PHADA Working to Secure Answers, Solutions
PHADA President Mark Gillett.
It is hard to believe but, in a few weeks, we will enter the last quarter of 2024 and the start of a new fiscal year. As we approach the autumn season, HAs face a considerable amount of uncertainty in terms of the budget and some important program changes that are in the works. This is an opportune time to review those issues and to let you know what PHADA is doing to ensure as much stability as possible in this uncertain period.
HCV Shortfall
HUD recently reviewed the financials of nearly 800 HAs and found that nearly 400 would be in shortfall by the end of the year. Roughly $400 million is needed to shore up their voucher programs. The Department noted that even well-managed HAs may experience shortfalls due to adverse market conditions or other factors. As a result, HUD is completing a second offset of unspent HCV reserves of more than 900 HAs. HUD says this is necessary to ensure assistance is maintained for all presently served families. PHADA has registered its concerns throughout this year about inadequate inflation factors, FMR errors and the HAP proration.
We have also argued that HAs should not be unduly penalized at artificially low levels next year when HCV funding is rebenchmarked. The present uncertainty is compounded by the fact that Congress will not consider supplemental appropriations, and the FY 25 spending bill may not be finalized until sometime early next year. For additional details surrounding this issue, please see the separate article here.
New Operating Fund Questions
HUD recently issued Notice 2024-25, which includes a provision that would require HAs to remit interest income they earn on operating funds. This provision was not previously announced before its release and is deeply worrying because many HAs earn considerable sums through investments on their rental income and other resources. These funds are especially needed at a time when many HAs are already short funded, insurance costs are skyrocketing, and tenant accounts receivable are at all-time highs for many agencies.
The provision would be implemented starting in 2025. HUD is developing supplemental guidance to elaborate on missing details and mechanics, explaining how the remittance would work. PHADA requested the opportunity to engage with HUD on the development of that guidance to ensure it is fair and workable. We appreciate HUD is agreeable to this approach and we will have several accountants and financial officers in the dialogue. Our goal is to mitigate any potential damage this new scheme may pose to our programs and residents.
FY 25 Budget on Hold Until After Elections
Of course, another important unknown is the question of who will be in the White House and running the next Congress that convenes in January. That will no doubt affect our funding and regulatory environment.
To provide more certainty heading into the new calendar year, we would like to see the current Congress and the Biden Administration finish the appropriations process before January. The pending Senate bill is certainly preferable to the House measure (see our Position Paper here) but even it still does not provide sufficient operating and capital funds. In any case, PHADA will continue to press for the adoption of optimal funding for public housing, RAD, and HCV accounts in the new fiscal year that begins in less than one month.
On the regulatory side, we appreciate that Acting Secretary Adrianne Todman accepted our suggestions to delay implementation of HOTMA and the NSPIRE-V inspections protocol for the voucher program. Still, HAs are in an uncertain position, especially on HOTMA because it is inextricably linked to the Housing Information Portal (HIP), which is still not operational. We are continuing conversations with HUD staff about the HOTMA compliance date.
The other unknown is the status of the Build America Buy America (BABA) rule. HUD has been helpful in creating some useful waivers, and although BABA is technically effective now, most of our funds in the pipeline are not yet subject to its requirements. At the same time, there have also been discussions about exempting some housing programs, but nothing definitive has been established. We strongly support broad exceptions and will report further details as soon as possible.
Conclusion
All these matters will be on PHADA’s agenda when we meet with Secretary Todman, other HUD officials, and Congress in Washington in just a matter of days. I want to assure you that PHADA’s top priority is to secure adequate FY 25 funding and workable solutions that answer some of the unknowns mentioned above.