On September 29, 2023, HUD issued a notice that provides guidance to Public Housing Agencies (PHAs) and Multifamily Housing (MFH) owners regarding the implementation of the many program changes brought about by the Housing Opportunity Through Modernization Act of 2016 (HOTMA). The changes were made to sections 102 and 104 of HOTMA and the final rule, issued by HUD on February 14, 2023.
The deadline for implementation and full compliance has been moved up a year to January 1, 2025. Owners and PHAs who are ready for HOTMA can put the changes into effect as soon as January 1, 2024. Essentially this notice provides guidance to MFHs that is very similar to that first given PHAs in July.
HUD notes: “HUD understands that the system development timeframes for the Housing Information Portal (HIP) and Tenant Rental Assistance Certification System (TRACS) make full implementation and compliance with the final rule by the January 1, 2024, deadline unlikely. Additionally, because these HOTMA changes apply to all current participants and new admissions, implementation of the HOTMA final rule cannot be achieved immediately on a universal basis but rather is an ongoing process that will happen over the course of a year as routine program activities occur.”
Programs Affected by HOTMA
- Housing Choice Voucher (HCV)
- Public Housing
- Section 8 Moderate Rehabilitation (Mod Rehab)
- Section 8 Moderate Rehabilitation Single Room Occupancy (SRO)
- Section 8 Project-Based Rental Assistance (PBRA)
- Section 202/8
- Section 202/811 Capital Advance with Project Rental Assistance Contracts (202/811 PRAC)
- Non-insured 236 projects with Interest Reduction Payments (236 IRP)
- Section 811 Project Rental Assistance (811 PRA)
- Senior Preservation Rental Assistance Contracts (SPRAC)
Overview of the HOTMA changes
Sections 102 and 104 of HOTMA make sweeping changes to the United States Housing Act of 1937 (1937 Act), particularly those affecting income calculations and reviews. Section 102 changes requirements related to income reviews for Public Housing and Section 8 programs. Section 104 sets maximum asset limits for Public Housing and Section 8 applicants and participants.
What Owners/Agents and PHAs must do once their software is HOTMA-compliant
- Each PHA will establish a compliance date based on when the PHA’s software is able to submit to HIP. All transactions effective on the PHA’s compliance date or later will be processed using HOTMA policies.
- For example, a PHA with a May 1, 2024, compliance date will need to send Annual Reexamination packets reflecting the HOTMA changes in January 2024. The PHA must inform the family as to whether their income determination is being conducted under the pre-HOTMA regulations or the HOTMA final rule. PHAs must implement their revised ACOP and Administrative Plans.
Compliance date and required actions for MFH owners
- MFH Owners must update their Tenant Selection Plans and EIV policies and procedures to reflect HOTMA rules and discretionary policies by March 31, 2024..
- MFH Owners must make the revised Tenant Selection Plan publicly available by March 31, 2024
What Multifamily Owners must do once their software is HOTMA-compliant
- MFH Owners must provide tenants at least 60 days’ notice that their lease will be modified at the end of the lease term after the expiration of the 60 days’ notice. Once proper notice is given, MFH Owners must begin using the revised Model Leases at the expiration of a family’s lease term.
- MFH Owners must implement their revised Tenant Selection Plans and EIV policies and procedures.
- All tenant data submissions must comply with the HOTMA regulations. Before their first reexaminations under HOTMA, MFH Owners must inform families that their income determinations will be conducted per the HOTMA final rule.
How HUD will monitor MFH Owner compliance prior to January 1, 2025
Prior to January 1, 2025, MFH Owners will not be penalized for HOTMA-related tenant file errors during Management and Occupancy Reviews (MORs). Instead, the Contract Administrator will issue observations with corrective actions.
How HUD will monitor owner compliance on or after January 1, 2025
- Contractor Administrators will issue HOTMA-related findings during MORs MFH Owners must correct all HOTMA-related observations that were issued by Contract Administrators during 2024
- MFH Owners who fail to implement HOTMA may be found in default of their business agreements with HUD
Create a Plan to Keep ACOPs Updated
How a PHA handles over-income families and posting the new maximum income limits and alternative rents need to be added to their ACOP. This vital change to Public Housing policy affects many parts of PHA operations, including how to handle Rent Choice, Recertifications, Interim Recertifications, and much more. US Housing Consultants is now offering a web-based ACOP and Administrative Plan option, which includes updates to PHAs as HOMTA is implemented. We can keep you up to date on implementation and new HOTMA requirements and give you the tools to enjoy the transition. If you should have any questions about what needs to be included in the ACOP update, please contact us.
