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HUD Implements Statutory Changes to Section 8 Inspections, Extremely Low-Income Definition, and Utility Allowances

Published on June 25, 2014 by NCSHA Staff
HUD Implements Statutory Changes to Section 8 Inspections, Extremely Low-Income Definition, and Utility Allowances

In the June 25 Federal Register, HUD published a notice of statutory changes implementing provisions included in the FY 2014 omnibus appropriations bill enacted in January 2014. The notice, effective July 1, 2014, establishes the terms and conditions for implementing changes to the frequency of required housing inspections, the statutory definition of extremely low-income (ELI), utility allowances, and the statutory definition of a public housing agency (PHA). So that the changes may take effect as quickly as possible, the appropriations bill allows HUD to implement the changes through a notice, provided that HUD follows the notice with a rulemaking process within six months.

The new definition of ELI is the only change applicable to the project-based Section 8 program. The other changes apply to the Public Housing program and the Section 8 Housing Choice Voucher (voucher) and project-based voucher programs. The changes implemented by the notice are outlined below.

Biennial Inspections and Alternative Inspection Methods
The FY 2014 appropriations bill allows PHAs to inspect assisted units during the term of the housing assistance payment (HAP) contract at least biennially instead of annually. It also allows PHAs to use alternative inspection methods. According to the notice, HUD is implementing this change in a limited fashion as full implementation may necessitate additional complexity and HUD believes it will greatly benefit from stakeholder input during the rulemaking process on how to fully implement these changes.

The change to biennial inspections is effective for any unit under a HAP contract where the PHA has conducted a housing quality standards (HQS) inspection within the 12 months preceding the notice’s July 1 effective date. If an inspection was conducted during that timeframe, the PHA will not be required to re-inspect until the lapse of 24 months following the last inspection. However, if the most recent inspection occurred prior to that timeframe, the PHA is required to conduct an annual HQS inspection.

A PHA may comply with the biennial inspection requirement through an inspection conducted for a different housing assistance program. PHAs may rely on inspections conducted under the HOME Investment Partnerships (HOME) or the Low Income Housing Tax Credit (Housing Credit) programs. A PHA may also rely on inspections conducted by HUD, such as one performed by HUD’s Real Estate Assessment Center. A PHA only needs to amend its administrative plan to use one of these options.

If a PHA chooses a different standard, it must submit to its local HUD field office a certification affirming that the standard “provides the same or greater protection to occupants of dwelling units meeting such standard or requirement” as would HQS.

A PHA may not use an alternative inspection method in lieu of the initial unit or any interim inspection. PHAs are still required to conduct an initial inspection, prior to entering into a HAP contract, and interim inspections, if a family or government official notifies the PHA of a unit’s failure to comply with HQS.

Extremely Low-Income Definition
The FY 2014 appropriations bill adds to statute a definition of ELI families. It defines ELI families as very low-income families whose incomes do not exceed the higher of the federal poverty level or 30 percent of area median income (AMI). The definition affects ELI targeting requirements for the public housing, voucher, project-based voucher, and project-based Section 8 programs. As of July 1, compliance with the targeting requirements under each of these programs must take into account the new definition of ELI.

For the voucher programs, compliance with the targeting requirements is determined for each of a PHA’s fiscal years based on new admissions to both programs. Not less than 75 percent of such admissions shall be ELI families. For the project-based Section 8 program, the contract administrator must make available to ELI families not less than 40 percent of the Section 8-assisted units that become available for occupancy in any fiscal year.

Utility Allowances
The FY 2014 appropriations bill limits the utility allowance payment for tenant-based vouchers to the family unit size for which the voucher is issued, irrespective of the size of the unit rented by the family, with an exemption for families with a person with disabilities. Therefore, the utility allowance for a family is the lower of the utility allowance amount for the family unit size or the utility allowance amount for the size of the unit rented by the family. At the request of a family with a person with disabilities, the PHA must approve a utility allowance higher than the applicable amount if such a higher utility allowance is needed as a reasonable accommodation. This change applies to vouchers issued after July 1 and to current program participants. For current tenants, a PHA must implement the new allowance at the family’s next annual reexamination, provided that the PHA is able to provide the family with at least 60 days’ notice prior to reexamination.

PHA Consortia
The FY 2014 appropriations bill amends the definition of PHA to include in its general definition “a consortium of such entities or bodies as approved by the Secretary.” The notice states the HUD Secretary will not approve any consortium of PHAs for administration of project-based Section 8 program contracts.