Housing Opportunity Through Modernization Act (HR 3700)
Housing Opportunity Through Modernization Act (HR 3700)
Overview: The Housing Opportunity Through Modernization Act (HOTMA) is a bipartisan bill which passed the House and Senate with unanimous support and was signed by the President on July 29th, 2016. Catholic Charities joined other housing advocacy organizations in supporting the bill.
Below is a summary of the key aspects of the bill. If you have questions, please contact Lucas Swanepoel, Senior Director of Government Affairs of Catholic Charities USA: Lswanepoel@catholiccharitiesusa.org
Section 8 Rental Assistance and Public Housing Reform
Inspections and Safety for Housing Choice Voucher Program:
- Section revises Public Housing Agencies’ (PHAs) requirements for inspecting dwellings and sets procedures for addressing defects when determine noncompliance or withholding assistance payments.
- Units are generally required to be inspected before occupancy unless, if in the previous 24 months, the property has been determined to meet housing quality and safety standards.
Compliance with Safety Standards:
- If dwelling unit is out of compliance with federal standards, the PHA has authorization to withhold assistance payments until the issues are addressed.
- Specifies the amount of time an owner has to correct a life-threatening (24 hours) or non-life-threatening (30 days) fault before payments are withheld
- Owners are prohibited from terminating tenancy because of the withholding of subsidy payments; however, the tenant is allowed to terminate the tenancy by notifying the owner.
- If damage is caused by the tenant, other than regular wear and tear, the PHA is authorized to waive the withholding of assistance payments and the requirement that the fault be addressed. This measure does not exonerate the tenant from liability for the damage under applicable laws.
NOTE: Both the provisions regarding inspections and the consequences of noncompliance with safety standards take effect after the Department of Housing and Urban Development (HUD) issues the implementing regulations.
- Changes law by allowing PHAs to project-base up to 20 percent of their authorized number of vouchers, rather than the current law allowance of 20 percent of budget authority. Allows an additional 10 percent of vouchers to be used for project-based assistance in housing for families with veterans, housing providing supportive services to persons with disabilities or elderly persons or housing located in areas where vouchers are hard to use
- Increases length of PHA contract with a private owner from 15 years to 20 years
- Changes current limit on percentage of units that may be project-based from 25 percent of units in project to the greater of 25 units or 25 percent of units in a project. Limit waived if units are used exclusively for elderly households eligible for supportive services and can be increased up to 40 percent of units if in an area where vouchers are hard to use or poverty rate is 20 percent or less.
- Allows owners of PHA to request rent adjustment and modifies the tenant selection process to give preferences to families who qualify for voluntary services
- Eliminates current limitation on amount of funding that can be used for capital improvements – currently 20 percent
- Allows “HUD-Veteran Veterans Affairs Supportive Housing” and “Family Unification Program” vouchers to be project-based under the same policies and procedures as general purpose vouchers
- Grandfathers-in projects where the percentage of units receiving subsidies already exceeds the maximum
- Authorizes HUD to establish additional monitoring and oversight requirements for projects where more than 40 percent of the units are receiving housing subsidies
- The bill maintains the determination of the family income for initial occupancy as the estimated family income for the upcoming year. For subsequent annual reviews, family income is the income for the preceding year. This measure authorizes a PHA or private owner to determine a family's income based on income determinations made by other means-tested federal public assistance programs such as TANF or SNAP. HUD must consult with other federal agencies to enable PHAs and private owners to have access to these income determinations.
- Exclusions from income calculation:
- Deferred disability benefits from the VA;
- Income earned by a full-time student;
- Scholarship awards and income from educational savings accounts; and
- Imputed return on assets under $50,000, adjusted annually for inflation (the "imputed" return is a HUD-determined interest rate on assets)
- Allows families to request an income review due to a reduction in adjusted income only if it has decreased by 10 percent or more. This measure authorizes HUD to establish a lower percentage change or to permit PHAs to establish a lower percentage change.
- PHAs are required to conduct income reviews if a family's adjusted income increases by 10 percent or more, unless the change is due only to an earned income increase and not a decrease in medical or child care expenses. PHAs are not permitted to conduct an income review due to an increase in adjusted income in the last three months of an income certification period.
- The bill eliminates the prohibition in current law against increasing the rent charged to a family within 12 months of employment. It also eliminates the option for families to receive rent subsidy as a deposit into a savings account that can only be used for purchasing a home, paying education costs, moving out of assisted living, or expenses that would promote self-sufficiency and are authorized by the PHA.
Adjusted Income Deductions for elderly and disabled family members and dependents
- The deduction allowed for any elderly or disabled families increases from $400 to $525 per year but maintains the current $480 deduction for each dependent in the home. Both deductions however will now be adjusted for inflation in future years.
- Maintains the deduction of reasonable child care expenses that do not exceed 5 percent of annual family income
Limitation of Eligibility Based on Assets
- The bill establishes limitations on asset limit of $100,000, adjusted annually for inflation, for a family to be eligible for housing assistance:
- Individuals that own real property suitable as a residence are not eligible for housing assistance unless the person is a victim of domestic violence or the property is for sale.
- The bill establishes limitations on tenancy for families whose income exceeds 120 percent of the median income for the area, with adjustments for smaller or larger families.
- Family living in public housing with income exceeding income limit is required to pay PHA monthly rent equal to or greater than the fair market value and PHA may terminate family’s tenancy within six months of determination.
- PHAs are required to report annually on number of over-income families and number of families on PHA waiting lists.
Fair Market Rents
- Eliminates requirement that proposed fair market rent (FMR) be published for comment but requires that FMRs be published at least 30 days before they go into effect
- Maintains 90-110 percent FMR discretionary range for payments but allows PHA to increase payment standard to 120 percent where necessary to accommodate individuals with disability
- PHA may establish payment standards greater than 120 percent of FMR with HUD approval.
- PHAs are not required to lower rent as a result of a reduction in fair market rental values if the same family continues to live in a unit and was receiving assistance when the fair market rental was reduced.
Funding for Public Housing Funding Flexibility
- Allows PHA to establish replacement reserve to fund capital activities included in in five-year action plan. PHAs may deposit funds from the capital fund into the reserve and hold them until expended on major capital project (some restrictions apply).
- Allows up to 20 percent of operating funds to be used for capital purposes provided the use is outlined in PHA’s annual plan
Family Unification Program
- Extends housing assistance program for children placed in custody of public child welfare agency because of lack of adequate housing from 21 years old to 24 years old
- Extends from 18 to 36 months the maximum amount of time that support will be provided under the program
- Allows the program to begin 90 days before the participants leave foster care
- HUD is required within 180 days of enactment to improve coordination between PHA and public child welfare agencies on implementation of this provision.
Other Relevant Housing Provisions
- Veterans: Establishes a Special Assistant for Veterans Affairs with HUD responsible for ensuring veterans fair access to HUD housing and homeless assistance programs and serving as a HUD liaison with the VA
- Continuum of Care: Requires HUD, within 90 days of enactment, to define the term "geographic area" for the Continuum of Care program
- Emergency Solutions Grants: Expands eligibility for Emergency Solutions sub-grants to PHAs and local redevelopment authorities
- Disaster Housing — Requires income verification for the Disaster Housing Assistance program in order to prevent fraud and abuse
- Energy Efficiency — Clarifies that HUD cannot require energy efficiency standards other than those applicable under the Cranston-Gonzalez National Affordable Housing Act when making a grant to develop housing under the Self-Help Homeownership Opportunity Program
- Rural Housing — In accordance with standards that the Agriculture Department establishes, allows the Secretary to delegate their authority to approve and execute binding Rural Housing Service loan guarantees to certain preferred lenders
- Migrants to Guam from associated States: Requires U.S. citizens and nationals be given preference for assistance over lawfully resident migrants from Marshall Islands, Micronesia and Palau