Housing Opportunity Through Modernization Act of Overview. February 8, 2017 Presenter: Seth Embry, Senior Associate

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1 Housing Opportunity Through Modernization Act of Overview February 8, 2017 Presenter: Seth Embry, Senior Associate

2 Agenda Background of HOTMA Status of Implementation Looking Forward

3 HOTMA - Background Signed into law in July, 2016 Goal update and improve statutes relevant to housing programs including HCV, Public Housing, Rural Housing, FHA Mortgage Insurance, Housing for Homeless and Veterans, and others Some of the law s provisions went into effect immediately, some required HUD action As we go through the review, I will indicate the status of the provision

4 Status of Implementation Initial implementation guidance Issued: October 2016 Outlined the law Effective: October 2016 Implementation notice Issued: January 2017 Began to implement the law Effective: Unknown

5 Status of Implementation January Implementation notice Potentially subject to a government-wide delay on regulations The effective date is unknown at this time Information in the January implementation notice is subject to change

6 Section 101 Inspection of Dwelling Units HCV Initial Inspections HQS Enforcement

7 Section 101 Highlights Provides PHAs with an option to allow families to move into units before HQS inspections are approved (with conditions) Standardizes the timeframes for correcting deficiencies and withholding payments under the above option Deals with allowing families to relocate from units with failed inspections along with providing financial assistance to those families Based on regulations provided in the January implementation notice

8 Initial Inspections* Initial HQS Inspections are still required for HAP to begin, unless 1. HQS Inspection failed items are only non-life threatening conditions If repairs are not made after 30 days, the PHA must withhold the HAP Once deficiencies are corrected, HAP can begin again, and PHA can choose to provide HAP retroactive for the period of time payments were withheld 2. The unit was approved under an alternative inspection method within the previous 24 months PHA can permit occupancy before the HQS Inspection is complete Once HQS Inspection is complete and the unit is approved, PHA can provide the owner with HAPs retroactive to the beginning of the lease term

9 Initial Inspections (Implementation Status)* PHAs that wish to implement this flexibility must amend their administrative plan Include HUD s definition of non-life-threatening conditions Include HUD s and the PHA s life-threatening conditions These definitions will apply to ALL inspections PHAs can choose to apply this policy to all initial inspections, or a portion of initial inspections This may require you to amend your PHA plan, in which case follow your public notice requirements

10 Initial Inspections (Implementation Status)* Life-Threatening Conditions Defined 1. Gas (natural or liquid petroleum) leak or fumes 2. Electrical hazards that could result in shock or fire 3. Inoperable or missing smoke detector 4. Interior air quality (inoperable or missing carbon monoxide detector) 5. Gas/oil fired water heater or heating, ventilation, or cooling system with missing, damaged, improper, or misaligned chimney venting

11 Initial Inspections (Implementation Status)* Life-Threatening Conditions Defined 6. Lack of alternative means of exit in case of fire or blocked egress 7. Other interior hazards (required fire extinguisher is missing, inoperable, or expired 8. Deteriorated pain in a unit built before 1978 that is to be occupied by a family with a child under 6 years of age 9. Any other condition subsequently identified by HUD 10. Any other condition identified by your PHA s admin plan prior to April 18, 2017

12 Initial Inspections (Implementation Status) Lead Paint Hazard Exception* PHAs cannot approve tenancy, execute the HAP contract, or make assistance payments until lead hazard reduction is complete For regular or interim inspections, lead hazard reduction must be completed not in 24 hours as is the requirement for life-threatening conditions, but must follow the requirements in 24 CFR part 35.

13 Initial Inspections (Implementation Status)* Keep in mind: PHAs must document that the HQS inspection did not reveal any lifethreatening deficiencies PHAs must provide notice to owners and tenants of the new procedures Families must agree to approve the assisted tenancy under this flexibility

14 Initial Inspections (Implementation Status)* Keep in mind: Owners must be provided notice of failure in writing If deficiencies are not corrected within 30 days of this notification, assistance payments must be withheld until the unit meets HQS PHA can establish a policy regarding how long it will wait before terminating the HAP contract for HQS non-compliance, but that time period cannot exceed 180 days PHAs must notify HUD prior to implementing this new flexibility Continue to report as usual in PIC; guidance regarding SEMAP Indicator 11 is forthcoming

15 Alternative Inspections* The alternative inspection method is not new, and PHAs that choose to authorize occupancy under the alternative inspection provision must abide by Section 2 of the implementation notice PHAs must continue to meet requirements of 24 CFR The HCV administrative plan must be updated to identify the approved alternative inspection methods, and if needed, the PHA Plan would be amended as well

16 Alternative Inspections* Implementation of this section does not relieve the PHA of its duty to complete the HQS Inspection HAP contract must be executed on or before the beginning of the lease term (not within 60 days of the beginning of the lease term) All PHAs implementing this provision must complete the initial inspection within 15 days of receiving the RFTA for units eligible for expedited occupancy under this section regardless of the size of the program

17 Alternative Inspections* PHAs must notify owners and tenants of the new procedures Families must be aware of the list of life-threatening deficiencies in order to identify them in the unit PHAs must notify HUD of their intention to adopt this policy at least 30 days before it is implemented Again, HUD plans to provide guidance on how SEMAP Indicator 11 will be modified

18 HQS Enforcement This section has not yet been implemented by required regulations Steps to HQS Noncompliance: Failed HQS inspection Notification to the owner in writing Deficiencies not corrected on time (24 hours for life-threatening conditions, 30 days for all others) PHAs can withhold assistance to owners during periods of corrections. If corrections are made on time, payments must restart and the PHA can make retroactive assistance payments

19 HQS Enforcement This section has not yet been implemented by required regulations PHAs must abate assistance payments for units in noncompliance with HQS Payments cannot restart until the unit is in compliance with HQS Owners have 60 days in abatement before the PHA must terminate the HAP contract Once a unit is in abatement, tenants must be issued a voucher to move to another unit

20 HQS Enforcement This section has not yet been implemented by required regulations Families have relocation benefits At least 90 days from the termination of the HAP contract to lease a new residence If they are unable to lease during that time, PHA must allow the family the option to move into the first available unit owned or operated by the PHA PHAs can use up to two months of HAP withheld or abated for relocation costs

21 Section 102 Income Reviews Interim Reexaminations Calculation of Income Reasonable Accommodation Payment Standard

22 Income Reviews This section has not yet been implemented by required regulations Income reviews occur when assistance to the family begins and annually thereafter At the family s request when changes in income or deductions result in a decrease of 10 percent If the family s income increased by 10 percent or more For PBV, income reviews are not longer required annually

23 Calculation of Income This section has not yet been implemented by required regulations PHAs and Owners must use estimate family income for the upcoming year at initial review At annual reviews, PHAs and owners must use the income for the preceding year, and take into account any increases or decreases greater than 10 percent PHAs and owners can rely on income determinations by Federal means-tested assistance programs (such as TANF, Medicaid, or SNAP)

24 Calculation of Income This section has not yet been implemented by required regulations Actual income from assets is counted when determining rents, but imputed income is only counted to the extent that net family assets exceed $50,000.

25 Calculation of Income (Excluded) This section has not yet been implemented by required regulations Elderly/disabled deduction raised to $525 Educational Savings Accounts Medical expenses threshold raised to 10 percent PH mandatory earned income disregard eliminated

26 Reasonable Accommodation Payment Standards This provision was effective upon enactment of the legislation PHAs can establish a payment standard up to 120 percent of the FMR as a reasonable accommodation for a person with a disability without HUD approval

27 Section 103 Limitation on Public Housing Tenancy for Over-Income Families Income Eligibility

28 Public Housing Income Eligibility This section has not yet been implemented by required regulations Maximum amount of annual adjusted income for continued occupancy is 120% of AMI In those cases, the PHA must terminate the family s tenancy within six months or charge the family a monthly rent equal to either the HUDdetermined Fair Market Rent for the unit or the operating and capital subsidies provided for the unit, whichever is greater

29 Section 104 Limitation on Eligibility for Assistance Based on Assets Income Eligibility Assets Access to Financial Records

30 Income Eligibility Assets This section has not yet been implemented by required regulations At no time can a family with net assets above $100,000 be provided assistance under Public Housing or the HCV program This includes real property suitable for occupancy that the family owns (fully or part of) Excludes property owned by tenants receiving assistance under a PHA homeownership program, or manufactured housing, victims of domestic violence, or families selling applicable property Self-certification of net assets allowed if the amount is under $50,000

31 Access to Financial Records This section has not yet been implemented by required regulations Starting in FY 2018, PHAs must to require all applicants and participants to provide authorization to the PHA to access financial records from financial institutions for the purposes of income eligibility PHAs may determine applicants and participants ineligible for assistance based on the refusal to provide access to these records

32 Section 105 Units Owned by a PHA

33 Units Owned by a PHA* New definition overrides the definition at 24 CFR (PBV) and 24 CFR (PHA-owned) Owned by a PHA Owned by an entity wholly controlled by the PHA Owned by a limited liability company 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 Before you can treat units as no longer PHA-owned, you need an opinion from your legal counsel

34 Section 106 PHA Project-Based Assistance PBV Assistance Limitations Income-Mixing Cap PBV Contracts Tenant Selection

35 PBV Highlights* PHA HCV limit changed from 20% of funding to 20% of units Adds an additional 10% allowance for housing for homeless, veterans, and elderly and disabled persons Changes the project unit cap to the greater of 25 units or 25% of units Initial and extended contract term maximum is 20 years Allowable selection preference for families that qualify for services

36 PBV Highlights* PHAs can attach PBV assistance in PHA-owned or controlled structures without competition FUP and HUD-VASH vouchers can be project-based

37 PBV Assistance Limitations* The limitation on PBVs is now based on authorized units instead of funding (limit remains 20%) PHAs must submit information regarding the total number of units authorized and committed to PBV, in addition to the number of units to which the PHA is proposing to attach project-based assistance to their local field office

38 PBV Assistance Limitations* Exception to the limit: an additional 10% of authorized units can be used for project-based assistance units that house homeless families, families with veterans, permanent supportive housing for persons with disabilities or elderly individuals, or in areas where vouchers are difficult to use Person with disability or elderly defined at 24 CFR Supportive housing must offer services for all assisted families, such as personal assistance, housekeeping, health-related services, and more

39 PBV Assistance Limitations Exceptions* Some units aren t subject to the percentage limitation Units under PBV HAP contract that are not first effective until the effective date of the rule Units that met one of the following conditions in the 5 years prior to the PHA issuing the RFP under which the unit was selected or selected the project received certain HUD assistance or was subject to a rent restriction

40 PBV Assistance Limitations Exceptions* PH Capital/Operating Funds Project-Based Rental Assistance Housing For the Elderly Housing for Persons With Disabilities The Rent Supplement program Rental Assistance Program (RAP) Section 236 Section 221(d)(3) or (d)(4) BMIR Housing For the Elderly Housing for Persons With Disabilities

41 PBV Assistance Limitations Exceptions* Must replace a unit that would have qualified if it were an existing or rehabbed unit New unit must be on the same site of the replaced units New PBV project must be intended to replace affordable rental units at the same site, proven by either: Former residents given selection preference (right of first occupancy) PBV project was included in the site s redevelopment plan prior to demolition

42 PBV Assistance Limitations Exceptions* For new construction and PBV rehab projects, the number of units subject to the exception cannot exceed the number of units being replaced Standard criteria for selection of projects/units still apply These units are excluded from the number of units authorized under your ACC Notice must be provided to HUD and local PH Director

43 PBV Assistance Limitations Exceptions* Vouchers project-based under RAD HUD-VASH PBV Set-aside vouchers

44 Income-Mixing Cap* PBV limit is 25 percent or 25 units in a project, whichever is greater Exceptions: Units exclusively serving elderly families Units housing households eligible for supportive services. PHAs must include in the PHA administrative plan the type of services offered to families for a project to qualify under the exception Projects that are in a census tract with a poverty rate of 20 percent or less

45 Income-Mixing Cap Exceptions* Projects not subject to the cap are those that meet the criteria for an exception to the percentage limitation (including new construction) Units that met one of the following conditions in the 5 years prior to the PHA issuing the RFP under which the unit was selected or selected the project received certain HUD assistance or was subject to a rent restriction Can not be under contract on or before the effective date of the notice

46 PBV Contracts* New initial and extension HAP contract term is 20 years PHAs, in times of insufficient funding, must first take all cost-savings measures prior to failing to make payments under existing PBV HAP contracts Biennial inspections may be conducted using a random sampling of at least 20 percent of the PBV units in each building.

47 PBV Contracts* PHAs and owners can amend the HAP contract to add additional PBV contract units in projects that already have a HAP contract without having to fulfill the selection requirements for those added PBV units When HAP contracts expire, PHAs must provide tenant-based vouchers to families PHA and owner must allow family to remain in unit with tenant-based voucher assistance

48 Tenant Selection* PHAs may allow owners with PBV contracts to create and maintain site-based waiting lists, but HUD will implement this later through rulemaking PHAs can establish selection preferences for families who qualify for voluntary services available to occupants Must be consistent with nondiscrimination and civil rights requirements Any individual who is qualified for the services must be able to receive the preference

49 Tenant Selection* Voluntary services can consist of a variety of activities and services designed to help the recipient live in the community as independently as possible Voluntary services can also include disability-specific services which are provided to support a person with a disability For preferences based on qualification for a disability-specific service, PHAs and owners have to consider how to implement this preference consistent with Section 504 and the ADA

50 PHA-Owned Structures* PHAs can attach PBVs to project that the PHA has an ownership interest or control of without following a competitive process PHA must be engaged in an initiative to improve, develop, or replace a public housing property or site Minimum is $25,000 per unit in hard costs PHA Plan must detail the work and the number of units of PBVs being added

51 Special-Purpose Vouchers* Family Unification Program and HUD-VASH vouchers can be projectbased without additional HUD approval For HUD-VASH vouchers, PHAs must ensure the local VA Medical Center will be able to provide supportive services to any projectbased vouchers For FUP vouchers, PHAs may limit the project-based vouchers to one category of FUP eligible families

52 PBV Provisions in HOTMA not Implemented Entering into a PBV HAP contract for a unit that does not qualify as existing housing regardless of with an AHAP was executed Providing rent adjustments using an operating cost factor Establishing owner-maintained site-based waiting lists Environmental review requirements for existing housing

53 Section 107 Establishment of Fair Market Rent

54 Fair Market Rent* With a reduction in FMRs, PHAs are not required to reduce the payment standard of a continually assisted family under HAP contract PHAs must amend their administrative plan HOTMA also changed the procedures by which HUD publishes FMRs Interested parties can comment on or request HUD reevaluate proposed FMRs

55 Section 108 Collection of Utility Data

56 Collection of Utility Data This section has not yet been implemented by required regulations HUD will publish data on utility consumption and costs in local areas

57 Section 109 Public Housing Capital and Operating Funds Replacement Reserves Operating Fund Flexibility

58 Replacement Reserves This section has not yet been implemented by required regulations Reserves are used for capital and management activities Funds can be moved from your Capital Fund into the replacement reserve at any time Funds from other sources require HUD approval No minimum transfer requirement Reserve maximum is the amount of capital needs Initial transfers above 20% of the operating fund require HUD approval

59 Operating Fund Flexibility This section has not yet been implemented by required regulations PHAs can transfer up to 20% of operating funds appropriated in a fiscal year (starting in 2016) into the Capital Fund

60 Section 110 Family Unification Program fro Children Aging out of Foster Care Term of Assistance and Eligibility

61 Term of Assistance and Eligibility* FUP-eligible youth can receive assistance for 36 months Youth are eligible to age 24 Youth are eligible if they will be leaving foster care within 90 days and are homeless or at risk for homelessness Definition of risk of homelessness is at 24 CFR 576.2

62 Section 112 Use of Vouchers for Manufactured Housing

63 Vouchers in Manufactured Housing* Expanded definition of rent monthly payments made by the family to amortize the cost of purchasing the manufactured home Tenant-paid utilities Rent of the property the home is located on Excess payments can be directed to the family, lender, or utility company

64 Other Information* Section 113 In Guam, US citizens and nationals receive preferences for financial assistance Section 114 Certain jurisdictions were provided exceptions from the PHA Resident Board Member Requirement Section 402 PHAs eligible to receive Emergency Solutions Grants funding. HUD will issue guidance regarding these subawards