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HUD Issues Allocation and Special Administrative Fee for New Incremental Housing Choice Vouchers

HUD began issuing fair share vouchers this week to housing authorities (HAs) across the country. The relevant HUD Notice, PIH 2022-29 (HA), announced the availability of 19,700 fair share vouchers. The Notice states that HUD should have notified eligible HAs of their voucher award as of August 26, 2022. The notification will specify the number of vouchers allocated to the HA in accordance with the allocation formula and will provide specific instructions regarding how the HA may decline the allocation.

The Notice states:

If a PHA determines it does not want the HCV award, the PHA must submit a notice declining the award to NewHCVs@hud.gov by September 2, 2022. If HUD does not receive a declination from the PHA, HUD will deem the HCV award accepted. However, if for any reason after this date a PHA decides to return the vouchers awarded, the PHA should reach out to NewHCVs@hud.gov to begin this process.

HUD staff have called this allocation the most significant issuance of fair share vouchers in twenty years. While there is significant need for affordable rental units for lower-income individuals and families across the country, there is concern amongst some HAs related to utilization in their communities. Factors such as inadequate FMRs and rising market rents have made it difficult for voucher holders to find homes in one of the most challenging rental markets in many years.

In a meeting with HUD staff, it was stated that the distribution of these vouchers will be spread more widely and evenly than in recent years, with hopes that many more HAs will have a chance to secure some of these vouchers for their communities. These will be the most flexible vouchers HAs can hope to receive since other recent allocation notices, including one for 4,000 stability vouchers, are targeted towards special needs such as homeless, at risk of homeless, and victims of domestic violence and sex trafficking. HUD also recently issued a notice for 8,500 VASH vouchers. These notices along with additional information can be found here.

The current fair share notice emphasizes that while these are fair share vouchers, the $200 million for funding these comes from the Consolidated Appropriations Act of 2022 (2022 Act). The Act states that in issuing these vouchers, HUD may consider such factors as severe cost burden, overcrowding, substandard housing for very low-income renters, homelessness, and administrative capacity. The allocation method is required to include rural and urban areas. As a result of this language, HUD encourages HAs to establish preferences to assist these populations consistent with HCV regulations and statute, though such preferences are not required.

 

Allocation Formula

Based on the factors noted above, as outlined in the 2022 Act, HUD will allocate vouchers where there is greatest need and ensure representation of both rural and urban areas.

Eligible HAs will receive a minimum of three vouchers to encourage small, and particularly rural HAs, to participate. The maximum award of vouchers to any individual HA is limited to 450 vouchers. HUD states this limit is intended to “avoid overwhelming the capacity of an agency to lease vouchers swiftly.”

 

Administrative Fees

Under the 2022 Act, there is no additional funding provided for administrative fees for these new vouchers, though HUD is using some other related funding to provide a one-time special fee of $750 per voucher for these vouchers once the PHA’s CACC is amended to reflect the new funding obligation. This fee is intended to support immediate start-up costs and to facilitate leasing of these vouchers. HAs will also be eligible for ongoing administrative fees based on their leasing rates. Under statute, HAs are allocated a fee amount for each voucher that is under HAP contract as of the first day of each month. For further information on the proration and reconciliation of FY 22 Administrative Fees, see PIH 2022-14 “Implementation of the Federal Fiscal Year (FFY) 2022 Funding Provisions for the Housing Choice Voucher Program.”

 

Use of Funds, Renewals, and Reporting of HAP and Administrative Fees

These vouchers will roll into the HA’s renewals after the first year and must be reported monthly into the Voucher Management System (VMS) in the same manner as for the HA’s regular HCV program.

This funding must be used exclusively for the leasing of new admissions to the HCV program. These funds cannot be used for HCV renewals or for the accumulation of reserves. HUD states: “PHAs are required to track the initial leasing of these vouchers and spending to document that these funds were used for leasing new admissions.”

Questions concerning this notice should be directed by email to HUD at: NewHCVS@hud.gov

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