible for referring families and youth to the PHA for a 
determination of eligibility for FUP rental assistance. Once the PCWA 
makes the referral, the PHA places the FUP applicant on its waiting 
list,\3\ determines whether the family or youth meets HCV program 
eligibility requirements, and conducts all other processes relating to 
voucher issuance and administration. The PCWA is responsible for 
providing or leveraging follow-up supportive services, such as 
educational counseling and job preparation, for the period defined in 
the notice or Notice of Funding Availability/Opportunity (NOFA/O) for 
which the funding was made available.
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    \3\ FYI TPVs do not require the use of a waiting list since the 
FYI TPV is awarded to the PHA for use by a specific person and is a 
special (non-waiting list) admission.
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    The FSHO amendments made changes to the FUP authorized under 
section 8(x) of the U.S. Housing Act of 1937 to provide eligible youth 
with an extension of FUPY/FYI voucher assistance for up to 24 months 
beyond the 36-month time limit of assistance if they are participating 
in an FSS program under section 23 of the U.S. Housing Act of 1937 (42 
U.S.C. 1437u). In cases where a PHA is not carrying out an FSS program 
or is carrying out an FSS program in which the youth has been unable to 
enroll, FSHO provides the youth with an extension of FUPY/FYI voucher 
assistance for up to 24 months beyond the 36-month time limit of 
assistance if they engaged in education, workforce development, or 
employment activities for at least 9 months of the 12-month period 
preceding the extension. FSHO also provides an extension of FUPY/FYI 
voucher assistance for up to 24 months beyond the 36-month time limit 
of assistance for youth who are responsible for the care of a dependent 
child under the age of 6 or for the care of an incapacitated person; 
regularly and actively participating in a drug addiction or alcohol 
treatment and rehabilitation program; or incapable of complying with 
the requirement to participate in an FSS program or engage in 
education, workforce development, or employment activities, as 
applicable, due to a documented medical condition.
    This notice implements and provides guidance on the provisions of 
FSHO that are effective as of this notice's effective date (see Section 
III). This notice also identifies the provisions of FSHO that were 
effective upon enactment (i.e., December 27, 2020) or otherwise already 
in effect and advises of actions that may or must be taken now to 
comply with the changes (see Section IV). Additionally, this notice 
identifies the provisions of FSHO that require further action from HUD 
to be implemented (see Section V).
    Through this notice, HUD also seeks public comment on certain 
provisions of FSHO. Specifically, HUD seeks public comment on the 
provisions of FSHO related to participation in an FSS program and 
engagement in education, workforce development, and employment 
activities and has included specific questions for public comment in 
each of these sections. While this notice implements these provisions, 
HUD is seeking public comment in order to determine whether future 
changes are necessary. HUD also welcomes public comment on any of the 
other provisions of this notice. All comments must be submitted using 
the two methods detailed above.

II. Applicability (Section 103(d) of FSHO)

    Section 103(d) of FSHO made the provisions of FSHO applicable only 
to FUPY/FYI vouchers that were not in use on behalf of an assisted 
family as of the date of the enactment of FSHO (i.e., December 27, 
2020). For FUPY/FYI tenant-based vouchers, the provisions of FSHO apply 
to eligible youth who first leased or leases a unit where the effective 
date of the HAP contract execution is after December 27, 2020. For 
FUPY/FYI project-based vouchers (PBVs), the provisions of FSHO apply to 
eligible youth who first entered or enters into a lease agreement for 
their PBV unit after December 27, 2020.\4\ \5\ \6\

[[Page 3572]]

The provisions of FSHO apply to FUPY/FYI vouchers regardless of whether 
the PHA was awarded the voucher allocation before or after the 
enactment of FSHO as long as the youth first leased or leases a unit 
after the date of enactment of FSHO (i.e., December 27, 2020).
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    \4\ Except for the provisions related to the PBV percentage 
limitation and income-mixing requirement, which are tied to the 
effective date of the HAP contract. These provisions are discussed 
in section IV(D) of this document.
    \5\ While PHAs may project-base FUPY/FYI vouchers (except FYI 
TPVs), PHAs are reminded that sponsor-based housing is not permitted 
under the PBV program (unless the PHA is a Moving to Work (MTW) 
agency, and it has received HUD approval to create a sponsor-based 
housing program through its Annual MTW Plan or MTW Supplement to the 
PHA Plan). Under the sponsor-based housing model, PHAs provide 
housing funds directly to sponsors (i.e., nonprofits and social 
service providers) through a competitive process and the providers 
use the funds to secure private market rentals, typically through 
master lease contracts, that are then subleased to program 
participants. Certain administrative responsibilities (e.g., 
eligibility determinations, wait list management) are delegated to 
the qualified sponsor and the PHA performs a quality control audit.
    \6\ Note that PHAs are prohibited from project-basing FYI TPVs 
since FYI TPVs ``sunset'' (i.e., may not be reissued) when a youth 
leaves the program.
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III. Provisions of FSHO Implemented Through This Notice

A. Requirements To Extend Assistance for Youth Aging Out of Foster Care 
(Section 103(b)(1) of FSHO)

i. Extension of Assistance
    Section 103(b)(1) of FSHO amended section 8(x) of the U.S. Housing 
Act of 1937 (42 U.S.C. 1437f(x)) to add a new paragraph (5), 
subparagraph (A), to provide an extension of FUPY/FYI assistance for 
youth who are participating in a Family Self-Sufficiency (FSS) program 
under section 23 of the U.S. Housing Act of 1937 (42 U.S.C. 1437u) and 
for youth who are unable to enroll in an FSS program but who engaged in 
education, workforce development, or employment activities for at least 
9 months of the 12-month period preceding the extension. Section 
103(b)(1) of FSHO also provides youth with an extension of FUPY/FYI 
assistance if they meet one of three statutory exceptions. These 
requirements for the extension of FUPY/FYI assistance are described 
below.
    PHAs must inform FUPY/FYI youth of the provisions of FSHO that 
allow for an extension of FUPY/FYI assistance and the requirements that 
they must meet to receive such an extension during the family briefing 
(24 CFR 982.301(a)). PHAs must also notify FUPY/FYI youth who were 
issued a voucher prior to the publication of this notice and first 
leased or leases a unit after 12/27/2020, to inform them of the 
availability of this extension of assistance and the requirements that 
they must meet to receive such an extension. PHAs should note that FSHO 
does not restart or otherwise impact the initial 36-month time limit of 
assistance for FUPY/FYI vouchers but does make FUPY/FYI youth who first 
leased or leases a unit after 12/27/2020 eligible for an extension of 
assistance of up to 24 months.
    Through the publication of this notice, HUD is not establishing 
terms or conditions for meeting these requirements beyond those 
contained in the statute. HUD is providing PHAs with flexibility in 
applying these requirements and encourages PHAs to consider how they 
can provide extensions of FUPY/FYI assistance to the broadest 
population possible consistent with the statutory requirements. In 
accordance with 24 CFR 982.54(a), PHAs must update their Administrative 
Plans to include written policies regarding how they will implement the 
following provisions of FSHO. HUD encourages PHAs to consult with their 
partnering PCWAs and other groups that work with foster youth when 
formulating their policies for implementing the requirements below.
    As one of the goals of FSHO is to help FUPY/FYI youth advance their 
education, improve their career and employment prospects, and build 
towards financial security, HUD encourages PHAs that do not currently 
administer an FSS program to start one by creating an FSS Action Plan 
pursuant to 24 CFR 984.201 and having it approved by their local HUD 
Field Office. The creation of an FSS program would allow FUPY/FYI youth 
who enroll in the FSS program to accrue funds in an escrow account, in 
accordance with 24 CFR 984.305. Youth may use these funds to invest 
further in their education, to build financial security, or to help 
achieve other life goals.
(a) Extension of Assistance for Youth Participating in a Family Self-
Sufficiency Program
    An eligible youth who is participating in the Family Self-
Sufficiency (FSS) program authorized under section 23 of the U.S. 
Housing Act of 1937 (42 U.S.C. 1437u) is entitled to receive FUPY/FYI 
assistance for up to an additional 24 months beyond the 36-month time 
limit of assistance as long as the youth is in compliance with the 
applicable terms and conditions of the FSS program set forth in section 
23 of the U.S. Housing Act and the FSS program regulations at 24 CFR 
part 984.
    Families cannot be required to participate in the FSS program as a 
condition of receipt of assistance under the HCV program, including 
FUPY/FYI assistance. However, only FUPY/FYI youth that sign an FSS 
Contract of Participation and comply with the requirements of the FSS 
program are entitled to receive an extension of the time limit for 
voucher assistance under this statutory provision. A FUPY/FYI youth 
must participate in the FSS program if it is available to them in order 
to receive the extension of the time limit for voucher assistance 
unless the youth meets one of the statutory exceptions described in 
paragraph (c) below.
    A PHA that carries out an FSS program must inform the FUPY/FYI 
youth of the availability of the FSS program at the time the voucher is 
issued and offer them an FSS slot, if available, or offer to place them 
on the FSS waiting list. The PHA must also notify FUPY/FYI youth who 
were issued a voucher prior to the publication of this notice and first 
leased or leases a unit after 12/27/2020, and offer them an FSS slot, 
if available, or offer to place them on the FSS waiting list.
    HUD has determined that if a PHA that carries out an FSS program is 
unable to offer a FUPY/FYI youth an FSS slot during their first 36 
months of receiving FUPY/FYI assistance, the youth is considered to 
have been ``unable to enroll'' in the program and may have their 
voucher extended by meeting the education, workforce development, or 
employment requirements in paragraph (b) below. In other words, a FUPY/
FYI youth must accept an FSS slot if it is offered to them prior to the 
36-month mark in order to receive an extension of assistance (unless 
the youth meets one of the statutory exceptions described in paragraph 
(c) below). If an FSS slot becomes available between the 36-month mark 
and the 48-month mark, the PHA must offer the slot to a FUPY/FYI youth 
who had their voucher extended based on meeting the education, 
workforce development, or employment requirement or one of the 
statutory exceptions (even if the youth previously declined an FSS slot 
because they met one of the statutory exceptions). The PHA must work 
with the youth to determine whether enrollment in FSS is feasible and 
in their best interest given any education, workforce development, or 
employment activities that the youth is engaged in and any statutory 
exceptions that apply to the youth, as well as the remaining time on 
their FUPY/FYI voucher. If the FUPY/FYI youth accepts the FSS slot, the 
PHA must work with the youth to establish Contract of Participation 
goals and an Individual Training and Services Plan (ITSP) that can be 
accomplished within the time period left on the FUPY/FYI voucher. The 
PHA may, but is not required to, offer a FUPY/FYI youth an FSS slot 
that becomes available between the 48-month mark and the 60-month mark, 
since the youth will have already received their second and final 
extension under FSHO.
    HUD is establishing this 36-month cut-off because it recognizes 
that it may not always be feasible or in the best

[[Page 3573]]

interest of the youth to enroll in an FSS program after the 36-month 
mark because of the limited time period of FUPY/FYI assistance. At that 
point, the FUPY/FYI youth will already be engaging in education, 
workforce development, or employment activities described in paragraph 
(b) below (unless they meet one of the statutory exceptions described 
in paragraph (c) below), and it may not be feasible to incorporate 
these activities into an FSS Contract of Participation for the 
remaining time period of the FUPY/FYI voucher. Therefore, a FUPY/FYI 
youth who met the alternative requirement described in paragraph (b) 
below or one of the statutory exceptions described in paragraph (c) 
below at the 36-month mark and received an extension of assistance on 
that basis may decline an FSS slot that is offered between the 36-month 
mark and the 48-month mark and meet the alternative requirements 
described in paragraph (b) below or one of the statutory exceptions 
descrbed in paragraph (c) below in order to receive an extension of 
assistance at the 48-month mark.
    A PHA may give a selection preference for up to 50 percent of their 
FSS program slots to families with a member already enrolled in, or on 
the waiting list for, an FSS-related service program (24 CFR 984.203). 
If a PHA chooses to establish a selection preference in its FSS 
program, the PHA may, but is not required to, create a selection 
preference for FUPY/FYI youth to help ensure that they are able to 
enroll in the program. This is allowed under 24 CFR 984.203 because the 
services provided through the PCWA or other parties as required by the 
FUPY/FYI programs are considered an ``FSS related service program.'' 
FUPY/FYI youth participating in the services or who are on the waiting 
list for the services may be considered eligible for the preference.
    For FUPY/FYI youth who enroll in the FSS program, the PHA must 
comply with the regulations concerning the term of the FSS Contract of 
Participation at 24 CFR 984.303(c) and any extensions of that term at 
24 CFR 984.303(d). However, since it will be known that the FUPY/FYI 
participant's voucher will only be available for a specific period of 
time (not to exceed 60 months, total), the PHA's FSS Program 
Coordinator must work with the FUPY/FYI youth to establish Contract of 
Participation goals and an ITSP that can be accomplished within the 
time period left on the FUPY/FYI voucher. For example, a FUPY/FYI youth 
who enrolls in FSS at the beginning of their first year of receiving 
FUPY/FYI assistance would have five years in the FSS program before the 
expiration of their FUPY/FYI assistance while a youth that enrolls in 
FSS at the beginning of their third year of receiving FUPY/FYI 
assistance would have 3 years in the FSS program before the expiration 
of their FUPY/FYI assistance. The PHA should also ensure that their FSS 
Action Plan reflects policies that allow for goals to be changed or 
added to the Contract of Participation in order to allow the youth to 
continue in the FSS program through the full Contract of Participation 
period in the case that the FUPY/FYI youth is later issued a regular 
voucher or if there is another type of change in rental assistance 
which allows for the youth to continue in FSS after the FUPY/FYI 
assistance has expired.
    If the PHA does not have an FSS program or if the FUPY/FYI youth 
has not been provided an opportunity to enroll in the FSS program 
during the first 24 months of FUPY/FYI assistance, HUD encourages the 
PHA to remind the youth at the 24-month reexamination of the education, 
workforce development, and employment requirements described in 
paragraph (b) below so that the youth has enough time to meet these 
requirements prior to the expiration of the 36-month time period for 
FUPY/FYI assistance. However, if the FUPY/FYI youth is later offered an 
FSS slot prior to the 36-month mark, the youth will be required to 
enroll in the FSS program in order to receive an extension of 
assistance at the end of the 36-month and 48-month time periods (unless 
they meet one of the statutory exceptions described in paragraph (c) 
below). If the FUPY/FYI youth is offered an FSS slot prior to the 36-
month mark, the youth will not be considered to have been ``unable to 
enroll'' in the FSS program, and, as a result, will not be eligible to 
receive an extension of assistance based on meeting the education, 
workforce development, or employment requirements described in 
paragraph (b) below.
    At the 36-month and 48-month reexaminations, the PHA must extend 
the FUPY/FYI voucher assistance if the youth is participating in and in 
compliance with the FSS program as long as the youth is still eligible 
for the HCV program. In any case, the FUPY/FYI youth cannot receive 
more than a total of 60 months of FUPY/FYI voucher assistance even if 
the FSS Contract of Participation time period extends beyond the FUPY/
FYI voucher 60-month mark.
Question for Comment
    1. In order to receive an extension of FUPY/FYI assistance, should 
the cut-off for requiring a youth to enroll in the FSS program be the 
36-month mark or is a different cut-off more appropriate based on the 
requirements of the FSS program?
(b) Extension of Assistance for Youth Engaging in Education, Workforce 
Development, or Employment Activities
    If a PHA does not carry out an FSS program under section 23 the 
U.S. Housing Act of 1937 (42 U.S.C. 1437u) or the FUPY/FYI youth has 
been unable to enroll in the program during the first 36 months of 
receiving FUPY/FYI assistance, the FUPY/FYI youth is entitled to 
receive an extension of FUPY/FYI assistance for up to two successive 
12-month periods beyond the 36-month time limit of assistance provided 
that the youth engaged in at least one of the education, workforce 
development, or employment activities below for not less than 9 months 
of the 12-month period preceding each extension.
    In order to meet the 9-months out of the preceding 12-months 
requirement, the youth may have engaged in one of the education, 
workforce development, or employment activities described below or a 
combination of these activities. For example, a youth may have engaged 
in obtaining a recognized postsecondary credential at the beginning of 
the 12-month period, but then the youth obtained the credential and 
became employed later in the 12-month period. The youth may combine the 
time that they were engaged in obtaining a recognized postsecondary 
credential and the time that they were employed in order to meet the 9-
months out of 12-months requirement.
    HUD notes that FSHO does not establish a minimum number of classes 
or credits that a youth must be enrolled in or a minimum number of 
hours that a youth must work in order to receive an extension of FUPY/
FYI assistance under this provision. Conversely, FSHO does not prohibit 
a PHA from establishing such minimum requirements. Therefore, a PHA 
may, but is not required, to establish a minimum number of classes or 
credits that a youth must be enrolled in or a minimum number of hours 
that a youth must work in order to receive an extension of FUPY/FYI 
assistance under this provision. However, HUD strongly encourages PHAs 
to establish policies that provide extensions of FUPY/FYI assistance 
for youth that were engaged in such activities on a part-time basis as 
long as they meet the requirement to engage in such activities for not 
less than 9 months of the 12-month period preceding each extension. If 
a PHA

[[Page 3574]]

chooses to establish minimum requirements, HUD encourages the PHA to 
establish policies that would allow them to make exceptions to such 
requirements for circumstances beyond the youth's control.
    For example, a PHA may establish a requirement that a youth must be 
enrolled in education activities on at least a halftime basis but may 
make exceptions to this requirement if the youth is unable to enroll in 
a sufficient number of classes due to a lack of course offerings by the 
educational institution where the youth is enrolled. Similarly, a PHA 
may establish a requirement that a youth must work a minimum number of 
hours per week but may make exceptions to this requirement if the 
youth's hours are reduced due to circumstances beyond their control or 
the youth must temporarily reduce their work hours due to a family 
emergency. A PHA's policies implementing its education, workforce 
development, and employment requirements must be included in its 
Administrative Plan, in accordance with the procedures set forth in 24 
CFR 903.21.
Education Requirements
    <bullet> The youth was engaged in obtaining a recognized 
postsecondary credential or a secondary school diploma or its 
recognized equivalent.
    A PHA may use the definitions of ``recognized postsecondary 
credential'' and ``secondary school diploma or its recognized 
equivalent'' under the Workforce Innovation and Opportunity Act (WIOA).
    WIOA defines a ``recognized postsecondary credential'' as a 
credential consisting of an industry-recognized certificate or 
certification, a certificate of completion of an apprenticeship, a 
license recognized by the State involved or Federal Government, or an 
associate or baccalaureate degree (29 U.S.C. 3102). Examples of a 
``recognized postsecondary credential'' include, but are not limited 
to, an associate's degree, bachelor's degree, occupational licensure, 
or occupational certification (see U.S. Department of Labor, Training 
and Employment Guidance Letter No. 10-16, Change 1).
    For the purpose of WIOA, the U.S. Department of Labor defines a 
``secondary school diploma or its recognized equivalent'' as a 
secondary school diploma (or alternate diploma) that is recognized by a 
State and that is included for accountability purposes under the 
Elementary and Secondary Education Act of 1965 (ESEA), as amended by 
the Every Student Succeeds Act (ESSA). A secondary school equivalency 
certification signifies that a student has completed the requirement 
for a high school education. Examples of a ``secondary school diploma 
or its recognized equivalent'' include, but are not limited to, 
obtaining certification of attaining passing scores on a State-
recognized high school equivalency test, earning a secondary school 
diploma or State-recognized equivalent, or obtaining certification of 
passing a State-recognized competency-based assessment.
    <bullet> The youth was enrolled in an ``institution of higher 
education,'' as such term is defined in section 101(a) of the Higher 
Education Act of 1965 (20 U.S.C. 1001(a)) or an institution that meets 
the definition of a ``proprietary institution of higher education'' or 
a ``postsecondary vocational institution'' under sections 102(b)(1) and 
(c)(1) of the Higher Education Act of 1965 (20 U.S.C. 1002(b)(1) and 
(c)(1)), respectively.
Workforce Development Requirements
    <bullet> The youth was participating in a career pathway, as such 
term is defined in section 3 of the Workforce Innovation and 
Opportunity Act (29 U.S.C. 3102).
Employment Requirements
    <bullet> The youth was employed.
Questions for Comment
    2. Should HUD establish a minimum number of classes or credits that 
a youth must be enrolled in or a minimum number of hours that a youth 
must work in order to receive an extension of FUPY/FYI assistance under 
this provision?
    3. Should HUD establish a maximum number of classes or credits or a 
maximum number of work hours that a PHA may require in order for a 
youth to receive an extension of FUPY/FYI assistance under this 
provision?
(c) Extension of Assistance Exceptions
    A FUPY/FYI youth will be entitled to receive an extension of their 
FUPY/FYI assistance for up to 24 months beyond the 36-month time limit 
of assistance if they certify that they meet one of the exceptions 
below.
    <bullet> The FUPY/FYI youth is a parent or other household member 
responsible for the care of a dependent child under the age of 6 or for 
the care of an incapacitated person.
    HUD is not defining the term ``incapacitated person'' but is 
providing PHAs with flexibility in applying this requirement. PHAs may 
choose to apply the definition of ``incapacitated person'' that has 
been established under state or local law. HUD encourages PHAs to apply 
this exception in a manner that provides extensions of FUPY/FYI 
assistance to the broadest population possible consistent with the 
statutory requirements.
    FSHO does not require that the child or incapacitated person reside 
in the household in order for the FUPY/FYI youth to certify that they 
meet this exception. For example, a FUPY/FYI youth may submit this 
certification on the basis that they are responsible for the care of a 
dependent child under the age of 6 even if the child resides in the 
household only part of the time due to a shared custody arrangement. 
Similarly, a FUPY/FYI youth may submit this certification on the basis 
that they are responsible for the care of an incapacitated person, such 
as an elderly relative, even if the incapacitated person does not 
reside in the household.
    <bullet> The FUPY/FYI youth is a person who is regularly and 
actively participating in a drug addiction or alcohol treatment and 
rehabilitation program.
    <bullet> The FUPY/FYI youth is a person who is incapable of 
complying with the requirement to participate in a Family Self-
Sufficiency (FSS) program as described in paragraph (a) above or engage 
in education, workforce development, or employment activities as 
described in paragraph (b) above, as applicable, due to a documented 
medical condition.
    HUD is not defining the types of medical conditions that may meet 
this requirement but is providing PHAs with flexibility in applying 
this requirement. HUD encourages PHAs to apply this exception in a 
manner that provides extensions of FUPY/FYI assistance to the broadest 
population possible consistent with the statutory requirements.
    A FUPY/FYI youth that meets one of these exceptions must still be 
offered an opportunity to enroll in FSS (if it is available to them) 
and receive any supportive services available to FUPY/FYI youth, 
including those described in section III.B. of this document. A FUPY/
FYI youth may choose to participate in an FSS program or engage in 
education, workforce development, or employment activities even if they 
meet one of these statutory exceptions.
ii. Verification of Compliance
    In order to extend the FUPY/FYI assistance for an eligible youth 
beyond the 36-month time period, the PHA must determine that the youth 
meets one of the statutory conditions described in paragraphs 
III(A)(i)(a), (b), or (c) above. Section 103(b)(1) of FSHO

[[Page 3575]]

requires that the PHA verify that the FUPY/FYI youth meets one of these 
statutory conditions on an annual basis in conjunction with reviews for 
determining income eligibility for the HCV program (24 CFR 982.516). In 
order to provide an extension of assistance, the PHA would need to 
verify compliance with these requirements at the end of the 36-month 
time period and the 48-month time period of FUPY/FYI assistance. The 
PHA does not need to verify compliance with these requirements at the 
end of the 60-month time period since the maximum length of assistance 
is 60 months.
    HUD notes that since FUPY/FYI vouchers are limited to 36 months, a 
PHA will only need to conduct an annual reexamination of the FUPY/FYI 
youth at the end of the 36-month time period and the 48-month time 
period if the youth meets one of the statutory conditions that allow 
for the extension of FUPY/FYI assistance. Therefore, the PHA may wish 
to time its verification of compliance process in advance of the annual 
reexamination process. The PHA should ensure that it provides 
sufficient time for the FUPY/FYI youth to demonstrate that they meet 
one of these statutory conditions and for the PHA to conduct an annual 
reexamination prior to the expiration of the FUPY/FYI assistance.
    Since the PHA only needs to verify compliance with the statutory 
conditions described in paragraphs III(A)(i)(a), (b), or (c) above on 
an annual basis (i.e., at the end of the 36-month time period and the 
48-month time period), the failure of a FUPY/FYI youth to meet one of 
these statutory conditions would only impact their ability to receive a 
subsequent extension of FUPY/FYI assistance; it would not serve as a 
basis for terminating the FUPY/FYI assistance prior to the annual 
reexamination. This does not affect the ability of the PHA to terminate 
FUPY/FYI assistance in accordance with 24 CFR 982.552.
    Furthermore, a FUPY/FYI youth who received an extension of voucher 
assistance at the end of the 36-month time period based on meeting one 
of these statutory conditions does not have to meet this same statutory 
condition when they reach the end of the 48-month time period. The 
FUPY/FYI youth may demonstrate that they meet a different condition in 
order to receive an extension of their assistance.
    For example, a FUPY/FYI youth received an extension of voucher 
assistance at the end of the 36-month time period based on their 
certification that they were caring for a child under the age of 6. 
However, at the 48-month reexamination, the child is no longer under 
the age of 6. The FUPY/FYI youth must be given an opportunity to show 
that they meet a different condition in order to receive an extension 
of their assistance.
    To verify compliance with the statutory conditions described in 
paragraphs III(A)(i)(a), (b), or (c) above, the PHA must conduct the 
following activities, as applicable, prior to the end of the 36-month 
time period and 48-month time period:
(a) Verification of Compliance for Youth Participating in a Family 
Self-Sufficiency Program
    To verify compliance with the FSS requirement described in 
paragraph III(A)(i)(a) above, the PHA must examine its records to 
confirm, or obtain confirmation from the PHA's FSS program staff, that 
the FUPY/FYI participant is in compliance with FSS program requirements 
and has not been terminated from the FSS program.
(b) Verification of Compliance for Youth Who Engage in Education, 
Workforce Development, or Employment Activities or Who Meet One of the 
Statutory Exceptions
    To verify compliance with the education, workforce development, or 
employment requirement described in paragraph III(A)(i)(b) above or one 
of the statutory exceptions described in paragraph III(A)(i)(c) above, 
the PHA must provide the FUPY/FYI youth written notification informing 
them that they may receive an extension of their FUPY/FYI assistance if 
they meet one of the statutory conditions described in paragraphs 
III(A)(i)(b) and (c) above and providing instructions on how the youth 
may demonstrate that they meet one of these conditions.\7\ This 
notification must be provided sufficiently in advance of the end of the 
36-month time period or 48-month time period, as applicable, to allow 
the FUPY/FYI youth to demonstrate that they meet one of these statutory 
conditions and for the PHA to conduct an annual reexamination prior to 
the expiration of the FUPY/FYI assistance. When necessary, the PHA must 
provide this notification in a format accessible to FUPY/FYI youth with 
disabilities (see 24 CFR 8.6) and in a translated format for FUPY/FYI 
youth with limited English proficiency (see 24 CFR 1.4(b)(2)(i); 72 FR 
2731).
---------------------------------------------------------------------------

    \7\ HUD encourages PHAs to ensure that any written notification 
that is sent to the FUPY/FYI youth only includes the statutory 
conditions that are available to them. Specifically, the PHA should 
be mindful that the education, workforce development, and employment 
requirement described in paragraph III(A)(i)(b) above is only 
available to FUPY/FYI youth who are unable to enroll in the FSS 
program.
---------------------------------------------------------------------------

    In order for the FUPY/FYI youth to meet the education, workforce 
development, or employment requirement described in paragraph 
III(A)(i)(b) above, the youth must demonstrate to the PHA that they 
were engaged in at least one education, workforce development, or 
employment activity for at least 9 months of the 12-month period 
immediately preceding the end of 36-month or 48-month time period, as 
applicable. Due to the timing of when the PHA verifies compliance and 
conducts the annual reexamination, the FUPY/FYI youth may have not yet 
met the 9-month requirement but may be able to demonstrate that they 
will meet the 9-month requirement as of the end of the 36-month or 48-
month time period. In such cases, the FUPY/FYI youth will still be 
considered to have met the requirements of paragraph III(A)(i)(b). In 
order for the FUPY/FYI youth to meet one of the statutory exceptions 
described in paragraph III(A)(i)(c) above, the youth must submit a 
certification to the PHA that they meet one of these exceptions. This 
certification is the only documentation that the FUPY/FYI youth must 
submit in order to demonstrate that they meet one of these exceptions.
    If the PHA determines that the youth meets one of the statutory 
conditions described in paragraphs III(A)(i)(a), (b), or (c) above, the 
PHA would then conduct an annual reexamination. If the annual 
reexamination determines that the youth is still eligible for the HCV 
program, the PHA must provide the FUPY/FYI youth the extension of 
voucher assistance in accordance with the applicable statutory 
provision.
    If the FUPY/FYI youth does not meet any of the statutory conditions 
described in paragraphs III(A)(i)(a), (b), and (c) above, the youth is 
subject to the statutory time limit of 36 months or the time limit of 
any extension that the youth has already received, and the FUPY/FYI 
voucher must be terminated once the youth reaches this time limit. The 
calculation of the time limit begins from the date the first HAP 
contract is signed (for tenant-based vouchers) or from the date the 
youth entered into the initial lease agreement (for project-based 
vouchers). Note that the number of months is calculated based on the 
number of months that HAP subsidy is being paid on behalf of the youth, 
not the number of months that the youth is in the FUPY/FYI program. 
Prior to termination, the PHA must offer the FUPY/FYI youth the 
opportunity to request an informal hearing, in accordance with 24 CFR 
982.555 and

[[Page 3576]]

the procedures set forth in its Administrative Plan.

B. Supportive Services (Section 103(b)(1) of FSHO)

    Section 103(b)(1) of FSHO amended section 8(x) of the U.S. Housing 
Act of 1937 (42 U.S.C. 1437f(x)) to add a new paragraph (5), 
subparagraph (B), that makes FUPY/FYI youth eligible for any supportive 
services (as such term is defined in section 3 of the Workforce 
Innovation and Opportunity Act (WIOA) (29 U.S.C. 3102)) made available 
in connection with any housing assistance program of the PHA, by or 
through the PHA. Section 3 of WIOA defines supportive services as 
services, such as transportation, child care, dependent care, and 
needs-related payments, that are necessary to enable an individual to 
participate in activities authorized under WIOA.\8\ This subparagraph 
also requires the PHA to inform the youth of the existence of such 
programs or services and of their eligibility for such programs and 
services upon initial provision of FUPY/FYI assistance.
---------------------------------------------------------------------------

    \8\ Section 3 of WIOA (29 U.S.C. 3102) also includes ``housing'' 
in its definition of ``supportive services.'' However, housing would 
not be considered a supportive service under the FUPY/FYI program.
---------------------------------------------------------------------------

    The FUP program already requires that the PHA's partnering PCWA(s) 
offer a range of supportive services to eligible youth for the period 
defined in the notice or NOFA/O for which the funding was made 
available. FSHO does not change these existing requirements but 
requires that the PHA make available to FUPY/FYI youth any supportive 
services that are made available in connection with any other housing 
assistance program of the PHA, by or through the PHA. However, this 
provision of FSHO does not supersede any eligibility requirements for 
the supportive services that are made available in connection with any 
other housing assistance program of the PHA, by or through the PHA.
    At the time the FUPY/FYI voucher is issued to an eligible youth, 
the PHA must inform the youth of the FUPY/FYI supportive services 
available to them, the existence of any other programs or services, and 
their eligibility for such programs and services. The PHA must provide 
this information as part of the family briefing pursuant to 24 CFR 
982.301(a). However, participation in supportive services cannot be 
required as a condition of receiving FUPY/FYI assistance.

C. Applicability to Moving to Work Agencies (Section 103(b)(1) of FSHO)

    Section 103(b)(1) of FSHO amended section 8(x) of the U.S. Housing 
Act of 1937 (42 U.S.C. 1437f(x)) to add a new paragraph (5), 
subparagraph (C), to allow Moving to Work (MTW) agencies to establish 
alternative terms, conditions, or requirements for the extension of 
FUPY/FYI assistance. For example, an MTW agency may provide an 
extension of FUPY/FYI assistance for youth participating in a local MTW 
self-sufficiency program in lieu of participating in an FSS program 
under section 23 of the U.S. Housing Act. Note that an MTW agency may 
only waive or modify the terms, conditions, or requirements to receive 
an extension of FUPY/FYI assistance, not the length of the extension of 
assistance. An MTW agency also may not waive or modify the exceptions 
under which a youth who does not meet the requirement to participate in 
an FSS program as described in paragraph III(A)(i)(a) of this document 
or engage in education, workforce development, or employment activities 
as described in paragraph III(A)(i)(b) of this document, as applicable, 
may receive an extension of FUPY/FYI assistance.
    Any alternative terms, conditions, and requirements for the 
extension of FUPY/FYI assistance must be included in the Annual MTW 
Plan (for initial agencies) or the MTW Supplement to the PHA Plan (for 
expansion agencies). If an MTW PHA's Annual MTW Plan or MTW Supplement 
to the Annual PHA Plan does not include alternative terms, then the 
policies set forth in this Notice will apply to the MTW PHA. Further, 
FUPY/FYI vouchers are not eligible for funding fungibility under the 
Standard MTW Agreement or MTW Amendment to the Annual Contributions 
Contract.

D. Termination of Vouchers Upon Turnover (Section 103(b)(1) of FSHO)

    Section 103(b)(1) of FSHO amended section 8(x) of the U.S. Housing 
Act of 1937 (42 U.S.C. 1437f(x)) to add a new paragraph (5), 
subparagraph (D), to prohibit a PHA from reissuing a FUPY/FYI voucher 
when assistance for the youth initially assisted is terminated, unless 
specifically authorized by the Secretary.
    This provision of FSHO prohibiting the reissuance of vouchers upon 
turnover does not affect FUPY/FYI vouchers funded by an appropriations 
Act that specified such vouchers be reissued to eligible youth upon 
turnover. Currently, the appropriations Acts for FUPY/FYI require that 
vouchers be made available to eligible recipients upon turnover (except 
for FYI TPVs awarded under Notice PIH 2019-20, which cannot be reissued 
when the youth exits the HCV program). For FUPY/FYI vouchers (except 
FYI TPVs), PHAs are currently required to notify HUD if it determines 
that it no longer has an identified need for a FUPY/FYI voucher upon 
turnover, so HUD can recapture the assistance and reallocate it to a 
PHA with an identified need. If there are changes to this requirement 
in future FUPY/FYI appropriations Acts, HUD will provide guidance at 
that time.

IV. Provisions of FSHO Effective Upon Enactment or Otherwise Already in 
Effect

A. Definition of Family (Section 103(a) of FSHO)

    Section 103(a) of FSHO amended the definition of ``family'' at 
section 3(b)(3)(A) of the U.S. Housing Act of 1937 (42 U.S.C. 
1437a(b)(3)(A)) to clarify that a family may include families 
consisting of a single person who is a youth described in section 
8(x)(2)(B) of the U.S. Housing Act of 1937 (42 U.S.C. 1437f(x)(2)(B)).
    Implementation Action. This statutory change was effective as of 
the date of enactment of FSHO (i.e., December 27, 2020). This document 
serves as notice to PHAs that the definition of family in the PHA's 
Administrative Plan must reflect this statutory change (24 CFR 
982.54(d)(4)(i)). At a later date, HUD will undertake conforming 
rulemaking to revise its regulations to reflect this statutory change.

B. Allocation of Assistance for Youth Aging Out of Foster Care (Section 
103(b)(1) of FSHO)

    Section 103(b)(1) of FSHO amended section 8(x)(3) of the U.S. 
Housing Act of 1937 to require that the Secretary, subject only to the 
availability of funds, allocate FUPY/FYI assistance to any PHA that (1) 
administers FUPY/FYI assistance or seeks to administer such assistance, 
consistent with procedures established by the Secretary, (2) has 
requested FUPY/FYI assistance so that they may provide timely 
assistance to eligible youth, and (3) has submitted to the Secretary a 
statement describing how it will connect assisted youths with local 
community resources and self-sufficiency services, to the extent they 
are available, and obtain referrals from PCWAs regarding youths in 
foster care who become eligible for FUPY/FYI assistance.
    Implementation Action. The Consolidated Appropriations Act, 2021, 
(Pub. L. 116-260) and the Further Consolidated Appropriations Act, 
2020,

[[Page 3577]]

(Pub. L. 116-94) made funding available to provide HCV assistance on a 
non-competitive basis for eligible youth under section 8(x) of the U.S. 
Housing Act of 1937. HUD made this funding available through Notices 
PIH 2020-28 and PIH 2021-26. These notices set forth application 
requirements that are consistent with this provision of FSHO.

C. Reports (Section 103(b)(1) of FSHO)

    Section 103(b)(1) of FSHO amended section 8(x) of the U.S. Housing 
Act of 1937 (42 U.S.C. 1437f(x)) to add a new paragraph (5), 
subparagraph (E)(i)(I), to require that PHAs report the number of 
persons on whose behalf FUPY/FYI assistance was provided during the 
fiscal year.
    Implementation Action. PHAs are already required to report this 
information in the Public Information Center (PIC). PHAs must use a 
special program code for FUPY/FYI voucher participants in line 2n of 
the Family Report (form HUD-50058) or line 2p of the MTW Family Report 
(form HUD-50058-MTW), as applicable. If the voucher is issued as part 
of FUP, the special program code is ``FUPY.'' If the voucher is issued 
as part of FYI, the special program code is ``FYI,'' except for FYI 
TPVs, whose special program code is ``FYITPV.''

D. Exceptions to Limitations for Project-Based Voucher (PBV) Assistance 
(Section 103(c) of FSHO)

    Section 103(c) of FSHO amended the percentage limitation at section 
8(o)(13)(B)(ii) of the U.S. Housing Act of 1937 (42 U.S.C. 
1437f(o)(13)(B)(ii)) and the income-mixing requirement at section 
8(o)(13)(D)(ii)(I) of the U.S. Housing Act (42 U.S.C. 
1437f(o)(13)(D)(ii)(I)) for units that house eligible youth receiving 
FUPY/FYI assistance. Note that this section is not applicable to FYI 
TPVs that were awarded under Notice PIH 2019-20, since PHAs are 
prohibited from project-basing FYI TPVs.
    While FUP vouchers (not including FYI vouchers) can be used for 
either families or youth, a PBV unit may only be covered by these 
amendments to the percentage limitation and income-mixing requirement 
if the FUP PBV assistance is provided on behalf of an eligible youth. 
Therefore, the HAP contract must specify that the PBV unit is 
specifically made available to FUP youth in order for the unit to be 
covered. In order to make PBV units specifically available to FUP 
youth, the PHA must determine that such a limitation is consistent with 
the local housing needs of both eligible FUP populations (i.e., 
families and youth) and maintain documentation to support this 
determination. The PHA must also amend its Administrative Plan to 
include the limitation of these FUP PBV units to eligible youth. Since 
FYI vouchers are already limited to youth, the PHA does not need to 
take these steps in order to project-base FYI vouchers under this new 
percentage limitation and income-mixing requirement authority.
(i) Section 103(c)(1), Percentage Limitation
    Section 103(c)(1) of FSHO amended the percentage limitation at 
section 8(o)(13)(B)(ii) of the U.S. Housing Act of 1937 to make units 
that house eligible youth receiving FUPY/FYI assistance an eligible 
category of units where a PHA is permitted to project-base additional 
vouchers above the 20 percent PBV program limitation. Section 
8(o)(13)(B)(ii) of the U.S. Housing Act of 1937, as amended by section 
106(a)(2) of the Housing Opportunity Through Modernization Act of 2016, 
Public Law 114-201, 130 Stat. 782 (HOTMA), allows a PHA to project-base 
an additional 10 percent of its units above the 20 percent program 
limit, provided those additional units fall into one of the following 
categories: (1) The units are specifically made available to house 
individuals and families that meet the definition of homeless under 
section 103 of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 
11302); (2) The units are specifically made available to house families 
that are comprised of or include a veteran; (3) The units provide 
supportive housing to persons with disabilities or to elderly persons; 
(4) The units are located in a census tract with a poverty rate of 20 
percent or less, as determined in the most recent American Community 
Survey 5-Year Estimates. Pursuant to section 103(c)(1) of FSHO, this 
list of categories now includes units that house eligible youth 
receiving FUPY/FYI assistance.
    Implementation Action. The provision of HOTMA that amended section 
8(o)(13)(B)(ii) of the U.S. Housing Act of 1937 to allow for a 10 
percent increase in project-based vouchers for certain categories of 
units was implemented via a Federal Register notice, 82 FR 5458 
(January 18, 2017) (``HOTMA January 18, 2017, Notice''), and the 
subsequent amendment, 82 FR 32461 (July 14, 2017) (``HOTMA July 14, 
2017, Notice''). HUD subsequently issued guidance on HOTMA 
implementation in Notice PIH 2017-21. Under section II.C.2.B. of the 
HOTMA January 18, 2017, Notice, a PHA that wishes to add PBV units 
under the 10 percent exception authority must submit certain 
information to HUD.
    This statutory change making units that house eligible youth 
receiving FUPY/FYI assistance eligible for the 10 percent increase in 
the program cap was effective as of the date of enactment of FSHO 
(i.e., December 27, 2020) and applies to vouchers that were not in use 
on behalf of an assisted family as of December 27, 2020. A PHA that 
wishes to add PBV units that house eligible youth receiving FUPY/FYI 
assistance under the 10 percent exception authority must submit the 
information required under section II.C.2.B. of the HOTMA January 18, 
2017, Notice to HUD. A PHA may amend a previous submission under 
section II.C.2.B. that is currently in process if it wants to include 
units that house eligible youth receiving FUPY/FYI assistance under the 
10 percent exception authority.
    A PHA need not meet the 20 percent program cap before it can 
designate eligible units for the 10 percent exception category. For 
example, if a PHA has project-based 10 percent of its units under the 
percentage limitation and wants to project-base 5 percent of its units 
under the 10 percent exception category, it may do so. This PHA would 
have 10 percent remaining under the percentage limitation and 5 percent 
remaining under the 10 percent exception authority. A PHA proposal that 
would result in the PHA exceeding either the 20 percent program cap or 
the 10 percent exception from the program cap will be rejected by the 
HUD field office. As long as a PHA has not exceeded the 30 percent 
limit, it may amend its proposal by moving units from one category to 
the other, provided that only eligible units are counted toward the 10 
percent exception from the program cap.
    PBV units that house eligible youth receiving FUPY/FYI assistance 
may only be covered by this 10 percent exception authority if the units 
are under a HAP contract that became effective after December 27, 2020, 
and if the unit is occupied by an eligible youth receiving FUPY/FYI 
assistance. Units added after December 27, 2020, through an amendment 
of a HAP contract that became effective after December 27, 2020, are 
eligible for this 10 percent exception authority. In contrast, units 
added after December 27, 2020, through an amendment of a HAP contract 
that became effective on or prior to December 27, 2020, are not 
eligible for this 10 percent exception authority.
    The PBV unit specifically made available to FUPY/FYI youth, as 
applicable, will apply under the 10 percent exception authority as long 
as

[[Page 3578]]

an eligible youth receiving FUPY/FYI assistance resides in the unit. 
Therefore, prior to project-basing a FUPY/FYI voucher under this 10 
percent exception authority, the PHA must plan for how it will maintain 
compliance with this 10 percent exception authority once the FUPY/FYI 
assistance has expired for a particular youth who has leased the unit. 
In order for the unit to remain under the FUPY/FYI exception authority, 
the youth must vacate the unit once their FUPY/FYI assistance has 
expired and the owner must lease the unit to another FUPY/FYI youth. If 
the youth does not move from the unit upon the expiration of their 
FUPY/FYI assistance, at that time the PHA must take one of the 
following actions since the unit no longer qualifies for the FUPY/FYI 
exception authority:
    <bullet> Remove the unit from the HAP contract. The PHA would 
remove the unit from the HAP contract if the youth remains in the unit 
without assistance or with non-FUPY/FYI tenant-based assistance. The 
unit may be added back to the contract per 24 CFR 983.207(b) \9\ if the 
youth later moves from the unit;
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    \9\ As amended by HOTMA (see HOTMA January 18, 2017 Notice; 
Notice PIH 2017-21 Att. J).
---------------------------------------------------------------------------

    <bullet> Amend the HAP contract to substitute the youth's current 
unit for another unit in the building if it is possible to do so in 
accordance with 24 CFR 983.207(a). Such a substitution will result in 
the other unit in the building being covered by the FUPY/FYI 10 percent 
exception authority. A PHA may, but is not required to, in conjunction 
with such substitution add the youth's current unit to the HAP contract 
if it is possible to do so in accordance with 24 CFR 983.207(b), as 
amended by HOTMA, including that such addition does not cause the PHA 
to exceed the program limitation or become non-compliant with the 
income-mixing requirement (as described in the following section). If 
the youth's current unit is not added to the HAP contract, the youth 
may remain in the unit without assistance or with non-FUPY/FYI tenant-
based assistance; or
    <bullet> Change the 10 percent exception authority category from 
FUPY/FYI to one of the other 10 percent exception categories if the 
FUPY/FYI youth, or the unit, happens to qualify for it, so long as the 
change is allowable under the income-mixing requirement (as described 
in the following section).
    A PHA may only allow the youth to remain in the unit with non-FUPY/
FYI HCV assistance (either tenant-based or project-based, as 
applicable) if the youth was selected from the applicable waiting list 
in accordance with the policies set forth in the PHA's Administrative 
Plan. A PHA may, but is not required to, create a preference applicable 
to the PHA's regular HCV and/or PBV waiting lists for persons whose 
FUPY/FYI assistance is expiring and will have a lack of adequate 
housing as a result of their termination from the program, or other 
similar category. However, as noted above, the unit will no longer 
qualify for the FUPY/FYI exception category if the youth remains in the 
unit with another form of HCV assistance after their FUPY/FYI 
assistance has expired.
    At a later date, HUD will undertake conforming rulemaking to revise 
its regulations to reflect this statutory change.
(ii) Section 103(c)(2), Income-Mixing Requirement
    Section 103(c)(2) of FSHO amended the income-mixing requirement 
(i.e., the project cap) at section 8(o)(13)(D)(ii)(I) of the U.S. 
Housing Act of 1937 to except units that are exclusively made available 
to youth receiving FUPY/FYI assistance from the cap on the number of 
PBV units in a project. Section 8(o)(13)(D)(ii)(I) of the U.S. Housing 
Act, as amended by section 106(a)(3) of HOTMA, generally limits the 
number of PBV units in a project to the greater of 25 units or 25 
percent of the units in the project. Under HOTMA, units that are in one 
of the following categories are excluded from the 25 percent or 25-unit 
project cap on PBV assistance: (1) Units exclusively serving elderly 
families (as such term is defined in 24 CFR 5.403); or (2) Units 
housing households eligible for supportive services available to all 
families receiving PBV assistance in the project. Pursuant to section 
103(c)(2) of FSHO, this list of categories now includes units that are 
exclusively made available to eligible youth receiving FUPY/FYI 
assistance.
    Implementation Action. The provision of HOTMA that amended section 
8(o)(13)(D)(ii)(I) of the U.S. Housing Act of 1937 to except certain 
categories of units from the project cap was implemented via the HOTMA 
January 18, 2017, Notice and amended in the HOTMA July 14, 2017, 
Notice. HUD subsequently issued guidance on HOTMA implementation in 
Notice PIH 2017-21. Under section II.C.3.A. of the HOTMA January 18, 
2017, Notice, owners under HAP contracts already in effect prior to the 
effective date of the HOTMA January 18, 2017, Notice (i.e., April 18, 
2017) are still obligated by the terms of those HAP contracts with 
respect to the requirements that apply to the number of excepted units 
in a multifamily project. The owner must continue to designate the same 
number of contract units and assist the same number of excepted 
families as provided under the HAP contract during the remaining term 
of the HAP contract unless the owner and the PHA mutually agree to 
change those requirements.
    This statutory change excepting units that are exclusively made 
available to youth receiving FUPY/FYI assistance from the project cap 
was effective as of the date of enactment of FSHO (i.e., December 27, 
2020) and applies to vouchers that were not in use on behalf of an 
assisted family as of December 27, 2020. Therefore, units exclusively 
made available to youth receiving FUPY/FYI assistance may be excepted 
from the project cap for HAP contracts first effective after December 
27, 2020. Consistent with the effect on existing contracts in the 
implementation of the HOTMA provision on units exclusively made 
available to certain families, owners under HAP contracts already in 
effect on or prior to December 27, 2020, are still obligated by the 
terms of those HAP contracts with respect to the requirements that 
apply to the number of excepted units in a multifamily project. The 
owner must continue to designate the same number of contract units and 
assist the same number of excepted families as provided under the HAP 
contract during the remaining term of the HAP contract unless the owner 
and the PHA mutually agree to change those requirements. The PHA and 
owner may agree by mutual consent to change the terms of a HAP contract 
already in effect as it pertains to the exception category of units 
exclusively made available to youth receiving FUPY/FYI assistance 
(i.e., a PHA and owner may agree to add excepted units exclusively made 
available to FUPY/FYI youth to an existing HAP contract or change the 
exception category of a current excepted unit to be a unit exclusively 
made available to FUPY/FYI youth). The PBV HAP contract may not be 
changed to include units exclusively made available to youth receiving 
FUPY/FYI assistance if the change would jeopardize an assisted family's 
eligibility for continued assistance at the project.
    Excepted PBV units exclusively made available to FUPY/FYI youth, as 
applicable, qualify as excepted as long as an eligible youth receiving 
FUPY/FYI assistance resides in the unit. Therefore, prior to entering 
into a HAP contract that includes FUPY/FYI excepted units, the PHA must 
plan for how it will maintain compliance with the requirements for 
excepted units once the FUPY/FYI assistance has expired for a 
particular youth who has leased the

[[Page 3579]]

unit. In order for the unit to remain under the FUPY/FYI excepted unit 
category, the youth must vacate the unit once their FUPY/FYI assistance 
has expired and the owner must lease the unit to another FUPY/FYI 
youth. If the youth does not move from the unit upon the expiration of 
their FUPY/FYI assistance, at that time the PHA must take one of the 
following actions in order to maintain compliance with the income-
mixing requirement:
    <bullet> Remove the unit from the HAP contract. The PHA would 
remove the unit from the HAP contract if the youth remains in the unit 
without assistance or with non-FUPY/FYI tenant-based assistance. The 
unit may be added back to the contract per 24 CFR 983.207(b) \10\ if 
the youth later moves from the unit;
---------------------------------------------------------------------------

    \10\ As amended by HOTMA (see HOTMA January 18, 2017 Notice; 
Notice PIH 2017-21 Att. J).
---------------------------------------------------------------------------

    <bullet> Amend the HAP contract to substitute the youth's current 
unit for another unit in the building if it is possible to do so in 
accordance with 24 CFR 983.207(a). Such a substitution will result in 
the other unit in the building being covered by the FUPY/FYI excepted 
unit category. A PHA may, but is not required to, in conjunction with 
such substitution add the youth's current unit to the HAP contract if 
it is possible to do so in accordance with 24 CFR 983.207(b), as 
amended by HOTMA, including that such addition does not cause the PHA 
to exceed the program limitation or become non-compliant with the 
income-mixing requirement. If the youth's current unit is not added to 
the HAP contract, the youth may remain in the unit without assistance 
or with non-FUPY/FYI tenant-based assistance; or
    <bullet> Amend the HAP contract to change the excepted unit 
category from FUPY/FYI to another excepted unit category (such as 
supportive services) if the FUPY/FYI youth, or the unit, happens to 
qualify for it, or change the unit to a non-excepted unit if doing so 
is allowable under the income-mixing requirement. Such a change in the 
form of PBV assistance used in the unit is permissible only if it does 
not cause the PHA to exceed the program limitation.
    A PHA should be aware that it may only allow the youth to remain in 
the unit with non-FUPY/FYI HCV assistance (either tenant-based or 
project-based, as applicable) if the youth was selected from the 
applicable waiting list in accordance with the policies set forth in 
the PHA's Administrative Plan. A PHA may, but is not required to, 
create a preference applicable to the PHA's regular HCV and/or PBV 
waiting lists for persons whose FUPY/FYI assistance is expiring and 
will have a lack of adequate housing as a result of their termination 
from the program, or other similar category. However, as noted above, 
the unit will no longer qualify for the FUPY/FYI excepted unit category 
if the youth remains in the unit with another form of HCV assistance 
after their FUPY/FYI assistance has expired.
    At a later date, HUD will undertake conforming rulemaking to revise 
its regulations to reflect this statutory change.

V. Provisions of FSHO That Require Future Action From HUD To Be 
Implemented

A. Reports (Section 103(b)(1) of FSHO)

    Section 103(b)(1) of FSHO amended section 8(x) of the U.S. Housing 
Act of 1937 (42 U.S.C. 1437f(x)) to add a new paragraph (5), 
subparagraphs I(i)(II) and (III), to require that PHAs report the 
following information to HUD regarding FUPY/FYI assistance.
(i) The Number of Persons Who Applied for FUPY/FYI Assistance During 
the Fiscal Year Who Were Not Provided FUPY/FYI Assistance and the 
Reason Why the PHA Was Unable To Provide Such Assistance
    PHAs are required to report the number of persons who applied for 
FUPY/FYI assistance during the fiscal year who were not provided FUPY/
FYI assistance and the reason why the PHA was unable to provide such 
assistance. For the purpose of this reporting requirement, HUD 
interprets the number of persons who applied for assistance during the 
fiscal year to be the number of youth that a partnering PCWA determined 
to be eligible for FUPY/FYI assistance and referred to the PHA during 
the fiscal year. Therefore, the PHA must report the number of persons 
who were referred for FUPY/FYI assistance by a partnering PCWA during 
the fiscal year who were not provided FUPY/FYI assistance and the 
reason why the PHA was unable to provide such assistance. For example, 
a PHA may have been unable to provide FUPY/FYI assistance because it 
did not have any FUPY/FYI vouchers available or it determined that the 
person was not eligible for the HCV program.
    Implementation Action. The requirement to report this information 
to HUD is not in effect until HUD completes the Paperwork Reduction Act 
requirements. Until such time, PHAs are not required to report this 
information to HUD. HUD notes that it would be beneficial for PHAs to 
maintain this information to facilitate future reporting to HUD.
(ii) How the PHA Communicated or Collaborated With PCWAs To Collect 
Such Data During the Fiscal Year
    PHAs are required to report how they communicated or collaborated 
with PCWAs to collect the data described in paragraphs IV(C) and 
V(A)(i) of this document.
    Implementation Action. The requirement to report this information 
to HUD is not in effect until HUD completes the Paperwork Reduction Act 
requirements. Until such time, PHAs are not required to report this 
information to HUD. HUD notes that it would be beneficial for PHAs to 
maintain this information to facilitate future reporting to HUD.

B. Coordination Between Public Housing Agencies and Public Child 
Welfare Agencies (Section 103(b)(2) of FSHO)

    Section 103(b)(2) of FSHO amended section 8(x)(4) of the U.S. 
Housing Act of 1937 (42 U.S.C. 1437f(x)(4)), which requires HUD to 
issue guidance to improve coordination between PHAs and PCWAs in 
carrying out the FUP program. Specifically, section 103(b)(2) of FSHO 
requires the provision of guidance on establishing a point of contact 
at the PHA to receive appropriate referrals of eligible recipients from 
its partnering PCWA(s).
    Implementation Action. HUD will provide guidance in this area as 
part of the guidance required by section 8(x)(4) of the U.S. Housing 
Act. HUD expects to issue this guidance in the near future.

C. Supplemental Fees for Administering Assistance for Youth Aging Out 
of Foster Care (Section 103(b)(3) of FSHO)

    Section 103(b)(3) of FSHO amended section 8(q) of the U.S. Housing 
Act of 1937 (42 U.S.C 1437f(q)) by adding a new paragraph (5) to allow 
HUD to provide supplemental fees to PHAs for the cost of administering 
FUPY or FYI vouchers but only if the PHA waives any residency 
requirement that it has established pursuant to section 8(r)(1)(B)(i) 
of the U.S. Housing Act of 1937 (42 U.S.C. 1437f(r)(1)(B)(i)). Section 
8(r)(1)(B)(i) allows PHAs to require that any family that does not live 
in its jurisdiction at the time the family applies for HCV assistance 
must lease and occupy a dwelling in the PHA's jurisdiction during the 
first 12-months of assistance.
    A PHA's residency requirement applies to all HCVs. As a result, 
PHAs are prohibited from making changes to the residency requirement 
for FUPY and

[[Page 3580]]

FYI only absent statutory authority as FSHO did not grant such 
authority.
    Implementation Action: Should HUD receive funding to provide 
supplemental fees for FUPY or FYI vouchers under this section, HUD will 
issue a notice communicating the availability of funds, eligible 
activities and expenses, and instructions on how to apply for such 
funds.

VI. Environmental Impact

    This notice does not direct, provide for assistance or loan and 
mortgage insurance for, or otherwise govern or regulate, real property 
acquisition, disposition, leasing, rehabilitation, alteration, 
demolition, or new construction, or establish, revise, or provide for 
standards for construction or construction materials, manufactured 
housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this 
notice is categorically excluded from environmental review under the 
National Environmental Policy Act of 1969 (42 U.S.C. 4321).

Dominique Blom,
General Deputy Assistant Secretary for Public and Indian Housing.
[FR Doc. 2022-01285 Filed 1-21-22; 8:45 am]
BILLING CODE 4210-67-P


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