HUD Extends HOTMA Deadline for CPD Programs

On December 8, 2023, HUD issued a notice extending the compliance date for Community Planning and Development Programs (CPD) to implement rules delineated in “Housing Opportunity Through Modernization Act of 2016: Implementation of Section 102, 103, and 104” until January 1, 2025. The notice, published in the National Register, can be found here. The HOTMA extension applies to HOME Investment Partnerships Program (HOME), HOME-American Rescue Plan program, Housing Trust Fund (HTF), Housing Opportunities for Persons with AIDS (HOPWA), Community Development Block Grant Program (CDBG), Emergency Solution Grants (ESG), Continuum of Care (CoC) programs, and CPD programs funded through competitive process.

Why is HUD Delaying HOTMA for CPD Programs?

HUD says it is taking this action “to allow jurisdictions, participants, and grantees additional time to incorporate HUD’s income and asset requirements into their own programs and the flexibility to transition implementing HOTMA requirements under their own timelines.” Essentially this means that HUD is allowing grantees to set their own compliance date, it may be no earlier than January 1, 2024, and no later than January 1, 2025. On September 29, 2023, HUD’s Office of Public and Indian Housing and Office of Housing announced that HUD would allow for a later compliance date than the effective date of the HOTMA final rule. Through the HOTMA Notice, HUD allowed PHAs the flexibility to establish their own compliance date for sections 102 and 104 of HOTMA as early as January 1, 2024, and no later than January 1, 2025. HUD decided that CPD grantees receiving assistance through CPD programs must have the same flexibility as PHAs.

HUD’s advice to CPD Grantees

To fully implement and comply with the HOTMA, CPD program administrators need to develop and/or update program guidelines, including policies, procedures, and internal systems, and conduct software updates to incorporate the new income and asset requirements. HUD says it understands that until the Department has provided the guidance and performed the software updates necessary for CPD grantees to implement the HOTMA final rule, CPD grantees may not be able to comply with all requirements, hence the extension. CPD grantees must do the following, as applicable, to implement the HOTMA final rule:

• Conduct any public process necessary to comply with the consolidated plan requirements.
• Update program guidelines, policies and procedures, templates, income and asset forms, and applications.
• Conduct internal and external system and software updates.
• Update income and asset regulatory citations and requirements in written agreement templates.
• Require owners to send notices to tenants of any expected changes to leases or rents required by the HOTMA final rule.
• Train staff, sub-recipients, and contractors on the new income requirements and perform outreach to housing partners (e.g., project owners) to implement the HOTMA final rule.

HUD plans to help CPDs reach HOTMA compliance, it will issue supplemental guidance to HOME participating jurisdictions and HTF grantees, including guidance on obtaining income eligibility determinations made by PHAs, owners, and providers of HUD rental assistance or subsidy programs. HUD also intends to publish, through a Federal Register notice, guidance on implementing HOTMA standards applicable to the HOPWA program. Properties that have layered funding combining CPD Programs and Tax Credits should look for guidance from their state housing finance authority and CPD Participating Jurisdiction (PJ). In some scenarios, PJs and other state agencies may align with HOTMA implementation. However, nothing in this notice clarifies any specific implementation plan. It is possible that there may be states and jurisdictions where implementation plans differ depending on the funding program.