Source: https://www.federalregister.gov/documents/2017/07/14/2017-14631/housing-opportunity-through-modernization-act-of-2016-implementation-of-various-section-8-voucher
Timestamp: 2017-11-23 10:29:29
Document Index: 731376752

Matched Legal Cases: ['§\u2009105', '§\u2009106', '§\u2009106', '§\u2009106', '§\u2009106', '§\u2009106', '§\u2009106', '§\u2009106', '§\u2009106']

Federal Register :: Housing Opportunity Through Modernization Act of 2016: Implementation of Various Section 8 Voucher Provisions; Correction
A Rule by the Housing and Urban Development Department on 07/14/2017
32461-32463 (3 pages)
A. Units Owned by a PHA (HOTMA § 105)—Controlling Interest
B. Units Not Subject to Project-Based Voucher (PBV) Program Unit Limitation (HOTMA § 106(a)(2)) and Projects Not Subject to Project Cap (HOTMA § 106(a)(3))—Flexible Subsidy Projects
C. Units Not Subject to PBV Program Unit Limitation (HOTMA § 106(a)(2))—Replacement Housing
D. Changes to Income-Mixing Requirements for a Project (Project Cap) (HOTMA § 106(a)(3))—Supportive Services Exception
E. Changes to Income-Mixing Requirements for a Project (Project Cap) (HOTMA § 106(a)(3))—Units in Low-Poverty Census Tract Exception
F. Changes to Income Mixing Requirements for a Project (Project Cap) (HOTMA § 106(a)(3))—Grandfathering of Certain Properties
G. Projects Not Subject to a Project Cap (HOTMA § 106(a)(3))—Replacement Housing
H. Attaching PBVs to Structures Owned by PHAs (HOTMA § 106(a)(9))
https://www.federalregister.gov/d/2017-14631 https://www.federalregister.gov/d/2017-14631
HOTMA amended section 8(o) of the 1937 Act to provide a statutory definition of units owned by a PHA, overriding the regulatory definitions at 24 CFR 983.3 and 24 CFR 982.352. HOTMA establishes three categories under which a project is PHA-owned. A project is PHA-owned when the project is: (1) Owned by the PHA; (2) owned by an entity wholly controlled by the PHA; or (3) owned by a limited liability company (LLC) or limited partnership in which the PHA (or an entity wholly controlled by the PHA) holds a controlling interest in the managing member or general partner. The January 18, 2017, implementation document (page 5463, section B), used the phrase “50 percent or more” to define a level of control that constitutes a controlling interest and would thus indicate PHA ownership. The threshold for control should be “more than 50 percent” rather than “50 percent or more.”
This document also corrects a typographical error contained in the January 18, 2017, implementation document in the definition of “controlling interest” for purposes of establishing PHA ownership. Specifically, the implementation document incorrectly refers to equivalent levels of control in other “organizational” structures. This document corrects the definition to refer to “ownership” structures.
HOTMA amended the 1937 Act to except certain units from both the PHA program unit percentage limitation at section 8(o)(13)(B) and the income-mixing requirement at section 8(o)(13)(D). Specifically, HOTMA excepts units of project-based assistance that “are attached to units previously subject to federally required rent restrictions or receiving another type of long-term subsidy or project-based assistance provided by the Secretary.” The January 18, 2017, implementation document (page 5465, section C.2.C, and page 5467, section C.3.D, respectively) inadvertently excluded from the list of excepted units those units that have received assistance under section 201 of the Housing and Community Development Amendments of 1978. Therefore, HUD is correcting the January 18, 2017, implementation document to add the Flexible Subsidy Program in both lists.
In discussing the units that are not subject to the PBV program unit limitation, the January 18, 2017, implementation document describes the circumstances under which PBV new construction units will qualify as replacement housing for the covered units and likewise are exempt from the program limitation (page 5465, section C.2.C(2)). One of the requirements is that the newly constructed unit is located on the same site as the unit it is replacing. In describing this requirement, the January 18 2017, implementation document inadvertently referred to the “site of the original public housing development” instead of “site of the original development.” To avoid any indication that this requirement is only applicable to former public housing units as opposed to all the covered forms of HUD assistance listed earlier in the January 18, 2017, implementation document, C.2.C(2)(b) is revised to strike “public housing” from the paragraph.
HOTMA amends the 1937 Act with respect to the threshold for exemption from the income-mixing requirement. The income mixing requirement Start Printed Page 32462exception for supportive services now applies to dwelling units assisted under the contract that are exclusively made available to “households eligible for supportive services that are made available to the assisted residents of the project, according to the standards for such services the Secretary may establish.” HOTMA requires that families must be “eligible” for the supportive services, rather than “receiving” the supportive services, for the units made available to such families to be excluded from the income-mixing requirement. As clarified in the January 18, 2017, implementation document (page 5467, section C.3.B(2)), this HOTMA change means that a PHA may not require family participation in the supportive services as a condition of living in an excepted unit. Therefore, a PHA may not rely solely on a supportive services program that would require a family to engage in the supportive services once the family enrolls in the program, such as Family Self-Sufficiency (FSS), for the unit to meet the supportive services exception.
The January 18, 2017, implementation document states that “if the FSS family fails to successfully complete the FSS contract of participation or supportive services objective and consequently is no longer eligible for the supportive services, the family must vacate the unit . . . and the PHA shall cease paying housing assistance payments on behalf of the ineligible family.” Upon further consideration, HUD is concerned that the sentence may be misinterpreted to imply that a PHA could, under HOTMA, establish a supportive services exception based exclusively on participation in FSS (where participation in the supportive services is required as opposed to voluntary), rather than in combination with another supportive services option where participation in the supportive services is voluntary. Additionally, HUD has determined that this provision could be wrongly construed in a way that conflicts with current FSS requirements, which do not allow termination from the housing assistance program for failure to complete the FSS contract of participation. See the Federal Register notice entitled, “Waivers and Alternative Requirements for the Family Self-Sufficiency Program”, published on December 29, 2014, at 79 FR 78100.
HOTMA amended the 1937 Act with respect to the types of units that are exempt from the income-mixing requirement. The January 18, 2017, implementation document (page 5467, section C.3.B(3)), noted that “projects that are in a census tract with a poverty rate of 20 percent or less” are excluded from the cap. However, the January 18, 2017, implementation document should have clarified that while PBV projects located in a census tract with a poverty rate of 20 percent or less are excluded from the 25 percent unit cap, those projects are subject to an alternative income mixing requirement that is the greater of 25 units or 40 percent of the units. HUD is adding a sentence to this section as a clarification.
There are two typographical errors in the last sentence of section C.3.C on page 5467. The word “contact” should be “contract” and the last word of the sentence should be “project” and not “unit”.
HOTMA amended the 1937 Act to add a new section 8(o)(13)(N), which allows a PHA that is engaged in an initiative to improve, develop, or replace a public housing property or site to attach PBVs to projects in which the PHA has an ownership or controlling interest, without following a competitive process. In the January 18, 2017, implementation document (page 5471, section C.6), HUD stated that, in order to avail itself of this exemption from the competitive award of PBVs, a PHA must “be planning rehabilitation or construction on the project with a minimum of $25,000 per unit in hard costs.” However, this minimum per unit cost would not be applicable in a situation where a PHA is replacing a public housing property or site with existing housing owned or controlled by the PHA.
A “controlling interest” is—
3. On page 5465, beginning in the second column, paragraph (b) is corrected by removing “public housing” in the second sentence.
A PHA may not require participation in the supportive services as a condition of living in an excepted unit, although the family must be eligible to receive the supportive services, and the supportive services must be offered to the family. As such, a PHA may not rely solely on a supportive services program that would require the family to engage in the services once enrolled, such as FSS, for the unit to qualify for the supportive services exception. In the case of a family that chooses to participate in the supportive services, as described by the PHA in the administrative plan, and successfully completes the supportive services objective, the unit continues to be an excepted unit for as long as the family resides in the unit even though the family is no longer eligible for the service.Start Printed Page 32463
However, if a family becomes ineligible for the supportive services during their tenancy (for reasons other than successfully completing the supportive services objective), the unit will no longer be considered an excepted unit under this category. If the PHA does not want to reduce the number of excepted units in their project-based portfolio, the PHA may: (i) Substitute the excepted unit for a non-excepted unit if it is possible to do so in accordance with 24 CFR 983.207(a), so that the unit does not lose its excepted status, or (ii) temporarily remove the unit from the PBV HAP contract and provide the family with tenant-based assistance. Note that the family would have to be ineligible for all the supportive services made available for the unit to lose its excepted status. For example, consider a project where the supportive services made available to assisted families in the project include both FSS supportive services (for families that voluntarily join the FSS program) and non-FSS supportive services (where, unlike FSS, participation in supportive services is not mandatory). If a family joined the FSS program but later dropped out of the FSS program, the unit would continue to be an exception unit provided the family is eligible for the non-FSS supportive services.
“For these projects, the project cap is the greater of 25 units or 40 percent (instead of 25 percent) of the units in the project.”
The PBV HAP contract may not be changed to the HOTMA requirement if the change would jeopardize an assisted family's eligibility for continued assistance at the project (e.g., excepted units at the project included units designated for the disabled, and changing to the HOTMA standard would result in those units no longer being eligible as an excepted unit unless the owner will make supportive services available to all assisted families in the project.