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HUD Revises 2024 HAP Shortfall Funding Requirements

On June 24, HUD published Notice PIH 2024-21 (HA), “HCV 2024 HAP Funding – Revised HAP Set-aside Shortfall Funding Requirements.” This notice supersedes Appendix E of PIH Notice 2024-16 on 2024 HAP funding, issued only a month earlier. Despite PHADA’s calls for caution by HUD in continuing to push lease-up over other considerations, HUD is now backtracking. As the notice states:

Due to 2024 shortfall concerns, HUD must take several steps to mitigate the risk that funding resources may not be available to prevent terminations in CY 2024. This includes delaying the awarding of funding under the other HAP set-aside categories until later in the year, revising the exceptions under which a shortfall PHA may continue to issue vouchers, and establishing other additional eligibility conditions for shortfall funding. Further actions may also be warranted.

Both HUD and HAs are impacted by congressional delays in appropriations, shortening timeframes to assess and respond to changing costs and replacing projected with actual funding. PHADA is not surprised by this action, as the trend of rental cost increases outpacing funding is not new, and such action was surely only a matter of time. Uncertain FY 25 budgets under strict spending caps create a risk of future funding shortfalls.

The administration’s proposed budget would further exacerbate these risks in their proposal to fund all 2025 renewals in part by recapturing nearly one billion dollars from existing HA HAP reserves, as previously reported in the April 3, 2024, Advocate. Reducing reserves increases future shortfall risks. Urge your members of Congress to fully fund renewals and protect reserves against future uncertainty.


HUD’s Shortfall Prevention Team (SPT) to Manage Process

HUD’s Shortfall Prevention Team (SPT) will identify projected shortfalls using the two-year tool and will notify agencies of that determination. At the time of notification, agencies are required to:

  • Suspend issuance of vouchers (with some limited exceptions).
  • Suspend absorption of port-in vouchers.
  • Take other cost-saving measures identified by the SPT.
  • Apply for Shortfall funding “in accordance with the timeframe specified by the SPT.”

Housing Authorities with questions or concerns about shortfall eligibility and funding calculations can contact the SPT at: shortfallinquiries@hud.gov.


Other Notice Provisions

In addition to detailing exceptions when vouchers can be issued and other provisions requiring following the directives of the SPT, the notice includes several additional provisions, including:

  • Statements that Shortfall Funding will be prioritized over other set-aside funding categories.
  • Awards of shortfall and set-aside funding will be delayed until later in the year when shortfall needs are better known.
  • Reviews the application process, emphasizing that applicants must be working with the SPT at time of application and must have received SPT confirmation of the funding shortfall.
  • Provides detailed explanations of the Shortfall and Funding Shortfall Calculations.

Members with questions about calculation and determination of shortfall can contact the SPT at: shorfallinquiries@hud.gov, their local field office, or financial management division representative.

PHADA will continue to monitor HUD actions regarding budgets, shortfall, and other administrative and funding issues and keep members apprised of any further developments. Member feedback on this, as on all issues, is welcomed to individual staff or to: policy@phada.org.

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