National Housing Law Project Housing Law Bulletin

Last May, HUD published an interim rule/1/ establishing the framework for implementing the new "merged" voucher program adopted by Congress in the Quality Housing and Work Responsibility Act of 1998,/2/ and for resolving various issues raised by the conversion of certificate subsidies to the new vouchers. While HUD originally scheduled the interim rule to take effect on August 12, 1999, it later delayed the effective date to October 1, 1999, through a subsequent notice./3/ HUD announced the delay to provide more time for PHAs to prepare for implementation of the new voucher program and revise their software. Hence, the interim rule is now effective, and a final rule is expected by the end of October or early November of 1999.

The effect of this delay is that for those issues in which the former August 12, 1999 effective date served as a trigger for the applicability of new policies or duties, October 1, 1999 is now the new trigger date./4/

The following are some highlights of the changes now effective after October 1:

• New contracts are vouchers: PHAs can only enter into new assistance contracts (as distinct from renewals) under the voucher program and not under the certificate program.

• Payment Standards:

• PHAs can now set different payment standards within the 90-110 percent of Fair Market Rent (FMR) range within designated parts of an FMR area and/or for different bedroom sizes.

• Any voucher payment standards beneath 90 percent of the FMR (the old minimum was 80 percent of FMR) must be raised at least to 90 percent of FMR, unless HUD approves a lower standard.

• Tenant rent burden limit: There is a new maximum family contribution for new participants and movers: PHA’s cannot approve a unit whose rent would cause tenant rent and utility burden to exceed 40 percent of adjusted income.

• End of "shopping incentive": The "shopping incentive" that provided tenants with lower effective contributions toward rent if leasing a unit costing less than the payment standard has been eliminated.

• Conversion issues:

• Most tenants with prior certificate HAP contracts who stay in place are converted to the voucher program when their second regular reexamination after October 1, 1999 becomes effective, or upon any earlier conversion to a voucher HAP contract.

• Tenants with prior certificate HAP contracts who move get converted to the voucher program when the new contract is executed.

• Certificate holders who have not entered into HAP contracts prior to October 1, 1999 who lease up after the merger date are automatically converted to vouchers. Further, PHAs may issue a new voucher with a new search period to households that have been searching with certificates.

• Current voucher tenants are immediately subject to the new voucher rules, except that they continue to receive any benefit from the "shopping incentive" until the second annual recertification after merger.

• Expedited Inspections: PHAs with less than 1250 subsidies have 15 days to inspect, as do larger PHAs "to the extent practicable."

Significant changes contained in the final rule will be reviewed in a future Bulletin article.

Notes

1    The Interim Rule on Certificate & Voucher Merger, 64 Fed. Reg. 26632-26651 (May 14, 1999) (to be codified at 24 C.F.R. Part 982 (2000)).

2    Quality Housing and Work Responsibility Act, Pub. L. No. 105-276, Title V, 112 Stat. 2461, 2518 (Oct. 21, 1998), codified at various parts of 42 U.S.C. §§ 1437-13664.

3    Notice of Delayed Effective Date, 64 Fed. Reg. 43613 (Aug. 11, 1999).

4    Technically, throughout the interim rule, where there is a reference in the regulatory text to the August 12 date, October 1 should be substituted.