30020 Federal Register / Vol. 87, No. 95 / Tuesday, May 17, 2022 / Rules and Regulations 

1The Native American Housing Assistance and 

Self Determination Act of 1996 (25 U.S.C. 4101 et 

seq.) (NAHASDA) removed the application of the 

FSS program to Indian Housing Authorities. 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Parts 887 and 984 

[Docket No. FR–6114–F–03] 

RIN 2577–AD09 

Streamlining and Implementation of 

Economic Growth, Regulatory Relief, 

and Consumer Protection Act Changes 

to Family Self-Sufficiency (FSS) 

Program 

AGENCY: Office of the Assistant 

Secretary for Public and Indian Housing 

and Office of the Assistant Secretary for 

Housing—Federal Housing 

Commissioner, Department of Housing 

and Urban Development (HUD). 

ACTION: Final rule. 

SUMMARY: This final rule amends HUD’s 

regulations to implement changes to the 

Family Self-Sufficiency (FSS) program 

made by the Economic Growth, 

Regulatory Relief, and Consumer 

Protection Act (‘‘the Economic Growth 

Act’’ or ‘‘the Act’’). Section 306 of the 

Act made multiple amendments to the 

FSS program, including changes to the 

methodology for determining the size of 

the FSS program, expanding the 

definition of eligible families to include 

tenants of certain privately owned 

multifamily properties subsidized with 

Project-Based Rental Assistance (PBRA), 

updating the FSS Contract of 

Participation (CoP), reducing burdens 

on Public Housing Agencies (PHAs) and 

multifamily assisted housing owners, 

clarifying escrow account requirements, 

and updating the FSS Action Plan 

requirements. After consideration of 

public comments, this final rule 

incorporates these changes, responds to 

public comments, and further revises 

HUD’s FSS regulations to further 

streamline the program for PHAs, 

multifamily property owners, and 

eligible families, including providing 

that families participating in the 

Housing Choice Voucher 

Homeownership Program and all 

Section 8 programs can participate in 

the FSS program, revising certain 

definitions that apply to the program to 

align with commenters’ suggestions, 

making changes to the CoP provisions, 

revising the lists of activities for which 

forfeited escrow funds may be used, and 

making changes to portability 

provisions. 

DATES: 

Effective date: June 16, 2022. 

Compliance date: Public Housing 

Authority and Owner compliance with 

this rule is required no later than 

November 14, 2022. 

FOR FURTHER INFORMATION CONTACT: For 

Public and Indian Housing (PIH) FSS 

contact Anice S. Chenault, Office of 

Public and Indian Housing, U.S. 

Department of Housing and Urban 

Development, 451 7th Street SW, Room 

4120, Washington, DC 20410; telephone 

number 502–618–6163 (this is not a tollfree number); and for Multifamily FSS 

contact Elizabeth Fernandez, Office of 

Multifamily Housing Programs, U.S. 

Department of Housing and Urban 

Development, 451 7th Street SW, Room 

6182, Washington, DC 20410; telephone 

number 202–402–6763 (this is not a tollfree number). The public is encouraged 

to email questions to FSS@hud.gov or 

MF_FSS@hud.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

In 1990, section 554 of the Cranston 

Gonzalez National Affordable Housing 

Act (Pub. L. 101–625, approved 

November 28, 1990) amended the 

United States Housing Act of 1937 by 

adding a new section 23 (42 U.S.C. 

1437u) to create the FSS program. The 

FSS program requires that PHAs and 

Indian Housing Authorities 1 use Public 

and Indian Housing assistance and 

Section 8 Housing assistance rental 

voucher programs, together with public 

and private resources, to provide 

supportive services, case management, 

and an escrow account to participating 

families, with the intent to help families 

achieve economic independence and 

self-sufficiency. The program’s goal is to 

enable participating low-income 

families to increase their earned income, 

achieve economic stability, and reduce 

or eliminate their need for welfare 

assistance and rental subsidies. FSS 

Program Coordinators create plans with 

participating families to achieve goals 

and connect them with services that 

will assist the family in making progress 

toward economic security. As the 

family’s earnings increase, the 

difference between the original rent and 

the increased rent due to increased 

earned income is credited to an interestbearing escrow account on the family’s 

behalf. Families that meet program 

requirements and successfully complete 

the FSS program receive their accrued 

FSS escrow funds, plus interest. No 

regulatory restrictions exist on the use 

of the escrowed funds. Many families 

use the funds to help with the purchase 

of a home, debt reduction, postsecondary education, or to start a new 

business. 

On May 24, 2018, the Economic 

Growth, Regulatory Relief, and 

Consumer Protection Act (the 

‘‘Economic Growth Act’’ or ‘‘the Act’’) 

was signed into law (Pub. L. 115–174), 

and section 306 of title III of the Act, 

Protections for Veterans, Consumers, 

and Homeowners, amended the United 

States Housing Act of 1937 (42 U.S.C. 

1437, et seq.), FSS program, which 

required HUD to issue regulations to 

update its program requirements and 

provide new provisions for private 

owners of multifamily assisted housing 

to set up their own FSS programs. 

Additional details about the FSS 

program may be found in the 

background of the ‘‘Streamlining and 

Implementation of Economic Growth, 

Regulatory Relief, and Consumer 

Protection Act Changes to Family SelfSufficiency (FSS)’’ at 85 FR 59234 

(September 21, 2020). 

II. The September 21, 2020, Proposed 

Rule 

On September 21, 2020 (85 FR 59234), 

HUD published a proposed rule to 

implement changes required by the 

Economic Growth Act and streamline 

the FSS program. The public comment 

period closed on November 20, 2020, 

and HUD received 105 public 

comments. The proposed rule makes 

changes to the existing FSS regulations 

at 24 CFR part 984 and adds a new 24 

CFR part 887 to address the FSS 

program for owners of multifamily 

assisted housing. The proposed rule also 

updates references to PHAs and owners 

and clarifies the provisions that would 

apply to both when operating an FSS 

program. Owners would be subject to 

the requirements only if they are 

operating an FSS program. 

The changes include updating the 

mandatory size of a PHA’s required FSS 

program and available exceptions; 

updating the definition of eligible 

families; allowing family members other 

than the Head of Household for rental 

assistance purposes to sign the Contract 

of Participation (CoP) and to meet the 

employment obligation; amending the 

definition of supportive services; 

changing the term of the CoP; amending 

the requirements pertaining to the 

management of the escrow account, 

including the requirements for forfeiture 

of the escrow funds; and, amending 

reporting requirements. Also, the 

Economic Growth Act provided new 

provisions for private owners of 

multifamily assisted housing to set up 

their own FSS program or enter into a 

Cooperative Agreement with another 

private owner or PHA to offer an FSS 


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Federal Register / Vol. 87, No. 95 / Tuesday, May 17, 2022 / Rules and Regulations 30021 

2HUD currently uses the term Notices of Funding 

Opportunity or ‘‘NOFO’’ for documents that would 

previously have been referred to as Notice of 

Funding Availability or ‘‘NOFAs.’’ This change is 

based on the terminology used in Office of 

Management and Budget Management in its 

Guidance for Grants and Agreements (85 FR 49506, 

August 13, 2020). 

program to the owner’s assisted 

residents. For more information about 

the specific proposed changes to 

conform with the Economic Growth Act 

see the background of the ‘‘Streamlining 

and Implementation of Economic 

Growth, Regulatory Relief, and 

Consumer Protection Act Changes to 

Family Self-Sufficiency (FSS)’’ at 85 FR 

59234 (September 21, 2020). 

HUD also proposed changes, that 

were not statutorily required, to 

streamline the program, including 

removing references to the 

establishment of mandatory programs; 

requiring an FSS Program Coordinator 

as a Program Coordinating Committee 

(PCC) member; requiring that at least 

one resident participant from each 

HUD-assisted program served by FSS is 

a member of the PCC; revising the 

amount of time a family must be 

independent from welfare assistance 

prior to expiration of the CoP; 

expanding the definition of ‘‘good 

cause’’ for a contract extension to 

include the active pursuit of a goal that 

will further self-sufficiency, such as a 

college degree or credit repair program; 

removing the provision that 

automatically completes the FSS 

contract when thirty percent (30%) of 

the family’s adjusted monthly income 

equals or exceeds the Fair Market Rent 

(FMR); requiring that nullification 

would occur when the PHA or owner 

and participant determine that services 

integral to an FSS family’s advancement 

towards self-sufficiency are unavailable 

or when the head of FSS family 

becomes permanently disabled and 

unable to work or dies during the period 

of the contract, with exceptions; 

differentiating between ‘‘determining 

the FSS escrow amount’’ and ‘‘crediting 

that FSS escrow amount’’ to a family’s 

FSS escrow account and requiring that, 

during the term of the FSS contract, the 

PHA or owner credits the escrow 

amount to each Family’s FSS escrow 

account on a monthly basis; revising the 

provision concerning reduction of 

amounts due by the FSS family; and 

revising several provisions concerning 

FSS families that move with continued 

housing choice voucher (HCV) 

assistance from the jurisdiction of one 

PHA to the jurisdiction of another PHA 

under portability. HUD also reminded 

PHAs and owners that they may not 

establish mandatory goals or 

requirements for all participants other 

than the two mandatory goals set in 

regulation (seek and maintain suitable 

employment, and be independent from 

welfare assistance), and that all other 

goals must be set on an individual basis. 

After the publication of the proposed 

rule, HUD determined that changes to 

the information collection requirements 

described in it would be necessary. As 

a result, on November 15, 2021, at 86 FR 

62964, HUD published a supplemental 

notice of proposed rulemaking reopening the public comment period on 

the information collection requirements 

in the September 21, 2020, proposed 

rule. HUD received only one comment, 

which spoke about affordable housing 

generally and not about FSS or 

information collection requirements. 

III. Changes Made at the Final Rule 

Stage 

In response to public comments, a 

discussion of which is presented in 

Section IV, and in further consideration 

of issues addressed at the proposed rule 

stage, HUD is publishing this final rule 

adopting the September 21, 2020, 

proposed rule as final with the 

following changes. 

A. Purpose, applicability, and scope. 

As part of this final rule, HUD updates 

the list of public housing and voucher 

programs through which families can 

participate in the FSS program in 

§ 984.101. Public commenters noted that 

the change in the Economic Growth Act 

provided HUD with further flexibility to 

allow participants beyond those being 

funded under 8(o) of the U.S. Housing 

Act of 1937. After further consideration, 

HUD amends § 984.101 to provide that 

families participating in the HCV 

Homeownership Program under section 

8(y) of the U.S. Housing Act of 1937 will 

also be allowed to participate in the FSS 

program. Additionally, this final rule 

includes Moderate Rehabilitation and 

Moderate Rehabilitation Single Room 

Occupancy for homeless individuals 

under 24 CFR part 882 in the list of 

programs under which families can 

participate in FSS, as these are also 

Section 8-assisted housing. The final 

rule also explicitly identifies Family 

Unification Program (FUP) assistance 

under section 8(x) of the 1937 Act as a 

program under which families can 

participate in FSS; the proposed rule 

did not adequately distinguish that FUP 

is not a section 8(o) program, unlike 

other special purpose vouchers. 

This final rule also clarifies in 

§ 984.101 that participation in the FSS 

program, or lack thereof, may not be 

used as cause to terminate rental 

assistance. 

B. Definitions. In § 984.103, this final 

rule maintains the current definition of 

‘‘effective date of the Contract of 

Participation’’ which currently is the 

first day of the month following the 

month in which the FSS family and the 

PHA or owner entered into the Contract 

of Participation, rather than finalize the 

proposed rule definition that would 

have made this the date the parties sign 

the contract. HUD revises the definition 

slightly so the effective date will be the 

first day of the month following the date 

in which the FSS family and the PHA 

or owner entered into the Contract of 

Participation for clarity, but the change 

is not substantive. HUD is maintaining 

the current definition because many 

commenters requested that the CoP 

continue to conform with other rental 

assistance processes that operate on a 

monthly cycle. 

Additionally, this final rule revises 

the definition of ‘‘FSS family in good 

standing’’ as recommended by some 

commenters to mean an FSS family that 

is in compliance with their FSS CoP, 

has satisfied or is current on any debts 

owed the PHA or owner, and is in 

compliance with the regulations 

regarding participation in the relevant 

rental assistance program. The 

definition under the proposed rule 

provided that an FSS family is in good 

standing if it is not in eviction 

proceedings and is otherwise in 

compliance with any repayment 

agreement and the FSS CoP and did not 

include language noting that the family 

must also be in compliance with 

regulations for the relevant assistance 

program. This final rule also expands 

the definition of ‘‘Personal welfare’’ in 

§ 984.103 to include health, dental, 

mental health and health insurance 

services. 

C. Cooperative Agreements. In 

response to public comment, this final 

rule specifies in §§ 887.107 and 984.106 

that Cooperative Agreements between 

PHAs and owners of multifamily 

properties must include processes for 

the entities to communicate with each 

other about changes in their Action 

Plans to ensure continued coordination 

between the participating entities in 

administering their program. 

D. FSS award funds formula. This 

final rule removes language in 

§§ 887.111 and 984.107 of the proposed 

rule that stated notice of, and changes 

to, the FSS Award Funds Formula will 

be published in the Federal Register, as 

the formula will continue to be 

published in Notices of Funding 

Opportunities (NOFO).2 HUD believes 

that adding the publication of the 

funding formula in the Federal Register 

would duplicate the inclusion of the 

formula that would also need to be 


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30022 Federal Register / Vol. 87, No. 95 / Tuesday, May 17, 2022 / Rules and Regulations 

included in the NOFO. This final rule 

adds the statutory formula to HUD’s 

regulations in § 984.107 for clarity. 

E. FSS Action Plans. Section 984.201 

of this final rule includes examples of 

policies over which PHAs/owners have 

discretion. These may be included in 

the FSS Action Plan to help HUD 

determine the soundness of the PHA or 

owner’s FSS program. 

F. FSS appropriated funds. This final 

rule revises § 984.302 to clarify that FSS 

appropriated funds awarded pursuant to 

this statute may be used by PHAs or 

owners for eligible FSS costs, including 

when an owner operates an FSS 

program through a Cooperative 

Agreement or on its own. Additionally, 

to ensure that there is no confusion 

about funding available to PBRA owners 

who operate an FSS program, this final 

rule adds a provision at § 887.113(a), 

that states that owners may also or 

alternatively use residual receipts to pay 

for reasonable FSS program operation 

costs, including hiring an FSS Program 

Coordinator or coordinators for their 

FSS program. This new regulatory text 

implements statutory language of 

section 23(l) of the U.S. Housing Act of 

1937, as amended by the Economic 

Growth Act, which states that PBRA 

owners may access funding from any 

residual receipt accounts for the 

property to hire an FSS Program 

Coordinator(s) for their program. 

G. Contract of Participation. In 

§ 984.303, which covers the ‘‘Contract of 

Participation,’’ this final rule makes 

various changes and revisions. This 

clarifies that there will only be one CoP 

per household, and there may be an 

Individual Training and Services Plan 

(ITSP) for as many members of the 

household that wish to participate, 

which will be incorporated into the 

CoP. The rule also revises the regulatory 

text in paragraph (b)(3) to clarify that all 

considerations allowed for other 

residents for repayment agreements and 

other matters shall also be allowed for 

FSS participants. The rule revises 

§ 984.303(b)(2) to state that being 

independent from welfare assistance 

will be a mandatory final goal instead of 

an interim goal. 

Additionally, the rule revises 

paragraph (b)(4)(iii) to note that the 

determination of suitable employment 

will be made with the agreement of the 

affected participant, so that the affected 

participant has input into this matter 

along with the PHA or owner, and 

expands the regulation to include that 

the determination will involve 

consideration of the receipt of other 

benefits of the participant, to ensure that 

new employment will not cause the loss 

of necessary supports, in addition to the 

skills, education, and job training of that 

participant. Further, in paragraph (a) 

this final rule eliminates the 

requirement from the proposed rule that 

the family consult with the PHA or 

owner in designating the head of FSS 

family, as HUD believes that it is 

generally in the best interests of assisted 

households to choose the head of FSS 

family that is most suitable for their 

individual household circumstances. 

This final rule also revises paragraph 

(d) to clarify that the determination of 

good cause for a Contract extension can 

include circumstances beyond the 

control of the FSS family that impede 

the family’s ability to complete the CoP 

obligations and can include any 

circumstance that the PHA or owner 

determines warrants an extension, as 

long as the PHA or owner is consistent 

in its determinations. Further, this final 

rule provides in paragraph (k) that while 

the CoP will be terminated, escrow can 

be disbursed to the family when 

services that the PHA or owner and the 

FSS family have agreed are integral to 

the FSS family’s advancement towards 

self-sufficiency are unavailable. Under 

the proposed rule language, only the 

PHA or owner made that determination. 

This final rule revises paragraph (f) to 

clarify that modifications to the CoP 

must be in writing and signed by the 

PHA/owner as well as the head of FSS 

family. Additionally, this final rule 

revises paragraph (j) to clarify that only 

non-HUD funds or non-HUD restricted 

funds can be used by PHAs and owners 

to offer supportive services to former 

FSS families that have left assisted 

housing. 

Lastly, this final rule provides in 

paragraph (k) that a CoP will be 

terminated but escrow can be disbursed 

to the family rather than forfeited, if an 

FSS family in good standing moves 

outside the jurisdiction of the PHA for 

good cause, as determined by the PHA, 

and continuation of the CoP after the 

move, or completion of the CoP prior to 

the move, is not possible. 

H. FSS escrow account. This final rule 

removes from § 984.305 language that 

would permit a PHA or owner to set a 

policy to either conduct a new reexamination of income before the 

effective date of the FSS contract, or to 

use the amounts on the family’s last 

income re-examination when setting a 

participant’s baseline rent. This final 

rule will instead require the PHA or 

owner to use the amounts on the most 

recent rent certification. HUD believes 

this is more in line with congressional 

intent. 

Additionally, this final rule expands 

the list of eligible activities for which 

forfeited escrow funds may be used to 

include other costs related to achieving 

obligations outlined in the CoPs of 

remaining FSS participants and adds to 

the list of ineligible activities ‘‘general 

administrative costs of the FSS 

program.’’ HUD has made this change to 

eliminate any incentive PHAs may have 

had not to graduate participating 

families so as to recapture the forfeited 

escrow funds and to ensure forfeited 

funds are used to advance participants’ 

goals and not for the overall 

implementation of the FSS program. 

This final rule does not contain 

language from the proposed rule that 

would have provided for escrow 

disbursement to an estate if the head of 

the FSS family dies before a CoP is 

completed, as HUD determined that 

there is no legal authority for this. 

However, if the head of the FSS family 

dies before the CoP is completed, 

another member of the FSS family may 

take over the CoP. 

This final rule also clarifies how the 

increase in the family’s monthly rent is 

determined when computing the FSS 

credit amount for Section 8 Moderate 

Rehabilitation (Mod Rehab) and PBRA 

families and that, as is the case with 

Project-Based Vouchers (PBVs), it is the 

difference between the baseline monthly 

rent and the current gross rent. 

I. HCV portability requirement. Due to 

the fact that PBVs are allocated to a 

specific unit, a family with a PBV does 

not have the right to take that rental 

assistance and move. Generally, after 

having a PBV for 12 months, the family 

may apply for and receive Tenant-Based 

Rental Assistance (TBRA, also known as 

a Tenant-Based Voucher) if it is 

available. The proposed rule did not 

discuss an FSS family’s right to move 

after transitioning from a PBV to TBRA. 

In § 984.306, this final rule clarifies that 

a PBV family that has been enrolled in 

the FSS program for 12 months, and 

who exercises its right to transfer from 

the PBV unit to tenant-based rental 

assistance in accordance with 24 CFR 

983.261, may move outside of the 

jurisdiction of the initial PHA in 

accordance with standard portability 

regulations. The PHA’s discretion to 

allow portability moves for TBRA FSS 

participants within the 12 months 

following the effective date of the CoP 

also applies to PBV families who 

become Tenant-Based voucher families. 

Additionally, this final rule provides 

that a receiving PHA that is already 

serving the number of families 

identified in its FSS Action Plan and 

determines it does not have the 

resources to manage the additional FSS 

contract is not required to enroll a 

porting family. In such cases, the initial 

PHA must discuss with the family 


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options available to the family, such as 

modification of the FSS contract, 

termination of the FSS contract and 

forfeiture of escrow, termination of the 

contract and the release of escrow if the 

initial PHA determines there is good 

cause for the move, or locating a 

receiving PHA that has the capacity to 

enroll the family into its FSS program. 

HUD has made this change after 

considering public comments and 

determining that a lack of capacity to 

serve a ported FSS family would be a 

reasonable justification for a receiving 

PHA to deny enrollment of the ported 

FSS family into its FSS program. 

Further, in response to comments, 

this final rule allows a family that was 

not an FSS participant at the initial PHA 

to enroll in a receiving PHA’s program 

when the receiving PHA bills the initial 

PHA if the initial PHA agrees, and the 

initial PHA manages an FSS program. 

Under the proposed rule, if the 

receiving PHA bills the initial PHA, a 

family that was not an FSS participant 

at the initial PHA would not have been 

able to enroll in the receiving PHA’s 

FSS program. 

J. Basic requirements of FSS (for 

multifamily FSS programs). This final 

rule revises § 887.105 to provide that 

where a Program Coordinating 

Committee (PCC) is available, owners 

can either work with that PCC or create 

their own, either by themselves, or in 

conjunction with other owners. This 

adds flexibility to the language that was 

in the proposed rule that said owners 

must work with a PCC when one is 

available and did not mention an option 

for such owners to create their own 

PCCs. 

Additionally, under this final rule, 

multifamily owners are not exempt from 

the family selection procedures in 

§ 984.203. HUD makes this change from 

the proposed rule in order to give the 

owner the option of using certain 

selection preferences and motivational 

screening factors and make it easier for 

an owner to operate an FSS program 

through a Cooperative Agreement with 

a PHA that uses selection preferences or 

motivational screening factors. 

K. Additional grammatical and 

technical changes. This final rule makes 

additional grammatical and technical 

changes throughout, such as clarifying 

the usage of the word ‘‘jurisdiction’’ so 

that it is only used when referring to a 

PHA’s jurisdiction, and not also the 

community where a PBRA property is 

located; clarifying that PBRA owners 

may develop their own FSS Action 

Plans; including ‘‘Head of Household’’ 

in the list of definitions defined in part 

5 of HUD’s regulations; and other minor 

changes for clarity and conformance. 

L. Delayed compliance date. This 

final rule includes a compliance date 

that provides PHAs and owners with up 

to six months from the date of 

publication of this rule to comply with 

its provisions. HUD encourages PHAs 

and owners to comply with this new 

rule’s provisions as soon as possible. 

This means that all FSS Action Plans 

must be updated by the compliance 

date. HUD intends to provide guidance 

on that process and encourages PHAs 

and Owners to visit the FSS Resources 

web page at: https://www.hud.gov/ 

program_offices/public_indian_

housing/programs/hcv/fss and to 

subscribe to HUD’s FSS listserv at 

https://public.govdelivery.com/ 

accounts/USHUDPIH/signup/30989. 

The requirements in this rule may apply 

to CoPs that are signed after the effective 

date of the rule but before the 

compliance date if the PHA or Owner is 

in compliance with the new rule. PHAs 

and Owners may reach an agreement 

with FSS participants covered by 

existing CoPs to modify those CoPs on 

a family-by-family basis, so those 

contracts are governed by this final rule. 

IV. Public Comments 

The public comment period for the 

September 21, 2020, proposed rule 

closed on November 20, 2020. HUD 

received and reviewed 105 comments 

on the proposed rule from a wide 

variety of interested entities, including: 

Individuals, public housing agencies, 

affordable housing organizations, 

housing associations, community 

development corporations, and 

investment companies. This section 

addresses significant issues raised by 

the public comments and is organized 

by the proposed rule section, with 

summaries of the issues followed by 

HUD’s responses. There were also 

numerous comments received both in 

support of and opposition to the 

proposed rule generally, as well as 

comments that did not address one 

specific section of the proposed rule. 

Those comments are organized into 

general categories and responded to 

accordingly. Following are the issues 

raised by the public comments and 

HUD’s responses. 

General Support 

Commenters generally supported the 

proposed rule as beneficial to program 

participants and to beneficiaries. A 

commenter supported updating FSS 

rules so that PHAs do not have to ignore 

outdated language. 

HUD Response: HUD appreciates this 

feedback and the time taken to review 

the proposed rule. 

Section 984.101: Purpose, Applicability, 

Scope 

Section 8 Participants Eligibility 

A commenter asked HUD to clearly 

state that all Section 8 participants are 

eligible to participate in FSS, including 

those with Non-Elderly Disabled (NED), 

Veterans Affairs Supportive Housing 

(VASH), and Mainstream Vouchers. The 

commenter also asked HUD to provide 

specific instructions on reporting 

through the PIH Information Center 

(PIC) and Voucher Management System 

(VMS), noting that there is no clear 

direction on how to assist families on 

Mainstream 5 and the funds used for 

escrows need to be backed out and 

submitted as Housing Assistance 

Payments (HAP) in the Mainstream 5 

VMS line. The commenter said when 

they asked HUD, they were told 

Mainstream 5 participants were not 

eligible to participate in FSS as the 

funds are from the Section 811 

Supportive Housing for Persons with a 

Disability program. 

HUD Response: As stated in the 

proposed and this final rule, families 

assisted under Section 8 voucher 

programs are eligible to participate in 

FSS. This includes any applicable 

special purpose voucher considered 

rental assistance under section 8(o) or 

8(x) of the U.S. Housing Act of 1937 

(1937 Act) (such as Family Unification 

Program (FUP), Foster Youth Initiative 

(FYI), Veterans Affairs Supportive 

Housing (VASH), and Mainstream 

Vouchers). Based on comments received 

concerning the eligibility of Housing 

Choice Vouchers (HCV) homeownership 

families for FSS, HUD has revised the 

regulatory text to clarify and allow HCV 

homeownership families to participate 

in FSS. Additionally, this final rule 

includes Section 8 Moderate 

Rehabilitation for low-income families 

and Moderate Rehabilitation Single 

Room Occupancy for homeless 

individuals under 24 CFR part 882 in 

the list of programs under which 

families can participate in FSS, as these 

are also Section 8-assisted housing. For 

further explanation concerning this 

change, see the discussion of public 

comments on § 984.103. As it relates to 

the reporting concerns raised by a 

commenter, HUD is in the process of 

updating VMS to allow PHAs to 

properly report FSS escrow deposits 

and forfeitures for Mainstream Voucher 

participants and will share guidance 

when it is available. 

Non-Participation 

Commenters supported HUD’s 

addition of language clarifying that a 

family’s rental assistance shall not be 


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30024 Federal Register / Vol. 87, No. 95 / Tuesday, May 17, 2022 / Rules and Regulations 

delayed or terminated by reason of a 

family electing not to participate in the 

FSS program because families may, 

despite best efforts, fail to meet the 

obligations and objectives of the CoP, 

which would disincentivize 

participation. A commenter stated that 

the non-participation clause was too 

narrow and suggested HUD should 

affirmatively state that rental assistance 

cannot be terminated for noncompliance with the FSS program to 

avoid ambiguity and conform with the 

statute. 

HUD Response: This final rule revises 

§ 984.101(d) to be clear that 

participation in the FSS program, or 

lack thereof, may not be used as cause 

to terminate rental assistance. This final 

rule also revises § 887.101(d) to be clear 

that assistance under Section 8 Housing 

assistance payments programs cannot be 

refused, delayed or terminated because 

a family chooses not to participate in an 

FSS program. 

Mandatory and Voluntary Programs 

A commenter stated HUD should 

leave the language as is and allow the 

PHA to decide if they want to keep the 

program voluntary or make it 

mandatory. 

HUD Response: As used in the 

proposed rule and this final rule, the 

terms ‘‘voluntary’’ and ‘‘mandatory’’ 

refer to whether PHAs are required to 

institute an FSS program, not whether 

residents must participate. All FSS 

programs must be voluntary for 

participants. 

Section 984.102: Program Objectives 

Graduation Timing 

A commenter requested that HUD add 

a provision allowing a client to graduate 

at time of verification of full-time/ 

suitable employment or at the time the 

new wages/income from employment is 

added to the Form HUD–50058 Family 

Report. 

HUD Response: As explained in 

§ 984.303, the CoP is considered 

completed and a family’s participation 

in the program is considered concluded 

when the FSS family has fulfilled all of 

its obligation under the CoP, on or 

before the expiration of the Contract 

term. Section 984.303(b) requires that 

the head of FSS family under the CoP 

seek and maintain suitable employment 

during the term of the contract, but the 

family may have other obligations under 

the CoP, as described in § 984.303. 

Participants may graduate at any time 

their obligations under the CoP are met. 

The national average time in the 

program for graduates is less than four 

years. HUD notes that the goal of FSS 

is self-sufficiency; therefore, a 

participant being hired for their first job 

may in fact be only at the beginning of 

what they can achieve while in the FSS 

program. 

Performance Measures 

Commenters recommended that HUD 

allow the public the opportunity to 

comment on any performance 

standards. A commenter said any 

performance standards that will impact 

new, or renewal funding and incentives 

should be subject to public comments 

prior to the effective date. A commenter 

said that there were issues with HUD’s 

attempt to implement new performance 

metrics in the past and asked that 

HUD’s scoring system not place 

excessive weight on increased earned 

income, which may negatively impact 

FSS program participants that are 

enrolled in lengthier training and 

educational programs compared to 

participants that focus specifically on 

employment. A commenter said any 

weighing of graduation rates and 

earnings performance should be equal to 

reflect their equal importance. Other 

commenters expressed concern that the 

‘‘Composite Score’’ methodology does 

not give credit for programs or 

participants who enter educational 

pursuits prior to entering employment. 

Another commenter recommended that 

the performance measures and criteria 

for awarding incentives include an FSS 

family’s successful move to 

homeownership when graduating. 

A commenter stated that HUD 

received criticism for attempting to 

implement the performance 

measurement system and that HUD 

found inexplicable anomalies between 

consecutive years of scoring of certain 

housing authorities. The commenter 

said that Congress specifically 

prohibited HUD in an appropriations act 

from using funding to consider FSS 

performance measures or scores in 

determining funding awards. The 

commenter stated that the system does 

not account for the diversity of 

households in educational levels, skills, 

and employability at enrollment, and 

that HUD’s own contractor 

recommended that HUD tailor its 

performance measurement system to fit 

the stated structure and goals of the 

program. The commenter suggested 

HUD devise a system that: Is not 

implemented retroactively; does not fail 

to award points to all the educational, 

employment and supportive services 

allowed by statute for program 

participants; does not score performance 

until FSS contracts are completed; does 

not penalize non-metropolitan areas 

who may have a dearth of employment 

opportunities in their markets; does not 

penalize PHAs that are voluntarily 

administering an FSS program with no 

FSS Program Coordinator funding from 

HUD; and does not prevent PHAs from 

administering the FSS program at the 

local level. The commenter also said 

HUD lacks authority to determine how 

participants and PHAs will devise their 

contracts under FSS, and that if HUD 

wants to limit pre-employment services 

and educational/job training, it should 

seek a statutory change. This commenter 

asked HUD to remove from the final rule 

the explicit language related to HUD’s 

proposed measurement system factors— 

namely graduation from the program, 

increased earned income, and program 

participation—since no such language is 

included in section 306 of the Economic 

Growth, Regulatory Relief, and 

Consumer Protection Act. 

Two commenters stated the proposed 

rule is silent about how performance 

standards would affect coordinator 

funding awards and said HUD should 

comply with Congress’ directive by 

specifying that funding for renewed and 

additional coordinator positions would 

be subject to performance criteria. One 

commenter said it would not be fair to 

provide agencies serving more families 

than they are required additional points 

as other programs may be serving 

families and individuals that may 

require more time with a coordinator. 

Another commenter stated the 

‘‘Composite Score’’ accurately evaluates 

the success of the FSS program 

outcomes, and that when one looks at 

the outcomes achieved and not the 

process then it becomes clear what is 

being evaluated. 

A commenter said it has no objection 

to HUD using a PIC driven ‘‘Composite 

Score’’ to evaluate its FSS program but 

asked that HUD provide detailed 

reporting guidelines on how and when 

the data is mined from PIC to ensure 

they are reporting accurately. Another 

commenter said that the HUDcommissioned MDRC National FSS 

Evaluation will provide rich 

information about FSS program 

operations and that any changes in 

evaluation measurements should wait 

until the results of this study are 

published so that they may inform best 

practices for performance measurement. 

One commenter stated a concern that 

the proposed rule would not give credit 

to a program for graduating participants 

who have never received Temporary 

Assistance for Needy Families (TANF) 

or whose wages remained steady 

throughout the five-year FSS contract. 

The commenter was also concerned that 

the performance measure did not 

address the number of program 


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participants who did not have TANF 

within the time of their FSS contract. 

Another commenter expressed 

concern about the potential for 

developing a tool that is not flexible 

enough to reflect the complicated nature 

of the participants in the FSS program, 

the outside forces that directly impact 

their ability to meet and reach their 

ITSP goals, and the non-quantifiable 

impact of services and supports on their 

long-term economic stability. The 

commenter opposed the development of 

a tool that is applied the same way to 

all programs, if that tool cannot account 

for the impact of region, participant 

enrollment characteristics, short- and 

medium-term economic realities and 

changing government priorities. 

Commenters stated that the proposed 

rule did not reference Moving to Work 

(MTW) agencies as being covered by 

such an evaluation system, but it also 

did not indicate that MTW agencies will 

be exempt or subject to different criteria. 

The commenters said that the scoring 

criteria in the proposed rule should not 

apply to MTW agencies without 

engaging the MTW Collaborative and 

the individual MTW PHAs in a 

collaborative process to develop the 

tool, ensuring that in drafting scoring 

criteria HUD will consider the unique 

circumstances of MTW agencies 

operating alternative FSS programs. A 

commenter said that the Form HUD– 

50058/PIC does not allow for accurate 

reporting for MTW agencies, and if HUD 

intends to use Form HUD–50058–MTW 

for FSS performance scoring, HUD must 

fix the existing technical issues. 

HUD Response: The Proposed Family 

Self-Sufficiency Performance 

Measurement System (‘‘Composite 

Score’’) Notice requesting public 

comment was published on December 

12, 2017 (82 FR 58434). The Final 

Notice was published in the Federal 

Register on November 15, 2018 (83 FR 

57493). HUD wishes to note that the 

Performance Management System, as 

published, is not structured to include 

MTW agencies, unfunded FSS programs 

or PBRA FSS programs. The majority of 

the comments above commented on the 

current Performance Measurement 

System, not the proposed rule. 

Section 984.103: Definitions 

Baseline Annual Earned Income 

A commenter agreed with HUD’s 

proposed definition of ‘‘Baseline 

Annual Earned Income,’’ stating it 

aligns with the new Housing 

Opportunity through Modernization Act 

(HOTMA) proposal of removing Earned 

Income Disallowance (EID). One 

commenter agreed that disregarded 

income associated with self-sufficiency 

incentives should no longer be excluded 

in calculating baseline annual earned 

income because families who previously 

could not build escrow could now do so 

even if they are in a waiver program. 

Another commenter stated that 

instructing PHAs and owners to add 

back any disregard of earned income 

associated with self-sufficiency 

initiatives would have a punitive effect 

and likely deter rather than encourage 

participation for the persons with 

disabilities who could most benefit from 

FSS. This commenter said that just as 

HUD is proposing greater consistency 

across the board by allowing FSS 

families the opportunity to continue 

participation during the six-month ZeroHAP window rather than automatically 

graduating families who meet the 30% 

rule, HUD should maintain consistency 

across programs by continuing to extend 

the EID in calculating the baseline 

income for FSS CoP purposes. 

Commenters requested that HUD 

clarify the definition and asked 

specifically about the meaning of 

‘‘disregard of earned income associated 

with self-sufficiency initiatives.’’ One 

commenter asked if it referenced EID, 

Jobs Plus, or others, and, if so, that HUD 

provide a citation to the source of these 

initiatives so PHAs may easily reference 

them. Another commenter asked HUD 

to clarify whether the self-sufficiency 

initiatives HUD is in the process of 

implementing from the HOTMA would 

impact the calculation of FSS escrow. 

HUD Response: As explained in the 

proposed rule’s preamble, adding back 

any disregarded earned income 

associated with self-sufficiency 

initiatives at the time that the PHA or 

owner determines the baseline annual 

earned income (that is, when the PHA 

or owner is determining the amount of 

earned income when the family enrolls 

in the program), helps ensure that 

escrow amounts are the result of 

increases in earned income while the 

family is in the FSS program. 

Otherwise, the family’s earned income 

would be lower at baseline resulting in 

potential for higher escrow credits based 

on increases in earned income that 

happened prior to FSS enrollment. It 

does not mean that this will necessarily 

result in all families with a disregard 

not being able to escrow, but rather, that 

the calculation will more accurately 

reflect increases in escrow that are the 

result of increases in earned income 

while the family is in FSS. Based on 

this, HUD has determined not to change 

the proposed regulatory language. 

Currently, ‘‘self-sufficiency initiatives’’ 

includes programs that include financial 

incentives including the Jobs Plus 

Earned Income Disregard and the 

standard Earned Income Disregard. 

HUD’s proposed rule implementing 

sections 102, 103, and 104 of HOTMA 

(published on September 17, 2019 at 84 

FR 48820) would eliminate the standard 

Earned Income Disregard. Additionally, 

that proposed rule would change rent 

calculation, but would not introduce 

new ‘‘self-sufficiency initiatives’’ (with 

financial incentives). HUD is not 

including the name of specific selfsufficiency initiatives in the rule, as we 

do not wish to limit ‘‘self-sufficiency 

initiatives’’ to those that exist at present. 

However, this final rule revises the 

definition to note that disregarded 

earned income ‘‘or other adjustments 

associated with self-sufficiency 

initiatives’’ may be applied when 

calculating baseline annual earned 

income, to account for ‘‘self-sufficiency 

initiatives.’’ This final rule also clarifies 

that any disregarded earned income 

‘‘and other adjustments associated with 

self-sufficiency initiatives’’ will be 

included in calculations of current 

annual earned income. 

Certification/Documentation of Goal 

Attainment and Completion 

A commenter stated the certification 

standard should be consistent with the 

HCV program of self-certification, and 

PHAs should strive to get third-party 

verification to confirm CoP goals were 

met. Another commenter recommended 

that HUD reduce unnecessary 

administrative burdens on housing 

providers and demonstrate trust in 

families by clarifying that selfcertification is permissible for 

documenting: (1) Completion of ITSP 

Goals; and (2) being independent from 

cash welfare assistance. This commenter 

recommended that under § 984.305(c), 

HUD explicitly state that selfcertification of goal completion is 

sufficient evidence. 

One commenter asked that HUD 

further clarify the certification 

definition to include a verification 

hierarchy to track ITSP goals with 

evidence provided by participants, such 

as third-party authentic documents, to 

help keep clear, concise record keeping. 

This commenter supported selfcertification only in situations where 

third-party verification would be 

difficult. 

HUD Response: The definition of 

certification, as written, and 24 CFR 

984.305(c)(1) and (2) allows for PHAs 

and owners to accept self-certification of 

being independent from welfare 

assistance from FSS participants and 24 

CFR 984.305(c)(4) also gives PHAs and 

owners the discretion to require third 

party verification. This final rule notes 


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3U.S. Department of Housing and Urban 

Development, Family Self-Sufficiency Program 

Proposed Rule Questions & Answers (Q&A), https:// 

www.hud.gov/sites/dfiles/PIH/documents/QA_on_

FSS_Proposed%20Rule_-clean.pdf. 

that the requirements for the 

documentation of attainment of ITSP 

goals will be left to the PHA or owner 

to determine, and the policy may be 

included in their FSS Action Plan. 

Current Monthly Rent 

A commenter recommended that HUD 

allow the current definition of family 

rent to remain, to decrease the 

uncertainty FSS Program Coordinators 

may have when explaining what family 

rent is to an FSS participant when 

determining the escrow calculation. 

HUD Response: HUD declines to 

accept the commenter’s 

recommendation. The proposed rule 

does not define ‘‘family rent.’’ The 

definitions of ‘‘baseline monthly rent’’ 

and ‘‘current monthly rent’’ were 

updated in the proposed rule and this 

final rule to reflect the evolution of rent 

options and nuances since the original 

regulations were written. The definition 

in the current regulation does not 

encompass the current realities. 

Effective Date of the Contract of 

Participation (CoP) (Question 1) 

Several commenters supported the 

proposed change to the effective date of 

the CoP. Commenters suggested that this 

could cause less confusion about the 

FSS program start date. One commenter 

supported the change but noted that 

software changes may need to be 

implemented to track these new dates. 

Two commenters supported the change 

to define this as the day the head of FSS 

family and PHA or owner execute the 

CoP. One commenter stated the current 

definition creates unnecessary delays 

for families interested in enrolling in the 

program. A commenter suggested 

applying this change prospectively 

rather than retroactively, as that would 

cause undue confusion for all parties. 

Many commenters opposed the 

proposed change to the CoP effective 

date. Commenters stated that the change 

would make recordkeeping and escrow 

reporting more complicated, creating an 

administrative burden. Other 

commenters said it would be harder to 

track and monitor progress and end 

dates for FSS program participants. A 

commenter requested the option of 

keeping the effective date as the first of 

the following month. 

Several commenters opposed defining 

the date of the CoP as the date it is 

executed, stating the CoP should 

continue to begin the next first of the 

month from the date of signing the 

contract. 

Other commenters noted that the 

change would be inconsistent with rent 

calculations, which are generally 

effective the first day of the month. One 

commenter noted that Section 8 actions 

could affect an FSS program 

participant’s income on the day that the 

Contract of Participation is signed, or 

the time directly afterwards. 

A commenter said there are some 

Form HUD–50058 (Family Report) 

actions that are not processed due to 

household changes, but Contract rent 

increases or change of unit due to 

extenuating circumstances such as fire, 

flooding, or owner possession of unit, 

and asked how this would impact the 

CoP start date. 

A commenter stated that because the 

tenant file comes from the Section 8 

population to the FSS program, there 

have always been issues with actions 

that are in process by the current 

occupancy specialist and the FSS 

reporting timelines. For FSS Program 

Coordinators that do not process their 

own actions or in some cases do not 

even have access to those functions in 

the HCV software, this must be 

coordinated with the Occupancy 

Specialist. In the case of the proposed 

rule, the FSS enrollment addendum, for 

example, would be entered for the 

October 15th enrollment date and the 

pending action would still need to be 

deleted and reprocessed to include the 

FSS progress enrollment, so either way 

there is additional data entry to be done 

and clear communication with other 

staff if one is not processing the actions 

in the software. 

Another commenter suggested an 

option to keep the effective date of the 

CoP on the first of the following month 

after signing to allow for easier tracking 

and PIC submission purposes. 

A commenter said that starting the 

CoP on the date the contract is executed 

may pose a challenge if the participant 

has submitted an interim recertification 

for a rent decrease that has not yet been 

processed at the time of enrollment. The 

commenter asked if a recertification that 

occurred before the execution of the CoP 

but processed after the execution of the 

CoP would count as the first 

recertification of income for the purpose 

of the CoP? Would the baseline rent be 

the last rental amount paid by the 

family or the next rental payment which 

would reflect the interim recertification? 

The commenter stated that it is unclear 

if a family graduates from the program 

mid-month as to whether an agency 

would be required to pro-rate the 

family’s escrow credit for the month or 

not. 

One commenter stated that if the 

effective date of the contract is changed 

from the date of signing, this affects the 

monthly rent roll and landlord 

payments, which would trigger the 

system to pro-rate payments that were 

already issued for that month. A 

commenter said a new workaround may 

need to be created to overcome this 

issue. 

HUD Response: HUD appreciates the 

comments on the proposal. Many 

commenters opposed the change and 

requested that the CoP continue to 

conform with other rental assistance 

processes that operate on a monthly 

cycle. This final rule does not include 

the provision to change the effective 

date to the same date as the enrollment 

date. The CoP effective date will remain 

the first of the month following 

execution of the CoP. HUD does not 

believe that the rent roll or landlord 

payments should be impacted by the 

Contract effective date. The new statute 

and proposed and final regulation state 

that the CoP will end no later than 5 

years after the first recertification of 

income after the execution date of the 

CoP. Therefore, a change in rent due to 

‘‘contract rent increases or change of 

unit due to extenuating circumstances 

such as fire, flooding, or owner 

possession of unit’’ as suggested by a 

commenter, would not impact the start 

date or the length of the CoP. HUD notes 

that while the statute uses the term 

‘‘recertification,’’ these regulations use 

the term ‘‘re-examination,’’ and these 

two terms have the same meaning in 

this rule. 

Eligible Families 

Commenters requested that HUD not 

limit eligible voucher recipients to 

‘‘section 8(o)’’ program participants in 

the proposed definition of ‘‘eligible 

families’’ and should replace this with 

‘‘Housing Choice Voucher program 

participants, including families with 

project-based vouchers and 

homeownership vouchers.’’ These 

commenters said that HUD does not 

explain why the proposed definition 

excludes these voucher participants. 

The commenters stated that a HUD Q&A 

clarifies that families receiving rental 

assistance through the Family 

Unification Program, other special 

purpose vouchers or Tenant Protection 

Vouchers would still be eligible to 

participate in FSS.3 The commenters 

said the statute does not prohibit these 

categories of families, and families 

utilizing the HCV homeownership 

program still pay income-based rent and 

could benefit from the additional 

savings available through the FSS 

program. These commenters stated HUD 

would also need to eliminate the 


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proposed definition of ‘‘section 8(o)’’ 

and make parallel changes in the 

definition of ‘‘FSS family’’ and 

elsewhere in the new regulations. 

Another commenter advocated that 

anyone of any income-based program 

should be eligible for this opportunity 

because the FSS program’s objective is 

to help people become independent of 

welfare assistance and work their way 

up to homeownership. 

A commenter recommended this 

definition be changed to allow families 

participating in the HCV 

homeownership program to have the 

opportunity to participate in FSS. 

Another commenter disagreed that those 

FSS participants who move into 

homeownership could or should remain 

on the FSS Program because most of the 

homeownership programs in their area 

offer assistance programs in case 

homeowners face hardship. A 

commenter recommended that 

Homeownership participants not be 

allowed to participate in FSS once they 

meet their CoP requirements. 

A commenter supported the proposed 

rule change allowing residents at Rental 

Assistance Demonstration (RAD)- 

converted properties to participate in 

the FSS program. Another commenter 

stated that FSS authorizing documents 

do not fully support the intentions of 

the FSS program, especially in RADconverted properties. The commenter 

said there is conflicting information 

regarding the eligibility of former PHA 

relocated residents within a PHA’s FSS 

Action Plan between the continuum of 

RAD Notices, the 2020 FSS Renewal 

Notice of Funding Availability (NOFA), 

and HUD’s proposed rule. The 

commenter said that the NOFA language 

seemed punitive to the resident and 

inconsistent with the program’s 

intentions and asked that HUD consider 

consistent language to allow continuous 

resident participation so long as the 

PHA and post-RAD conversion owner 

enter into a Cooperative Agreement and 

that residents be allowed into the 

program at any time after relocation. 

The commenter also asked that any new 

residents to the RAD-converted property 

also have the option to enroll into FSS 

and that the NOFA acknowledge these 

as eligible families. 

HUD Response: As it concerns the 

eligibility of HCV homeownership 

families (under section 8(y) of the U.S. 

Housing Act of 1937) to participate in 

FSS, HUD has considered the comments 

received, which are almost unanimously 

supportive of such participation. HUD 

has also determined that while section 

23 of the 1937 Act prior to the Economic 

Growth Act amendments prevented an 

HCV homeownership family from 

participating in FSS, changes to the 

definition of eligible families under 

section 23(c)(1) as amended by the 

Economic Growth Act mean that 

participants receiving HCV 

homeownership assistance may also be 

included in this definition; the statutory 

definition of FSS eligible families under 

the Economic Growth Act includes 

Section 8 participants broadly rather 

than being limited to Section 8 rental 

certificate or rental voucher program 

participants. HUD revised § 984.101 of 

this rule accordingly, so that 

participants of the HCV homeownership 

option are eligible to participate in FSS. 

Additionally, HUD revised the 

definition of Section 8 programs to 

include multifamily assisted housing; 

tenant-based and project-based rental 

assistance under section 8(o) of the 1937 

Act; the HCV homeownership option 

under section 8(y) of the 1937 Act; 

Family Unification Program (FUP) 

assistance under section 8(x) of the 1937 

Act; and Moderate Rehabilitation for 

low-income families and Moderate 

Rehabilitation Single Room Occupancy 

for homeless individuals under 24 CFR 

part 882. Tenant-based and projectbased rental assistance under section 

8(o) of the 1937 Act includes any 

applicable special purpose voucher 

considered rental assistance under 

section 8(o) of the 1937 Act (such as 

FYI, VASH, and Mainstream Vouchers). 

The comment about conflicting 

information regarding eligibility for 

residents at RAD-converted properties 

refers to the FY20 Notice of Funding 

Availability (NOFA). The FY20 NOFA 

reflects the eligibility of RAD-affected 

public housing residents prior to the 

new statute being implemented. The 

final rule will allow PBRA residents in 

RAD-converted properties to be served 

by PHAs with FSS appropriated funds 

if the PBRA owner enters into a 

Cooperative Agreement with the PHA 

and this will be reflected in future 

NOFOs following implementation of the 

final rule. 

Family Self-Sufficiency (FSS) Program 

A commenter stated that the 

definition of ‘‘FSS program’’ is 

established within its own jurisdiction 

and the language should be left as is 

because it gives the PHA more 

flexibility in defining and managing the 

program. 

Commenters noted that the definition 

referred to ‘‘a program established by a 

PHA or owner within its jurisdiction’’ 

but the phrase ‘‘within its jurisdiction’’ 

has no applicability to owners and 

could be read to indicate that a PBRA 

owner is somehow within the 

jurisdiction of the local PHA, and 

therefore recommended deleting the 

phrase ‘‘within its jurisdiction’’ from 

this definition. 

HUD Response: HUD has clarified its 

usage of the word ‘‘jurisdiction’’ 

throughout this rule. In the proposed 

rule, ‘‘jurisdiction’’ was sometimes used 

to refer to the community where a PBRA 

property is located. In this final rule, 

‘‘jurisdiction’’ is only used when 

referring to a PHA’s jurisdiction. 

Supportive Services 

A commenter stated support for 

HUD’s clarification that PHAs are only 

required to coordinate the availability of 

supportive services, not actually 

provide them, but requested that HUD 

clarify in its definition that PHAs and 

owners may directly provide supportive 

services, such as a childcare center or 

health clinic. Another commenter asked 

if, because of this provision, PHAs 

should no longer provide credit and 

financial services, even though PHAs 

are supposed to be trained in them in 

case an FSS participant faces those 

obstacles. Lastly, a commenter 

suggested that the final rule provide the 

flexibility for services to be conducted 

onsite or virtually, due to the COVID– 

19 pandemic. 

A commenter suggested that HUD 

keep intact the full list of services as 

distinctly listed by Congress so as not to 

minimize the importance of any one 

specific service by combining it with 

other services. The commenter stated 

that the system fails to account for 

achievement such as obtaining a college 

degree and favors an approach that 

moves participants quickly to 

employment. 

A commenter asked HUD to integrate 

health as part of the necessary 

conditions that promote and advance 

self-sufficiency because a health 

condition often prevents otherwise 

eligible families from participating in 

the FSS program. Before paragraph (ix) 

(Other services) of the definition, the 

commenter suggested adding the 

following: ‘‘(ix) Health management and 

empowerment—where available, the 

coordination with a Community Health 

Worker (CHW) as may be necessary to 

improve the health of the FSS 

participant, so long as the FSS 

participant consents in writing. The FSS 

participant may also withdraw consent, 

in writing, at any time.’’ 

Another commenter questioned 

whether FSS families could participate 

in first-time homebuyer programs while 

they are in the FSS program and what 

protections would the regulations 

provide to protect against possible 

discrimination while transitioning into 

homeownership. 


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HUD Response: PHAs and owners 

may provide FSS services directly using 

non-FSS appropriated funding, in 

accordance with the eligible activities of 

those funds. The FSS program does not 

impose any restrictions as to the 

location or modality of the services. 

The definition of Supportive Services 

in the final rule at § 984.103 includes all 

services as defined in the statute and 

adds clarifying language. Both 

education and employment-related 

supportive services are included, as in 

the statute. This final rule expands the 

definition of ‘‘Personal welfare’’ to 

include health, dental, mental health, 

and health insurance services. 

FSS families may, and often do, 

participate in first-time homebuyer 

programs while they are in the FSS 

program. Participating in a first-time 

homebuyer program, receiving housing 

counseling services, or participating in 

any form of homebuyer education or 

advocacy program should have no 

adverse effect on an FSS family’s 

participation in FSS. Participation in 

the FSS program would not curtail or 

impact in any way the protections 

against discrimination that cover all 

families. 

Section 984.105: Minimum Program Size 

Extension of HUD-Approved Exception 

(Question 2) 

A number of commenters supported 

the proposed change to extend the 

duration for a HUD-approved exception 

to five years. A commenter suggested 

that an annual report should be 

submitted by the PHAs to HUD 

concerning the use of the exception. 

Another commenter stated that the 

duration of any HUD-approved 

exception should be left at the PHA’s 

discretion. When a PHA submits the 

request for an exception, the PHA 

should provide a good cause for the 

requested timeframe since FSS 

participant family profiles vary between 

PHAs as well as local circumstances. 

HUD Response: HUD appreciates the 

comments received in response to this 

question and, will keep the five-year 

limit on exceptions as stated in the 

proposed rule. In the interest of 

consistency in HUD’s administration of 

the FSS program, HUD will not leave 

the time period of an exception up to 

each PHA. Under section 23 of the 1937 

Act, as amended by the Economic 

Growth Act, HUD does not have the 

discretion to grant a permanent 

exception to the implementation of a 

Mandatory Program. 

Proposed Changes to Minimum Program 

Size 

A commenter opposed the proposed 

change to the minimum program size. A 

commenter disagreed with the proposal 

that when determining the minimum 

program size, the relevant figure is the 

total number of Public Housing units 

plus the total number of HCV units 

because even within the context of a 

unified FSS program, the calculation of 

program size for HCV participants 

should be calculated independently of 

the total number of public housing 

units. This commenter said that this has 

the potential to negatively impact the 

Section Eight Management Assessment 

Program (SEMAP) scores of PHAs that 

are working to comply with mandatory 

FSS requirements and whose current 

SEMAP scores derive from their 

performance serving HCV program 

participants. This commenter asked 

whether this change would impact 

current FSS obligations or would only 

apply to future obligations. 

A commenter asked for more 

clarification for PHAs to accurately 

track their mandatory size. A 

commenter asked HUD to clarify 

whether HUD will be providing PHAs 

with the accurate number of required 

families to be served as of May 24, 2018, 

and whether all participants who have 

graduated since October 21, 1998, still 

reduce the May 24, 2018, mandatory 

number. Another commenter requested 

that the final rule provide additional 

clarification for FSS programs that 

reduced their size according to existing 

regulations because the proposed rule 

does not make it clear as to whether a 

program that reduces its program size 

after May 24, 2018, but before the final 

rule is implemented will be required to 

revert their program back to the size it 

was on May 24, 2018, or maintain its 

current minimum program size. The 

commenter recommended that HUD 

allow the minimum size of an FSS 

program to be either what it was on May 

24, 2018, or the lesser amount if, as 

allowed by current regulations, a family 

graduated after May 24, 2018, and the 

FSS program opted not to refill that 

spot. 

HUD Response: HUD will calculate 

each PHA’s minimum program size as of 

May 24, 2018, by calculating the 

original minimum program size 

(including public housing and Section 

8) and reducing that number by the 

number of graduations reflected in PIC 

since October 21, 1998, to date. HUD 

plans to communicate these through the 

Field Offices to PHAs and provide 

additional forthcoming guidance. 

Section 984.106: Cooperative 

Agreements (Question 3) 

Several commenters stated that the 

list of requirements for PHAs entering 

into a Cooperative Agreement with 

owners of multifamily properties to 

voluntarily make an FSS program 

available to the owner’s assisted tenants 

was comprehensive. One commenter 

noted that the requirement is being 

expanded without adequate 

appropriations to fund the FSS program, 

which would create an administrative 

burden for PHAs taking on an additional 

caseload for eligible families covered 

under a Cooperative Agreement with 

owners of multifamily properties. 

Another commenter opposed the change 

stating that it makes more sense to have 

the staff providing direct services to the 

client track and be knowledgeable about 

their escrow account, and that having 

separate hands involved with service 

coordination and escrow tracking 

creates an administrative burden on 

staff. One commenter recommended 

defining the word ‘‘serve’’ and the 

statement ‘‘FSS funds’’ to clarify that 

funds cannot be used for additional 

service provision like activities or 

incentives. 

HUD Response: HUD appreciates 

commenter feedback on the proposed 

list’s comprehensiveness and notes that 

the preponderance of commenters felt it 

was comprehensive. HUD notes the 

concerns raised by a commenter 

regarding coordination between FSS 

Program Coordinators and staff who 

track client escrows when these 

functions are not performed by the same 

staff; however, HUD does not feel that 

such challenges are insurmountable, or 

should prevent a PHA from choosing to 

serve PBRA residents via Cooperative 

Agreement. The PBRA owner is 

ultimately responsible for managing the 

Federal funds provided through their 

PBRA contract, for rent calculation, and 

for the amounts placed in escrow and 

distributed to FSS families. The rule 

requires that the Cooperative Agreement 

between a PHA and an owner set forth 

the procedures for the sharing of escrow 

information between the PHA and the 

owner. HUD recommends that these 

procedures include the role of the FSS 

Program Coordinators. Each PHA may 

choose whether to enter into a 

Cooperative Agreement with a 

multifamily owner, assessing its own 

capacity to take on new participants by 

expanding the program or integrating 

them into their current program size. 

PBRA residents served by a PHA are 

already incorporated into the ‘‘number 

of residents served’’ as part of the NOFO 

funding process. HUD does not believe 


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it is necessary to define the words 

‘‘serve’’ or ‘‘FSS funds’’ in the rule. 

Section 984.107: FSS Award Funds 

Formula 

Incorporation of Formula in the Final 

Rule 

Commenters stated that HUD should 

incorporate a formula in the final FSS 

rule addressing how HUD will approach 

the discretionary authorities provided in 

42 U.S.C. 1437u(i), created by the 

Economic Growth Act. The commenters 

encouraged HUD to specify in the final 

rule the other criteria which may be 

considered in determining eligibility for 

base or additional awards, which should 

include factors such as the planned 

enrollment level for a new or growing 

program, or the historic enrollment level 

for an existing program which may be 

experiencing a temporary dip in 

enrollment. One commenter stated that 

this requirement is mandatory, rather 

than discretionary. 

A commenter urged HUD to detail 

funding formulas in the final rule, as 

well as address how it will approach 

other discretionary funding authorities 

to give housing providers and service 

coordinators a clear understanding of 

the funding parameters and allow them 

to better prepare for the future. 

‘‘Base Awards’’ Threshold and Prorating 

the Award Amount 

Commenters suggested that the 

Secretary use discretion, under the 

Economic Growth Act to determine the 

policy concerning awards for eligible 

entities serving fewer than 25 

participants (the threshold for a ‘‘base 

award’’) and suggested that such a 

policy could include prorating the 

award amount or allowing such entities 

to combine programs. 

A commenter suggested that HUD 

should clarify that the first priority 

encompasses only the renewal of the 

full costs of the same number of fulltime and part-time coordinators as were 

funded by FSS awards in the prior year, 

with appropriate adjustments for local 

staffing costs and for year-to-year costof-living increases; and that the second 

priority encompasses all other funding 

requests, whether for new coordinators, 

incremental increases from part-time to 

full-time coordinators, or for existing 

coordinators not previously funded with 

FSS award funding. 

Criteria for Determining Additional 

Awards of FSS Program Coordinator 

Funding 

Commenters urged HUD to address its 

intended approach to determining 

awards of ‘‘new or incremental 

coordinator funding’’ under the second 

priority and urged HUD to use fair and 

reasonable ‘‘general principles.’’ The 

commenter suggested additional funds 

appropriated by Congress should be 

used for program expansion and 

deploying additional service 

coordinators. 

Commenters recommended that HUD 

commit in the rule to implementing 

competitive processes that provide fair 

and reasonable access to funding for 

both programs operated by PHAs and 

programs operated by PBRA owners; 

and a reasonable balance between 

incremental awards for existing 

programs and new awards for 

previously unfunded programs. 

HUD Response: This final rule adds 

the statutory funding formula in 

regulation. The new statute codifies the 

formula that HUD has used in NOFOs 

(previously called ‘‘NOFAs’’) for many 

years. All of the areas that are at HUD’s 

discretion (criteria for funding, policy 

on award for eligible entities that are 

serving fewer than 25 participations, 

amounts available, etc.) in the new 

statute have been and will continue to 

be addressed in standard NOFOs. The 

statute provides that First Priority 

funding goes to FSS Program 

Coordinators that qualify as renewals. 

Beyond that, Second Priority will fund 

new programs or additional 

coordinators for renewal grantees. The 

distribution and priority under the 

Second Priority will be published in the 

NOFO each year. HUD has determined 

that it would be duplicative to publish 

the funding formula in both the NOFO, 

which is available to the public on 

Grants.gov, and also in a separate 

Federal Register Notice. Additionally, 

publishing the formula in a separate 

Federal Register Notice could 

potentially delay funding awards, and 

since funding is annual, it is critical that 

awards be made by December 31 of the 

year in which it was appropriated. 

Therefore, this final rule removes 

language from the proposed rule that 

provides that HUD will publish a 

separate notice in the Federal Register. 

Each year, within the bounds of the 

statute, the implementation of the 

funding award formula may change 

slightly to reflect best practices, lessons 

learned, the needs of the day, etc. All 

criteria for making awards are shared, in 

conformance with the HUD Reform Act, 

with the applicant community via the 

NOFO. 

Incentives for Innovation and High 

Performance 

Commenters said that the final rule 

should address HUD’s implementation 

of new subsection (i)(6) of 42 U.S.C. 

1437u(i), created at section 306(a)(11) of 

the Economic Growth Act, which 

authorizes the Secretary to reserve up to 

5 percent of FSS appropriated funding 

for use as ‘‘incentives for innovation 

and high performance.’’ 

Commenters recommended that the 

authorized incentives for innovation 

and high performance be incorporated 

within a competitive funding process 

for allocation of funding to ‘‘second 

priority’’ requests for new or 

incremental coordinator funding. The 

commenters noted that the ‘‘incentive’’ 

funding under this section, unlike all 

other funding authorized in subsection 

(i), is not specifically restricted to use 

for FSS Program Coordinators, but is 

more flexibly defined as ‘‘to provide 

support or to reward’’ FSS programs; 

and urged HUD to provide in the final 

rule that it may employ this authority to 

provide support to innovative or highperforming FSS programs for costs other 

than coordinator costs, which could 

include the costs of IT systems, 

participant incentives, or other costs. 

Commenters recommended that HUD 

support programs to establish 

innovation, cross-sector partnerships to 

help strengthen the types and quality of 

services offered to FSS participants 

(such as partnerships with employers, 

workforce and career development 

programs, colleges, etc.). A commenter 

encouraged flexibility for program 

providers and the possibility of 

incentives that may allow them to 

pursue innovative efforts, which could 

complement the service coordinators’ 

work and improve resident outcomes. 

The commenter suggested that incentive 

payments permitted under the rules 

should only be considered after 

renewals are fully funded. 

HUD Response: HUD appreciates the 

comments. At the current time, HUD is 

focused on Priorities One and Two as 

stated in the Statute. If HUD chooses to 

avail itself of the option for Incentives 

for Innovation and High Performance, 

we will issue a separate notice. 

However, at this time, HUD is not 

including it in this final rule. 

Section 984.201: Action Plan 

A commenter requested that HUD 

state the exact ‘‘slight changes’’ it is 

making especially since they are not 

easily identifiable in section 306 of the 

Economic Growth Act. 

HUD Response: Compared to the 

current regulation (24 CFR 984.201), the 

final rule at § 984.201: (1) Expands 

requirements for consultation on the 

FSS Action Plan, as required by section 

23, as amended; (2) removes language 

around FSS Action Plan submission 

requirements for mandatory programs 


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(there are no new mandatory programs); 

(3) adds language to clarify that all 

voluntary programs are required to have 

an approved FSS Action Plan, 

regardless of whether they receive 

funding (this is not a change, just a 

clarification); (4) deletes references to 

outdated programs that no longer exist 

(e.g., the Job Opportunities and Basic 

Skills Training Program under part F of 

title IV of the Social Security Act has 

been replaced by the Workforce 

Innovation and Opportunity Act); and 

(5) removes requirements for policies 

around ‘‘terminating or withholding 

Section 8 assistance’’ (as this provision 

has been removed per other areas of 

statute). In the final rule, HUD is also 

adding to § 984.201(d)(13) providing 

that optional additional information is 

such other information that would help 

HUD determine the soundness of the 

proposed FSS program. Examples of 

policies that may be included in the FSS 

Action Plan include: 

• Policies related to the modification 

of goals in the ITSP; 

• The circumstances in which an 

extension of the Contract of 

Participation may be granted; 

• Policies on the interim 

disbursement of escrow, including 

limitations on the use of the funds (if 

any); 

• Policies regarding eligible uses of 

forfeited escrow funds by families in 

good standing; 

• Policies regarding the re-enrollment 

of previous FSS participants, including 

graduates and those who exited the 

program without graduating; 

• Policies on requirements for 

documentation of goal completion; 

• Policies on documentation of the 

household’s designation of the ‘‘head of 

FSS family;’’ and 

• Policies for providing an FSS 

selection preference for porting families 

(if the PHA elects to offer such a 

preference). 

Section 984.202: Program Coordinating 

Committees (PCCs) 

A commenter said they support the 

proposal to include service coordinators 

on PCCs because the committee should 

have a deep understanding of resident 

needs, and service coordinators are 

uniquely skilled at building 

relationships with residents to 

understand the complex challenges they 

may be facing and then swiftly connect 

them to essential resources. Another 

commenter agreed that the PCC should 

include at least one participating FSS 

family member and an FSS staff 

coordinator, and stated their agency 

already includes these individuals as 

committee members. Another 

commenter stated it can be difficult to 

have a resident participant from a FUP 

voucher holder group as persons housed 

with a FUP voucher have multiple 

ongoing challenges and little time for 

goals not closely related to their own 

welfare. 

HUD Response: HUD appreciates 

these comments. The requirement is 

that one participant per type of rental 

assistance served in the FSS program 

must be included in the PCC—Public 

Housing, Housing Choice Vouchers, 

and/or Multifamily Housing. It is not 

required that each type of voucher (FUP, 

VASH, etc.) be represented. 

Section 984.203: FSS Family Selection 

Procedures 

A commenter objected to 

§ 984.203(d)’s use of ‘‘motivation’’ as a 

factor in screening candidates, as it 

would reinforce negative and untrue 

stereotypes about families. Another 

commenter suggested leaving the 

current language regarding ‘‘motivation’’ 

as is to make sure everyone has an 

opportunity to participate in the 

program, and the PHA should be able to 

determine if a participant is motivated. 

HUD Response: The original 

regulation and proposed rule both 

allowed a PHA (and owner, in the 

proposed rule) to screen for motivation 

as an option. There was no change to 

the original regulation in the proposed 

rule and HUD is not changing the final 

regulation as it relates to motivation as 

a screening factor in this final rule. 

Section 984.302: FSS Funds 

Two commenters stated that 

§ 984.302(c) is somewhat ambiguous 

and urged HUD to revise it so that it 

explicitly conveys PBRA owners’ 

eligibility to access FSS appropriated 

funds for independently operated FSS 

programs, consistent with the statutory 

language and intent. The commenters 

suggested either deleting the phrase 

‘‘including through a Cooperative 

Agreement in accordance with 

§ 984.106;’’ or adding at the end of the 

section a new phrase ‘‘or through an 

independently operated PHA or PBRA 

FSS program.’’ 

HUD Response: Subject to funding 

priorities in section 23(i)(3) and HUD 

appropriations, HUD may award FSS 

appropriated funds directly to PBRA 

owners operating FSS programs 

independently or in partnership with 

another PBRA owner. To clarify this, 

HUD revises § 984.302 to state that FSS 

appropriated funds may be used by an 

owner when it operates an FSS program 

‘‘through a Cooperative Agreement or on 

its own.’’ As long as it is permitted in 

the NOFO, an owner may choose to 

subcontract awarded funding to another 

entity such as another owner or a PHA 

with whom the owner has a Cooperative 

Agreement. To ensure that there is no 

confusion about funding available to 

PBRA owners who operate an FSS 

program, HUD added a regulatory 

provision at § 887.113(a) that states that 

owners may also use residual receipts to 

pay for reasonable FSS program 

operation costs, including hiring an FSS 

Program Coordinator(s) for their 

program. 

Section 984.303: Contract of 

Participation 

A commenter said ‘‘Seek 

Employment’’ should include a 

requirement for the FSS participant and 

FSS Program Coordinator to certify that 

the participant has completed these 

defined activities, and that any false 

certification is reason for termination, 

because in auditing FSS files, this is 

often an undocumented component. 

Another commenter said the new 

final sentence in § 984.303(b)(3) is 

confusing and should be rewritten as 

follows to provide more clarity: ‘‘All 

considerations allowed for other 

assisted residents for repayment 

agreements, etc., shall also be allowed 

for FSS participants.’’ The commenter 

also stated § 984.303(i) is mostly 

repetitive of § 984.303(b)(5). A 

commenter said that, to make the 

regulations easier to read, HUD should 

add the right to a hearing from 

§ 984.303(i) to § 984.303(b)(5) and delete 

§ 984.303(i). 

HUD Response: HUD appreciates the 

recommendations provided by 

commenters for regulatory text changes 

to clarify requirements and streamline 

the regulations. HUD has revised the 

regulatory text in § 984.303(b)(3) as 

suggested by a commenter. HUD has 

also revised § 984.303(b)(5), which 

addresses the form and content of the 

CoP, to cross-reference § 984.303(i), 

which addresses actions PHAs may take 

for non-compliance with the CoP, 

instead of restating the requirements. As 

it concerns requiring the FSS 

participant and coordinator to certify 

that the Family has completed its 

defined activities and goals, under 

current requirements, which continue to 

apply under this rule, PHAs are already 

responsible for ensuring that the Family 

complies with the CoP, including the 

goals and activities defined in the 

Family’s ITSP and the final rule 

includes an option that the PHA include 

in its FSS Action Plan the policies on 

documentation of goal completion. See 

24 CFR 984.201(d)(13). 


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4U.S. Department of Housing and Urban 

Development, Administering an Effective Family 

Self-Sufficiency Program: A Guidebook Based on 

Evidence and Promising Practices, https://

www.hudexchange.info/resource/5241/ 

administering-an-effective-fss-program-guidebook/. 

5Note: This question was labeled as ‘‘Question 

X’’ in the proposed rule. 

Allowing Any Adult Member of the FSS 

Family, and Not Solely the Head of 

Household for Rental Assistance 

Purposes, To Execute the CoP (Question 

4) 

Many commenters agreed with the 

proposed change. A commenter noted 

that allowing any adult to be head of 

FSS family may increase participation at 

their PHA. Commenters stated this is a 

positive change for the program that 

will make it easier to serve families. A 

commenter noted this would allow 

access to the FSS program where the 

head of household is disabled and 

unable to work. 

A number of commenters said that the 

proposed change needed more 

revisions. One commenter suggested 

guidance on the number of adult 

members in a family that may be eligible 

to execute a CoP and the number of 

times a household can participate in the 

FSS program. Some commenters stated 

that without clarity, this could cause 

confusion as to who was the head of the 

household under various circumstances. 

Other commenters said there could be 

confusion when there are disagreements 

concerning the beneficiary of the escrow 

account. 

One commenter questioned if PHAs 

would have discretion on the 

implementation of this new rule. The 

commenter also questioned if the head 

of FSS family successfully completes 

the FSS contract, and the Head of 

Household for rental assistance 

purposes is behind on rent or 

noncompliant with the lease; can the 

PHA hold the head of FSS family 

responsible? One commenter requested 

explicit guidance on how the proposed 

change would be operationalized, 

specifically regarding changes in 

household composition and distribution 

of escrow. The commenter further stated 

that the proposed change could put FSS 

staff in the position of having to 

arbitrate as to which household member 

is the primary FSS participant who 

signs the CoP. A commenter asked if the 

HCV Head of Household would be 

required to sign an addendum to the 

CoP that states they have designated the 

other adult member as the head of FSS 

family. 

One commenter recommended that 

any adult family member who expresses 

interest in joining the FSS program, and 

is ultimately enrolled first, be 

considered the head and designated as 

the individual allowed to execute the 

contract and requested guidance on 

when a family fails to designate an adult 

family member. 

A commenter noted the proposed 

revision seemed to be missing the 

following: who would receive the 

disbursement; what would happen if the 

adult family members left the assisted 

household; if another adult household 

member could enroll to participate after 

the Head of Household enrolled and 

completed FSS; and if consent from the 

Head of Household would be required 

regarding who would be entitled to 

escrow. 

One commenter opposed the 

proposed change. A commenter was 

concerned that there could be 

circumstances in which this might not 

be advisable, such as when there is a 

coercive dynamic in a household 

relationship. Another commenter 

warned that if the head of FSS family is 

not the Head of Household, they may 

not have decision-making power over 

who gets on the lease and lives in the 

household, including those who may be 

receiving cash welfare; and therefore, 

the ability to graduate may be beyond 

the head of FSS family’s control. 

HUD Response: The change from only 

the Head of Household for rental 

assistance purposes being able to sign 

the CoP to any adult household member 

being eligible to sign a CoP is statutory. 

The final rule will reflect a change to 

clarify that there will be only one CoP 

per household at any one time. There 

may be an unlimited number of ITSPs 

for each Family. The proposed rule 

stated that the head of FSS family is ‘‘as 

designated by the Family.’’ The final 

rule will eliminate ‘‘in consultation 

with the PHA or the owner.’’ The PHA 

may make itself available to consult 

with families on this decision. HUD 

recognizes that financial disagreements 

between household members may cause 

significant distress, and that sometimes 

such conflicts rise to the level of 

financial abuse. However, HUD believes 

that as a general policy, it is in the best 

interests of assisted households to 

choose the head of FSS family that is 

most suitable for their individual 

household circumstances. While a head 

of FSS family who is not also the Head 

of Household for rental assistance 

purposes will not have control over 

some decisions, such as to who joins the 

household, they may still be the best 

choice to serve as head of FSS family; 

that choice should be made by the 

household, informed by their greater 

knowledge of their own circumstances. 

FSS Program Coordinators may provide 

information on resources for people 

experiencing abuse where appropriate. 

The PHA or owner may make a policy 

in the FSS Action Plan regarding 

documentation of that decision. 

The escrow will be disbursed to the 

head of FSS family. The number of 

times a family can participate in the FSS 

program and other policies on reenrollment have been and will remain 

policies to be determined at the local 

level. Please see the Promising Practices 

Guidebook for more discussion.4 If the 

head of FSS family leaves the 

household, as with any CoP, a 

determination will be made regarding 

whether that person is eligible to 

graduate before they leave. If they do 

not graduate, as is the case now, another 

family member may step in as head of 

FSS family and continue with the CoP. 

While generally the Head of Household 

for rental assistance purposes, which 

may be different than the head of FSS 

family, would be responsible for debts 

incurred by the family in connection 

with the rental assistance program, such 

debts are subtracted from the escrow 

balance prior to disbursement of escrow 

at graduation. 

Time Period That a Family Must Be 

Independent From Welfare (Questions 

5, 6, and X 5) 

Many commenters supported 

removing the 12-month requirement or 

changing the requirement to being 

independent from welfare assistance at 

the time of their Contract of 

Participation expiring or graduation 

instead. These commenters stated: This 

would lead to better outcomes, allow 

flexibility for clients finishing school or 

training; this would assist families 

dealing with the ‘‘benefits cliff’’ in a 

more gradual and welcoming manner; 

this would reduce the need for FSS 

escrow accounts to be forfeited by 

participants who would be otherwise 

eligible to receive any remaining 

escrow; this would ease the 

administrative burden for FSS staff; 

often the end date for being 

independent from welfare assistance is 

out of the participants’ hands as they 

usually have transitional benefits after 

becoming employed; and the current 12- 

month period has prevented otherwise 

qualified participants from graduating 

and leads to artificially forfeiting 

accumulated escrow for families who 

are employed but had a period of time 

on public assistance. Commenters stated 

that the 12-month requirement was 

punitive, would needlessly frustrate 

families’ attempt to graduate, and did 

not incentivize families to graduate. 

Many commenters supported, for the 


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same reasons, allowing PHAs to set the 

requirement at their discretion. 

Some commenters did not 

recommend giving PHAs discretion and 

requested that HUD keep this uniform to 

the program, while others supported 

PHAs having discretion while 

maintaining a certain maximum. 

Some commenters opposed the 

proposed change and agreed with the 

12-month requirement, seeing no issue 

or undue burden a PHA would 

experience with the timeframe. The 

commenters suggested that, given the 

confirmation requirement, effective 

organizations should have a data 

sharing agreement with the appropriate 

entities to determine the FSS 

participants’ welfare assistance status 

regardless of the requisite time period. 

The commenters believed that without a 

timeline, there could be a lack of 

motivation for families to gradually 

become independent from welfare. The 

commenters stated that a participant 

must be free from cash assistance over 

a period to adjust financially to being 

self-sufficient and the proposed change 

defeats the purpose of the program. 

Commenters noted that the CoP can be 

extended to allow a participant time to 

become free of assistance, so this is not 

typically a barrier to successful program 

completion. The commenters added that 

if a participant is not free of cash 

assistance after seven years of 

participating in the program, they likely 

are not in a place or time in their life 

to become self-sufficient. A commenter 

suggested adding extra resources to help 

the families reach that 12-month goal, 

including PHA discretion, and warned 

that it would also be detrimental to 

external stakeholders in the long run 

with the possibility of having to 

reallocate more funds to the welfare 

system to continue the programs. 

Some commenters supported 

changing the rule so that welfare 

independence is only required for the 

participating member of the family in 

the FSS program, not the entire 

household because the participation in 

TANF or other welfare programs should 

not reflect the progress and eligibility 

for graduation of the participating 

member. 

Some commenters said that this 

should have no impact on TANF 

requirements. Commenters stated that 

TANF is not a good indicator of welfare 

self-sufficiency. One commenter stated 

that accessing TANF within a specified 

time should not preclude completion of 

the program and the emphasis on 

utilization of TANF is a deficit-based 

requirement that does little to promote 

self-sufficiency because families 

encounter a range of changing life 

circumstances where they may need to 

access TANF assistance to sustain their 

livelihood. Another commenter noted 

that after moving into the work 

components of the TANF program, 

families can continue receiving benefits 

for up to 24 months and there are 

instances where the continuation of 

welfare helps families offset increased 

costs due to a decrease in other incomebased supports. 

One commenter stated that some 

participants decide to not enroll in the 

program for fear of losing or being 

denied other benefits. The commenter 

suggested that the rule clearly state that 

the savings held in escrow is only 

contingently available to families and 

would not be counted as an asset or 

resource for other state or Federal 

benefits. A commenter stated that 

reducing or eliminating the time would 

allow for families to successfully 

complete the Contract and collect 

escrow even if a family member has 

needed access to TANF in the past 12 

months. One commenter stated there is 

nothing to preclude a family from 

returning to TANF after graduation from 

FSS. A few commenters noted that the 

TANF (Family Investment Program 

(FIP)) income eligibility guidelines are 

so low that most working families 

would not be eligible for TANF benefits. 

Some commenters suggested 

alternative time requirements, because 

requiring participants to be free from 

TANF for a full 12 months poses undue 

hardship for many families and leaves 

little room for flexibility. Commenters 

suggested a 3- or 6-month requirement 

off TANF as a reasonable timeframe that 

would allow participants to demonstrate 

stable employment and financial selfsufficiency prior to graduating from the 

FSS program. They added that requiring 

participants to maintain stable 

employment for 3 months rather than 

abstain from TANF benefits for 3 

months would be a better indicator of 

participants’ ability to demonstrate long 

term self-sufficiency and positive steps 

toward goal achievement. They urged 

HUD to consider revising the FSS work 

requirement in addition to, or in lieu of, 

the TANF requirement. 

One commenter stated that a required 

time limit off TANF before program end 

could be beneficial if clients used their 

time in the program to work on the areas 

which are hindering them from holding 

down a successful position that would 

eliminate the need for TANF. Some 

commenters said the requirement to be 

independent from TANF should follow 

the same requirements as being 

independent from other welfare, and 

most participants are aware that TANF 

is temporary. While another commenter 

said that requiring participants to be 

TANF free should be required, and that 

not receiving welfare assistance is a sign 

of self-sufficiency and would enhance 

their independence from government 

assistance. Another commenter stated 

that by keeping the 12-month rule, FSS 

Program Coordinators can work in 

conjunction with TANF staff to provide 

transitional services to the participant. 

Commenters supported the proposed 

change and stated that removing the 12- 

month requirement would decrease 

incentive for FSS participants from 

exiting the program permanently. A 

number of commenters stated that the 

application of the welfare requirement 

in FSS will not impact participants’ 

decision to permanently stay off 

welfare. Another commenter said that 

removing the 12-month requirement 

increases FSS family access to escrow 

account balances that can be used for 

asset building activities. Two 

commenters answered ‘‘no,’’ saying that 

many of their participants are not 

receiving ‘‘cash’’ welfare assistance 

anyway. 

A commenter stated FSS participants 

will still be required to be independent 

from welfare assistance at the time their 

CoP ends, so the incentive to be 

independent from welfare assistance 

remains without a static timeframe. A 

few commenters said that most 

participants transition off welfare 

assistance as they increase their income, 

so this is a good complement to the FSS 

Goals. One of these commenters said the 

PHA’s ability to work with an 

individual to define ‘‘suitable’’ 

employment will take care of the rare 

exceptions. 

One commenter suggested that HUD 

reconsider using terms such as 

‘‘incentive’’ when describing the 

decisions a household may make 

regarding their receipt of welfare 

assistance or other forms of public 

assistance because this language 

reinforces negative and untrue 

stereotypes about people who receive 

welfare and/or housing assistance. 

HUD Response: HUD thanks 

commenters for responses to Questions 

5, 6, and X. This final rule maintains the 

language as it was in the proposed rule, 

eliminating the requirement to be 

independent from welfare assistance for 

12 months prior to graduation. The 

requirement will be for the household to 

be independent from welfare assistance 

on the day of graduation. The 

requirement to be independent from 

welfare assistance in § 984.303(b)(2) will 

be revised to reflect that it will be a 

required final goal, as opposed to an 

interim goal. In addition to the 

explanation provided in the preamble to 


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the proposed rule, HUD is attempting to 

prevent a scenario when, for instance, a 

participant is unable to graduate 

because they have met all of their goals 

with the exception of being independent 

from welfare assistance for 12 months 

but is ineligible for an extension on 

their CoP. With regard to other benefits, 

the only other entitlement program to 

which FSS directly relates is TANF and 

it is a contingency of the HUD program 

that participants be free from TANF. 

Until the escrow funds are disbursed, 

they are the property of the PHA and 

cannot impact any eligibility of the FSS 

family for any benefit or entitlement. 

HUD cannot speak to the impact of the 

escrow, once disbursed, on other 

Federal, state, or local programs. The 

Internal Revenue Service has 

determined that escrow disbursements 

do not qualify as income and are not 

taxable and do not require a Form 1099. 

See: https://www.hud.gov/sites/ 

documents/FSSESCROWTAX_

IRSOPINION.PDF. 

Section 984.303(b)(1) 

Two commenters interpreted the 

change to § 984.303(b)(1) to mean that 

PHAs and owners would have the 

discretion to use a CoP in the form of 

their choosing, and supported this 

change, as it would enable programs to 

streamline the CoP, revise it to use more 

plain and straightforward language, and 

make it available in other languages 

besides English. The commenters 

recommended that HUD require all 

PHAs and owners to make available and 

to accept electronic execution of the 

CoP in whatever form in use. Another 

commenter said there needs to be some 

standard parameters on the wording of 

each Agency’s CoP and perhaps each 

Agency’s proposed CoP should be 

reviewed by their FSS Field Office. 

HUD Response: The CoP form itself 

(including ITSP) will be revised as part 

of the Paperwork Reduction Act package 

that is published with the final rule. 

PHAs or owners may translate the CoP 

into any applicable language and may 

revise the structure of the CoP as long 

as the information and content included 

in the CoP is the same as on the HUD 

form. Along with producing documents 

in translated formats, PHAs and owners 

must also provide any other necessary 

language assistance services to ensure 

meaningful access for persons with 

limited English proficiency in 

compliance with Title VI of the Civil 

Rights Act. PHAs and owners that 

provide access to CoP forms in printed 

format or an electronic format and 

accept electronic submissions and 

signatures must ensure that such forms 

and procedures are language accessible 

and accessible with respect to the 

communications needs of persons with 

disabilities. PHAs and owners must 

ensure effective communication with 

individuals with disabilities in 

accordance with Section 504 of the 

Rehabilitation Act of 1973 (Section 504) 

and the Americans with Disabilities Act 

(ADA), which includes providing the 

CoP form (including ITSP) in accessible 

formats. Furthermore, PHAs and owners 

must provide reasonable 

accommodations and modifications for 

individuals with disabilities consistent 

with applicable Federal 

nondiscrimination laws. 

Section 984.303(b)(2): FSS Family Goals 

Commenters agreed with prohibiting 

the PHA or owner from modifying or 

adding additional required activities 

that must be completed by every 

participant. According to the 

commenters, one of the fundamental 

strengths of the FSS program is its 

flexibility: Each participant can set and 

make progress toward the particular 

goals that matter to them and make 

sense in their particular situation. 

Commenters said that if a PHA or owner 

can require other mandatory goals 

beyond the parameters of the terms and 

conditions prescribed by HUD, it would 

serve only to curtail participation and 

participant success in the program. 

Another commenter noted that a 

minimum income limit from wages for 

FSS graduation would enhance the 

program. A commenter stated that any 

household member completing the ITSP 

goals would accomplish the FSS 

program’s purpose. Another commenter 

recommended that only completion of 

ITSP goals by the head of FSS family 

should be evaluated for purposes of 

determining completion of graduation 

requirements including meeting the 

employment obligation. A commenter 

stated that this clarification is not new, 

and that it has been in the NOFA for 

several years. A commenter suggested 

that the ITSP should be updated to 

allow the PHA flexibility to change the 

format. 

HUD Response: Thank you for your 

comments on this topic. As stated, this 

is a continuation of the current policy 

that does not allow for program-wide 

graduation requirements/enhancements 

(beyond the two required by regulation: 

I.e., to complete the FSS program, the 

head of the FSS family must seek and 

maintain employment and the family 

must be independent of welfare 

assistance). All ITSP goals for all family 

members with ITSPs become part of the 

CoP and must be completed in order for 

the family to graduate. This final rule 

revises § 984.303(g) to clarify the 

requirement that all family members’ 

ITSPs that are part of the CoP must be 

completed on or before the expiration of 

the contract term. 

Regarding the ITSP format, as stated 

above regarding the CoP (of which the 

ITSP is a part), PHAs or owners may 

translate the ITSP into any applicable 

language and may revise the structure of 

the ITSP as long as the information and 

contents included in the ITSP is the 

same as on the HUD form. This includes 

translating into an electronic format and 

accepting electronic signatures. PHAs 

and owners must ensure effective 

communication with individuals with 

disabilities in accordance with the 

Section 504 and the ADA, which 

includes providing the CoP form 

(including ITSP) in accessible formats. 

Section 984.303(b)(4): Employment 

Obligation 

A commenter said the family member 

who signed the CoP should be 

employed at the time of Contract 

termination, and the PHA should also 

have flexibility to mandate some 

requirement that would support SelfSufficiency, such as opening a savings 

account and saving a reasonable amount 

that is suitable for the family, such as 

saving $20 a month. 

HUD Response: Any goals other than 

the two mandatory goals of being 

employed and independent from 

welfare assistance, such as establishing 

a bank account and contributing to it 

may be negotiated on a person-byperson basis and may not be mandated 

for all participants. HUD will not 

mandate additional requirements, as 

they may be unnecessary or infeasible 

for some families. 

Section 984.303(b)(4)(iii): Suitable 

Employment 

Two commenters said the ‘‘suitable 

employment’’ definition gives PHAs and 

owners too much authority in 

determining what is suitable and can be 

applied arbitrarily and without 

substantiation, leading to unequal rules 

across and possibly within FSS 

programs. The commenters 

recommended that the proposed 

language be refined such that the FSS 

participant defines ‘‘suitable 

employment.’’ The commenters 

believed goal setting and goal defining 

should be a mutual effort to include the 

coordinator’s knowledge and expertise 

in the field, as well as the client’s right 

to self-determination. Another 

commenter stated an expert in the field 

should provide the definition after a 

thorough assessment. A commenter 

asked if it was possible to include 

‘‘achieving a local living wage’’ in 


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6U.S. Department of Housing and Urban 

Development, PIH Notice 2020–13 (HA), REV–1, 

https://www.hud.gov/sites/dfiles/OCHCO/ 

documents/2020/13pihn.pdf. 

‘‘Determination of Suitable 

Employment’’ as there are several 

sources readily available to determine 

what a living wage is for communities 

across the U.S. One commenter 

suggested that HUD should consider 

implementing a minimum income for 

wages similar to the homeownership 

program. 

HUD Response: The final rule revises 

paragraph (b)(4)(iii) of the proposed rule 

to note that the determination of 

suitable employment will be made 

‘‘with the agreement of the affected 

participant,’’ so that the affected 

participant has input into this matter 

along with the PHA or owner, and that 

the determination will be based on the 

receipt of other benefits of the 

participant, in addition to the skills, 

education, and job training of that 

participant. When making the 

determination of ‘‘suitable 

employment’’ it is critical to be aware of 

how increased income may affect other 

benefits such as Social Security 

Disability, Medicare, Medicaid, etc. 

which may be in the best interest of the 

participant to keep rather than 

increasing income beyond eligibility 

limits. 

Good Cause for a Contract Extension 

(Question 7) 

Several commenters supported 

expanding the ‘‘good cause’’ definition 

to include additional circumstances, 

like a natural disaster, serious illness, or 

involuntary loss of employment, 

especially during the COVID–19 

pandemic. One commenter 

recommended that the definition 

include any other circumstance that the 

PHA determines is preventing the 

family from achieving their goal within 

the five-year timeframe, on a case-bycase basis. Another commenter 

suggested that the definition include a 

natural disaster. One commenter 

questioned how the Health Insurance 

Portability and Accountability Act 

(HIPAA) impacted this rule, when 

‘‘serious illness’’ would consider an 

additional circumstance for ‘‘good 

cause.’’ A commenter questioned how a 

PHA would verify ‘‘involuntary loss of 

employment’’ when employers are not 

required to disclose why an employee 

was terminated. One commenter noted 

that the definition concerning 

‘‘involuntary loss of employment’’ may 

need to be revised, as it may not 

consider circumstances where 

individuals voluntarily leave 

employment based on not being able to 

afford increases in childcare if the FSS 

participant is not receiving childcare 

assistance. Another commenter 

encouraged HUD to clarify and define 

new circumstances to now be 

considered ‘‘good cause’’ to extend a 

family’s contract. Another commenter 

recommended clarifying the definition 

to include additional circumstances, 

including active pursuit of a goal that 

furthers self-sufficiency. 

One commenter opposed establishing 

a definition for ‘‘good cause’’ for a 

Contract extension, suggesting that 

individual circumstances should be 

considered and left to the PHA’s 

discretion. One commenter suggested 

that reasons for ‘‘good cause’’ should be 

at the FSS Program Coordinator’s 

discretion because they are familiar 

with the clients’ needs and goals. One 

commenter suggested adding some 

language that advises that the two-year 

extension period is a guideline not an 

absolute, as every reason for an 

extension does not require an automatic 

two-year extension. Another commenter 

suggested that the FSS participant must 

have already met at least one goal to 

qualify for such an extension. 

A commenter recommended that HUD 

codify that declared disasters or 

emergencies recognized by local, State, 

or Federal government should qualify as 

good cause categorically, instead of 

relying on case-by-case waivers such as 

the one provided for this section under 

PIH Notice 2020–13, PH and HCV–6: 

Family Self-Sufficiency (FSS) Contract 

of Participation: Contract Extension, 

dated July 2, 2020.6

One commenter believed the 

proposed definition is sufficient, and 

does not require any further 

clarification, as the examples provided 

communicate intent, while allowing the 

PHA or owner flexibility to assess on a 

case-by-case basis. 

HUD Response: The final Contract of 

Participation (CoP) regulations at 

§ 984.303(d) state that ‘‘good cause’’ to 

extend the CoP is determined on a caseby-case basis by the PHA or owner. 

HUD declines to define and limit ‘‘good 

cause,’’ but the final rule expands the 

examples of ‘‘good cause’’ to include 

more than circumstances beyond the 

participant’s control, including active 

pursuit of a current or additional goal 

that will result in furtherance of selfsufficiency during the period of the 

extension. 

The final rule has also been revised to 

include that the PHA or owner can grant 

the extension as long as the PHA or 

owner is consistent in its determination 

as to which circumstances warrant an 

extension. The participant must request 

an extension, so any information shared 

by the family in pursuit of that goal will 

be voluntarily shared. Additionally, 

unless the PHA or owner employs 

medical staff, HIPAA does not apply in 

this situation. 

Removal of the Automatic Completion 

Provision (AKA ‘‘30% Rule’’) (Question 

8) 

Several commenters supported 

removing the automatic completion 

provision. Commenters noted that 

removing the automatic completion 

provision would lead to more 

consistency between programs and 

fairness for all participants, and that 

removing this provision would also be 

more administratively efficient because 

PHAs would not have to track automatic 

completion. One commenter noted that 

additional time is helpful for the FSS 

Program Coordinator to work with the 

FSS family in completing any remaining 

subgoals and provide additional support 

for maintaining the employment as well 

as building confidence with financial 

literacy so the family can positively 

manage the additional income. Another 

commenter stated it doesn’t exclude the 

other way to graduate and provides a 

clear ‘‘look at the math’’ definition of 

graduation for cases where a family’s 

graduation is in dispute. Some 

commenters stated it would allow for 

true independence from rental 

assistance when 30% of income fully 

covers contract rent and the family 

successfully leaves both the FSS and 

Section 8 programs. 

Commenters asked for clarification on 

how the proposal would operate when 

the HAP contract is terminated after the 

six-month grace period after a family’s 

last housing assistance payment is made 

if their goals are not met. Commenters 

expressed concern that the six months 

was not enough time for families to 

complete their goals. Commenters 

recommended that a family graduate 

automatically at the end of this grace 

period because the family has reached 

independence. 

A commenter suggested that 

regulations should be established to 

prevent the family from reporting losses 

of income immediately after escrow 

disbursement to maintain the housing 

assistance or decrease tenant portion of 

rent. 

Commenters suggested that HUD 

include a provision that allows for 

automatic graduation when an FSS 

participant moves to market rate 

housing and releases their housing 

subsidy under positive circumstances. 

Two commenters asked HUD to 

clarify whether families were allowed to 


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retain the escrow immediately after 

graduation. 

Another commenter asked if the 30% 

rule is removed, will ongoing Contracts 

of Participation be grandfathered since 

the CoP does include the 30% rule as a 

way to graduate FSS? One commenter 

asked HUD to elaborate further and 

asked if the 30% would be replaced by 

a different percentage. 

HUD Response: Based on the 

commenters’ support for removal of the 

automatic FSS graduation provision (the 

30% rule), HUD will move forward with 

such removal as proposed. Under HCV 

and PBV regulations, zero-HAP voucher 

families (i.e., families for which no HAP 

payments are made), are automatically 

terminated from the housing assistance 

program 180 calendar days after the last 

HAP payment. Under current FSS 

requirements, which continue to apply 

under this rule, once housing assistance 

is terminated, FSS participation also 

terminates. However, Zero-HAP families 

may continue to escrow during this 180- 

day period if they have not surpassed 

the Low-Income threshold (80% of Area 

Median Income (AMI)). Also, the 180- 

day period gives the family and the FSS 

Program Coordinator time to review the 

ITSP and make changes, if necessary, to 

put the family on a path to graduation 

prior to the expiration of the 180-days. 

Escrow Funds in the Case of 

Nullification (Question 9) 

A number of commenters supported 

adding the language regarding the 

handling of escrow funds in the case of 

nullification. One commenter supported 

the change and noted that these 

situations are currently handled through 

a waiver process which can be timeconsuming and administratively 

burdensome for all parties involved. 

One commenter questioned whether the 

nullification would be considered a CoP 

Completion or Termination for purposes 

of keying #8 Recertification into PIC, as 

these are the only two choices that are 

given when completing a #8 Exit for 

FSS Participants. Commenters suggested 

that the proposed rule clarify who the 

beneficiaries of the escrow account 

would be when the CoP has been 

nullified. One commenter noted that 

FSS Participants in good standing who 

find themselves disabled and unable to 

work should be able to receive the funds 

if there is no household member who 

could take over the FSS CoP and 

complete it to receive the family’s 

escrow funds. 

A commenter suggested this can be 

managed in two different ways: the CoP 

can be terminated and the funds can be 

passed on to a member in the household 

who was appointed by the head of FSS 

family, or the CoP can continue if there 

is an adult member in the household 

who can continue and fulfill the CoP, 

and during the enrollment period the 

head of FSS family should assign the 

person whom these funds can go to in 

case something such as death happens. 

Commenters suggested that escrow 

management should be managed on a 

case-by-case basis, dependent upon the 

circumstances for nullification. Another 

commenter suggested that if the reason 

for nullification is that the family was 

considered ‘‘not in good standing’’ due 

to eviction or non-compliance with the 

agreement, then the escrow funds 

should be liquidated and belong to the 

PHA for funding housing repairs, 

unpaid rent, support for tenants in good 

standing, or improvements where 

needed. Another commenter suggested 

that if a CoP is nullified the PHA must 

document and report to HUD its 

reasonable efforts to discover the 

availability of these services. 

Some commenters said that the 

language of the escrow distribution 

should allow an FSS program 

participant to reject the distribution in 

such cases where their SSA benefits 

would be in jeopardy by obtaining such 

a resource. Another commenter 

suggested that HUD should add 

language stating that following such a 

disbursement, the family member and/ 

or any other household member may not 

re-enroll in an FSS program at a later 

date. Two commenters suggested 

allowing the ITSP or CoP to be amended 

rather than nullified, such as by 

allowing an adult member who is able 

and agrees to take over the CoP. 

Other commenters opposed the 

change. Commenters noted that 

releasing escrow funds upon 

nullification of the FSS CoP does not 

align with the FSS program’s goal, and 

the escrow funds should remain an 

incentive to achieve self-sufficiency or 

to use towards achieving selfsufficiency. Other commenters stated 

that this will create an additional 

administrative burden to track and pay 

out monies for participants that have 

not completed the program regardless of 

why the CoP was nullified and will 

require the FSS Program Coordinator to 

seek out heirs in the case of a deceased 

single-person family. 

One commenter asked how nullifying 

would affect performance measures. A 

commenter said that even with this 

change, HUD should ensure families 

have the right to be consulted about and 

appeal adverse determinations by a PHA 

or owner that unavailable supportive 

services are integral to the family’s 

success. 

HUD Response: The regulation will be 

changed in § 984.303 to reflect that the 

FSS family will be consulted in the 

determination that services are not 

available, before the CoP is terminated 

and FSS escrow is disbursed. HUD 

notes that this final rule removes the 

term ‘‘nullification’’ and related 

references to the CoP being ‘‘null and 

void’’ from the regulations and instead 

refers to ‘‘terminations with FSS escrow 

disbursement.’’ For a contract to be 

‘‘null’’ or ‘‘void’’ means it has no legal 

validity, force, or effect. Contracts are 

voided in rare circumstances, such as 

when the contract was entered into 

under duress or its terms are 

unconscionable. This does not align 

with the use of ‘‘nullification’’ in the 

existing FSS regulations or in the 

proposed rule. HUD has determined 

there are situations when a family 

should receive escrow funds, even when 

they haven’t completed the CoP. The 

CoP will still be ‘‘terminated,’’ but the 

family will get escrow funds in those 

situations. This preamble retains the 

term ‘‘nullification’’ when discussing 

public comments, but the term will no 

longer appear in HUD’s FSS regulations. 

This final rule does not contain 

language from the proposed rule that 

would have provided for escrow 

disbursement to an estate if the head of 

FSS family dies before a CoP is 

completed. Section 23 of the 1937 Act, 

as amended by the Economic Growth 

Act, states that amounts in the escrow 

account may be withdrawn by the 

participating family after the family 

ceases to receive income assistance 

under Federal or State welfare 

programs, upon successful performance 

of the obligations of the family under 

the contract of participation entered into 

by the family under subsection (d), as 

determined according to the specific 

goals and terms included in the 

contract, and under other circumstances 

in which the Secretary determines an 

exception for good cause is warranted. 

The statute states that escrows may be 

‘‘withdrawn by the participating 

family.’’ An estate cannot be considered 

a ‘‘participating family.’’ Therefore, FSS 

escrow cannot be disbursed to an estate. 

There may be situations where there is 

good cause to disburse escrow to a 

remaining FSS family member when the 

head of FSS family dies. While the 

general rule is that the escrow is only 

withdrawn if the FSS family completes 

the CoP, the Economic Growth Act 

allows HUD to provide exceptions to 

this general rule when ‘‘good cause is 

warranted.’’ However, HUD cannot 

make a blanket finding of ‘‘good cause’’ 

in all cases when an FSS participant 


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dies before completing the CoP. There 

may be instances where good cause is 

warranted (e.g., when an FSS 

participant is close to completing the 

CoP and they die), but not always (e.g., 

when an FSS participant is a recent 

enrollee in the program and has not 

completed much of the CoP). Therefore, 

this final rule cannot provide for escrow 

disbursement any time the head of FSS 

family dies before a CoP is completed. 

Where good cause for an escrow 

disbursement to a family member may 

be warranted when the head of FSS 

Family dies, HUD will consider waiver 

requests, as has been the case prior to 

this rulemaking. 

HUD notes that the regulations 

continue to provide that if the head of 

FSS family is unable to complete the 

CoP, and the family wishes, another 

household member may take over the 

CoP. The disposition of forfeited escrow 

funds is addressed later in this 

document in the discussion about 

Question 14. 

Section 984.303(g), (h), (j), and (k) 

Some commenters recommended that 

HUD require PHAs and owners to offer 

the heads of FSS families the 

opportunity to pause participation in 

the program to deal with family crises 

and challenges without jeopardizing 

their escrow. These commenters stated 

that under the rules of some FSS 

programs, families may be terminated or 

denied coordination services for not 

complying with a required engagement 

schedule. The commenters said they 

had heard feedback from FSS 

participants that it would be helpful to 

have the option to ‘‘pause’’ their 

participation in the FSS program, citing 

reasons, such as health or family crisis, 

that are similar to why a participant 

might request an extension of their 

participation. Under current rules, these 

types of challenges contribute to 

increased terminations. These 

commenters said that suspending 

expectations for participating in services 

and accumulation of escrow and 

extending the CoP end date by the same 

period of time that the participant 

pauses their participation, would help 

to strengthen program participation and 

graduation rates, and support 

participants to maximize their escrow 

accumulation. Another commenter 

stated this may be a good idea but that 

allowing pausing would bring up a lot 

of questions that would need to be 

addressed and clarified. A commenter 

recommended HUD modify 

§ 984.303(h)(2) to be consistent with the 

final portability changes in § 984.306. 

HUD Response: The length of the CoP 

is statutory. Therefore, HUD has no 

discretion to extend it. An initial five 

years (or longer, depending on the 

timing of the next recertification after 

effective date), plus a two-year 

extension should be long enough to 

cover most family circumstances, even 

emergencies, and ‘‘pauses’’ in pursuing 

education and/or employment goals. 

PHAs and owners also are at liberty to 

add goals around basic needs and crisis 

response, if that is what is needed and 

agreed to by the family. It is the purview 

of each PHA or owner to set goals 

regarding ‘‘engagement’’ with each 

participant. It is up to the PHA or owner 

to revise those goals as agreed to by the 

family, to respond to family needs. 

As explained later in the discussion of 

§ 984.306, this final rule revises 

§ 984.303(h) and (k), in addition to 

§ 984.306, to provide that if PHAs make 

a determination that an FSS family in 

good standing moves outside the 

jurisdiction of the PHA and 

continuation of the CoP after the move 

or completion of the CoP prior to the 

move is not possible, the CoP may be 

terminated with FSS escrow 

disbursement. 

Additionally, this final rule revises 

§ 984.303(j) to clarify that only nonHUD funds or non-HUD-restricted funds 

can be used by PHAs and owners to 

offer supportive services to former FSS 

families that have left public housing, 

Section 8 housing, or other assisted 

housing. This clarification is dictated by 

statute. In addition to appropriated FSS 

funds, PHAs and owners may use, 

subject to funding restrictions, public 

housing operating funds, public housing 

non-rental income, public housing 

section 18 proceeds, section 8 

administrative fees, and PBRA residual 

receipts to pay for FSS coordinators. 

However, none of these funding sources 

can be used to assist families who are 

not public housing or section 8 

participants. Therefore, to the extent a 

PHA or owner wishes to coordinate 

services for former FSS families that 

have left assisted housing, the PHA or 

owner must do so using only funding 

sources that are not HUD funds or HUDrestricted funds. If a PHA or owner 

chooses to provide service coordination 

to unassisted families, the PHA or 

owner will need to calculate the FSS 

coordinator’s time spent on such 

coordination and prorate funding 

accordingly. Notwithstanding, PHAs or 

owners may permit former FSS families 

that have left assisted housing to attend 

FSS activities or functions (e.g., job 

fairs) that predominantly serve public 

housing residents or section 8 

participants without proration of 

funding. 

Section 984.304: Amount of Rent Paid 

by FSS Family and Increases in Family 

Income 

Changes to the Adjusted Income 

Threshold 

Commenters supported the proposed 

change to the adjusted income threshold 

because it would allow FSS families to 

continue to increase their escrow 

accounts. A commenter stated that 

participants should be given maximal 

opportunities to acquire as much escrow 

as possible during their term in the 

program. 

HUD Response: HUD thanks 

commenters for their feedback, and 

notes that these changes are statutory. 

Section 984.305: FSS Escrow Account 

Individual Escrow Accounts for 

Families 

A commenter asked whether the 

intent of the proposed rule was that 

each participating family will have their 

own escrow account, because under 

§ 984.305, ‘‘each family’s escrow 

account’’ seems to be contrary to 

§ 983.303 (a)(1): ‘‘[t]he PHA shall 

deposit account funds of all families 

participating in PHA’s FSS program in 

a single depository account.’’ 

HUD Response: Escrow for all 

families will still be deposited in a 

single depository account, but 

accounted for separately, as 

demonstrated by the reference to ‘‘each 

family’s escrow account.’’ This is not a 

change from the current regulation or 

practice. 

Interim Disbursements 

A commenter recommended HUD 

require all FSS programs to allow 

interim disbursements, under 

§ 984.305(c)(2)(ii), and to permit PHAs 

and owners some discretion to 

determine the frequency and conditions 

by which an interim disbursement 

would be permitted, and that 

participants be entitled to a formal 

grievance process if their request for an 

interim disbursement is denied. 

A commenter stated that the current 

economic hardship resulting from the 

COVID–19 pandemic demonstrated that 

interim disbursements from an FSS 

escrow account can be a powerful tool 

for families. The commenter suggested 

that in paragraph (c)(2)(ii), HUD should 

require all FSS programs to allow 

interim disbursements consistent with 

the rule rather than leaving this 

important component of the program to 

local discretion and make clear that 

families have hearing rights if a PHA or 

owner rejects a request for an interim 

disbursement. Additionally, the 


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7See supra footnote 3. 

commenter suggested that HUD should 

take the opportunity to learn from the 

likely increased use of interim 

disbursements during the pandemic to 

add other examples of grounds for 

families to receive an interim 

disbursement. 

HUD Response: Participants are 

entitled to a grievance or hearing per the 

PHA’s or owner’s grievance policy as 

specified in the FSS Action Plan. It is 

a best practice to allow for interim 

disbursements, but HUD will not make 

them mandatory at this time. For further 

discussion of Interim Disbursements 

and considerations around making this 

policy, please see the HUD FSS 

Promising Practices Guidebook.7

Frequency of Depositing Escrow 

Amounts to a Family’s FSS Escrow 

Account (Question 10) 

Many commenters supported the 

proposed monthly escrow deposits into 

a family’s FSS escrow account, where 

some are already doing it. Commenters 

said monthly calculating and crediting 

of escrow makes it easier to double 

check the escrow credit worksheet 

against the escrow deposit, prevent 

administrative backlog and delays in 

customer service for providing balance 

information to clients, and helps to 

maximize interest and the compounding 

effect of interest for the benefit of the 

FSS participant. 

One commenter generally opposed 

monthly escrow deposits, opting for 

annual deposits. Another commenter 

said the escrow calculation does not 

need to be done at every re-examination, 

and it should be left to the coordinator’s 

discretion as to the frequency of escrow 

deposits. Another commenter suggested 

that PHAs should have flexibility in the 

frequency of depositing escrow to allow 

for quarterly deposits. A commenter 

stated that smaller programs may 

operate sufficiently with greater 

flexibility in these timelines. 

Commenters stated that annual 

statements should continue to be 

provided to FSS participants, and 

balance inquiries can be provided at any 

time. 

A commenter stated that the 

statement for multi-family properties 

should be monthly or upon receipt of 

HUD rent subsidies, because that 

maximizes cash flow for the owner, in 

the event HUD rental subsidy payments 

are delayed. 

A commenter suggested the frequency 

of deposits should be determined based 

on the client’s income at the start of 

their program. 

A commenter stated a family should 

be able to have limited access to their 

account, including limits on the amount 

and times the account is accessed. 

HUD Response: Commenters largely 

supported the proposal for monthly 

escrow deposits and explained that this 

will prevent administrative backlogs 

and delays in customer service, as well 

as maximize interest for the FSS 

participants’ benefit. HUD has 

determined, in consideration of the 

comments received, to move forward 

with the change as proposed. As a point 

of clarification, the PHA is not required 

to calculate the escrow amount 

monthly; rather, the escrow amount is 

re-determined at each re-examination of 

family income. As explained in the 

proposed rule’s preamble, the 

requirement to provide an FSS escrow 

account report to the family, at least 

annually, has not changed; however, a 

family may inquire about their FSS 

escrow balance at any time. 

Whether the Family’s FSS Escrow 

Account Should Be Credited for Late 

Payments (Question 11) 

Some commenters agreed with the 

proposed change that escrow accounts 

be credited on a monthly basis, and that 

if there are cases where a tenant owes 

a landlord or housing authority unpaid 

rent at the end of a term, these should 

be subtracted from the escrow at the 

time of a final escrow payout. One 

commenter agreed that escrow should 

be credited for late payments, stating 

that by crediting the account the 

program acknowledges the family’s 

efforts to adhere to tenant obligations 

and is incentivizing follow through with 

rental payments. A commenter opposed 

the proposed change, stating a goal of 

self-sufficiency and stating that 

crediting late rent payments 

disincentivizes prompt rent payments 

and may negatively impact the owner 

and property operations. The 

commenter said any rent payments 

greater than 7 days late should not be 

credited to incentivize prompt rent 

payment. 

Many commenters opposed the 

proposed change, stating it would be an 

administrative burden; that landlords 

generally do not inform the PHA of late 

payments; that the person paying rent 

might not be the person participating in 

the program; and that it does not align 

with the obligations of the HCV or FSS 

program. Commenters also said that 

policies should be consistent across 

programs, and that there are other 

negative consequences for late rent 

payments. A commenter stated that 

PHAs would potentially have to deposit 

escrow credits into FSS escrow accounts 

at different times every month if some 

households pay rent on time while 

others are late. The commenter said 

money owed by an FSS family to a PHA 

is already required to be deducted from 

the family’s escrow account at the end 

of the FSS CoP. Commenters stated that 

a landlord’s best course of action is to 

enforce their lease with the tenant if the 

tenant is not in compliance with any 

part of the lease agreement. A 

commenter said changing the escrow 

calculation to mirror re-certs or annual 

exams for Section 8 may cause 

additional work for the Housing 

Specialist, but still may have no bearing 

on whether a client is paying their rent 

on time, and that FSS Program 

Coordinators requesting the client to 

provide a rent payment history monthly 

would assist with knowing if rent is 

paid on time. 

Commenters suggested adding 

language to allow FSS clients to be 

credited with an escrow deposit, as long 

as an FSS client pays their rent, even if 

they are late and they pay late fees. 

A commenter suggested that before 

escrow credit disbursement, the FSS 

participant family should certify that 

there is no outstanding balance 

regarding paying the owner any portion 

of the rent to owner that is not covered 

by the PHA housing assistance payment. 

A commenter said that escrow should 

not be credited if a tenant does not pay 

rent for a month from their own funds 

(for example, if paid by a rental 

assistance agency), but agreed that upon 

completion of the FSS CoP any funds 

owed to the PHA should be deducted 

from the final escrow disbursement. A 

commenter suggested that the rule 

further define the parameters for when 

late payments would and would not 

impact escrow credits, as there would 

likely be late payments outside the 

participant’s control and/or could be 

considered to have good cause. A 

commenter said that if an FSS family is 

not paying their rent on time, a more 

appropriate approach is referring them 

to financial counseling, and the PHA’s 

certified Homeownership Counselor or a 

partner from the PCC committee could 

provide this supportive service. A 

commenter suggested that the proposed 

change should be at the PHA’s 

discretion. The commenter further 

suggested that the FSS escrow should 

not be applied to debts owed by the 

participant, because escrow is received 

from HAP funds; if escrow is used to 

compensate for debts owed this reduces 

the housing assistance payment funding 

available to unassisted families who 

have applied for housing. Commenters 

suggested two payment plans for FSS 

families that are late on their rent: (a) 


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The PHA or owner could work together 

with the family on a payment plan 

where the family pays the rent in small 

increments throughout the month; and 

(b) a payment plan is aligned with the 

days the paycheck is received. 

A commenter stated that, if this 

provision were implemented, HUD 

would need to consider cases where 

partial rent is paid and whether that 

would result in a partial escrow credit 

or in cases where rent was paid on time 

but not credited to the individual’s 

account in a timely manner. The 

commenter said this provision would be 

particularly problematic in PBRA FSS 

programs because escrow credits are 

billed to HUD one month prior to rent 

being due; therefore, the housing 

provider is already in receipt of the 

escrow funds before rent is even due, 

which could result in additional 

retroactive adjustments and opens the 

door to even further potential errors in 

maintaining accurate escrow balances, 

which is already challenging enough for 

FSS programs to do. 

HUD Response: HUD appreciates the 

comments received on this issue and 

has determined, in consideration of 

such comments, not to implement a 

policy to stop escrow credits when the 

family is late in paying rent. HUD agrees 

with commenters that such a policy 

would be administratively burdensome, 

particularly for voucher families where 

the PHA is generally not the landlord 

and may not readily know that the 

family is late in paying rent, and 

because it would result in the PHA 

having to pause and resume escrow 

deposits for such families during the 

Contract term. Additionally, the rule 

already requires the family’s FSS escrow 

balance to be reduced at the time of 

graduation by amounts owned by the 

FSS family for rent, or other amounts, 

that were due under the housing 

assistance program. 

In response to the commenter who 

said ceasing escrow credits when a 

family is late in paying rent is a good 

policy because crediting late rent 

payments disincentives prompt rent 

payments, HUD appreciates this 

perspective. However, besides the 

reasons described above for not 

instituting this policy, HUD agrees with 

commenters that a more effective 

approach for the FSS program would be 

to refer such families to the supports 

needed to ensure that rent payments are 

made on time and have landlords use 

other mechanisms already available to 

them to enforce the lease. 

Conducting a New Income 

Recertification (Question 12) 

A commenter sought clarification 

regarding the income recertification 

because the FY19 NOFA removed this 

requirement, and it is still removed on 

the FY20 NOFA but is still on the 

current FSS CoP form. The commenter 

was concerned that there be consistency 

across the board for all program 

participants. Another commenter agreed 

with removing the 120-day requirement, 

as it would be less of an administrative 

burden. 

A commenter supported decisions 

made at the local level in favor of local 

objectives and conditions. In general, 

the commenter noted this would not 

appear to be a significant issue since 

increases in income must be reported by 

households (unless the agency has a 

policy that states otherwise), and 

agencies must conduct a re-examination 

of income if the household has a 

decrease in income (unless the agency 

has a policy that states otherwise). 

A commenter opposed the proposed 

change, stating it would be an 

administrative burden and potentially 

create a barrier for a family to accrue 

escrow, and noted that since HUD has 

decided to waive the 120-day 

requirement to ease barriers to 

enrollment in the program, it would be 

counter-productive to allow discretion. 

Some commenters suggested that 

multifamily owners should have the 

same discretion as PHAs regarding this 

issue. Another commenter said that this 

change should be available across the 

board to all families participating in the 

HCV program. A commenter suggested 

eliminating the 120-day recertification 

requirement, using its MTW waiver 

flexibility, and believed this change 

strengthened the program, both 

administratively by eliminating the 

requirement of a recertification, and 

programmatically for the participants, 

by streamlining the process and creating 

a straight line from interest to 

enrollment. 

Commenters suggested that the final 

rule remove PHA or owner discretion in 

deciding whether to conduct a new 

income examination prior to the 

execution of a CoP because such 

discretion, if exercised, would limit a 

household’s potential to optimize the 

accrual of escrow and effectively 

reinstate the 120-day rule which was 

eliminated in the FY19 FSS Program 

Renewal NOFA. These commenters 

stated the pandemic crisis has further 

demonstrated the importance of HUD 

maintaining its commitment to ‘‘ease 

barriers to participation’’ by stating 

plainly in the regulation, without the 

housing provider’s discretion, that the 

income and rents amounts to be used in 

the CoP shall be taken from the amounts 

on the last certification, re-examination, 

or interim determination in effect at the 

time the family enrolls in the FSS 

Program. The commenters said they saw 

significant delays for families who 

wanted to enroll but could not because 

they needed to complete an additional 

re-examination before enrollment. A 

commenter said that this requirement 

also creates an additional administrative 

burden on housing providers. 

Additionally, commenters said this rule 

makes it so that people need to re-certify 

even if they do not have a change in 

income, and sometimes housing 

authorities do not allow for a 

recertification if there was no income 

change. 

A commenter supported HUD’s 

proposal to lift the requirement that a 

PHA or owner must perform a 

recertification for a resident to enroll in 

the FSS program if it has been greater 

than 120 days since the resident’s most 

recent recertification and permit the 

administrators of FSS programs to 

determine whether to use the resident’s 

most recent annual recertification or 

whether to perform an additional 

recertification as more effective and 

efficient. 

According to a commenter, the final 

rule should ensure tenants have the 

right to request an interim income 

recertification or full re-examination at 

the time of enrollment if their income 

has decreased since the last 

recertification. 

A commenter suggested that the 

proposed rule should include language 

requiring PHAs or owners to conduct a 

re-examination if the family requests it 

based on a loss of income since the last 

re-examination and should make it clear 

that a new or recent interim rent 

adjustment may be relied on to 

determine baseline earned income. 

HUD Response: Upon reviewing the 

Joint Explanatory Statement for FY21 

Appropriations, HUD interprets the 

language to indicate that a policy 

requiring a recertification immediately 

prior to FSS enrollment is not consistent 

with Congressional intent. Thus, the 

regulation will be revised to require the 

PHA or owner, when setting a 

participant’s baseline rent, to use the 

amounts on the most recent rent 

certification (with no discretion to do 

otherwise.) All standard rent 

certification regulations must be 

followed, including honoring a 

resident’s request for a recertification 

due to loss of income, if that is a 

standard option. 


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Escrow Calculation (Question 13) 

Several commenters supported the 

proposed streamlined escrow 

calculation, stating that removing the 

difference in the calculation of escrow 

between very low-income and lowincome families should provide a degree 

of simplification that can be enhanced 

by other proposed changes in the 

calculation. 

Commenters supported the proposed 

escrow calculation worksheet because 

they said it would be more user 

friendly. A commenter said the 

proposed change is easier, but in doing 

a case study against the current 

worksheet, the calculated outcomes are 

not coming up the same. 

Some commenters opposed the 

proposed change, stating that it further 

complicates escrow calculations. 

A commenter stated the Multifamily 

FSS Escrow Credit Worksheet still has 

escrow deducted if the family is over 

the very-low-income limit, and that this 

deduction was to be eliminated with the 

proposed rule. The commenter opposed 

the proposed change, stating that 

eliminating this for only HCV/PH and 

not PBRA is not an equitable 

representation of the families on the 

programs that are designed to mirror 

one another. Additionally, the 

commenter stated that this deduction is 

taken away from the maximum escrow 

amount versus the ‘‘preliminary escrow 

credit,’’ which amounts to a double 

penalty for increasing earned income. 

A commenter suggested adding the 

line item from the 50058s to the 

spreadsheet to ease input and auditing. 

A commenter stated that the proposed 

rule provides a slightly streamlined 

escrow calculation, but requires users to 

calculate a monthly escrow cap and to 

obtain data to determine if the family’s 

adjusted monthly income exceeds 80% 

of AMI. In addition, the commenter said 

that the proposed rule effectively 

continues to limit escrow to lower 

income families and provides a monthly 

cap, further limiting escrow potential. 

The commenter suggested a more 

streamlined escrow calculation process, 

where all escrow calculations are done 

the same way for all participants, 

eliminating the low-income check. The 

commenter stated that this would make 

it easier to explain to tenants and staff 

alike and has the benefit of offering all 

FSS participants the same access to 

escrow. 

Some commenters opposed the 

escrow cap where the family’s adjusted 

monthly income exceeds 80% of AMI. 

A commenter suggested that the final 

rule contemplate the growth of wages 

earned specifically by the head of FSS 

family. Another commenter suggested 

the calculation should be based on the 

difference between the baseline and 

current 30% of monthly earned income, 

as that is the true reflection of the 

participants’ growth in a work incentive 

program. A commenter suggested that 

the escrow calculation software should 

have a drop down for payment 

standards for the jurisdiction for which 

the participant resides, as many FSS 

Program Coordinators do not conduct 

recertifications. A commenter suggested 

a slight modification to the formula for 

the escrow credit worksheet, since on 

some calculations, under ‘‘Calculation 

of Escrow’’ do not round up to the 

nearest dollar, including the final 

escrow credit. 

Commenters stated the FSS escrow 

worksheet appears to work well for 

some of the more challenging escrow 

calculation situations, but that it would 

need to include reference to the line 

item for Form 50059 and identify which 

lines wouldn’t apply to multifamily. 

The commenters said it is not clear 

whether there is a separate escrow 

credit worksheet for multifamily using 

the proposed guidelines. The 

commenters suggested that the line 

number of Form 50058 or Form 50059 

accordingly be referenced for all items 

entered in the escrow sheet, to reduce 

confusion and allow the calculation to 

be better automated by software. The 

commenters said that currently, the 

instructions for (8) and (11), 80% AMI 

and Applicable Payment Standard (for 

HCV families), suggest that the number 

be collected from an external link. The 

commenters further stated that if this 

number does not appear on Form 50058, 

the commenters recommended 

identifying another standard place from 

the recertification process where this 

number can be found to not require an 

external search. 

HUD Response: After consideration of 

comments received concerning the 

proposed escrow calculation, HUD 

determined not to make changes to the 

proposed requirements. Without 

specific details concerning how some 

commenters found that the proposed 

calculation further complicated escrow 

calculations, HUD is unable to 

determine which areas of the 

calculation could be revised or 

improved. As a reminder, parts of the 

proposed changes were based on 

statutory changes (such as a very lowincome family’s escrow no longer 

capped) and the formula now 

incorporates other programmatic 

considerations not previously 

contemplated in the regulation (such as 

capping escrow for zero-HAP HCV 

families at the lower of the gross rent or 

payment standard and capping escrow 

for zero-HAP PBV, Mod Rehab, or Mod 

Rehab SRO families at the difference 

between the baseline monthly rent and 

current gross rent). 

Regarding opposition to the escrow 

cap where the family’s adjusted 

monthly income exceeds 80% of AMI, 

HUD has no discretion to modify this 

statutory requirement, which has been 

in place since the FSS program’s 

enactment. Regarding the suggestion 

that the calculation should be based on 

the difference between the baseline and 

current 30% of monthly earned income, 

the statute requires an increase in the 

amount of rent paid by the family (not 

just an increase in earned income); 

therefore, HUD has no authority to 

change this part of the calculation. As 

to commenters’ technical suggestions 

concerning the escrow calculation 

worksheet (i.e., adding the line item 

from Form 50058s to the spreadsheet to 

ease input and auditing; rounding up to 

the nearest dollar; and incorporating the 

payment standard and 80% of AMI into 

the escrow calculation worksheet). HUD 

will consider the feasibility of these 

suggestions as it finalizes the escrow 

worksheet. 

Definition of ‘‘Good Standing’’ and List 

of Eligible Activities for Forfeited 

Escrow Funds (Question 14) 

Good Standing 

A commenter supported establishing 

the definition of ‘‘good standing’’ in the 

regulations and not leaving it to an 

individual PHA or owner’s discretion 

because the definition of good standing 

can vary significantly on a subjective 

basis, even within the same program, 

and is confusing and frustrating for 

participants. This commenter said that 

under these new regulations, the head of 

FSS family who signs the CoP may not 

be the Head of Household for rental 

assistance purposes and therefore may 

not be able to control compliance with 

a repayment agreement since it is the 

Head of Household for rental assistance 

purposes who enters into a repayment 

agreement. A commenter stated the 

language should be left as is and the 

PHA should be allowed to continue to 

define good standing. 

Commenters opposed the proposed 

definition of ‘‘good standing’’ for 

unfairly penalizing families who are in 

current eviction proceedings. These 

commenters said it could exclude 

families facing eviction without cause. 

These commenters stated that some 

landlords initiate eviction proceedings 

as a means of terminating leases of 

voucher holders without cause. These 

commenters said HUD does not define 


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the phrase ‘‘eviction proceedings,’’ 

which is inherently unclear. These 

commenters stated that a family’s 

compliance with FSS and HUD program 

requirements would not be affected 

simply by the landlord’s initiation of an 

eviction action. Commenters also stated 

it would be unduly burdensome to 

PHAs and owners to have to determine 

whether pending eviction proceedings 

are likely to affect a family’s standing in 

the FSS program. 

Some commenters suggested that the 

final rule should clearly define ‘‘good 

standing’’ as families who: Are in 

compliance with their FSS CoP; have 

either satisfied or are current on any 

debts owed the PHA; and are in 

compliance with the PHA’s regulations 

regarding participation in the HCV 

program, including rent and restitution 

payments. A commenter suggested 

adding language to the definition, to 

read: ‘‘FSS family in good standing 

means, for purposes of this part, an FSS 

family that is not in current eviction 

proceedings or have open lease 

violations that may lead to eviction if 

left uncured and is otherwise in 

compliance with any repayment 

agreement and the FSS CoP.’’ 

Commenters suggested ‘‘good standing’’ 

should also include participants who 

have documented progress towards their 

goals or self-sufficiency, such as 

communication with the FSS, 

coordinator, paystubs for work, class 

schedule if working on post-secondary 

education, etc. Only participants who 

are in ‘‘good standing’ should benefit 

from forfeited escrow for eligible 

activities. A commenter suggested that 

the definition of ‘‘good standing’’ 

should simply be any family who has 

not been found to be in non-compliance 

with FSS requirements. A commenter 

suggested that ‘‘good standing’’ should 

mean any FSS that is not in the 

termination process. 

HUD Response: As recommended by 

commenters, this final rule defines 

‘‘good standing’’ as an FSS family that 

is in compliance with their FSS CoP; 

has either satisfied or are current on any 

debts owed the PHA or owner; and is in 

compliance with the regulations 

regarding participation in the relevant 

rental assistance program, including 

rent payments. 

Eligible Activities 

Commenters supported the proposal 

to allow forfeited escrow funds to be 

used for FSS participants in good 

standing. Commenters also supported 

the proposed rule’s definition of 

‘‘eligible activities.’’ Commenters said 

the proposed definition would enable 

Coordinators and participants to access 

resources to address significant barriers 

families face in achieving their goals. 

Commenters suggested that the 

proposed rule should add items to the 

eligible activities list for which forfeited 

escrow may be used. Commenters made 

the following suggestions: Childcare and 

citizenship costs; a catch-all that would 

allow PHAs to determine ‘‘other eligible 

activities,’’ potentially in consultation 

with the Secretary; staff training; 

educational expenses for FSS 

participants in good standing; items or 

expenses needed for self-sufficiency 

advancement; hosting job fairs; 

employment driven activities; mock 

interviews; counseling agencies; bus 

passes; obtaining or renewing state 

identification cards and driver’s 

licenses; unpaid rent expenses; needed 

repairs or updates; food or clothing 

vouchers; families within the program 

that demonstrate the most need; 

gardening or recreational programs for 

their tenants; gas to go to a job 

interview; cost of interview clothing; 

homeownership bonus; scholarship 

funds; emergency funds; source for 

interim disbursement funds for 

participants who don’t have escrow 

accrued; stipends for participants who 

are part of the PCC or Client Advisory 

Board (CAB); conferences expenses for 

FSS Program Coordinators; emergency 

medical co-pays; emergency 

transportation; a grant fund resource to 

assist participants with meeting their 

goals; and meaningful graduation 

ceremonies. 

A commenter suggested using the list 

of allowable uses of interim escrow 

disbursements as a model for allowable 

use of forfeited funds to help program 

participants. Commenters stated that 

this is especially important now, within 

the context of the COVID–19 pandemic 

and subsequent barriers to access digital 

technology, which is essential to take 

classes and work from home or at an offsite location. 

A commenter recommended that HUD 

explore adding incentives like gift cards 

or bonus escrow earnings for 

participants in good standing who 

complete big achievements (example: 

Graduating with a degree, paying off 

large debts, etc.). Another commenter 

suggested that for a participant to access 

incentives or activities funded by 

forfeited escrow funds, they would be 

required to have an existing goal or 

create a new goal related to the use of 

funding. 

Commenters suggested that the 

proposed rule also include a list of 

ineligible activities and provide 

discretion to PHAs regarding eligible 

activities. Specifically, some 

commenters suggested that the proposed 

rule state that funds cannot be used for 

general administrative costs of PHAs or 

owners. 

A commenter suggested that forfeited 

escrow should go to good standing 

participants who need the money for a 

good cause and the FSS Programs, such 

as: laptops or books for participants 

pursuing an education; car repairs for 

participants who need a vehicle for 

employment purposes; registration fees 

for education purposes or short-term 

certifications. 

A commenter suggested that housing 

providers have a clear definition of how 

these funds will be used up front, 

perhaps in the Action Plan, to avoid 

subjective or discriminatory 

disbursement of these funds. A 

commenter warned that allowable 

activities must be equally available for 

all FSS participants in a given program 

and should not be allowed to be used 

as a resource for individual participants, 

but instead should be equally available 

to people consistent with the purposes 

of the FSS program. 

A commenter also suggested that the 

final rule should include as safe harbor 

allowances: educational programs and 

workshops for participants, and down 

payment assistance for families who 

graduate and choose to exit subsidized 

housing. 

A commenter stated escrow funds are 

HAP funds and any funds that are 

forfeited should be returned to HAP 

funds to benefit all HCV participants 

and applicants. 

A commenter stated that the 

bookkeeping process for these funds 

must be carefully developed because 

PHAs do not have accounts in place to 

separate escrow funds assigned to 

participants from forfeited FSS escrow 

funds and asked how PHAs would 

account for FSS forfeitures on the 

balance sheet. 

A commenter stated that when FSS 

escrows are forfeited, in the case of a 

Cooperative Agreement, the funds 

should go to the FSS administering 

entity (PHA or owner) and that 

administering entity is responsible to 

utilize the funds as defined as allowable 

uses. 

HUD Response: This final rule adds 

‘‘and other costs related to achieving 

obligations outlined in the Contract of 

Participation’’ to eligible activities, and 

‘‘general administrative costs of the FSS 

program’’ to ineligible activities. HUD 

revised this final rule (1) to eliminate 

any incentive PHAs may have had not 

to graduate participating families so as 

to recapture the forfeited escrow funds 

and (2) to ensure forfeited funds are 

used to advance participants’ goals and 

not for the overall implementation of 


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8U.S. Department of Housing and Urban 

Development, Notice PIH 2016–09 (HA), https://

www.hud.gov/sites/documents/16-09PIHN.PDF. 

the FSS program. Additionally, 

consistent with Section 23(e)(3) of the 

1937 Act, as amended by the Economic 

Growth Act, HUD revises the final rule 

to clarify that forfeited escrow accounts 

must be used for the benefit of FSS 

participants, and not for the FSS 

program more broadly. 

Section 984.306: HCV Portability 

Requirements 

Proposed Changes to HCV Portability 

Requirements (Question 15) 

Several commenters supported the 

proposed changes to the porting 

requirements. A commenter opposed 

HUD making changes regarding 

portability because these provisions are 

not addressed in the act, and the title of 

the proposed rule does not mention 

revisions to existing regulations. A 

commenter recommended HUD be 

consistent with current program 

regulations and require denying 

portability moves use existing 

provisions outlined under PIH Notice 

2016–09, Section (6), Denying Family 

Requests to Move, and Section (7) 

Denying Family Requests to Move— 

Insufficient Funding.8

HUD Response: While the Economic 

Growth Act does not specifically 

address portability in the FSS context, 

HUD exercised its authority to issue 

regulations to amend and clarify the 

existing FSS portability regulatory 

provisions. This regulatory section 

addresses portability provisions as they 

are applicable to the FSS program 

specifically and are not meant to replace 

portability requirements that are 

applicable to all HCV families (whether 

or not they are also participating in the 

FSS program). HCV portability 

requirements, as established in 

regulation at 24 CFR part 982, subpart 

H, and clarified in PIH Notice 2016–09, 

continue to apply. 

HUD also took the opportunity to 

clarify the intersection between the 

family right to move from the PBV unit 

with continued tenant-based rental 

assistance (in accordance with 24 CFR 

983.261) and the FSS portability 

requirements. While portability 

requirements do not apply to the PBV 

program, if the PBV family exercises its 

right to move with continued tenantbased rental assistance and is offered a 

tenant-based voucher, portability 

provisions apply. This final rule 

clarifies that a PBV family who has been 

enrolled in the FSS program for 12 

months, and who exercises its right to 

move from the PBV unit with continued 

tenant-based rental assistance, may 

move outside of the jurisdiction of the 

initial PHA in accordance with 

portability requirements. Additionally, 

the PHA’s discretion to allow portability 

moves within the 12 months following 

the effective date of the CoP also applies 

to such PBV families. 

Porting of FSS Family Where Both 

PHAs Have FSS Programs 

Commenters diverged regarding 

whether the receiving PHA should be 

required to absorb the family into its 

FSS program. Several commenters 

specifically supported encouraging or 

requiring the receiving PHA to absorb 

the porting FSS family into the 

receiving FSS Program, which would 

ease administrative burdens. 

Commenters suggested that receiving 

PHAs should be required to absorb the 

family if the initial PHA vouched for the 

family. Commenters specifically noted 

the burden of management of an escrow 

account, and the inability of most 

software programs to account for a 

family that is not in the system for rent 

calculation purposes, as a reason that 

the receiving PHA should be required to 

administer the escrow. Commenters 

stated it is especially burdensome when 

PHAs, especially small PHAs, must 

continue providing participating 

families with FSS assistance when the 

family may be two or more hours away. 

A commenter said that the receiving 

PHA would receive the credit when a 

family graduates even though the initial 

PHA did all the work. A commenter 

objected that it is not clear what the 

process is for sending and receiving 

escrow funds for families that port and 

are absorbed. 

Other commenters opposed requiring 

the receiving PHA to enroll families that 

port and preferred it be left to the 

discretion of the receiving PHA. 

Commenters stated that the involved 

PHAs, who must work together in the 

portability procedure, should come to 

an agreement at their discretion. 

Commenters also asked what would 

happen if the receiving PHA is at full 

FSS capacity, especially for agencies 

with only a part-time position. A 

commenter suggested that receiving 

PHAs (RHAs) should be required to 

enroll the FSS family into their FSS 

program only if the initial PHA (IHA) 

‘‘vouches’’ for the family. 

Some commenters opposed the 

continuation of FSS at all when a family 

ports. A commenter urged HUD to allow 

nullification where the PHA does not or 

cannot absorb the voucher. This 

commenter noted that absorptions are 

not determined based on FSS 

determinations but on the receiving 

PHA’s financial condition and the 

family size of the voucher. Another 

commenter stated that the goal should 

be to graduate families before porting if 

possible. 

HUD Response: Some commenters 

stated that it should be left to the 

discretion of the receiving PHA (RHA) 

whether to enroll the ported FSS family 

into its FSS program. Other commenters 

were supportive of requiring RHAs to 

enroll FSS families into their FSS 

program HUD considered these 

comments and determined that lack of 

capacity to serve the ported FSS family 

(because the RHA is already serving the 

number of FSS families identified in its 

FSS Action Plan) would be a reasonable 

justification for a RHA to deny 

enrollment of the ported FSS family into 

its FSS program. Therefore, while the 

RHA would generally be required to 

enroll the ported FSS family into its FSS 

program, the RHA has discretion to 

make determinations concerning the 

family’s enrollment if it lacks the 

capacity to manage the FSS contract. In 

such cases, the initial PHA (IHA) must 

inform the family of the potential 

impacts and options available to the 

family, as described in the regulatory 

text. 

As to the suggestion that RHAs should 

be required to enroll the FSS family into 

their FSS program only if the IHA 

‘‘vouches’’ for the family, the rule 

already provides that the RHA is 

required to enroll the FSS family into its 

FSS program only if the FSS family is 

in good standing. The final rule defines 

good standing as an FSS family that is 

in compliance with their FSS CoP; has 

either satisfied or are current on any 

debts owed the PHA; and is in 

compliance with the regulations 

regarding participation in the relevant 

rental assistance program, including 

rent payments. 

In response to comments about the 

burden of managing an escrow account, 

HUD notes that in cases where the RHA 

is absorbing the FSS family into its HCV 

program, the RHA would be the one 

managing the escrow account and all 

escrow balances are transferred by the 

IHA to the RHA. The commenters’ 

concern would only apply where the 

RHA is billing the IHA for the ported 

family. HUD considered these 

comments and determined that 

transferring the responsibility of 

managing the escrow account to the 

RHA may add another level of 

complexity to the process. The IHA’s 

annual contributions contract (ACC) 

funds the escrow account in a 

portability billing scenario, and all HAP 

(including FSS escrow amounts) is 

provided by HUD to the IHA. Also, the 


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IHA is responsible for reporting such 

escrow expenses to HUD in the Voucher 

Management System (VMS). Based on 

this, having the RHA manage the escrow 

account would not only require a 

transfer of information between 

agencies, but also a transfer of funds, 

including changes to transfer amounts 

each time that the escrow changes, and 

other complexities. In addition to this, 

placing the responsibility of escrow 

account management on the IHA in a 

portability billing scenario is a longstanding policy and the systems concern 

raised by commenters should be 

manageable through the modification of 

system specifications to match program 

requirements. 

Another commenter suggested that 

the FSS contract should be nullified if 

the RHA does not absorb the FSS family 

into its voucher program. HUD disagrees 

with terminating the contract and 

disbursing FSS escrow in all instances 

where the RHA does not absorb the FSS 

family into its voucher program. 

Instead, the IHA must work with the 

family to determine whether 

continuation of the CoP after the move, 

or completion of the CoP prior to the 

move, is possible. As discussed below, 

in instances where such continuation or 

completion is not possible, this final 

rule allows CoPs to be terminated and 

accumulated escrow to be disbursed if 

an FSS family in good standing is 

moving for good cause, as determined 

by the IHA. A commenter stated that the 

goal should be to graduate families 

before porting if possible. HUD agrees 

that this should be the goal, however, 

the final rule establishes the 

requirements when graduation prior to 

the port is not possible. 

FSS Family Moves To Receiving PHA 

That Does Not Administer an FSS 

Program 

A commenter supported the proposal 

to not allow a family to continue in the 

IHA’s FSS program when they port to an 

RHA that does not have an FSS 

program. Commenters agreed that RHAs 

not administering the FSS program 

should not have to commit to providing 

FSS services. 

Other commenters wanted to allow 

IHAs to choose to let a family continue 

with the IHA’s FSS program if the IHA 

chose to, or if the IHA and RHA agreed. 

A commenter suggested that this would 

be no different than staying with the 

IHA where the RHA does have an FSS 

program, as HUD proposed. A 

commenter stated that the IHA should 

continue to administer an FSS program 

only so that the families may keep their 

escrow with the IHA and work to 

complete their goals so they can 

graduate with escrow. Another 

commenter stated that the IHA should 

be required to continue with the family 

if the family chooses. Other commenters 

stated that the family should be allowed 

to graduate if feasible. A commenter 

suggested that HUD should allow the 

IHA and the family to work together to 

find a solution to remain in the program 

or graduate early so that the family is 

not punished for moving. A commenter 

suggested that HUD should allow 

graduation or termination if there are 12 

or fewer months remaining on the CoP. 

Another commenter suggested that if an 

RHA does not offer the FSS program, 

the RHA should refer the family to a 

PHA that administers an FSS program 

or administer the program itself. 

HUD Response: As explained in the 

proposed rule’s preamble, in order for a 

porting family to continue in FSS, it is 

not only important to know whether the 

RHA has an FSS program. It is also 

critical that the PHA that administers 

the rental assistance must have an FSS 

program. If the RHA absorbs the 

voucher, the RHA must have an FSS 

program in order for the participant to 

continue. If the RHA administers the 

voucher (bills the IHA) then the IHA 

must have an FSS program in order for 

the FSS participant to continue. It 

would be burdensome to require any 

PHA that does not administer an FSS 

program to manage such tasks even for 

a small number of FSS families, 

especially in light of the administrative 

complexity of a portability move, and 

the shared FSS responsibilities between 

PHAs. 

Additionally, the proposed rule 

already addresses the options available 

to the family, including modifying the 

FSS contract, which is already allowed 

under the regulation, so that the family 

may graduate from the FSS program 

prior to the move. The final rule also 

allows CoPs to be terminated and 

accumulated escrow to be disbursed if 

an FSS family in good standing is 

moving for good cause, as determined 

by the IHA, and where continuing the 

CoP after the move, or completing the 

CoP prior to the move, is not possible. 

Good cause for the move may include, 

but is not limited to, a housing 

opportunity in a lower-poverty/higher 

opportunity neighborhood, an 

employment opportunity for which the 

family has already obtained a job offer, 

the ability to be closer to family or other 

support network, or a move needed to 

protect health and safety of the family 

or family member. The IHA must 

discuss the available options with the 

family, including whether modification 

of the contract to allow for graduation 

prior to the move is a possibility for the 

family. PHAs must be consistent in their 

determinations of whether a family has 

good cause for a termination with FSS 

escrow disbursement and cannot allow 

escrow disbursement for some families 

but deny them for others if the families 

have the same or a comparable reason 

for moving. PHA determinations are 

subject to the nondiscrimination and 

equal opportunity requirements of the 

Fair Housing Act, Title VI of the Civil 

Rights Act, Section 504 of the 

Rehabilitation Act of 1973, and the 

Americans with Disabilities Act, which 

prohibit discriminatory practices and 

practices that have a discriminatory 

effect. One way a PHA can ensure 

consistency in determining whether 

there is good cause to terminate a 

contract with FSS escrow disbursement 

is to establish a written policy as to 

what the PHA considers to be good 

cause, or what factors the PHA will 

consider in making that determination 

and codifying it in the FSS Action Plan. 

Non-FSS Family Moves To Receiving 

PHA That Does Administer an FSS 

Program 

A commenter supported the 

opportunity for families to join an 

RHA’s FSS program when they port 

from an IHA that does not have an FSS 

program. Another commenter 

recommended that RHAs may continue 

to refuse to enroll an FSS family if their 

program is full or does not have 

capacity, or to use preferences as 

described in their respective FSS Action 

Plan. 

Commenters stated that HUD should 

not mandate that if the RHA chooses to 

bill the IHA, the family cannot enroll in 

the RHA’s FSS program, and suggested 

that the complex issues related to 

porting should be worked out by the 

agencies involved, not HUD, if the 

agencies are willing and able to share 

responsibilities. A commenter suggested 

that mandating otherwise would 

contradict the ‘‘choice’’ component of 

the program. 

HUD Response: The proposed rule 

addressed a new scenario (a non-FSS 

family who moved to an RHA that 

administers FSS). Under the proposed 

rule, the family could not enroll in the 

RHA’s FSS program where the RHA was 

billing the IHA. 

After consideration of comments 

received, HUD agrees that RHAs should 

have discretion to make determinations 

concerning FSS enrollment of such 

families. However, the billed IHA must 

agree to such enrollment, because the 

IHA would still be responsible for 

certain FSS tasks. If the IHA does not 

administer an FSS program, similar to 

§ 984.306(c) of the rule, enrollment of 


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9See supra note 3. 

the non-FSS family in the RHA’s FSS 

program would not be possible. This is 

because the IHA would be responsible 

for certain FSS tasks after the move 

(even if the family enrolls in the RHA’s 

FSS program), and it would be 

burdensome to require the IHA that 

does not administer an FSS program to 

manage such tasks for a small number 

of FSS families, especially in light of the 

administrative complexity of a 

portability move, and the shared FSS 

responsibilities between PHAs. 

FSS Family Moves to a New PHA and 

Wants To Re-Enroll 

A commenter asked HUD to opine on 

enrollment in an RHA’s FSS program, 

asking particularly whether a household 

moving in the fourth year of their FSS 

program should be eligible to receive 

their escrow payment and then re-enroll 

in a new five-year FSS program. 

HUD Response: If the family has 

completed the requirements of the FSS 

program prior to porting, then the IHA 

must graduate the family. The RHA 

should have policies in its FSS Action 

Plan regarding whether families that 

have graduated from the FSS program 

may re-enroll. For more information 

concerning policies on re-enrollment, 

please see the HUD FSS Promising 

Practices Guidebook.9

Section 984.401: Reporting 

Data on Curing Lease Violations 

A commenter suggested that FSS 

Program Coordinator actions to assist 

participants in curing lease violations 

should be reported, as this information 

help to evaluate the efficiency of FSS 

programs. 

HUD Response: HUD does not 

currently have an appropriate 

mechanism for reporting this 

information, and it is not included in 

the performance measures. In addition, 

while FSS Program Coordinators may 

sometimes help households resolve 

lease violation issues in the course of 

their work, this is not their primary 

function. Reporting and performance 

measurement of FSS programs will 

continue to focus on core FSS activities. 

CoP Termination Reporting 

A commenter suggested that in any 

case where a CoP termination occurs, an 

FSS administrator should note the 

termination date and the process used to 

substantiate the reason for termination, 

and report to HUD, along with the 

number of terminations as part of the 

routine reporting requirements. 

HUD Response: A separate report of 

this nature would be administratively 

burdensome. However, the reason for 

exit from the program (including 

termination) for PIH programs is 

reflected on the Form HUD–50058 and 

further investigation may be pursued by 

the HUD field office on a case-by-case 

basis or upon monitoring review. 

Section 887.101: Purpose, Scope, and 

Applicability 

Commenters supported the proposal 

to extend FSS eligibility to residents of 

PBRA-assisted properties and extend 

eligibility for FSS Program Coordinator 

funding to independently operated 

PBRA FSS programs. A commenter 

specifically supported mirroring the 

regulations for multi-family programs to 

those in the Housing Choice Voucher 

Program. 

Two commenters supported making 

the program voluntary for residents of 

PBRA properties. The commenters also 

recommended that HUD clarify that an 

FSS program may automatically enroll 

households and permit opting out of the 

program at any time. 

HUD Response: HUD appreciates 

commenters’ feedback and notes that 

extending FSS eligibility to residents of 

PBRA properties and eligibility for FSS 

Program Coordinator funding to PBRA 

FSS programs is permitted by section 23 

of the 1937 Act, as amended by the 

Economic Growth Act. The proposed 

regulations are streamlined to apply all 

PIH FSS regulations to PBRA owners 

with the few exceptions outlined in 24 

CFR part 887, which was included in 

the proposed rule. As stated in this 

preamble, all FSS programs are 

voluntary for participants. 

Administering an FSS program is 

voluntary for PBRA owners as well. 

HUD will not make the change 

regarding automatic enrollment and opt 

out as part of this final rulemaking, but 

HUD appreciates the suggestion and 

may consider it in the future. 

Section 887.105: Basic Requirements for 

the FSS Program 

Difficult To Consult in Some Areas 

One commenter stated that, under 

paragraph (a)(4), requiring owners to 

consult with a PCC may be difficult in 

rural or under-resourced communities 

or communities situated far from a 

public housing agency. 

HUD Response: HUD recognizes that 

fewer service partners are available in 

some communities, and that smaller 

housing provider entities may find it 

more difficult to establish partnerships 

with service providers. However, HUD 

views the establishment of partnerships 

as an essential component of FSS, even 

in communities where few partners are 

available. Communities with few 

potential service partners may find 

effective coordination even more crucial 

than those with more resources, to 

ensure that the FSS program is making 

the most of every available resource. 

The PCC also provides an important 

venue for resident input on the ongoing 

implementation of the FSS program. 

HUD has kept the requirements very 

flexible as to how the PCC operates to 

avoid unnecessary burdens, allowing 

PCCs to be tailored to local needs and 

circumstances. The PCC may meet 

frequently or may meet only once or 

twice a year, depending on what the 

PCC feels is necessary for effective 

coordination. The PCC may include 

many partners or only a few key 

partners. Meetings may be held in 

person or remotely. HUD encourages 

PBRA FSS programs to join an existing 

PCC if possible. 

Should Operate Independent of a PHA 

Commenters stated that owners 

should be able to operate their FSS 

program(s) independent of any PHA and 

recommended that HUD remove this 

requirement and instead strongly 

encourage owners to develop an 

advisory group of FSS families to inform 

the services offered and provided as part 

of the FSS program. 

HUD Response: Multifamily owners 

are not required to work with a PHA. 

Multifamily owners implementing an 

FSS program are encouraged, but not 

required, to work with an existing PCC. 

However, where a local PCC is 

available, they are required to work with 

the PCC or create their own PCC, if they 

prefer. Once FSS grant funds are made 

available to multifamily property 

owners, owners will be able to submit 

an independent NOFO application for 

funds to start their own FSS program. In 

this final rule, owners starting a 

voluntary FSS program, even those 

without FSS grant funds, are subject to 

the final rule. Whether or not an FSS 

program receives HUD FSS 

appropriated funding, housing 

providers are strongly encouraged to 

engage with residents and FSS 

participants regularly and to get their 

input on the property’s Action Plan and 

ongoing implementation of the FSS 

program. This can be done through 

joining or creating a PCC, or by other 

means such as a resident advisory 

group. 

Owners Should Be Allowed To Form an 

Action Plan 

Commenters stated that 

§ 887.105(a)(3) of the proposed rule 

requires that a PBRA FSS program have 

an Action Plan approved by HUD, as 


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described in § 984.201; but § 984.201(b) 

of the proposed rule appears to provide 

authority for developing an Action Plan 

only to PHAs. These commenters 

requested that HUD clarify that owners, 

too, are authorized to develop Action 

Plans for their PBRA FSS programs. 

HUD Response: All PHAs and owners 

are required to have an approved FSS 

Action Plan before implementing the 

program. HUD has added a clarification 

to the language regarding the 

development of Action Plans to make it 

clear that PBRA owners who wish to 

implement an FSS program are required 

to develop their own FSS Action Plans. 

Exclusion or Inclusion of Requirements 

for Multifamily Assisted Housing 

(Question 16) 

Several commenters expressed 

support and agreement with the 

exclusions and inclusions for 

multifamily assisted housing FSS 

programs. A commenter said that their 

current Program Coordinating 

Committee (PCC) includes HCV, PBV, 

and PH residents. 

A commenter objected to HUD’s 

reasoning to treat multifamily owners 

differently than PHAs in the family 

selection process. The commenter said 

that HUD states that the unequal 

treatment is due to the small size of the 

multifamily FSS programs but did not 

provide any figures to support or allow 

commenters to understand that 

justification. 

A commenter suggested that HUD 

consider the same justifications which 

apply to exclude multifamily owners 

from FSS requirements, especially 

related to the size of the multifamily 

property, to small or similarly sized 

PHAs. The commenter stated that small 

PHAs are overregulated yet pose a small 

risk to HUD. This commenter asked 

HUD to request such relief to small 

PHAs from Congress. The commenter 

stated that small towns and rural areas 

do not have the same resources as large 

towns and areas. This commenter asked 

HUD to exclude small PHAs from the 

PCC requirement and the family 

selection process. 

Some commenters stated that 

multifamily owners should be allowed, 

or should be required, to be members of 

the PCC, and should be allowed or 

required to attend regular meetings and 

contribute to oversight of the program. 

One commenter asked if a PBRA 

owner can collaborate with the PHA to 

have one combined Action Plan. 

HUD Response: HUD appreciates the 

feedback provided by commenters on 

the exclusions and inclusions for 

multifamily assisted housing FSS 

programs. HUD notes the concerns 

raised by commenters about the burden 

imposed by the regulations on small 

PHAs, but believes that the 

requirements are necessary to ensure 

that FSS families are well served by the 

program, and further notes that many of 

the requirements are statutory. In 

response to public comment, HUD has 

made a change in the final rule so that 

multifamily owners are no longer 

exempt from the family selection 

procedures in § 984.203. This section 

gives the owner the option of using 

certain selection preferences and 

motivational screening factors; housing 

providers are not required to use 

selection preferences or motivational 

screening factors, but HUD believes that 

as multifamily FSS programs grow in 

the future, they may wish to have these 

tools at their disposal for FSS waitlist 

management. This may also make it 

easier for an owner to operate an FSS 

program through a Cooperative 

Agreement with a PHA that uses 

selection preferences or motivational 

screening factors, by allowing them to 

align their family selection procedures. 

A PHA and PBRA owner may have a 

combined FSS Action Plan as long as it 

covers the requirements for both 

programs. If a housing provider chooses 

to establish a selection preference or use 

motivational screening factors, such 

activities are subject to Federal 

nondiscrimination and equal 

opportunity requirements. 

HUD excluded multifamily owners 

from the requirement to create a PCC in 

the proposed rule because, while 

statutorily required for PHAs, it was not 

required for owners in the FSS statute. 

HUD believes that coordination with the 

type of partners that would typically 

make up a PCC is essential to 

developing an Action Plan and 

successfully implementing an FSS 

program. In particular, a PCC provides 

an important opportunity for input from 

key service partners and from FSS 

participants. Where an existing PCC is 

available, multifamily housing owners 

who operate FSS programs are required 

by this rule to consult with or join a 

nearby PCC or create their own PCC, 

either by themselves, or in conjunction 

with other owners. In cases where the 

multifamily housing owner is unable to 

consult with or join an existing PCC, 

HUD encourages owners to establish 

their own PCC. If the owner does not 

join an existing PCC or create their own, 

owners are strongly encouraged to 

choose another avenue for receiving 

input from their partners and FSS 

participants. 

Section 887.107: Cooperative 

Agreements 

Requirements for Owners Entering Into 

a Cooperative Agreement (Question 17) 

A commenter stated the Cooperative 

Agreement should define reporting 

expectations by both the PHA and the 

property manager. This commenter 

suggested the Cooperative Agreement 

should also include a written data 

sharing agreement between the owner 

and PHA, or between owners. The 

commenter continued that appropriate 

release language should be added to the 

CoP to ensure the FSS participant is 

providing approval, and acknowledging 

said approval, for this new type of 

information sharing, as some states may 

have laws that, without written consent, 

may make such sharing illegal. The 

commenters stated that the Cooperative 

Agreement should have language 

ensuring any changes made to 

administering entities’ Action Plan after 

the Cooperative Agreement is 

completed, includes input from the 

owner, and that any Action Plans 

should include owner’s involvement 

under any Cooperative Agreements and 

certifications by the PHA to HUD as part 

of the HUD Action Plan approval 

process to ensure an owner does not get 

burdened by a Cooperative Agreement 

in which it was not involved. 

A commenter said that HUD should 

consider the consequences to PHAs or 

owners who fail to comply with a 

Cooperative Agreement or who face 

unresolved disputes. 

HUD Response: HUD’s intention is to 

allow flexibility in the requirements for 

Cooperative Agreements, and will not 

require reporting expectations, data 

sharing agreements, or release language 

to be included in the Cooperative 

Agreement per the regulations, but will 

consider including these topics in 

guidance. In response to public 

comment, HUD has added a 

requirement that the Cooperative 

Agreement must include process for 

entities to communicate about changes 

in the Action Plan. If a PBRA property 

is being served through a Cooperative 

Agreement, then at least one participant 

with assistance through PBRA must be 

a member of the PCC. HUD notes the 

concern expressed in one comment 

regarding the potential consequences to 

PHAs or owners who fail to comply 

with a Cooperative Agreement or who 

face unresolved disputes. HUD is not a 

party to the Cooperative Agreements so 

consequences and resolutions should be 

addressed by the parties involved. 


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Technical or Technological Challenges 

A commenter recommended that HUD 

remove #3 under Corrective Action for 

Failure to Meet Family Responsibilities 

from the FSS Contract of Participation, 

which allows the PHA to terminate HCV 

assistance where a family fails to meet 

responsibilities under the FSS contract. 

A commenter said the proposed rule 

would create an administrative burden 

and potentially require a separate 

system or require software adaptations 

to implement these changes for the 

reasons below. 

A number of commenters stated that 

the proposed change allowing the FSS 

head of household to be different from 

the HAP contract Head of Household 

would impact software applications that 

are currently designed to solely report 

on the Head of Household, and therefore 

these applications will have to be 

redesigned or adjusted to accommodate 

the required change in the Form 50058 

addendum. 

The FSS addendum currently requires 

a start and end date when completing an 

enrollment From 50058; a fatal error 

occurs when an end date is not added; 

this may require placing a temporary or 

place holder date in the addendum or 

creating FSS addendum adjustments; 

the CoP end date will need to remain 

blank until such time that the next 

recertification is completed; and this 

type of back and forth would not only 

be an administrative burden but also 

complicate the enrollment process and 

general understanding of the program 

for those potentially participating. 

A commenter stated that all FSS 

programs are required to submit FSS 

information through PIC at least one 

time per year, and MTW agencies need 

to submit this information as an interim 

recertification. The commenter further 

stated that FSS families that may qualify 

for bi-annual reviews due to a disability 

still have an interim recertification 

completed yearly strictly to send FSS 

information through PIC. The 

commenter said that under the proposed 

rule the FSS CoP would start for those 

families due to a PIC reporting 

requirement. 

A commenter said their current 

escrow accrual process is based on a 

strike point model and triggered when 

the enrollment Form 50058 is added, 

and that a work around to this process 

will need to be created to align with the 

new proposed rule. 

HUD Response: HUD appreciates 

commenters’ note regarding software 

changes. HUD understands that changes 

in program rules may necessitate 

changes in software to conform. HUD 

will review all Form 50058 flags and 

fatal errors and adjust based on the new 

regulations. Please note that an interim 

recertification is NOT required in order 

to submit an FSS Progress Report into 

PIC. 

Opposition to the Economic Growth Act 

Provision Regarding the Change in 

Length of the Contract of Participation 

A commenter opposed the provisions 

in the Economic Growth Act itself, and 

by extension, the proposed rule, that 

require a CoP to include a clause that 

each FSS family to fulfill their 

obligations no later than five years after 

the first recertification of income after 

the CoP’s execution date. The 

commenter opposed the proposed 

change, stating that it would create 

unintended and arbitrary inequities in 

the length of time that program 

participants can accumulate escrow and 

participate in certain programs. The 

commenter also stated that the proposed 

change would result in inequities in 

how long households can accrue 

escrow. 

Some commenters suggested that 

participants would have differing 

lengths of participation, whereby some 

participants would be given more time 

to accrue escrow than others, which 

raise fairness and equality concerns. A 

commenter was concerned that this 

change introduces varying timelines for 

FSS participants based on their annual 

recertification date, and said their 

programs operate on a two-year 

recertification cycle, meaning that some 

households could potentially have close 

to two years before their first 

recertification cycle, allowing for up to 

seven years, nine years if maximum 

extension were granted, to fulfill their 

obligations under the CoP. The 

commenter also said that this would 

allow some households more time than 

others based on recertification dates and 

allow for fewer opportunities for new 

FSS participants to enroll in the 

program as caseload sizes are limited. 

The commenter encouraged HUD to 

consider how it can implement this 

statute in a way that minimizes these 

variances. 

Commenters said it may be confusing 

to change to five years after the first 

recertification of income after the 

execution date of the contract. A 

commenter stated the current regulation 

is easier to understand, execute, and 

follow. 

A commenter stated the new 

recommendation may present errors in 

CoPs because if the CoP effective date is 

changed to the following renewal date 

after the CoP is signed it might create 

confusion. A commenter said there 

would be three different dates which 

turn out to be more information to look 

at, (the previous renewal date for 

enrollment purposes, the date they sign 

the CoP and then the effective CoP date 

which will be dated for following 

renewal). 

A commenter stated there was no 

advantage in delaying the accrual of 

escrow until the next annual 

reexamination for contracts locked in 

after the annual re-examination. The 

commenter believed that the Contract 

should remain a 5-year contract. The 

expansion of extending the Contract for 

‘‘good reason’’ gives the ability to the 

family to continue pursuing their goals 

if necessary, beyond the 5 years. 

HUD Response: The change in the 

length of the Contract of Participation is 

statutory and therefore HUD does not 

have any discretion to change it. HUD 

reminds all FSS practitioners that, 

beyond any requirements of funding, 

PHAs may set the number of concurrent 

enrollments themselves. Longer CoPs do 

not necessarily limit new enrollments. 

Programs are encouraged to review the 

FSS Promising Practices Guidebook and 

consider triaging their approach to case 

management/coaching as opposed to a 

one-size fits all. 

V. Findings and Certifications 

Regulatory Review—Executive Orders 

12866 and 13563 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health, and safety 

effects; distributive impacts; and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, 

reducing costs, harmonizing rules, and 

promoting flexibility. 

Under Executive Order 12866 

(Regulatory Planning and Review), a 

determination must be made whether a 

regulatory action is significant and; 

therefore, subject to review by the Office 

of Management and Budget (OMB), in 

accordance with the requirements of the 

order. This rule was determined to be a 

‘‘significant regulatory action’’ as 

defined in section 3(f) of the Executive 

order, but not an economically 

significant regulatory action, as 

provided under section 3(f)(1) of 

Executive Order 12866. Consistent with 

Executive Order 13563, this rule 

implements the streamlining 

requirements of section 306 and 

provides additional flexibility for PHAs 

and multifamily owners. HUD has 


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30046 Federal Register / Vol. 87, No. 95 / Tuesday, May 17, 2022 / Rules and Regulations 

prepared a Regulatory Impact Analysis 

(RIA) that addresses the costs and 

benefits of the final rule. HUD’s RIA is 

part of the docket file for this rule. 

The docket file is available for public 

inspection on regulations.gov and in the 

Regulations Division, Office of General 

Counsel, Room 10276, 451 7th Street 

SW, Washington, DC 20410–0500. Due 

to security measures at the HUD 

Headquarters building, please schedule 

an appointment to review the docket file 

by calling the Regulations Division at 

202–402–3055 (this is not a toll-free 

number). 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501– 

3520), an agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless the collection displays a valid 

control number. The information 

collection requirements contained in 

this final rule have been submitted to 

the Office of Management and Budget 

(OMB) under the Paperwork Reduction 

Act of 1995 (44 U.S.C. 3501–3520) and 

assigned OMB control number 2577– 

0178. HUD is updating existing 

information collection requirements 

along with this final rule. Additional 

requirements will become effective 

when the revised collection is approved 

by OMB. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (Pub. L. 104–4; 

approved March 22, 1995) (UMRA) 

establishes requirements for Federal 

agencies to assess the effects of their 

regulatory actions on State, local, and 

tribal governments, and on the private 

sector. This rule does not impose any 

Federal mandates on any State, local, or 

tribal government, or on the private 

sector, within the meaning of the 

UMRA. 

Environmental Review 

This final rule does not direct, 

provide for assistance or loan and 

mortgage insurance for, or otherwise 

govern or regulate, real property 

acquisition, disposition, leasing (other 

than tenant-based rental assistance), 

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 final rule 

is categorically excluded from 

environmental review under the 

National Environmental Policy Act of 

1969 (42 U.S.C. 4321, et seq.). 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

(5 U.S.C. 601 et seq.) generally requires 

an agency to conduct a regulatory 

flexibility analysis of any rule subject to 

notice and comment rulemaking 

requirements unless the agency certifies 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities. As has been 

discussed in this preamble, this rule 

will make changes to HUD’s regulations 

to implement the section 306 statutory 

changes and streamline other 

requirements. HUD believes this rule 

will overall reduce burden, including 

for small PHAs and multifamily owners. 

The burden reduction anticipated is 

more fully discussed in the 

accompanying Regulatory Impact 

Assessment (RIA). For these reasons, 

HUD determined that this rule would 

not have a significant economic impact 

on a substantial number of small 

entities. 

Executive Order 13132, Federalism 

Executive Order 13132 (entitled 

‘‘Federalism’’) prohibits an agency from 

publishing any rule that has federalism 

implications if the rule either: (1) 

Imposes substantial direct compliance 

costs on State and local governments 

and is not required by statute, or (2) 

preempts State law, unless the agency 

meets the consultation and funding 

requirements of section 6 of the 

Executive order. This final rule does not 

have federalism implications and does 

not impose substantial direct 

compliance costs on State and local 

governments nor preempt State law 

within the meaning of the Executive 

order. 

List of Subjects 

24 CFR Part 887 

Grant programs—housing and 

community development, Public 

housing, Rent subsidies, Reporting and 

recordkeeping requirements 

24 CFR Part 984 

Grant programs—housing and 

community development, Grant 

programs—Indians, Indians, Public 

housing, Rent subsidies, Reporting and 

recordkeeping requirements. 

Accordingly, for the reasons stated in 

the preamble, HUD amends 24 CFR 

chapters VIII and IX as follows: 

■ 1. Add part 887 to read as follows: 

PART 887—SECTION 8 HOUSING 

ASSISTANCE PAYMENTS 

PROGRAMS—FAMILY SELFSUFFICIENCY PROGRAM 

Sec. 

887.101 Purpose, scope, and applicability. 

887.103 Definitions. 

887.105 Basic requirements of FSS 

programs. 

887.107 Cooperative Agreements. 

887.109 Housing assistance and total tenant 

payments and increases in family 

income. 

887.111 FSS award funds formula. 

887.113 FSS funds. 

Authority: 42 U.S.C. 1437u, and 3535(d). 

§ 887.101 Purpose, scope, and 

applicability. 

(a) Purpose. (1) The purpose of the 

Family Self-Sufficiency (FSS) program 

is to promote the development of local 

strategies to coordinate the use of 

Department of Housing and Urban 

Development (HUD) assistance with 

public and private resources, to enable 

families eligible to receive HUD 

assistance to achieve economic 

independence and self-sufficiency. 

(2) The purpose of this part is to 

implement the policies and procedures 

applicable to operation of an FSS 

program under HUD’s Section 8 

Housing assistance payments programs, 

as established under section 23 of the 

1937 Act (42 U.S.C. 1437u). 

(b) Scope. Each owner may 

implement an FSS program 

independently or by way of a 

Cooperative Agreement with a Public 

Housing Agency (PHA) or another 

owner. Each owner that administers an 

FSS program must do so in accordance 

with the requirements of this part. 

(c) Applicability. This part applies to 

owners of multifamily rental housing 

properties assisted by Section 8 Housing 

assistance payments programs. See part 

984 of this title for program regulations 

applicable to PHAs. 

(d) Non-participation. Tenant 

participation in an FSS program is 

voluntary. Assistance under Section 8 

Housing assistance payments programs 

for a family that elects not to participate 

in an FSS program shall not be refused, 

delayed or terminated by reason of such 

election. 

§ 887.103 Definitions. 

The definitions in § 984.103 of this 

title apply to this part, except that 

eligible families means tenant families 

living in multifamily assisted housing. 

§ 887.105 Basic requirements of FSS 

programs. 

(a) An FSS program that is voluntarily 

established under this part by an owner 


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must comply with the following 

requirements: 

(1) Shall be operated in conformity 

with the regulations of this part and 

other Section 8 regulations, codified in 

24 CFR parts 5, 402, 880, 881, 883, and 

884, respectively, and with FSS program 

objectives, as described in § 984.102 of 

this title; 

(2) Shall coordinate supportive 

services as defined in § 984.103 of this 

title; 

(3) Shall have an Action Plan 

approved by HUD, as described in 

§ 984.201 of this title, before operating 

an FSS program; 

(4) When a Program Coordinating 

Committee (PCC), as described in 

§ 984.202 of this title, is available, 

owners shall work with that PCC or 

shall create their own PCC, either by 

themselves, or in conjunction with other 

owners; 

(5) Shall comply with the family 

selection procedures in § 984.203 of this 

title; 

(6) May make available and utilize 

onsite facilities, as described in 

§ 984.204 of this title; 

(7) Shall comply with the FSS funds 

provision, as described in § 984.302(c) 

of this title; 

(8) Shall enter into Contracts of 

Participation with eligible families, as 

described in § 984.303 of this title; 

(9) Shall establish and manage FSS 

escrow accounts as described in 

§ 984.305 of this title; 

(10) Shall report information to HUD 

as described in § 984.401 of this title; 

and 

(11) Shall be operated in compliance 

with applicable nondiscrimination and 

equal opportunity requirements 

including, but not limited to, those set 

forth in 24 CFR part 5. 

(b) An owner may employ appropriate 

staff, including an FSS Program 

Coordinator, to administer its FSS 

program, and may contract with an 

appropriate organization to establish 

and administer parts of the FSS 

program. 

§ 887.107 Cooperative Agreements. 

(a) An owner may enter into a 

Cooperative Agreement with: 

(1) A local PHA that operates an FSS 

program, pursuant to § 984.106 of this 

title; or 

(2) Another owner that operates an 

FSS program, pursuant to this section. 

(b) Owners that enter into a 

Cooperative Agreement pursuant to this 

part, must: 

(1) Open any FSS waiting lists to all 

eligible families residing in the 

properties covered by the Cooperative 

Agreement. 

(2) Provide periodic escrow amounts 

to the FSS Program Coordinator for FSS 

families covered by the Cooperative 

Agreement under this part. The 

Cooperative Agreement must provide 

that each owner is responsible for 

managing the escrow accounts of their 

participating families, including 

calculating and tracking of escrow in 

accordance with § 984.305 of this title, 

and set forth the procedures for the 

sharing of escrow information between 

the PHA and the owner. 

(3) The Cooperative Agreement must 

clearly specify the terms and conditions 

of such agreement, including the 

requirements of this section, and it must 

include a process for PHAs and owners 

to communicate with each other about 

changes in their Action Plan. 

§ 887.109 Housing assistance and total 

tenant payments and increases in family 

income. 

(a) Housing assistance payment. The 

housing assistance payment for an 

eligible family participating in the FSS 

program under this part is determined 

in accordance with the regulations set 

forth in § 5.661(e) of this title. 

(b) Total tenant payment. The total 

tenant payment for an FSS family 

participating in the FSS program is 

determined in accordance with § 5.628 

of this title. 

(c) Increases in FSS family income. 

Any increase in the earned income of an 

FSS family during its participation in an 

FSS program may not be considered as 

income or an asset for purposes of 

eligibility of the FSS family for other 

benefits, or amount of benefits payable 

to the FSS family, under any other 

program administered by HUD. 

§ 887.111 FSS award funds formula. 

The Secretary may establish a formula 

by which funds for administration of the 

FSS program are awarded consistent 

with 42 U.S.C. 1437u(i). 

§ 887.113 FSS funds. 

Owners may access funding from any 

residual receipt accounts for the 

property to cover reasonable costs 

associated with operation of an FSS 

program, including hiring an FSS 

Program Coordinator or coordinators for 

their FSS program. 

■ 2. Revise part 984 to read as follows: 

PART 984—SECTION 8 AND PUBLIC 

HOUSING FAMILY SELF-SUFFICIENCY 

PROGRAM 

Subpart A—General 

Sec. 

984.101 Purpose, applicability, and scope. 

984.102 Program objectives. 

984.103 Definitions. 

984.104 Basic requirements of the FSS 

program. 

984.105 Minimum program size. 

984.106 Cooperative Agreements. 

984.107 FSS award funds formula. 

Subpart B—Program Development and 

Approval Procedures 

984.201 Action Plan. 

984.202 Program Coordinating Committee 

(PCC). 

984.203 FSS family selection procedures. 

984.204 On-site facilities. 

Subpart C—Program Operations 

984.301 Program implementation. 

984.302 FSS funds. 

984.303 Contract of Participation (CoP). 

984.304 Amount of rent paid by FSS family 

and increases in family income. 

984.305 FSS escrow account. 

984.306 HCV portability requirements for 

FSS participants. 

Subpart D—Reporting 

984.401 Reporting. 

Authority: 42 U.S.C. 1437f, 1437u, and 

3535(d). 

Subpart A—General 

§ 984.101 Purpose, applicability, and 

scope. 

(a) Purpose. (1) The purpose of the 

Family Self-Sufficiency (FSS) program 

is to promote the development of local 

strategies to coordinate the use of 

Department of Housing and Urban 

Development (HUD or Department) 

assistance with public and private 

resources, to enable families eligible to 

receive HUD assistance to achieve 

economic independence and selfsufficiency. 

(2) The purpose of this part is to 

implement the policies and procedures 

applicable to operation of an FSS 

program, as established under section 

23 of the 1937 Act (42 U.S.C. 1437u). 

(b) Applicability. This part applies to 

Public Housing Agencies (PHAs) 

administering a public housing program 

under section 9, a project-based and/or 

tenant-based assistance program under 

section 8(o) of the U.S. Housing Act of 

1937 (1937 Act), a Housing Choice 

Voucher (HCV) homeownership 

program under section 8(y) of the U.S. 

Housing Act of 1937, or Section 8 

Moderate Rehabilitation for low-income 

families and Moderate Rehabilitation 

Single Room Occupancy for homeless 

individuals under 24 CFR part 882. See 

part 887 of this title for program 

regulations applicable to owners of 

multifamily assisted housing. 

(c) Scope. Each PHA that administers 

an FSS program must do so in 

accordance with the requirements of 

this part. See § 984.105 for more 

information concerning PHAs that are 

required to administer an FSS program. 


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(d) Non-participation. Participation in 

an FSS program is voluntary. A family’s 

admission to the public housing or 

Section 8 programs cannot be 

conditioned on participation in FSS. A 

family’s housing assistance cannot be 

terminated by reason of such election or 

due to an FSS family’s failure to comply 

with FSS program requirements in this 

part. 

§ 984.102 Program objectives. 

The objective of the FSS program is to 

reduce the dependency of low-income 

families on welfare assistance and 

housing subsidies. Under the FSS 

program, HUD assisted families are 

provided opportunities for education, 

job training, counseling, and other forms 

of social service assistance, while living 

in assisted housing, so that they may 

obtain the education, employment, and 

business and social skills necessary to 

achieve self-sufficiency, as defined in 

§ 984.103. The Department will evaluate 

the performance of a PHA’s or owner’s 

FSS program using a scoring system that 

measures criteria, such as graduation 

from the program, increased earned 

income, and program participation, as 

provided by HUD through a Federal 

Register notice. 

§ 984.103 Definitions. 

(a) The terms 1937 Act, Fair Market 

Rent, Head of household, HUD, Low 

income family, Public housing, Public 

Housing Agency (PHA), and Secretary, 

as used in this part, are defined in part 

5 of this title. 

(b) As used in this part: 

Baseline annual earned income 

means, for purposes of determining the 

FSS credit under § 984.305(b), the FSS 

family’s total annual earned income 

from wages and business income (if any) 

as of the effective date of the FSS 

contract. In calculating baseline annual 

earned income, all applicable 

exclusions of income must be applied, 

except for any disregarded earned 

income or other adjustments associated 

with self-sufficiency incentives that may 

be applicable to the determination of 

annual income. 

Baseline monthly rent means, for 

purposes of determining the FSS credit 

under § 984.305(b): 

(i) The FSS family’s total tenant 

payment (TTP), as of the effective date 

of the FSS contract, for families paying 

an income-based rent as of the effective 

date of the FSS contract; or 

(ii) The amount of the flat or ceiling 

rent (which includes the applicable 

utility allowance), and including any 

hardship discounts, as of the effective 

date of the FSS contract, for families 

paying a flat or ceiling rent as of the 

effective date of the FSS contract. 

Certification means a written 

assertion based on supporting evidence, 

provided by the FSS family or the PHA 

or owner, as may be required under this 

part, and which: 

(i) Shall be maintained by the PHA or 

owner in the case of the family’s 

certification, or by HUD in the case of 

the PHA’s or owner’s certification; 

(ii) Shall be made available for 

inspection by HUD, the PHA or owner, 

and the public, as appropriate; and, 

(iii) Shall be deemed to be accurate 

for purposes of this part, unless the 

Secretary or the PHA or owner, as 

applicable, determines otherwise after 

inspecting the evidence and providing 

due notice and opportunity for 

comment. 

Chief executive officer (CEO) means 

the elected official or the legally 

designated official of a unit of general 

local government, who has the primary 

responsibility for the conduct of that 

entity’s governmental affairs. 

Contract of Participation (CoP) means 

a contract, in a form with contents 

prescribed by HUD, entered into 

between an FSS family and a PHA or 

owner operating an FSS program that 

sets forth the terms and conditions 

governing participation in the FSS 

program. The CoP includes all 

Individual Training and Services Plans 

(ITSPs) entered into between the PHA or 

owner and all members of the family 

who will participate in the FSS 

program, and which plans are attached 

to the CoP as exhibits. For additional 

detail, see § 984.303. 

Current annual earned income means, 

for purposes of determining the FSS 

credit under § 984.305(b), the FSS 

family’s total annual earned income 

from wages and business income (if any) 

as of the most recent re-examination of 

income which occurs after the effective 

date of the FSS contract. In calculating 

current annual earned income, all 

applicable exclusions of income will 

apply, including any disregarded earned 

income and other adjustments 

associated with self-sufficiency 

incentives or other alternative rent 

structures that may be applicable to the 

determination of annual income. 

Current monthly rent means, for 

purposes of determining the FSS credit 

under § 984.305(b): 

(i) The FSS family’s TTP as of the 

most recent re-examination of income, 

which occurs after the effective date of 

the FSS contract, for families paying an 

income-based rent as of the most recent 

re-examination of income; or 

(ii) The amount of the flat rent (which 

includes the applicable utility 

allowance) or ceiling rent, including any 

hardship discounts, as of the most 

recent re-examination of income which 

occurs after the effective date of the FSS 

contract, for families paying a flat rent 

or ceiling rent as of the most recent reexamination of income. 

Earned income means income or 

earnings from wages, tips, salaries, other 

employee compensation, and selfemployment. Earned income does not 

include any pension or annuity, transfer 

payments, any cash or in-kind benefits, 

or funds deposited in or accrued interest 

on the FSS escrow account established 

by a PHA or owner on behalf of a FSS 

family. 

Effective date of Contract of 

Participation (CoP) means the first day 

of the month following the date in 

which the FSS family and the PHA or 

owner entered into the CoP. 

Eligible families means current 

residents of public housing (section 9) 

and current Section 8 program 

participants, as defined in this section, 

including those participating in other 

local self-sufficiency programs. 

Enrollment means the date that the 

FSS family entered into the CoP with 

the PHA or owner. 

Family Self-Sufficiency (FSS) Program 

means the program established by a 

PHA within its jurisdiction or by an 

owner to promote self-sufficiency 

among participating families, including 

the coordination of supportive services 

to these families, as authorized by 

section 23 of the 1937 Act. 

FSS escrow account (or, escrow) 

means the FSS escrow account 

authorized by section 23 of the 1937 

Act, and as provided by § 984.305. 

FSS escrow credit means the amount 

credited by the PHA or owner to the 

FSS family’s FSS escrow account. 

FSS family means a family that 

resides in public housing (section 9) or 

receives Section 8 assistance, as defined 

in this section, and that elects to 

participate in the FSS program, and 

whose designated adult member (head 

of FSS family), as determined in 

accordance with § 984.303(a), has 

signed the CoP. 

FSS family in good standing means, 

for purposes of this part, an FSS family 

that is in compliance with their FSS 

CoP; has either satisfied or are current 

on any debts owed the PHA or owner; 

and is in compliance with the 

regulations in part 5 and chapters VIII 

and IX of this title regarding 

participation in the relevant rental 

assistance program. 

FSS related service program means 

any program, publicly or privately 

sponsored, that offers the kinds of 

supportive services described in the 


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definition of ‘‘supportive services’’ set 

forth in this section. 

FSS slots refers to the total number of 

families (as determined in the Action 

Plan for mandatory programs in 

§ 984.105) that the PHA will serve in its 

FSS program. 

FSS Program Coordinator means the 

person(s) who runs the FSS program. 

This may include (but is not limited to) 

performing outreach, recruitment, and 

retention of FSS participants; goalsetting and case management/coaching 

of FSS participants; working with the 

community and service partners; and 

tracking program performance. 

FY means Federal fiscal year (starting 

October 1 and ending September 30, 

and year designated by the calendar 

year in which it ends). 

Head of FSS family means the 

designated adult family member of the 

FSS family who has signed the CoP. The 

head of FSS family may, but is not 

required to be, the head of the 

household for purposes of determining 

income eligibility and rent. 

Individual Training and Services Plan 

(ITSP) means a written plan that is 

prepared by the PHA or owner in 

consultation with a participating FSS 

family member (the person with for and 

whom the ITSP is being developed), and 

which sets forth: 

(i)(A) The final and interim goals for 

the participating FSS family member; 

(B) The supportive services to be 

provided to the participating FSS family 

member; 

(C) The activities to be completed by 

that family member; and, 

(D) The agreed upon completion dates 

for the goals, and activities. 

(ii) Each ITSP must be signed by the 

PHA or owner and the participating FSS 

family member and is attached to, and 

incorporated as part of the CoP. An ITSP 

must be prepared for each adult family 

member who elects to participate in the 

FSS program, including the head of FSS 

family who has signed the CoP. 

Multifamily assisted housing (also 

known as project-based rental 

assistance (PBRA)) means rental 

housing assisted by a Section 8 Housing 

Payments Program, pursuant to 24 CFR 

parts 880, 881, 883, 884, and 886. 

Owner means the owner of 

multifamily assisted housing. 

Program Coordinating Committee 

(PCC) means the committee described in 

§ 984.202. 

Section 8 means assistance provided 

under section 8 of the 1937 Act (42 

U.S.C. 1437f). Specifically, multifamily 

assisted housing, as defined in this 

section; tenant-based and project-based 

rental assistance under section 8(o) of 

the 1937 Act; the HCV homeownership 

option under section 8(y) of the 1937 

Act; Family Unification Program (FUP) 

assistance under section 8(x) of the 1937 

Act; and the Section 8 Moderate 

Rehabilitation (Mod Rehab) for lowincome families and Moderate 

Rehabilitation Single Room Occupancy 

(Mod Rehab SRO) for homeless 

individuals under 24 CFR part 882. 

Self-sufficiency means that an FSS 

family is no longer receiving Section 8, 

public housing assistance, or any 

Federal, State, or local rent, 

homeownership subsidies, or welfare 

assistance. Achievement of selfsufficiency, although an FSS program 

objective, is not a condition for receipt 

of the FSS escrow account funds. 

Supportive services means those 

appropriate services that a PHA or 

owner will coordinate on behalf of an 

FSS family under a CoP, which may 

include, but are not limited to: 

(i) Child care. Child care (on an asneeded or ongoing basis) of a type that 

provides sufficient hours of operation 

and serves an appropriate range of ages; 

(ii) Transportation. Transportation 

necessary to enable a participating FSS 

family member to receive available 

services, or to commute to their place(s) 

of employment; 

(iii) Education. Remedial education; 

education for completion of high school 

or attainment of a high school 

equivalency certificate; education in 

pursuit of a post-secondary degree or 

certificate; 

(iv) Employment supports. Job 

training, preparation, and counseling; 

job development and placement; and 

follow-up assistance after job placement 

and completion of the CoP; 

(v) Personal welfare. Substance/ 

alcohol abuse treatment and counseling, 

and health, dental, mental health and 

health insurance services; 

(vi) Household management. Training 

in household management; 

(vii) Homeownership and housing 

counseling. Homeownership education 

and assistance and housing counseling; 

(viii) Financial empowerment. 

Training in financial literacy, such as 

financial coaching, training in financial 

management, asset building, and money 

management, including engaging in 

mainstream banking, reviewing and 

improving credit scores, etc.; and 

(ix) Other services. Any other services 

and resources, including case 

management, optional services, and 

specialized services for individuals with 

disabilities, that are determined to be 

appropriate in assisting FSS families to 

achieve economic independence and 

self-sufficiency. Reasonable 

accommodations and modifications 

must be made for individuals with 

disabilities consistent with applicable 

Federal civil rights and 

nondiscrimination laws. 

Unit size or size of unit refers to the 

number of bedrooms in a dwelling unit. 

Very low-income family is defined as 

set out in § 813.102 of this title. 

Welfare assistance means (for 

purposes of the FSS program only) 

income assistance from Federal (i.e., 

Temporary Assistance for Needy 

Families (TANF) or subsequent 

program), State, or local welfare 

programs and includes only cash 

maintenance payments designed to meet 

a family’s ongoing basic needs. Welfare 

assistance does not include: 

(i) Nonrecurrent, short-term benefits 

that: 

(A) Are designed to deal with a 

specific crisis or episode of need; 

(B) Are not intended to meet recurrent 

or ongoing needs; and, 

(C) Will not extend beyond four 

months; 

(ii) Work subsidies (i.e., payments to 

employers or third parties to help cover 

the costs of employee wages, benefits, 

supervision, and training); 

(iii) Supportive services such as child 

care and transportation provided to 

families who are employed; 

(iv) Refundable earned income tax 

credits; 

(v) Contributions to, and distributions 

from, Individual Development Accounts 

under TANF; 

(vi) Services such as counseling, case 

management, peer support, child care 

information and referral, financial 

empowerment, transitional services, job 

retention, job advancement, and other 

employment-related services that do not 

provide basic income support; 

(vii) Amounts solely directed to 

meeting housing expenses; 

(viii) Amounts for health care; 

(ix) Supplemental Nutrition 

Assistance Program and emergency 

rental and utilities assistance; 

(x) Supplemental Security Income, 

Social Security Disability Income, or 

Social Security; and 

(xi) Child-only or non-needy TANF 

grants made to or on behalf of a 

dependent child solely on the basis of 

the child’s need and not on the need of 

the child’s current non-parental 

caretaker. 

§ 984.104 Basic requirements of the FSS 

program. 

(a) An FSS program established under 

this part shall be operated in conformity 

with the requirements of this part, 

including the Action Plan at § 984.201, 

and: 

(1) As applicable to voucher program 

participants: 


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(i) HCV regulations at 24 CFR part 

982, for HCV program participants; and 

(ii) Project-based voucher (PBV) 

regulations at 24 CFR part 983, for PBV 

program participants; and 

(iii) HCV Homeownership regulations 

at 24 CFR 982.625 through 982.643, for 

HCV homeownership participants; 

(2) As applicable to Mod Rehab and 

Mod Rehab SRO participants, 24 CFR 

part 882; 

(3) As applicable to public housing 

program participants, the applicable 

public housing regulations, including 

the regulations in 24 CFR parts 5, 

subpart F, 960, and 966; and, 

(4) The applicable nondiscrimination 

and equal opportunity requirements 

including, but not limited to, those set 

forth in 24 CFR part 5. 

(b) [Reserved] 

§ 984.105 Minimum program size. 

(a) FSS program size—(1) Minimum 

program size requirement. A PHA must 

operate an FSS program of the 

minimum program size determined in 

accordance with paragraph (b) of this 

section. 

(2) Exceptions to program operation 

requirement or to operate a smaller 

mandatory program. Paragraph (c) of 

this section states when HUD may grant 

an exception to the program operation 

requirement, and paragraph (d) of this 

section states when an exception may be 

granted to operate a program that is 

smaller than the minimum program 

size. 

(3) Option to operate larger FSS 

program. A PHA may choose to operate 

an FSS program larger than the 

minimum program size. 

(b) How to determine FSS minimum 

program size—(1) General requirement. 

Each PHA that was required to 

administer an FSS program on May 24, 

2018 (enactment date of the Economic 

Growth, Regulatory Relief, and 

Consumer Protection Act), shall 

continue to operate such program for, at 

a minimum, the total number of families 

the PHA was required by statute to serve 

as of May 24, 2018, subject only to the 

availability of sufficient amounts for 

housing assistance under appropriations 

acts and the provisions of paragraph 

(b)(2) of this section. 

(2) Reduction of minimum program 

size. The minimum program size for a 

PHA’s FSS program is reduced by one 

slot for each family from any rental 

assistance program (public housing or 

Section 8, including multifamily 

assisted housing) for which the PHA 

administers FSS under this section and 

that graduates from the FSS program by 

fulfilling its FSS CoP on or after October 

21, 1998. If an FSS slot is vacated by a 

family that has not completed its FSS 

CoP obligations, the slot must be filled 

by a replacement family which has been 

selected in accordance with the FSS 

family selection procedures set forth in 

§ 984.203. 

(c) Exception to program operation. 

(1) Upon approval by HUD, a PHA will 

not be required to carry out an FSS 

program if the PHA provides to HUD a 

certification, as defined in § 984.103, 

that the operation of such an FSS 

program is not feasible because of local 

circumstances, which may include, but 

are not limited to, the following: 

(i) Lack of supportive services 

accessible to eligible families, including 

insufficient availability of resources for 

programs under title I of the Workforce 

Innovation and Opportunity Act (29 

U.S.C. 3111 et seq.); 

(ii) Lack of funding for reasonable 

administrative costs; 

(iii) Lack of cooperation by other units 

of State or local government; or, 

(iv) Lack of interest in participating in 

the FSS program on the part of eligible 

families. 

(2) A program operation exception 

will not be granted if HUD determines 

that local circumstances do not preclude 

the PHA from effectively operating an 

FSS program that is smaller than the 

minimum program size. 

(d) Exception to operate a smaller 

mandatory program. Upon approval by 

HUD in its full discretion, a PHA may 

be permitted to operate an FSS program 

that is smaller than the minimum 

program size if the PHA requests an 

exception and provides to HUD a 

certification, as defined in § 984.103, 

that the operation of an FSS program of 

the minimum program size is not 

feasible because of local circumstances, 

which may include, but are not limited 

to: 

(1) Decrease in or lack of supportive 

services available to eligible families, 

including insufficient availability of 

resources for programs under title I of 

the Workforce Innovation and 

Opportunity Act (29 U.S.C. 3111 et 

seq.); 

(2) Decrease in or lack of funding for 

reasonable administrative costs; 

(3) Decrease in or lack of cooperation 

by other units of State or local 

government; or 

(4) Decrease in or lack of interest in 

participating in the FSS program on the 

part of eligible families. 

(e) Expiration of exception. A full or 

partial exception to the FSS minimum 

program size requirement (approved by 

HUD in accordance with paragraph (c) 

or (d) of this section) expires five (5) 

years from the date of HUD approval of 

the exception. If circumstances change 

and a HUD-approved exception is no 

longer needed, the PHA is not required 

to effectuate the exception for the full 

term of the exception. If a PHA seeks to 

continue an exception after its 

expiration, the PHA must submit a new 

request and certification to HUD for 

consideration. 

(f) Review of certification records. 

HUD reserves the right to examine, 

during its management review of the 

PHA, or at any time, the documentation 

and data that a PHA relied on in 

certifying to the unfeasibility of its 

establishing and operating an FSS 

program, or of operating one of less than 

minimum program size. 

§ 984.106 Cooperative Agreements. 

(a) A PHA may enter into a 

Cooperative Agreement with one or 

more owners to voluntarily make an 

FSS program available to the owner’s 

multifamily assisted housing tenants. 

(b) A PHA and owner that enter into 

a Cooperative Agreement to make an 

FSS program available pursuant to 

paragraph (a) of this section, are subject 

to this part and the following 

requirements: 

(1) The PHA must open its FSS 

waiting list to any eligible family 

residing in the multifamily assisted 

housing covered by the Cooperative 

Agreement. 

(2) The owner must provide, at the 

request of the PHA, information on 

escrow amounts for participating 

multifamily assisted housing tenants. 

The Cooperative Agreement must 

provide that the owner is responsible for 

managing the escrow account for 

participating multifamily assisted 

housing tenants, including calculating 

and tracking of escrow in accordance 

with § 984.305. The Cooperative 

Agreement must set forth the 

procedures that will be in place for the 

exchange of escrow information 

between the PHA and the owner. 

(3) The PHA may count multifamily 

assisted housing families served 

pursuant to a Cooperative Agreement 

under this subpart as part of the 

calculation of the FSS award under 

§§ 984.107 and 984.302. 

(4) The PHA may use FSS 

appropriated funds to serve multifamily 

assisted housing tenants subject to a 

Cooperative Agreement under this 

section. 

(5) The Cooperative Agreement must 

clearly specify the terms and conditions 

of such agreement, including the 

requirements of this section, and it must 

include a process for entities for PHAs 

and owners to communicate with each 

other about changes in their Action 

Plan. 


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§ 984.107 FSS award funds formula. 

The Secretary may establish a formula 

by which funds for administration of the 

FSS program are awarded consistent 

with 42 U.S.C. 1437u(i), which provides 

the following: 

(a) Base award. A PHA or owner 

serving 25 or more participants in the 

FSS program is eligible to receive an 

award equal to the costs, as determined 

by the Secretary, of 1 full-time family 

self-sufficiency coordinator position. 

The Secretary may, by notice (including 

a Notice of Funding Opportunity 

(NOFO)), determine the policy 

concerning the award for an eligible 

entity serving fewer than 25 such 

participants, including providing 

prorated awards or allowing such 

entities to combine their programs 

under this section for purposes of 

employing a coordinator. 

(b) Additional award. A PHA or 

owner that meets performance standards 

set by the Secretary is eligible to receive 

an additional award sufficient to cover 

the costs of filling an additional FSS 

coordinator position if such entity has 

75 or more participating families, and 

an additional coordinator for each 

additional 50 participating families, or 

such other ratio as may be established 

by the Secretary based on the award 

allocation evaluation under section 

23(i)(2)(E) of the U.S. Housing Act of 

1937. 

(c) State and regional entities. For 

purposes of calculating the award under 

this section, HUD may treat each 

administratively distinct part of a State 

or regional entity as a separate entity. 

(d) Determination of number of 

coordinators. In determining whether a 

PHA or owner meets a specific 

threshold for funding pursuant to this 

section, the Secretary shall consider the 

number of participants enrolled by the 

PHA or owner in its FSS program as 

well as other criteria determined by the 

Secretary. 

(e) Renewals and allocation. FSS 

awards shall be allocated, as established 

by the Secretary, in the following order 

of priority: 

(1) First priority. Renewal of the full 

cost of all FSS coordinators in the 

previous year at each PHA or owner 

with an existing FSS program that meets 

applicable performance standards set by 

the Secretary. If this first priority cannot 

be fully satisfied, the Secretary may 

prorate the funding for each PHA or 

owner, as long as: 

(i) Each PHA or owner that has 

received funding for at least 1 part-time 

coordinator in the prior fiscal year is 

provided sufficient funding for at least 

1 part-time coordinator as part of any 

such proration; and 

(ii) Each PHA or owner that has 

received funding for at least 1 full-time 

coordinator in the prior fiscal year is 

provided sufficient funding for at least 

1 full-time coordinator as part of any 

such proration. 

(2) Second priority. New or 

incremental coordinator funding. 

(f) Recapture or offset. Any FSS 

awards allocated under this section by 

the Secretary in a fiscal year that have 

not been spent by the end of the 

subsequent fiscal year or such other 

time period as determined by the 

Secretary may be recaptured by the 

Secretary and shall be available for 

providing additional awards pursuant to 

paragraph (b) of this section, or may be 

offset as determined by the Secretary. 

(g) Incentives for innovation and high 

performance. The Secretary may reserve 

up to 5 percent of the appropriated FSS 

funds to provide support to or reward 

FSS programs based on the rate of 

successful completion, increased earned 

income, or other factors as may be 

established by the Secretary. 

Subpart B—Program Development and 

Approval Procedures 

§ 984.201 Action Plan. 

(a) Requirement for Action Plan. A 

PHA or owner must have a HUDapproved Action Plan that complies 

with the requirements of this section 

before the PHA or owner operates an 

FSS program, whether the FSS program 

is a mandatory or voluntary program. 

(b) Development of Action Plan. The 

Action Plan shall be developed by the 

PHA or owner in consultation with the 

chief executive officer of the applicable 

unit of general local government and the 

Program Coordinating Committee. 

Consultation for the Action Plan by the 

PHA or owner shall also include 

representatives of current and 

prospective FSS program participants, 

any local agencies responsible for 

programs under title I of the Workforce 

Innovation and Opportunity Act (29 

U.S.C. 3111 et seq.), other appropriate 

organizations (such as other local 

welfare and employment or training 

institutions, child care providers, 

financial empowerment providers, 

nonprofit service providers, and private 

businesses), and any other public and 

private service providers affected by the 

operation of the PHA’s or owner’s 

program. 

(c) Plan submission—(1) Voluntary 

program. The PHA or owner must 

submit its Action Plan and obtain HUD 

approval of the plan before the PHA or 

owner carries out a voluntary FSS 

program, including a program that 

exceeds the minimum size for a 

mandatory program, regardless of 

whether the voluntary program receives 

HUD funding. 

(2) Revision. Following HUD’s initial 

approval of the Action Plan, no further 

approval of the Action Plan is required 

unless the PHA or owner proposes to 

make policy changes to the Action Plan 

or increase the size of a voluntary 

program; or HUD requires other 

changes. In such cases, the PHA or 

owner must submit such changes to the 

Action Plan to HUD for approval. 

(d) Contents of Plan. The Action Plan 

shall describe the policies and 

procedures for the operation of a PHA’s 

or owner’s FSS program, and shall 

contain, at a minimum, the following 

information: 

(1) Family demographics. A 

description of the number, size, 

characteristics, and other demographics 

(including racial and ethnic data), and 

the supportive service needs of the 

families expected to participate in the 

FSS program; 

(2) Estimate of participating families. 

A description of the number of eligible 

FSS families who can reasonably be 

expected to receive supportive services 

under the FSS program, based on 

available and anticipated Federal, tribal, 

State, local, and private resources; 

(3) Eligible families from other selfsufficiency programs. If applicable, the 

number of families, by program type, 

who are participating in other local selfsufficiency programs and are expected 

to agree to execute an FSS CoP; 

(4) FSS family selection procedures. A 

statement indicating the procedures to 

be utilized to select families for 

participation in the FSS program, 

subject to the requirements governing 

the selection of FSS families, set forth 

in § 984.203. This statement must 

include a description of how the 

selection procedures ensure that 

families will be selected without regard 

to race, color, religion, sex (including 

actual or perceived gender identity and 

sexual orientation), disability, familial 

status, or national origin; 

(5) Incentives to encourage 

participation. A description of the 

incentives that will be offered to eligible 

families to encourage their participation 

in the FSS program (incentives plan). 

The incentives plan shall provide for 

the establishment of the FSS escrow 

account in accordance with the 

requirements set forth in § 984.305, and 

other incentives, if any. The incentives 

plan shall be part of the Action Plan; 

(6) Outreach efforts. A description of: 

(i) The efforts, including notification 

and outreach efforts, to recruit FSS 

participants from among eligible 

families; and, 


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(ii) The actions to be taken to assure 

that both minority and non-minority 

groups are informed about the FSS 

program, and how this information will 

be made available; 

(7) FSS activities and supportive 

services. A description of the activities 

and supportive services to be 

coordinated on behalf of participating 

FSS families and identification of the 

public and private resources which are 

expected to provide the supportive 

services; 

(8) Method for identification of family 

support needs. A description of how the 

FSS program will identify the needs and 

coordinate the services and activities 

according to the needs of the FSS 

families; 

(9) Program termination; withholding 

of services; and available grievance 

procedures. A description of all policies 

concerning termination of participation 

in the FSS program, or withholding of 

coordination of supportive services, on 

the basis of a family’s failure to comply 

with the requirements of the CoP; and 

the grievance and hearing procedures 

available for FSS families; 

(10) Assurances of non-interference 

with rights of non-participating families. 

An assurance that a family’s election not 

to participate in the FSS program will 

not affect the family’s admission to 

public housing or to the Section 8 

program or the family’s right to 

occupancy in accordance with its lease; 

(11) Timetable for program 

implementation. A timetable for 

implementation of the FSS program, as 

provided in § 984.301(a)(1), including 

the schedule for filling FSS slots with 

eligible FSS families, as provided in 

§ 984.301; 

(12) Certification of coordination. A 

certification that development of the 

services and activities under the FSS 

program has been coordinated with 

programs under title I of the Workforce 

Innovation and Opportunity Act (29 

U.S.C. 3111 et seq.), and other relevant 

employment, child care, transportation, 

training, education, and financial 

empowerment programs in the area, and 

that implementation will continue to be 

coordinated, in order to avoid 

duplication of services and activities; 

and 

(13) Optional additional information. 

Such other information that would help 

HUD determine the soundness of the 

proposed FSS program. This may 

include, and is not limited to: 

(i) Policies related to the modification 

of goals in the ITSP; 

(ii) The circumstances in which an 

extension of the Contract of 

Participation may be granted; 

(iii) Policies on the interim 

disbursement of escrow, including 

limitations on the use of the funds (if 

any); 

(iv) Policies regarding eligible uses of 

forfeited escrow funds by families in 

good standing; 

(v) Policies regarding the reenrollment of previous FSS participants, 

including graduates and those who 

exited the program without graduating; 

(vi) Policies on requirements for 

documentation for goal completion; 

(vii) Policies on documentation of the 

household’s designation of the ‘‘head of 

FSS family;’’ and 

(viii) Policies for providing an FSS 

selection preference for porting families 

(if the PHA elects to offer such a 

preference). 

(e) Eligibility of a combined program. 

A PHA or owner that wishes to operate 

a joint FSS program with a PHA or 

owner may combine its resources with 

one or more PHAs or owners to deliver 

supportive services under a joint Action 

Plan that will provide for the 

coordination of a combined FSS 

program that meets the requirements of 

this part. 

(f) Single Action Plan. A PHA or 

owner may submit one Action Plan that 

covers all applicable rental assistance 

programs (Section 8 vouchers, PBRA, 

Mod Rehab, and public housing) served 

by the FSS program. 

§ 984.202 Program Coordinating 

Committee (PCC). 

(a) General. Each participating PHA 

(or joint FSS program) must establish a 

PCC whose functions will be to assist 

the PHA in securing commitments of 

public and private resources for the 

operation of the FSS program within the 

PHA’s jurisdiction, including assistance 

in developing the Action Plan and in 

operating the program. 

(b) Membership—(1) Required 

membership. The PCC must include 

representatives of the PHA, including 

one or more FSS Program Coordinators, 

and one or more participants from each 

HUD rental assistance program served 

by the PHA’s FSS program. The PHA 

may seek assistance from the following 

groups in identifying potential PCC 

members: 

(i) An area-wide or city-wide resident 

council, if one exists; 

(ii) If the PHA operates in a specific 

public housing development, the 

resident council or resident 

management corporation, if one exists, 

of the public housing development 

where the public housing FSS program 

is to be carried out; or 

(iii) Any other resident group, which 

the PHA believes is interested in the 

FSS program and would contribute to 

the development and coordination of 

the FSS program (such as the Resident 

Advisory Board or tenant association, as 

applicable). 

(2) Recommended membership. 

Membership on the PCC may include 

representatives of the unit of general 

local government served by the PHA, 

local agencies (if any) responsible for 

carrying out programs under title I of 

the Workforce Innovation and 

Opportunity Act (29 U.S.C. 3111 et 

seq.), and other organizations, such as 

other State, local, or tribal welfare and 

employment agencies, public and 

private primary, secondary, and postsecondary education or training 

institutions, child care providers, 

financial empowerment organizations, 

nonprofit service providers, private 

businesses, and any other public and 

private service providers with resources 

to assist the FSS program. 

(c) Alternative committee. The PHA 

may, in consultation with the chief 

executive officer of the unit of general 

local government served by the PHA 

and one or more residents of each HUDassisted program served by the FSS 

program, utilize an existing entity as the 

PCC if the membership of the existing 

entity consists, or will consist of, the 

individuals identified in paragraph 

(b)(1) of this section, and it may also 

include individuals from the same or 

similar organizations identified in 

paragraph (b)(2) of this section. 

§ 984.203 FSS family selection 

procedures. 

(a) Preference in the FSS selection 

process. A PHA has the option of 

selecting eligible families for up to fifty 

(50) percent of its FSS slots in 

accordance with a written policy, 

provided in the PHA’s FSS Action Plan, 

who have one or more family members 

currently enrolled in an FSS related 

service program or on the waiting list 

for such a program. The PHA may limit 

the selection preference given to 

participants in, and applicants for, FSS 

related service programs to one or more 

eligible FSS related service programs. A 

PHA that chooses to exercise the 

selection preference option must 

include the following information in its 

Action Plan: 

(1) The percentage of FSS slots, not to 

exceed fifty (50) percent of the total 

number of FSS slots, for which it will 

give a selection preference; 

(2) The FSS related service programs 

to which it will give a selection 

preference to the programs’ participants 

and applicants; and 

(3) The method of outreach to, and 

selection of, families with one or more 


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members participating in the identified 

programs. 

(b) Selection among families with 

preference. The PHA may use either of 

the following to select among applicants 

on the FSS waiting list with the same 

preference status: 

(1) Date and time of application to the 

FSS program; or, 

(2) A drawing or other random choice 

technique. 

(c) FSS selection without preference. 

For those FSS slots for which a selection 

preference is not applicable, the FSS 

slots must be filled with eligible 

families in accordance with an objective 

selection system, such as a lottery, the 

length of time living in subsidized 

housing, or the date the family 

expressed an interest in participating in 

the FSS program. The objective system 

to be used by the PHA must be 

described in the PHA’s Action Plan. 

(d) Motivation as a selection factor— 

(1) General. A PHA may screen families 

for interest, and motivation to 

participate in the FSS program, 

provided that the factors utilized by the 

PHA are those which solely measure the 

family’s interest and motivation to 

participate in the FSS program. 

(2) Permissible motivational screening 

factors. Permitted motivational factors 

include requiring attendance at FSS 

orientation sessions or preselection 

interviews and assigning certain tasks 

which indicate the family’s willingness 

to undertake the obligations which may 

be imposed by the FSS CoP. Any tasks 

assigned shall be those which may be 

readily accomplishable by the family, 

based on the family members’ 

educational level, capabilities, and 

disabilities, if any. Reasonable 

accommodations and modifications 

must be made for individuals with 

disabilities, including, e.g., mobility, 

manual, sensory, speech, mental, 

intellectual, or developmental 

disabilities, consistent with applicable 

Federal civil rights and 

nondiscrimination laws. 

(3) Prohibited motivational screening 

factors. Prohibited motivational 

screening factors include the family’s 

educational level, educational or 

standardized motivational test results, 

previous job history or job performance, 

credit rating, marital status, number of 

children, or other factors, such as 

sensory or manual skills, and any 

factors which may result in the 

exclusion, application of different 

eligibility requirements, or other 

discriminatory treatment or effect on the 

basis of race, color, national original, 

sex (including actual or perceived 

gender identity and sexual orientation), 

religion, familial status, or disability. 

§ 984.204 On-site facilities. 

Each PHA or owner may, subject to 

the approval of HUD, make available 

and utilize common areas or 

unoccupied dwelling units in properties 

owned by the entity to provide or 

coordinate supportive services under 

any FSS program. 

Subpart C—Program Operations 

§ 984.301 Program implementation. 

(a) Voluntary program 

implementation. Unless otherwise 

required under a funding notice, there is 

no deadline for implementation of a 

voluntary program. A voluntary 

program, however, may not be 

implemented before the requirements of 

§ 984.201 have been satisfied. 

(b) Program administration. A PHA 

may employ appropriate staff, including 

a service coordinator or FSS Program 

Coordinator to administer its FSS 

program, and may contract with an 

appropriate organization to establish 

and administer all or part of the FSS 

program, including the FSS escrow 

account, as provided by § 984.305. 

§ 984.302 FSS funds. 

(a) Public housing program. Subject to 

42 U.S.C. 1437g, 24 CFR part 990, and 

appropriations by Congress, PHAs may 

use funds provided under 42 U.S.C. 

1437g to cover reasonable and eligible 

administrative costs incurred by PHAs 

in carrying out the FSS program. 

(b) Section 8 program. Subject to 42 

U.S.C. 1437f, 24 CFR part 982, and 

appropriations by Congress, PHAs may 

use the administrative fees paid to PHAs 

for costs associated with operation of an 

FSS program. 

(c) FSS funds. FSS funds associated 

with operation of an FSS program are 

established by the Congress and subject 

to appropriations. FSS appropriated 

funds will be awarded to and used by 

PHAs or owners for costs associated 

with families who are enrolled in an 

FSS program under this part, including 

when an owner operates an FSS 

program through a Cooperative 

Agreement or on its own. 

§ 984.303 Contract of Participation (CoP). 

(a) General. Each eligible family that 

is selected to participate in an FSS 

program must enter into a CoP with the 

PHA or owner that operates the FSS 

program in which the family will 

participate. There will be no more than 

one CoP at any time for each family. 

There may be an ITSP for as many 

members of the family as wish to 

participate. The CoP shall be signed by 

a representative of the PHA or the 

owner and the head of FSS family, as 

designated by the family. This head of 

FSS family does not have to be the same 

as the official head of household for 

rental assistance purposes. 

(b) Form and content of contract—(1) 

General. The CoP, which incorporates 

the ITSP(s), shall set forth the principal 

terms and conditions governing 

participation in the FSS program. These 

include the rights and responsibilities of 

the FSS family and of the PHA or 

owner, the services to be provided to, 

and the activities to be completed by, 

each adult member of the FSS family 

who elects to participate in the program. 

(2) FSS family goals. The ITSP, 

incorporated in the CoP, shall establish 

specific interim and final goals by 

which the PHA or owner, and the 

family, measures the FSS family’s 

progress towards fulfilling its 

obligations under the CoP and becoming 

self-sufficient. For any FSS family that 

is a recipient of welfare assistance at the 

outset of the CoP or that receives 

welfare assistance while in the FSS 

program, the PHA or owner must 

establish as a final goal for each FSS 

participant that every member of the 

family become independent from 

welfare assistance before the expiration 

of the term of the CoP, including any 

extension thereof. Also, see the 

employment obligation described in 

paragraph (b)(4) of this section. Aside 

from the goals specifically required in 

this section, PHAs or owners must work 

with each participant to establish 

realistic and individualized goals and 

may not include additional mandatory 

goals or mandatory modifications of the 

two mandatory goals. 

(3) Compliance with lease terms. The 

CoP shall provide that one of the 

obligations of the FSS family is to 

comply with the terms and conditions 

of the respective public housing or 

Section 8 lease. However, all 

considerations allowed for other 

assisted residents for repayment 

agreements, etc., shall also be allowed 

for FSS participants. 

(4) Employment obligation—(i) 

Minimum requirement. Although all 

members of the FSS family may seek 

and maintain suitable employment 

during the term of the contract, only the 

head of FSS family shall be required 

under the CoP to seek and maintain 

suitable employment during the term of 

the contract and any extension thereof. 

(ii) Seek employment. The obligation 

to seek employment means searching for 

jobs, applying for employment, 

attending job interviews, and otherwise 

following through on employment 

opportunities. 

(iii) Determination of suitable 

employment. A determination of 


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suitable employment shall be made by 

the PHA or owner, with the agreement 

of the affected participant, based on the 

skills, education, job training, and 

receipt of other benefits of the 

household member, and based on the 

available job opportunities within the 

jurisdiction served by the PHA or in the 

community where the PBRA property is 

located. 

(5) Consequences of noncompliance 

with the contract. The CoP shall specify 

the consequences of noncompliance 

with the CoP as described in paragraph 

(i) of this section. 

(c) Contract of Participation term. The 

CoP shall state that each FSS family will 

be required to fulfill CoP obligations no 

later than 5 years after the first reexamination of income after the 

execution date of the CoP. 

(d) Contract of Participation 

extension. The PHA or owner shall, in 

writing, extend the term of the CoP for 

a period not to exceed two (2) years for 

any FSS family that requests, in writing, 

an extension of the contract, provided 

that the PHA or owner finds that good 

cause exists for granting the extension. 

The family’s written request for an 

extension must include a description of 

the need for the extension. Extension of 

the CoP will entitle the FSS family to 

continue to have amounts credited to 

the family’s FSS escrow account in 

accordance with § 984.304. As used in 

this paragraph (d), good cause means: 

(1) Circumstances beyond the control 

of the FSS family that impede the 

family’s ability to complete the CoP 

obligations, as determined by the PHA 

or owner, such as a serious illness or 

involuntary loss of employment; 

(2) Active pursuit of a current or 

additional goal that will result in 

furtherance of self-sufficiency during 

the period of the extension (e.g., 

completion of a college degree during 

which the participant is unemployed or 

under-employed, credit repair towards 

being homeownership ready, etc.) as 

determined by the PHA or owner; or 

(3) Any other circumstance that the 

PHA or owner determines warrants an 

extension, as long as the PHA or owner 

is consistent in its determination as to 

which circumstances warrant an 

extension. 

(e) Unavailability of supportive 

services—(1) Good-faith effort to replace 

unavailable services. If a social service 

agency fails to deliver the supportive 

services identified in an FSS family 

member’s ITSP, the PHA or owner shall 

make a good faith effort to obtain these 

services from another agency. 

(2) Assessment of necessity of 

services. If the PHA or owner is unable 

to obtain the services from another 

agency, the PHA or owner shall reassess 

the family member’s needs and 

determine whether other available 

services would achieve the same 

purpose. If other available services 

would not achieve the same purpose, 

the PHA or owner and the family shall 

determine whether the unavailable 

services are integral to the FSS family’s 

advancement or progress toward selfsufficiency. If the unavailable services 

are: 

(i) Determined not to be integral to the 

FSS family’s advancement toward selfsufficiency, the PHA or owner shall 

revise the ITSP to delete these services, 

and modify the CoP to remove any 

obligation on the part of the FSS family 

to accept the unavailable services, in 

accordance with paragraph (f) of this 

section; or, 

(ii) Determined to be integral to the 

FSS family’s advancement toward selfsufficiency, the PHA or owner shall 

terminate the CoP and follow the 

requirements in paragraph (k) of this 

section regarding FSS escrow 

disbursement. 

(f) Modification. The PHA or owner 

and the FSS family may mutually agree 

to modify the CoP with respect to the 

ITSP and/or the contract term in 

accordance with paragraph (d) of this 

section, and/or designation of the head 

of FSS family. Modifications must be in 

writing. 

(g) Completion of the contract. The 

CoP is considered to be completed, and 

a family’s participation in the FSS 

program is considered to be concluded 

when the FSS family has fulfilled all of 

its obligations under the CoP, including 

all family members’ ITSPs, on or before 

the expiration of the contract term, 

including any extension thereof. 

(h) Termination of the contract. The 

CoP shall be terminated if the family’s 

housing assistance is terminated in 

accordance with HUD requirements. 

The CoP may be terminated before the 

expiration of the contract term, and any 

extension thereof, by: 

(1) Mutual consent of the parties; 

(2) The failure of the FSS family to 

meet its obligations under the CoP 

without good cause. This includes an 

FSS family who has moved out of 

multifamily assisted housing and 

families receiving tenant-based 

assistance under section 8(o) of the 1937 

Act who fail to comply with the contract 

requirements because the family has 

moved outside the jurisdiction of the 

PHA, and the PHA has not determined 

that there is good cause terminate the 

CoP with FSS escrow disbursement in 

accordance with paragraph (k)(1)(iii) of 

this section; 

(3) The family’s withdrawal from the 

FSS program; 

(4) Such other act as is deemed 

inconsistent with the purpose of the 

FSS program; or 

(5) Operation of law. 

(i) Option to terminate FSS 

participation or withhold the 

coordination of supportive service 

assistance. The PHA or owner may 

withhold the coordination of supportive 

services or terminate the FSS family’s 

participation in the FSS program, if the 

PHA or owner determines, in 

accordance with the FSS Action Plan 

hearing procedures, that the FSS family 

has failed to comply without good cause 

with the requirements of the CoP in 

accordance with this section. 

(j) Transitional supportive service 

assistance. A PHA or owner may 

continue to offer to a former FSS family 

that has completed its CoP, appropriate 

coordination of those FSS supportive 

services needed to become selfsufficient if the family still resides in 

public housing or Section 8 housing. If 

the family no longer resides in public 

housing, Section 8, or other assisted 

housing, then a PHA or owner may 

continue to coordinate supportive 

services for a former FSS family that 

completed its CoP using only funding 

sources that are not HUD funds or HUDrestricted funds. 

(k) Termination with FSS escrow 

disbursement. (1) The CoP is will be 

terminated with FSS disbursement 

when: 

(i) Services that the PHA or owner 

and the FSS family have agreed are 

integral to the FSS family’s 

advancement towards self-sufficiency 

are unavailable, as described in 

paragraph (e) of this section; 

(ii) The head of the FSS family 

becomes permanently disabled and 

unable to work during the period of the 

contract, unless the PHA or owner and 

the FSS family determine that it is 

possible to modify the contract to 

designate a new head of the FSS family; 

or 

(iii) An FSS family in good standing 

moves outside the jurisdiction of the 

PHA (in accordance with portability 

requirements at § 982.353 of this 

chapter) for good cause, as determined 

by the PHA, and continuation of the 

CoP after the move, or completion of the 

CoP prior to the move, is not possible. 

PHAs must be consistent in their 

determinations of whether a family has 

good cause for a termination with FSS 

escrow disbursement under this 

paragraph (k). 

(2) Upon termination of a CoP 

pursuant to paragraph (k)(1) of this 


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section, escrow funds must be handled 

consistent with § 984.305. 

§ 984.304 Amount of rent paid by FSS 

family and increases in family income. 

(a) Amount of rent paid by FSS 

family. The amount of rent paid by an 

FSS family is determined in accordance 

with the requirements of the applicable 

housing assistance program as specified 

in paragraphs (a)(1) and (2) of this 

section. 

(1) Public housing program: 

Calculation of total tenant payment. 

Total tenant payment for an FSS family 

participating in the FSS program is 

determined in accordance with the 

regulations set forth in 24 CFR part 5, 

subpart F. 

(2) Section 8 programs: Calculation of 

rent. (i) For the HCV program, rent is 

determined in accordance with 24 CFR 

part 982, subpart K; and 

(ii) For the PBV program, rent is 

determined in accordance with 24 CFR 

part 983, subpart G. 

(b) Increases in FSS family income. 

Any increase in the earned income of an 

FSS family during its participation in an 

FSS program may not be considered as 

income or an asset for purposes of 

eligibility of the FSS family under any 

other program administered by HUD. 

§ 984.305 FSS escrow account. 

(a) Establishment of FSS escrow 

account—(1) General. The PHA or 

owner shall deposit the FSS escrow 

account funds of all families 

participating in an FSS program into a 

single interest-bearing depository 

account. The PHA or owner must 

deposit the FSS escrow account funds 

in one or more of the HUD-approved 

investments. The depository account 

may be part of the PHA’s or owner’s 

overall accounts or a separate account, 

as long as it is in compliance with 

paragraph (a)(2) of this section. During 

the term of the CoP, the FSS escrow 

account credit amount shall be 

determined in accordance with 

paragraph (b) of this section at each reexamination of income occurring after 

the effective date of the CoP. Such 

escrow credit amount must be deposited 

each month by the PHA or owner to 

each family’s FSS escrow account 

within the PHA’s or owner’s depository 

account. 

(2) Accounting for FSS escrow 

account funds—(i) Accounting records. 

The total of the combined FSS escrow 

account funds will be supported in the 

accounting records by a subsidiary 

ledger showing the balance applicable 

to each FSS family. 

(ii) Proration of investment income. 

The investment income for funds in the 

FSS escrow account must be prorated 

and credited to each family’s FSS 

escrow account based on the balance in 

each family’s FSS escrow account at the 

end of the period for which the 

investment income is credited. 

(iii) Reduction of amounts due by FSS 

family. If the FSS family has not paid 

the family contribution towards rent, or 

other amounts, if any, due under the 

public housing or Section 8-assisted 

lease, the balance in the family’s FSS 

account shall be reduced by that amount 

(as determined by the owner or reported 

by the owner to the PHA in the Section 

8(o) programs) at the time of final 

disbursement of FSS escrow funds in 

accordance with paragraph (c) of this 

section. If the FSS family has been 

found to have under-reported income 

after the baseline annual earned income 

was set, the amount credited to the FSS 

escrow account will be based on the 

income amounts originally reported by 

the FSS family. If the FSS family is 

found to have under-reported income in 

the re-examination used to set the 

baseline, the escrow for the entire 

period of the CoP will be re-calculated 

using the correct income to set the 

baseline and then calculate subsequent 

escrow amounts. 

(3) Reporting on FSS escrow account. 

Each PHA or owner will be required to 

make a report, at least once annually, to 

each FSS family on the status of the 

family’s FSS escrow account. At a 

minimum, the report will include: 

(i) The balance at the beginning of the 

reporting period; 

(ii) The amount of the family’s rent 

payment that was credited to the FSS 

escrow account, during the reporting 

period; 

(iii) Any deductions made from the 

account at the time of final 

disbursement of FSS escrow funds (see 

paragraphs (a)(2)(iii) and (c) of this 

section) for amounts due the PHA or 

owner; 

(iv) The amount of interest earned on 

the account during the year; and 

(v) The total in the account at the end 

of the reporting period. 

(b) FSS credit—(1) Determining the 

family’s baseline information. When 

determining the family’s baseline 

annual earned income and the baseline 

monthly rent amounts for purposes of 

computing the FSS escrow credit, the 

PHA or owner must use the amounts on 

the family’s last income re-examination. 

(2) Computation of amount. The FSS 

credit amount shall be the lower of: 

(i) Thirty (30) percent of one-twelfth 

(1⁄12) (i.e., two and a half (2.5) percent) 

of the amount by which the family’s 

current annual earned income exceeds 

the family’s baseline annual earned 

income; or 

(ii) The increase in the family’s 

monthly rent. The increase in the 

family’s monthly rent shall be the lower 

of: 

(A) The amount by which the family’s 

current monthly rent exceeds the 

family’s baseline monthly rent; 

(B) For HCV families, the difference 

between the baseline monthly rent and 

the current gross rent (i.e., rent to owner 

plus any utility allowance) or the 

payment standard, whichever is lower; 

or 

(C) For PBV, Mod Rehab, including 

Mod Rehab SRO, and PBRA families, 

the difference between the baseline 

monthly rent and the current gross rent 

(i.e., rent to owner or contract rent, as 

applicable, plus any utility allowance). 

(3) Ineligibility for FSS credit. FSS 

families who are not low-income 

families (i.e., whose adjusted annual 

income exceeds eighty (80) percent of 

the area median income) shall not be 

entitled to any FSS credit. 

(4) Cessation of FSS credit. The PHA 

or owner shall not make additional 

credits to the FSS family’s FSS escrow 

account: 

(i) When the FSS family has 

completed the CoP, as described in 

§ 984.303(g); 

(ii) When the CoP is terminated; or 

(iii) During the time an HCV family is 

in the process of moving to a new unit, 

in accordance with HCV program 

requirements in part 982 of this title, 

and is not under a lease. 

(c) Disbursement of FSS escrow 

account funds—(1) General. The 

amount in an FSS escrow account in 

excess of any amount owed to the PHA 

or owner by the FSS family, as provided 

in paragraph (a)(2)(iii) of this section, 

shall be paid to the head of FSS family 

when the CoP has been completed as 

provided in § 984.303(g), and if, at the 

time of contract completion, the head of 

FSS family submits to the PHA or owner 

a certification, as defined in § 984.103, 

that to the best of his or her knowledge 

and belief, no member of the FSS family 

is a recipient of welfare assistance. 

(2) Disbursement before expiration of 

contract term. (i) If the PHA or owner 

determines that the FSS family has 

fulfilled its obligations under the CoP 

before the expiration of the contract 

term, and the head of FSS family 

submits a certification that, to the best 

of his or her knowledge, no member of 

the FSS family is a recipient of welfare 

assistance, the amount in the family’s 

FSS escrow account, in excess of any 

amount owed to the PHA or owner by 

the FSS family, as provided in 


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paragraph (a)(2)(iii) of this section, shall 

be paid to the head of FSS family. 

(ii) If the PHA or owner determines 

that the FSS family has fulfilled certain 

interim goals established in the CoP and 

needs a portion of the FSS escrow 

account funds for purposes consistent 

with or in support of the CoP, such as 

completion of higher education (i.e., 

college, graduate school), job training, or 

to meet start-up expenses involved in 

creation of a small business, the PHA or 

owner may, at the PHA’s or owner’s sole 

discretion, disburse a portion of the 

funds from the family’s FSS escrow 

account to assist the family in paying 

those expenses. Unless the interim 

disbursement was made based on 

fraudulent information from the family, 

the family is not required to repay such 

interim disbursements if the family does 

not complete the CoP. 

(3) Disbursement in cases of 

termination of the CoP with 

disbursement of escrow. The PHA or 

owner must disburse to the family its 

FSS escrow account funds in excess of 

any amount owed to the PHA or owner 

by the FSS family, as provided in 

paragraph (a)(2)(iii) of this section, 

under circumstances in which HUD has 

determined good cause is warranted. 

HUD determines that there is good 

cause when a CoP is terminated in 

accordance with § 984.303(k). Therefore, 

if the CoP is terminated in accordance 

with § 984.303(k), the PHA or owner 

must disburse to the family its FSS 

escrow account funds in excess of any 

amount owed to the PHA or owner by 

the FSS family, as provided in 

paragraph (a)(2)(iii) of this section, as of 

the effective date of the termination of 

the contract. 

(4) Verification of family certification. 

Before disbursement of the FSS escrow 

account funds to the family, the PHA or 

owner may verify that the FSS family is 

no longer a recipient of welfare 

assistance by requesting copies of any 

documents which may indicate whether 

the family is receiving any welfare 

assistance and by contacting welfare 

agencies. 

(d) Succession of FSS escrow account. 

If the head of FSS family ceases to 

reside with other family members in the 

public housing or the Section 8-assisted 

unit, the remaining members of the FSS 

family, after consultation with the PHA 

or owner, shall have the right to take 

over the CoP or designate another family 

member to receive the funds in 

accordance with paragraph (c) of this 

section. 

(e) Use of FSS escrow account funds 

for homeownership. An FSS family may 

use disbursed FSS escrow account 

funds, in accordance with § 984.305(c), 

after final disbursement for the purchase 

of a home, including the purchase of a 

home under one of HUD’s 

homeownership programs, or other 

Federal, State, or local homeownership 

programs, unless such use is prohibited 

by the statute or regulations governing 

the particular homeownership program. 

(f) Forfeiture of FSS escrow account 

funds—(1) Conditions for forfeiture. 

Amounts in the FSS escrow account 

shall be forfeited upon the occurrence of 

the following: 

(i) The CoP is terminated, as provided 

in § 984.303(h); or, 

(ii) The CoP is completed by the 

family, as provided in § 984.303(g), but 

the FSS family is receiving welfare 

assistance at the time the CoP term 

expires, including any extension 

thereof. 

(2) Treatment of forfeited FSS escrow 

account funds. FSS escrow account 

funds forfeited by the FSS family must 

be used by the PHA or owner for the 

benefit of the FSS participants. 

(i) Specifically, such funds may be 

used for the following eligible activities: 

(A) Support for FSS participants in 

good standing, including, but not 

limited to, transportation, child care, 

training, testing fees, employment 

preparation costs, and other costs 

related to achieving obligations outlined 

in the CoP; 

(B) Training for FSS Program 

Coordinator(s); or 

(C) Other eligible activities as 

determined by the Secretary. 

(ii) Such funds may not be used for 

salary and fringe benefits of FSS 

Program Coordinators; general 

administrative costs of the FSS program, 

for housing assistance payments (HAP) 

expenses or public housing operating 

funds; or any other activity determined 

ineligible by the Secretary. 

§ 984.306 HCV portability requirements for 

FSS participants. 

(a) Initial period of CoP—(1) First 12 

months. During the first 12 months after 

the effective date of the FSS CoP, an 

FSS family may not move outside the 

jurisdiction of the PHA that first 

enrolled the family in the FSS program. 

However, the PHA may approve an FSS 

family’s request to move outside of its 

jurisdiction under portability (in 

accordance with § 982.353 of this 

chapter) during this period. This 

paragraph (a)(1) applies to a former PBV 

family who received tenant-based rental 

assistance in accordance with § 983.261 

of this chapter and exercised their right 

to move. 

(2) After the first 12 months. After the 

first 12 months of the FSS CoP, the FSS 

family with a tenant-based voucher may 

move outside the initial PHA 

jurisdiction under portability 

regulations (in accordance with 

§ 982.353 of this chapter). This 

paragraph (a)(2) applies to former PBV 

families who received tenant-based 

rental assistance in accordance with 

§ 983.261 of this chapter and exercised 

their right to move. 

(b) An FSS family moves to the 

jurisdiction of a receiving PHA that 

administers an FSS program. (1) 

Whether the receiving PHA bills the 

initial PHA or absorbs the FSS family 

into its HCV program, the receiving 

PHA must enroll an FSS family in good 

standing in its FSS program; unless 

(i) The receiving PHA is already 

serving the number of FSS families 

identified in its FSS Action Plan and 

determines that it does not have the 

resources to manage the FSS contract; or 

(ii) The receiving PHA and the initial 

PHA agree to the FSS family’s 

continued participation in the initial 

PHA’s FSS program. Prior to the PHAs 

agreeing to the continued participation, 

the initial PHA must determine that the 

relocating FSS family has demonstrated 

that, notwithstanding the move, it will 

be able to fulfill its responsibilities 

under the initial or a modified CoP at its 

new place of residence. For example, 

the FSS family may be able to commute 

to the supportive services specified in 

the CoP, or the family may move to 

obtain employment as specified in the 

contract. 

(2) Where continued FSS 

participation is not possible in 

accordance with paragraph (b)(1) of this 

section, the initial PHA must clearly 

discuss the options that may be 

available to the family, depending on 

the family’s specific circumstances, 

which may include, but are not limited 

to, modification of the FSS contract, 

termination of the FSS contract and 

forfeiture of escrow, termination with 

FSS escrow disbursement in accordance 

with § 984.303(k)(1)(iii), or locating a 

receiving PHA that has the capacity to 

enroll the family into its FSS program. 

(c) An FSS family moves to the 

jurisdiction of a receiving PHA that does 

not administer an FSS program. If the 

receiving PHA does not administer an 

FSS program, the FSS family may not 

continue participation in the FSS 

program. The initial PHA must clearly 

discuss the options that may be 

available to the family, depending on 

the family’s specific circumstances, 

which may include, but are not limited 

to, modification of the FSS contract, 

termination with FSS escrow 

disbursement in accordance with 

§ 984.303(k)(1)(iii), termination of the 

FSS contract and forfeiture of escrow, or 


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locating a receiving PHA that 

administers an FSS program. 

(d) Single FSS escrow account. 

Regardless of whether the FSS family 

remains in the FSS program of the 

initial PHA or is enrolled in the FSS 

program of the receiving PHA, the 

family will have only one FSS escrow 

account. If the receiving PHA is billing 

the initial PHA, the account will be 

maintained by the initial PHA. If an FSS 

family will be absorbed by the receiving 

PHA, the initial PHA will transfer the 

family’s FSS escrow account funds to 

the receiving PHA and the receiving 

PHA will maintain the funds in its FSS 

account. 

(e) FSS program termination; loss of 

FSS escrow account. (1) If an FSS family 

relocates to another jurisdiction, as 

provided under this section, and is 

unable to fulfill its obligations under the 

CoP (or any modifications thereto), the 

PHA, which is a party to the CoP, must 

terminate the FSS family from the FSS 

program, and the family’s FSS escrow 

account will be forfeited. Termination of 

FSS program participation and 

forfeiture of FSS escrow must be used 

only as a last resort, after the PHA 

determines, in consultation with the 

family, that the family would be unable 

to fulfill its obligations under the CoP 

after the move, that the current CoP 

cannot be modified to allow for 

graduation prior to porting, and that the 

current CoP cannot be terminated with 

FSS escrow disbursement in accordance 

with § 984.303(k)(1)(iii). When 

termination is the only option, the PHA 

must clearly notify the family that the 

move will result in the loss of escrow 

funds. 

(2) In the event of forfeiture of the 

family’s FSS escrow account funds, the 

FSS escrow account funds will revert to 

the PHA maintaining the FSS escrow 

account for the family. 

(f) Contract of Participation (CoP). (1) 

If the FSS family enrolls in the receiving 

PHA’s FSS program pursuant to this 

section, the receiving PHA will enter 

into a new CoP with the FSS family for 

the term remaining on the contract with 

the initial PHA. The initial PHA will 

terminate its CoP with the family. 

(2) If the FSS family remains in the 

FSS program of the initial PHA, 

pursuant to this section, the CoP 

executed by the initial PHA will remain 

as the contract in place. 

(g) New FSS enrollment into the 

receiving PHA’s FSS program—(1) 

Billing. If the receiving PHA bills the 

initial PHA, the receiving PHA may, 

consistent with the receiving PHA’s FSS 

enrollment policies, enroll a family that 

was not an FSS participant at the initial 

PHA into its FSS program, provided that 

the initial PHA manages an FSS 

program and agrees to such enrollment. 

If the receiving PHA bills the initial 

PHA, but the initial PHA does not 

manage an FSS program, the family may 

not enroll in the receiving PHA’s FSS 

program. 

(2) Absorption. If the receiving PHA 

absorbs the family into its HCV 

program, the receiving PHA may, 

consistent with the receiving PHA’s FSS 

enrollment policies, enroll a family that 

was not an FSS participant at the initial 

PHA into its FSS program. 

Subpart D—Reporting 

§ 984.401 Reporting. 

Each PHA or owner that carries out an 

FSS program shall submit to HUD, in 

the form prescribed by HUD, a report 

regarding its FSS program. The report 

shall include the following information: 

(a) A description of the activities 

carried out under the program; 

(b) A description of the effectiveness 

of the program in assisting families to 

achieve economic independence and 

self-sufficiency, including the number 

of families enrolled and graduated and 

the number of established escrow 

accounts and positive escrow balances; 

(c) A description of the effectiveness 

of the program in coordinating resources 

of communities to assist families to 

achieve economic independence and 

self-sufficiency; and 

(d) Any recommendations by the PHA 

or owner or the appropriate local 

Program Coordinating Committee for 

legislative or administrative action that 

would improve the FSS program and 

ensure the effectiveness of the program. 

Marcia L. Fudge, 

Secretary. 

[FR Doc. 2022–09528 Filed 5–16–22; 8:45 am] 

BILLING CODE 4210–67–P 


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