Streamlining HUD Regulations – Interim Final Rule – December 12, 2017

The Department of Housing and Urban Development (HUD) published an Interim Final Rule in the Federal Register on December 12, 2017, titled “Streamlining Administrative Regulations for Multifamily Housing Programs and Implementing Family Income Reviews Under the Fixing America’s Surface Transportation (FAST) Act.”

Background

On March 8, 2016, HUD published a Final Rule streamlining regulatory requirements pertaining to certain elements of the Housing Choice Voucher (HCV), Public Housing (PH) and Multifamily Housing (MFH) rental assistance programs. One of the major changes related to annual income reviews in the HCV, PH and Section 8 Project Based Rental Assistance (PBRA) programs for families with sources of fixed income. On December 4, 2015, President Obama signed the FAST Act into law. The law contained language that allowed PHAs and owners to conduct full income recertifications for families with 90% or more of their income from fixed income every three years instead of annually. This Interim Final Rule aligns the current regulatory flexibilities from the March 2016 final rule with those provided under the FAST Act.

Comments on this Interim Final Rule are due by January 11, 2018, and the rule will be effective on March 12, 2018.

Summary of the Interim Final Rule

1. Streamlined Certification of Fixed Income
   1. During years two and three after a full income review, PHAs and owners in the HCV, PH, and PBRA programs may determine a family’s fixed income by using a verified COLA or rate of interest on the individual sources of fixed income. In the case of a family with at least 90% of the family’s unadjusted income from fixed income, a PHA or owner using streamlined income verification may, but is not require to, adjust the non-fixed income. For families with at least one source of fixed income, but for which less than 90% of the family’s income is from fixed sources, PHAs and owners must verify and adjust non-fixed sources annually.
   2. This interim final rule does not change the requirement that full recertifications must be done every three years. Families must certify that all the information they submit for income verification, including sources of income, is accurate.
2. Utility Reimbursements
   1. Where tenants pay for their utility usage, owners must reimburse tenants if the utility allowance (UA) exceeds the total tenant payment.
   2. This interim final rule explicitly allows owners to make reimbursements of $45 or less (per quarter) on a quarterly basis, in order to eliminate the burdensome process of processing and mailing monthly reimbursement checks. In the event a family leaves the program in advance of its next quarterly reimbursement, the owner will be required to reimburse the family for a prorated share of the applicable reimbursement. If owners choose to take advantage of this quarterly reimbursement provision, they must have a policy in place to assist tenants for whom the quarterly reimbursements will pose a financial hardship.
   3. For the Section 202 and 811 programs, the regulations do not contain the requirements around utility reimbursements, leaving such requirements in the assistance contracts. Owners of these projects wishing to use the quarterly reimbursements will have to contact HUD to amend the assistance contracts.

• Family Declaration of Assets Under $5,000
  1. This rule amends the regulations so that, for a family that has assets equal to or less than $5,000, an owner, at recertification, may accept a family’s declaration that it has net assets equal to or less than $5,000, without annually taking additional steps to verify the accuracy of the declaration. Third-party verification of all family assets will be required every three years.
  2. The regulations allow owners in the Section 202 and 811 programs to require tenants to provide the same certification of assets allowed in the HCV, PH, and PBRA programs.

In the March 8, 2016, final rule, the provisions relating to utility allowance reimbursements and asset certification applied to the HCV and PH programs only. This rule expands these same policies to the MFH programs.

As noted above, while this is a “final” rule, it is an “interim” final rule, and does not go into effect until March 12, 2018. This will give HUD time to review any comments on the rule and make necessary changes prior to the effective date.