After extensive public comments and review, the Department of Housing and Urban Development (HUD) has unveiled its final rule for implementing the Housing Opportunity Through Modernization Act (HOTMA) today.
Signed into law in 2016, HOTMA makes numerous changes to the statutes governing HUD’s rental assistance programs, including Section 8, as well public housing, with the goal of streamlining administration and easing the burden on private owners and public housing authorities (PHAs).
The changes under HOTMA touch upon multiple areas, including standards for income determination, resident self-certification, and interim reexaminations.
“There are a number of changes here that are of a piece,” says Ethan Handelman, HUD deputy assistant secretary for multifamily housing. “It’s around streamlining and aligning the public housing and multifamily programs, so they will have implications for owners. They will also have implications for residents, overall making things like income determinations and asset tests easier to implement and simpler to do. It will also encourage asset building among residents, to make it easier for them to accumulate wealth and to fulfill the promise that affordable housing has always offered of giving people a platform upon which to build economically.”
When it comes to the calculation of income for residents, it’s been a long, complicated process. Officials say the new rules simplify the allowed deductions.
For instance, seniors and people with disabilities have been allowed to deduct a certain level of medical expenses from their income. The new rule helps raise the standard deduction for everyone but then also raises the threshold above which public housing and Section 8 residents can deduct additional medical expenses, according to Douglas Rice, special policy adviser at HUD. “It reduces the amount of paperwork and figuring out the medical deductions for those households,” he says.
One of the major benefits of HOTMA is that it aligns many of the rules for public housing and Section 8, adds Handelman. “If you’re in a public housing property next door to a Section 8 property, you are getting treated the same,” he says.
For residents, a large majority of the changes are positive, according to Rice. For instance, more of the increases in earned income that households may achieve during a year will be excluded from their rent determination for some period of time, he says. This enables tenants to keep more of those increased earnings in the short run and help build assets.
Residents will also be able to self-certify when their combined net family assets are $50,000 or less, eliminating a lot of paperwork for many households.
And, interim reexaminations would be triggered when a household’s adjusted income is estimated to increase by 10% or more.
It’s also notable that several of the improvements are going to be adjusted for inflation over time so that should reduce the need for future updates. The final rule still needs to be published in the Federal Register. The various components of HOTMA have different start times, with some of the key rules for determining tenant income and assets not going into effect until January 2024, which gives PHAs, HUD, and owners an opportunity to get up to speed and make changes to their IT systems, say officials.
As HUD leaders prepared the final rule, the agency received detailed comments across the board.
“A lot of this was working through not so much one hot button issue but a laundry list of issues that are salient to some people some of the time,” says Handelman.
One reason that it’s important to align the different regulations is that many PHAs operate more than traditional public housing. They also have units that have converted to Section 8 under the Rental Assistance Demonstration program, low-income housing tax credit developments, and other properties.
“It’s also because there is value in lowering the barriers to entry for doing affordable housing development,” Handelman says.
Read the final HOTMA rule.
