HUD PIH Publishes Final HOTMA-Related HCV and PBV Rule

HUD’s Office of Public and Indian Housing (PIH) published a final rule in the Federal Register on May 7 implementing provisions of the “Housing Opportunity Through Modernization Act of 2016” (HOTMA) affecting the Housing Choice Voucher (HCV) tenant-based program and the Project-Based Voucher (PBV) program. The sprawling final regulations also include non-HOTMA-related provisions. Many of the HOTMA provisions were implemented by Federal Register notices (for example, on January 18, 2017) and PIH Notices (for example, Notice PIH 2017-21). PIH issued a proposed rule on October 8, 2020 (see Memo, 10/13/20).

The final rule codifies HOTMA provisions pertaining to non-life-threatening Housing Quality Standards (HQS) deficiencies and alternative inspections, revisions to the definition of life-threatening deficiencies, and HQS enforcement.

The final rule has provisions implementing the cap on the number of HCVs that a public housing agency (PHA) may project base. It also lists federal programs at which PBV units are not subject to the PBV project cap. The rule addresses how many units in a project may be project-based. Other PBV-related provisions address owner-maintained waiting lists and allowing an owner to give preference to households qualifying for voluntary services, including disability-specific services offered in conjunction with assisted units. The final rule also includes many provisions pertaining to PHA administration of a PBV program.

For manufactured homes, the final rule covers calculating “rent” to include monthly payments a household makes toward purchasing a manufactured home; it also addresses the PHA option to make voucher housing assistance payments directly to households instead of to an owner for manufactured home space rentals.

As NLIHC evaluates the massive final rule, key areas most important to residents and advocates will be highlighted in future editions of Memo. This article presents provisions of the final rule pertaining to the PBV program cap.

The final rule mostly follows the HOTMA statutory text and the January 2017 Federal Register implementation notice, adding a couple of provisions proposed in 2020 as well as a couple of provisions not in the proposed rule.

As per the HOTMA statute:

  • Basically, no more than 20% of a PHA’s authorized voucher units may be project-based. (Many PBV units may be excluded when calculating this 20% project cap (see below)).
  • However, a PHA may project base an additional 10% of its authorized voucher units, provided the additional units meet one of the following targeted populations or locations (the first four directly reflect the HOTMA statute while the last two are added by the final rule):
    • The units are specifically made available to individuals and families that meet the “McKinney-Vento Act” definition of homeless.
    • The units are specifically made available to a veteran.
    • The units provide supportive housing to people with disabilities or to elderly people.
    • The units are located in an area where vouchers are difficult to use, namely:
      • A census tract with a poverty rate of 20% or less, or
      • A ZIP code where the rental vacancy rate is less than 4%, or
      • A ZIP code where 90% of the Small Area Fair Market Rent (SAFMR) is more than 110% of the metropolitan area FMR or county FMR.

(The two ZIP code options were not specified in the statute but were in the proposed rule.)

  • Units occupied by youth eligible for assistance through the Family Unification Program’s Foster Youth to Independence program (FUP/FYI).
  • Units replace, on a different site, units from types of properties “excluded” from the program caps (see below). The purpose of this option is to help facilitate siting properties in order to deconcentrate poverty and to place units in higher opportunity areas.

The HOTMA statute excludes from the program caps PBV units attached to properties previously subject to federally required rent restrictions or that received other HUD project-based assistance. Units are “excluded” from the program caps (the 20% basic cap and the 10% targeted cap) if in the five years prior to requesting PBVs:

  • A property’s units previously received assistance from various HUD programs, including: public housing, privately owned properties assisted by the Section 8 Project-Based Rental Assistance (PBRA) program, Section 202 Supportive Housing for the Elderly, and Section 811 Supportive Housing for Persons with Disabilities, or
  • A property’s units were previously subject to a federally required rent restriction, including: the Low-Income Housing Tax Credit (LIHTC), Section 515 Rural Rental Housing (administered by the Rural Housing Service of the U.S. Department of Agriculture), Section 202, and Section 811. (The final rule added LIHTC and Section 515 to the list previously included in the January 18, 2017, Federal Register notice and the 2020 proposed rule.)

The exclusion provisions mean that a PHA can project base more HCVs than the basic 20% plus 10% targeted caps, project basing 50% or more of its authorized vouchers. The preamble to the final rule states that the use of PBV assistance can be an effective preservation tool that can prevent the loss of affordable housing units in communities. However, PIH also states in the preamble and in the final rule text that a PHA should consider its ability to meet the variety of needs for tenant-based vouchers as well as project-based vouchers. In particular, the final rule concerns a PHA’s ability to meet its statutory obligation to provide a tenant-based voucher to a PBV household that chooses to move from a PBV unit after living in it for at least one year. PIH is also concerned about households on a PHA’s HCV waiting list if too many tenant-based vouchers are project-based. To that end, the final rule requires a PHA to conduct an analysis of the impact of project basing 50% or more of its authorized voucher units.

Rental Assistance Demonstration (RAD) and HUD-Veterans Affairs Supportive Housing (VASH) units are not mentioned in the final rule. The proposed rule explicitly excluded RAD and VASH from the program cap in the proposed rule, but PIH removed the explicit reference in the final rule. The preamble states that the RAD notice and VASH explicitly exclude them so there is no need to refer to them in the final rule. 

The official Federal Register version of the final rule is at:

An easier to read version of the final rule is at:

PIH’s HOTMA Resources page is at:

Information about the PBV program prior to publication of the final rule is on page 4-11 of NLIHC’s 2024 Advocates’ Guide.