Housing Opportunity Through Modernization Act of 2016-Housing Choice Voucher (HCV) and Project-Based Voucher Implementation; Additional Streamlining Changes; Technical Amendments

<RULE> DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT <CFR>24 CFR Parts 5, 888, 903, 982, 983, and 985</CFR> <DEPDOC>[Docket No. FR-6092-F-05]</DEPDOC> <RIN>RIN 2577-AD06</RIN> <SUBJECT>Housing Opportunity Through Modernization Act of 2016—Housing Choice Voucher (HCV) and Project-Based Voucher Implementation; Additional Streamlining Changes; Technical Amendments</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Office of the Assistant Secretary for Public and Indian Housing, HUD. <HD SOURCE="HED">ACTION:</HD> Final rule; technical amendments. <SUM> <HD SOURCE="HED">SUMMARY:</HD> In reviewing HUD's May 7, 2024, final rule Housing Opportunity Through Modernization Act of 2016-Housing Choice Voucher (HCV) and Project-Based Voucher Implementation; Additional Streamlining Changes, HUD discovered minor errors and provisions that would benefit from clarification. This rule corrects those technical errors, updates references, and makes clarifying amendments. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This rule is effective January 7, 2026. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> For information regarding this correction, contact Ryan Jones, Director, Housing Voucher Management and Operations Division, Department of Housing and Urban Development, 451 7th Street SW, Washington, DC 20011; telephone number 202-708-1112 (this is not a toll-free number); email <E T="03">HOTMAVoucher@hud.gov.</E> HUD welcomes and is prepared to receive calls from individuals who are deaf or hard of hearing, as well as individuals with speech and communication disabilities. To learn more about how to make an accessible telephone call, please visit <E T="03">https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> On May 7, 2024, HUD published a final rule amending HUD's regulations to implement changes to the Housing Choice Voucher (HCV) and Project-Based Voucher (PBV) programs made by the Housing Opportunity Through Modernization Act of 2016 (HOTMA) (89 FR 38224) (FR Doc. 2024-08601) (HOTMA Voucher Final Rule). The HOTMA Voucher Final Rule intended to reduce the burden on public housing agencies, by either modifying requirements or simplifying and clarifying existing regulatory language. On May 28, 2024, HUD published a Correction addressing five errors made in the HOTMA Voucher Final Rule. In reviewing the HOTMA Voucher Final Rule and the Correction, HUD identified additional inadvertent errors as well as provisions with unclear language. This rule corrects the inadvertent errors and clarifies regulatory requirements. <HD SOURCE="HD1">II. Changes Made in This Final Rule</HD> The following is an overview of the changes made to 24 CFR parts 5, 888, 903, 982, 983, and 985 in this final rule. <HD SOURCE="HD2">§ 5.100 and § 5.504 Definitions of Responsible Entity</HD> This final rule revises the definition of “Responsible entity” in part 5, subparts A and E. In the HOTMA Voucher Final Rule, HUD intended to amend the definitions to remove reference to the certificate program only. However, HUD inadvertently added a reference to the Section 235 Program in § 5.100 and removed references to several programs in § 5.504. This final rule corrects the definitions. <HD SOURCE="HD2">§ 888.113 Fair Market Rents for Existing Housing: Methodology</HD> The HOTMA Voucher Final Rule revised § 888.113(h)(1) to clarify that the PHA and owner may mutually agree to apply Small Area fair market rents (Small Area FMRs) to a PBV project where the project was selected before “either or both” the Small Area FMR designation and the PHA administrative policy. Prior to the HOTMA Voucher Final Rule, the regulatory text only stated “both” which inadvertently created confusion with respect to projects selected between the two events (the Small Area FMR designation and the PHA administrative policy extending Small Area FMRs to future PBV projects). HUD made the technical correction to paragraph (h)(1) to clarify that if the PHA is applying the Small Area FMRs to future PBV projects, the PHA may also establish a policy to extend the use of Small Area FMRs to current PBV projects, including those projects selected after the Small Area FMR designation but prior to the effective date of the PHA administrative policy, if the owner is willing to do so. HUD has subsequently realized that § 888.113(h)(3) and (4) also require technical corrections. The correction in paragraph (h)(3)(ii) reflects the changes made in the HOTMA Voucher Final Rule. A PHA administering an HCV program in either a metropolitan area not subject to the application of Small Area FMRs or in a non-metropolitan area for which HUD publishes Small Area FMRs may now choose to use Small Area FMRs after notification to HUD; HUD is no longer required to approve such PHA requests to voluntarily use Small Area FMRs, per § 888.113(c)(3). The correction in § 888.113(h)(4) clarifies that the term “effective date” in regard to the PHA administrative policy means the effective date of the policy in the PHA Administrative Plan that has been formally adopted by the PHA Board of Commissioners or other authorized PHA officials in accordance with 24 CFR 982.54(a). The current regulatory language has created confusion because it does not contemplate a situation where the PHA Board adopts the PBV Small Area FMR policy but provides that the policy does not go into effect until a specific date in the future. For example, the Board adopts the revision to the Administrative Plan on September 7, 2025, but provides in the revised Administrative Plan that the effective date of the new PBV Small Area FMR policy is January 1, 2026. HUD is concerned the existing text could be misconstrued to mean HUD is prohibiting the Board from establishing a future effective date beyond the actual date upon which Board formally adopted the proposed PBV Small Area FMR revision to the Administrative Plan, which was not the intent and which is clarified in this final rule. <HD SOURCE="HD2">§ 903.7 What information must a PHA provide in the Annual Plan?</HD> In this final rule, HUD is simplifying the language of § 903.7(b)(3) by putting a sentence into list format. <HD SOURCE="HD2">§ 982.205 Waiting List: Different Programs</HD> Section 982.205(a)(2)(i) and (ii) are amended to clarify that the reference to the PBV waiting list includes any owner-maintained waiting list. This clarifying language was added throughout the PBV regulations in the HOTMA Voucher Final Rule but was inadvertently left out of the HCV regulations. The correction does not add any new requirements. <SU>1</SU> <FTREF/> <FTNT> <SU>1</SU>   <E T="03">See</E> 983.251(c)(7)(ix) “All HCV waiting list administration requirements that apply to the PBV program (24 CFR part 982, subpart E, other than 24 CFR 982.201(e), 982.202(b)(2), and 982.204(d)) apply to owner-maintained waiting lists.” </FTNT> <HD SOURCE="HD2">§ 982.405 and § 982.406 Consistent Inclusion of Tenant-Based Lease Protection Provision and Clarifying Timing</HD> 24 CFR 982.404(d) was added in the HOTMA Voucher Final Rule to explain remedies for Housing Quality Standards (HQS) deficiencies identified during inspections other than the initial inspection, because initial inspections have separate requirements; generally, the unit must have no deficiencies before the family can move to and be assisted in the unit, but the PHA may use the alternative inspection option, the non-life-threatening (NLT) deficiencies option, or both (24 CFR 982.405(j), 982.406(e)-(f)) to enable the assisted tenancy to begin earlier. In creating this regulatory structure, HUD did not include a provision mirroring 24 CFR 982.404(d)(3), respecting families' protection from and options for lease termination during a period of withholding or abatement, in each of the paragraphs governing the inspection flexibilities for tenant-based HCV. The inspection flexibilities are governed by parallel provisions in the PBV program, and all of those PBV provisions (24 CFR 983.103(c)(2)(vi), (c)(3)(viii), and (c)(4)(vi)) do contain a provision mirroring 24 CFR 982.404(d)(3). The omission from 24 CFR 982.405(j), 982.406(e)-(f) is corrected in this final rule by the addition of new paragraphs at §§ 982.405(j)(7), 982.406(e)(7), and 982.406(f)(7). The new paragraphs do not add new requirements. They mirror the existing § 982.404(d)(3) and are included in §§ 982.405-406 for clarity and consistency. Additionally, HUD is clarifying the description of the PHA policy on termination after a prolonged period of deficiencies in §§ 982.405(j)(6)(ii), 982.406(e)(6)(ii), and 982.406(f)(6)(ii) by changing “The date by which” to “The number of days after which”. This language mirrors the project-based voucher regulations. HUD believes the new language is clearer and also avoids implying by differing language that the PHA is required to enact different policies depending on the type of inspection flexibility and program (tenant-based vs. project-based). <HD SOURCE="HD2">§ 983.3 PBV Definitions</HD> In the Final HOTMA Voucher Rule, HUD made changes to the definitions of “independent entity” in § 982.4 but failed to make the mirroring changes to § 983.3. The definitions should be the same. The § 983.3 definitions should read: “ <E T="03">Independent entity.</E> See 24 CFR 982.4”. <HD SOURCE="HD2">§ 983.103 Inspecting Units</HD> In the Final HOTMA Voucher Rule, HUD established provisions in § 983.103(c) for initial inspections of existing housing using the NLT option, the alternative inspections option, and the use of both of the foregoing options together. In doing so, each option is described separately in paragraphs (c)(2), (c)(3), and (c)(4), with each laying out the process to execute the HAP contract, inspect and correct deficienc ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 41k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━