[Federal Register Volume 82, Number 13 (Monday, January 23, 2017)]
[Notices]
[Pages 8056-8080]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-01310]



[[Page 8055]]

Vol. 82

Monday,

No. 13

January 23, 2017

Part V





Department of Housing and Urban Development





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Operations Notice for the Expansion of the Moving To Work Demonstration 
Program Solicitation of Comment; Notice

  Federal Register / Vol. 82 , No. 13 / Monday, January 23, 2017 / 
Notices  

[[Page 8056]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5994-N-01]


Operations Notice for the Expansion of the Moving To Work 
Demonstration Program Solicitation of Comment

AGENCY: Office of Public and Indian Housing, HUD.

ACTION: Notice; solicitation of comment.

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SUMMARY: The Public Housing/Section 8 Moving to Work (MTW) 
demonstration program was first established under Section 204 of the 
Omnibus Consolidated Rescissions and Appropriations Act of 1996 to 
provide statutory and regulatory flexibility to participating public 
housing agencies (PHAs) under three statutory objectives. Those three 
statutory objectives are: To reduce cost and achieve greater cost 
effectiveness in federal expenditures; to give incentives to families 
with children where the head of household is working, is seeking work, 
or is preparing for work by participating in job training, educational 
programs, or programs that assist people to obtain employment and 
become economically self-sufficient; and to increase housing choices 
for eligible low-income families.
    Section 239 of the Fiscal Year 2016 Appropriations Act, Public Law 
114-113 (2016 MTW Expansion Statute), signed by the President in 
December of 2015, authorizes HUD to expand the MTW demonstration 
program from the current level of 39 PHAs to an additional 100 PHAs 
over a period of seven years. In this notice, HUD seeks public comment 
on the draft Operations Notice for the Expansion of the MTW 
demonstration program (Operations Notice). The Operations Notice 
establishes requirements for the implementation and continued 
operations of the MTW demonstration program pursuant to the 2016 MTW 
Expansion Statute. HUD seeks public comment on all aspects of the 
Operations Notice and on specific areas for comment identified 
throughout this notice. HUD also seeks comment on the topic of 
regionalization in the MTW demonstration, which is discussed in Section 
9 of the Operations Notice. Appendix C of this notice contains a 
listing of all of the questions in which HUD seeks public comment.

DATES: Comment Due Date: March 24, 2017.

ADDRESSES: Interested persons are invited to submit comments regarding 
this notice to the Regulations Division, Office of General Counsel, 
Department of Housing and Urban Development, 451 7th Street SW., Room 
10276, Washington, DC 20410-0500. Communications must refer to the 
above docket number and title.
    Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
www.regulations.gov. HUD strongly encourages commenters to submit 
comments electronically. Electronic submission of comments allows the 
commenter maximum time to prepare and submit a comment, ensures timely 
receipt by HUD, and enables HUD to make them immediately available to 
the public. Comments submitted electronically through the 
www.regulations.gov Web site can be viewed by other commenters and 
interested members of the public. Commenters should follow the 
instructions provided on that site to submit comments electronically.

    Note:  To receive consideration as public comments, comments 
must be submitted through one of the two methods specified above. 
Again, all submissions must refer to the docket number and title of 
the notice.

    No Facsimile Comments. Facsimile (fax) comments are not acceptable.
    Public Inspection of Public Comments. All properly submitted 
comments and communications submitted to HUD will be available for 
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the 
above address. Due to security measures at the HUD Headquarters 
building, an appointment to review the public comments must be 
scheduled in advance by calling the Regulations Division at 202-708-
3055 (this is not a toll-free number). Individuals with speech or 
hearing impairments may access this number via TTY by calling the 
Federal Relay Service at 1-800-877-8339 (this is a toll-free number). 
Copies of all comments submitted are available for inspection and 
downloading at www.regulations.gov.

FOR FURTHER INFORMATION CONTACT:  Marianne Nazzaro, Office of Public 
and Indian Housing, Department of Housing and Urban Development, 451 
7th Street SW., Room 4130, Washington, DC 20410; email address [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

MTW Demonstration Program

    The MTW demonstration program was first established under Section 
204 of Title II of section 101(e) of the Omnibus Consolidated 
Rescissions and Appropriations Act of 1996, Public Law 104-134, 110 
Stat. 1321-281; 42 U.S.C. 1437f note (1996 MTW Statute) \1\ to provide 
statutory and regulatory flexibility \2\ to participating PHAs under 
three statutory objectives. Those three statutory objectives are to:
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    \1\ PHAs currently operating an MTW demonstration program 
include PHAs with an active MTW agreement as of December 15, 2015. 
PHAs currently operating an MTW program do not include PHAs that 
previously participated in the MTW demonstration and later left the 
demonstration.
    \2\ The MTW demonstration program may only provide certain 
flexibilities under the 1937 Act. For more information on the 
history of the MTW demonstration program, please go to: www.hud.gov/mtw.
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     Reduce cost and achieve greater cost effectiveness in 
federal expenditures;
     give incentives to families with children where the head 
of household is working; is seeking work; or is preparing for work by 
participating in job training, educational programs, or programs that 
assist people to obtain employment and become economically self-
sufficient; and
     increase housing choices for eligible low-income families.
    To achieve these objectives, PHAs selected for participation in the 
MTW demonstration are given exemptions from many existing public 
housing and voucher rules and offered more flexibility with how they 
use their Federal funds. MTW agencies use the opportunities presented 
by MTW to better address local housing needs. Learning from the 
experience of MTW agencies, HUD develops new housing policy 
recommendations that can positively impact assisted housing delivery 
for all PHAs nationwide.
    In addition to statutory and regulatory relief,\3\ MTW agencies 
have the flexibility to apply fungibility between public housing 
operating, public housing capital, and Housing Choice Voucher (HCV) 
assistance into an agency-wide funding source referred to as the ``MTW 
Block Grant.'' \4\ Use of the MTW Block Grant as a source of providing 
funding for eligible MTW activities across the three programs does not 
negate the need to track the funding to its original source.
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    \3\ For more information about the MTW demonstration program and 
the specific programs of current MTW agencies, please refer to the 
MTW Web site at: http://www.hud.gov/mtw.
    \4\ Funds awarded under Sections 8(o), 9(d), and 9(e) of the 
1937 Act are eligible for inclusion in the MTW Block Grant, with the 
exception of funds provided for specific non-MTW HCV sub-programs.
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    Throughout participation in the MTW demonstration program, all MTW 
agencies must continue to meet five statutory requirements established 
under the 1996 MTW Statute. These five statutory requirements are:

[[Page 8057]]

    (1) To ensure at least 75 percent of families assisted are very 
low-income as defined in Section 3(b)(2) of the U.S. Housing Act of 
1937 (the 1937 Act);
    (2) to establish a reasonable rent policy that is designed to 
encourage employment and self-sufficiency;
    (3) to continue to assist substantially the same total number of 
eligible low-income families as would have been served had funds not 
been combined; \5\
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    \5\ HUD's verification method detailed in Section 6(c)(i) of 
this notice.
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    (4) to maintain a comparable mix of families (by family size) as 
would have been provided had the funds not been used under the MTW 
demonstration program; and
    (5) to ensure housing assisted under the MTW demonstration program 
meets housing quality standards established or approved by the 
Secretary.
    There are currently 39 PHAs \6\ participating in the MTW 
demonstration program. The administrative structure for these 39 PHAs 
is outlined in the Standard MTW Agreement, a contract between each 
current MTW PHA and HUD. The 2016 MTW Expansion Statute extended the 
term of the Standard MTW Agreement through each of the current MTW 
PHA's 2028 fiscal year.
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    \6\ The 39 PHAs are: Alaska Housing Finance Corporation; Atlanta 
Housing Authority; Housing Authority of the City of Baltimore; 
Boulder Housing Partners; Cambridge Housing Authority; Housing 
Authority of Champaign County; Charlotte Housing Authority; Chicago 
Housing Authority; Housing Authority of Columbus, Georgia; District 
of Columbia Housing Authority; Delaware State Housing Authority; 
Fairfax County Redevelopment and Housing Authority; Holyoke Housing 
Authority; Keene Housing; King County Housing Authority; Lawrence-
Douglas County Housing Authority; Massachusetts Department of 
Housing and Community Development; Minneapolis Public Housing 
Authority; Housing Authority of the City of New Haven; Oakland 
Housing Authority; Orlando Housing Authority; Philadelphia Housing 
Authority; Housing Authority of the City of Pittsburgh; Portage 
Metropolitan Housing Authority; Home Forward (Portland, OR); Housing 
Authority of the City of Reno; San Antonio Housing Authority; 
Housing Authority of the County of San Bernardino; San Diego Housing 
Commission; Housing Authority of the County of San Mateo; Housing 
Authority of the County of Santa Clara/City of San Jose; Seattle 
Housing Authority; Tacoma Housing Authority; Tulare County Housing 
Authority; and Vancouver Housing Authority.
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2016 Expansion to the MTW Demonstration Program

    As directed by the 2016 MTW Expansion Statute, HUD is authorized to 
expand the MTW demonstration program from the current level of 39 PHAs 
to an additional 100 PHAs over a period of seven years. In expanding 
the MTW demonstration, HUD intends to build on the successes and 
lessons from the demonstration thus far. The vision for the MTW 
expansion is to learn from MTW interventions in order to improve the 
delivery of federally assisted housing and promote self-sufficiency for 
low-income families across the nation. Through the expansion, HUD will 
extend flexibility to a broader range of PHAs both in terms of size and 
geographic diversity and will balance the flexibility inherent in MTW 
with the need for measurement and evaluation at the outset.
    HUD will select the additional 100 PHAs in cohorts, with 
applications for each cohort to be sought via PIH Notice.\7\ For each 
cohort of agencies selected, the 2016 MTW Expansion Statute requires 
HUD to direct all the agencies in the cohort to implement one specific 
policy change, which HUD will rigorously evaluate. PHAs may implement 
additional policy changes. The MTW Research Advisory Committee, 
described further below, advised HUD on the policy changes to be tested 
through the new cohorts of MTW agencies and the methods of research and 
evaluation.
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    \7\ PIH Notice 2017-01 provides the Request for Applications for 
the first cohort of PHAs to be selected pursuant to the 2016 MTW 
Expansion Statute.
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Eligibility and Selection for the Expansion of the MTW Demonstration

    The 2016 MTW Expansion Statute provides that the 100 MTW agencies 
selected must be high performers, at the time of application to the 
demonstration, and represent geographic diversity across the country. 
Further, the statute provides that of these 100 PHAs:
     No less than 50 PHAs shall administer 1,000 or fewer 
aggregate housing voucher and public housing units;
     no less than 47 PHAs shall administer 1,001-6,000 
aggregate housing voucher and public housing units;
     no more than 3 PHAs shall administer 6,001-27,000 
aggregate housing voucher and public housing units;
     no PHA shall be granted MTW designation if it administers 
more than 27,000 aggregate housing voucher and public housing units; 
and
     five of the PHAs selected shall be agencies with a Rental 
Assistance Demonstration (RAD) portfolio award.
    HUD will issue separate notices, by cohort, soliciting applications 
from eligible PHAs for participation in the MTW demonstration. These 
notices, when issued, will outline the specific application submission 
requirements, evaluation criteria, and process HUD will use when 
selecting PHAs for MTW participation.

MTW Research Advisory Committee

    The 2016 MTW Expansion Statute established the MTW Research 
Advisory Committee (the Committee). The Committee is governed by the 
Federal Advisory Committee Act (5 U.S.C. Appendix 2), which sets forth 
standards for the formation and use of advisory committees. The purpose 
of the Committee is to provide independent advice with respect to the 
policies to be studied through the MTW expansion and the methods of 
research and evaluation related. The Advisory Committee is charged with 
advising HUD on the following:
     Policy proposals and evaluation methods for the MTW 
demonstration to inform the one specific policy change required for 
each cohort of agencies;
     rigorous research methodologies to measure the impact of 
policy changes studied;
     policy changes adopted by MTW agencies that have proven 
successful and can be applied more broadly to all PHAs; and
     statutory and/or regulatory changes (specific waivers and 
program and policy flexibility) necessary to implement policy changes 
for all PHAs.
    The Committee has no role in reviewing or selecting the 100 PHAs to 
participate in the expansion of the MTW demonstration.
    The Committee members were appointed in June 2016 by the HUD 
Secretary and chosen to ensure balance, diversity, and a broad 
representation of ideas.\8\ The Committee includes program and research 
experts from HUD; a representation of MTW agencies, including current 
and former residents; and independent subject matter experts in housing 
policy research.
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    \8\ For more information on the establishment, purpose, members 
and meeting content of the MTW Research Advisory Committee, please 
go to: http://go.usa.gov/xZnj9.
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    PHAs are reminded that the MTW demonstration program does not 
permit waivers related to fair housing, nondiscrimination, labor 
standards, or environmental requirements. Other subject matter 
prohibited from waivers or restricted with respect to waivers is 
discussed elsewhere in this notice.

Operations Notice for the Expansion of the MTW Demonstration

    HUD's guiding principles for the expansion of the MTW demonstration 
are: (1) Simplify; (2) learn; and (3) apply. HUD seeks to design and 
test new approaches to providing and administering housing assistance 
and then to apply the lessons learned

[[Page 8058]]

nationwide, all within a framework of simplifying program 
administration. The Operations Notice is a first step toward 
implementing this vision. The Operations Notice describes a new 
framework for the MTW demonstration that streamlines and simplifies 
HUD's oversight of participating PHAs while providing for rigorous 
evaluation of specific policy changes. The new framework would apply to 
all PHAs designated as an MTW PHA pursuant to the 2016 MTW Expansion 
Statute and to any previously-designated MTW agencies that agree to 
operate under the new framework. These PHAs are referred to in the 
Operations Notice as ``MTW agencies.'' Participation in the new 
framework will be formalized by an amendment to the PHA's Annual 
Contributions Contract (ACC), or other agreement as determined by HUD.
    A key feature of the new framework is that PHAs will not be 
required to seek HUD's approval for some of the waivers identified in 
the Operations Notice, as determined by HUD. Instead, via the 
Operations Notice, HUD will grant a set of general waivers to all MTW 
agencies when they are so designated. In addition, HUD seeks to reduce 
the data collection and reporting requirements for PHAs under the new 
framework, focusing on financial data, basic program monitoring and 
performance assessment, and evaluation of the specific policy changes 
to be tested through each cohort. HUD will rely on existing data and 
reporting that PHAs will continue to submit through HUD administrative 
systems.
    HUD is seeking comment on the draft Operations Notice because 
robust public comment is critical to ensuring that the Operations 
Notice effectively positions MTW agencies to be able to meet the 
demonstration's goals of increasing cost effectiveness, self-
sufficiency, and housing choice.
    The Operations Notice is organized into 12 sections as follows:

1. Purpose and Applicability
2. Waivers
    a. General Waivers
    b. Conditional Waivers
    c. Cohort-specific Waivers
3. Term of Participation
4. Funding, MTW Block Grant, and Financial Reporting
    a. Level of Funding
    b. Calculation of Funding
    c. MTW Block Grant and Flexibility in Use of Funds
    d. Financial Reporting and Auditing
5. Evaluation
    a. Program-wide Evaluation
    b. Cohort-specific Evaluation
6. Program Administration and Oversight
    a. Planning and Reporting
    b. Performance Assessment
    c. Monitoring and Oversight
7. Rental Assistance Demonstration Program
8. Applying MTW Flexibilities to Special Purpose Vouchers
    a. Veterans Affairs Supportive Housing (HUD-VASH)
    b. Family Unification Program (FUP)
    c. Non-Elderly Persons with Disabilities (NED) Vouchers
    d. Enhanced Vouchers and Tenant Protection Vouchers
9. Regionalization
10. Applicability of Other Federal, State, and Local Requirements
11. MTW Agencies Admitted Prior to 2016 MTW Expansion Statute
12. Sanctions, Terminations, and Default
    HUD seeks comment on all 12 sections of the Operations Notice, as 
well as Appendix A General Waivers, and Appendix B Conditional Waivers, 
which outline available waivers and MTW activities that may be 
implemented by MTW agencies. In addition, for some sections of the 
Operations Notice, HUD identifies specific topics for comment and poses 
questions on those topics.
    The majority of the Operations Notice applies only to MTW agencies, 
defined above as PHAs designated MTW pursuant to the 2016 MTW Expansion 
Statute and any previously-designated MTW agencies that agree to 
operate under the new framework. However, Section 9 of the Notice 
(Regionalization) also applies to existing MTW agencies, that is, those 
with an active MTW agreement as of December 15, 2015.

II. Draft Operations Notice

1. Purpose and Applicability

    The Operations Notice establishes requirements for the 
implementation and continued operation of the expansion of the MTW 
demonstration program pursuant to the 2016 MTW Expansion Statute. The 
Operations Notice applies to all PHAs designated as MTW pursuant to the 
2016 MTW Expansion Statute and to any previously-designated MTW PHA 
that elects to operate under the terms of this Notice.
    Through an amended ACC, or other agreement as determined by HUD, an 
MTW agency agrees to abide by the program structure, flexibilities, and 
terms and conditions detailed in the Operations Notice for the term of 
the agency's participation in MTW demonstration. HUD may supplement the 
Operations Notice with PIH Notices providing more detailed guidance and 
reserves the right to revise the Operations Notice to address 
unforeseen circumstances and programmatic clarifications. Any 
significant updates to the Operations Notice by HUD will be preceded by 
a public comment period. Additionally, HUD will develop informational 
materials to address various program elements that HUD will post on the 
MTW Web site.
    Unless otherwise provided in the Operations Notice, a PHA's MTW 
program applies to all of the agency's public housing assisted units 
(including agency-owned properties and units comprising a part of 
mixed-income, mixed finance communities), tenant-based Section 8 HCV 
assistance, project-based Section 8 voucher assistance under Section 
8(o), and Homeownership units developed using Section 8(y) HCV 
assistance. This Operating Notice does not apply to Section 8 HCV 
assistance that is required: (i) For payments to other public housing 
agencies under Section 8 HCV portability billing procedures; (ii) to 
meet particular purposes for which HUD has expressly committed the 
assistance to the agency; \9\ or (iii) to meet existing contractual 
obligations of the agency to a third party (such as HAP contracts with 
owners under the agency's Section 8 HCV program), unless a third party 
agrees to PBV activities implemented under the MTW program with the 
agency.
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    \9\ Five Year Mainstream Vouchers, Moderate Rehabilitation 
Renewals, HUD-Veterans Affairs Supportive Housing (HUD-VASH) 
Vouchers, Non-Elderly Disabled (NED) Vouchers, and Family 
Unification Program (FUP) Vouchers are not part of the MTW 
demonstration program.
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2. Waivers

    Pursuant to this section of the Operations Notice, HUD delegates to 
the MTW agency the authority to pursue locally-driven policies, 
procedures, and programs with the aim of developing more efficient ways 
to provide and administer housing assistance that increases housing 
choice, gives incentives to low, very-low, and extremely low-income 
families to achieve economic self-sufficiency, and reduce costs and 
achieve greater cost-effectiveness in federal expenditures. Many of 
these policies, procedures and programs require waivers of existing 
statutory and regulatory requirements. HUD therefore waives certain 
provisions of the 1937 Act as well as HUD's implementing requirements 
and regulations to implement the PHA's MTW demonstration activities as 
described in this Notice. Certain provisions of the 1937 Act will 
continue to apply to the PHA and the assistance received pursuant to 
the Act. These ongoing provisions, as well as other applicable federal, 
state, and local requirements, are described in Section 10 of this 
Operations Notice.

[[Page 8059]]

    This Notice discusses three categories of waivers, and the 
associated activities, that MTW agencies may pursue--general waivers; 
conditional waivers; and cohort-specific waivers. This Notice specifies 
the process for implementing MTW activities using the waivers under 
each category. Appendix A--General Waivers and Appendix B--Conditional 
Waivers provide the complete list of waivers and associated activities 
available for all MTW agencies. General Waivers are available to MTW 
agencies without HUD review--beyond the MTW application review. 
Conditional Waivers are available following additional HUD review and 
approval, as described generally in Appendix B. Cohort-Specific Waivers 
will be defined in a series of notices soliciting applications for 
participation in MTW.
    Appendices A and B provide an overview of the General and 
Conditional Waivers. The actual statutory and regulatory provisions 
that will be waived will be more clearly identified in the final 
Operations Notice, in response to this notice and further refinement. 
The specific statutory and regulatory provisions that will be covered 
by the waivers will be included in the final MTW Operations Notice, 
which is anticipated to be published later this summer. Please note 
that in adopting an MTW program, HUD and PHA may not waive or otherwise 
deviate from compliance with Fair Housing and Civil Rights laws and 
regulations.
    While MTW activities are listed by specific waiver, MTW agencies 
may group activities together to create more comprehensive initiatives 
at the local level.
    MTW agencies are subject to all remaining regulatory and statutory 
requirements, unless an activity is specifically and explicitly 
authorized in the Notice via the attached waivers, in which case the 
agency is exempt from the applicable regulatory and statutory 
requirements under the 1937 Act. The five statutory requirements 
established under the 1996 MTW Statute cannot be waived. Additionally, 
in implementing activities, MTW agencies remain subject to all other 
terms, conditions, and obligations under this Notice, and all other 
federal requirements applicable to public housing, HCV, PBV, and PHAs. 
To the extent any MTW activity conflicts with any of the five statutory 
requirements or other applicable requirements, HUD reserves the right 
to require the MTW agency to discontinue the activity or to revise it 
so that the requirements are complied with. HUD also reserves the right 
to require an MTW agency to discontinue any activity derived from a 
waiver should it have unforeseen, significant negative impacts on 
families, as determined by HUD.
    HUD understands that MTW agencies may wish to undertake activities 
that are not listed in Appendix A and Appendix B. If an MTW agency 
wishes to implement activities or request waivers that are not included 
in Appendix A or Appendix B, the MTW agency may seek approval from HUD 
for doing so via the MTW Supplement to the Annual Plan. (The MTW 
Supplement is discussed in Section 6 of this Notice.) The MTW agency 
must obtain explicit prior written approval from HUD for each 
additional activity and waiver.
    If HUD determines that an activity(s) derived from either a general 
waiver or a conditional waiver would impact or conflict with the 
specific policy(s) to be studied in the MTW agency's cohort group, the 
MTW agency will not be able to conduct that activity(s) until the 
evaluation of the specific policy change has concluded. (Once the 
evaluation of the policy change is completed, the MTW agency may 
implement the conflicting activities for the remainder of the agency's 
term of MTW participation.) Any MTW activities that would impact or 
conflict with the cohort-specific policy change will be identified in 
the respective Selection Notice so that the MTW agency is aware of this 
potential restriction on its use of waivers before it enters the MTW 
demonstration program.
a. General Waivers
    The MTW activities derived from the general waivers, within the 
specified program parameters listed in Appendix A, are available to all 
MTW agencies when the MTW ACC amendment, or other agreement to be 
determined by HUD, is executed. The MTW PHA must indicate via the MTW 
Supplement to its Annual Plan the MTW activities that it will undertake 
from the general waivers category. Prior HUD approval is not required 
to implement activities from the general waivers category.
    Appendix A contains the full list of general waivers currently 
available, the MTW activities associated with these general waivers, 
and the specific parameters around the implementation of those 
activities.
b. Conditional Waivers
    Conditional waivers listed in Appendix B are available to all MTW 
agencies within certain program parameters, but implementation of these 
MTW activities may not begin until additional information is received, 
vetted, and approved by HUD. The additional information required for 
each activity associated with a conditional waiver will be specified in 
the MTW Supplement to the Annual Plan (see Section 6 of this Notice). 
Conditional waivers are expected to have a greater and more direct 
impact on assisted households. Consequently, HUD seeks to ensure that 
adequate protections are in place for participants and MTW agencies 
prior to implementation. The additional information required must be 
submitted by the MTW agency via the MTW Supplement and reviewed and 
approved by HUD before the MTW PHA may implement the activity. 
Additional information may also be required throughout the time the MTW 
agency is conducting an activity associated with a conditional waiver. 
Upon request from the Department for the continued oversight of the 
conditional waivers, MTW agencies must provide hardship policies, 
impact analyses and/or other information required by HUD.
    Appendix B provides the full list of conditional waivers, the 
activities associated with these conditional waivers, and any specific 
parameters around the implementation of those activities.
    Waivers and MTW activities that are not provided as a general 
waiver or conditional waiver may be proposed by MTW agencies to HUD. 
Such waivers may be needed to implement an initiative being pursued by 
an MTW agency or may be the result of a local condition. Additional 
waivers will be reviewed on a case-by-case basis as part of the MTW 
Supplement review process. MTW agencies may not seek or obtain waivers 
from nondiscrimination or equal opportunity requirements.
c. Cohort-Specific Waivers
    A cohort-specific waiver is one that is not included in the general 
waivers or conditional waivers categories and that is available 
exclusively to an MTW agency that is implementing a cohort-specific 
policy change that requires the waivers. At the time of selection to 
MTW, each agency will be selected into an evaluative cohort that seeks 
to test a specific policy change, as specified in that cohort's 
Selection Notice. To the extent that one or more additional waivers, 
beyond the general waivers or conditional waivers, are needed to 
implement a specific policy change, HUD will grant that waiver(s) to 
the MTW agencies in the cohort as cohort-specific waivers.
    The cohort-specific waiver and the associated activity(s) will be 
described in detail in the applicable Selection Notice so that the MTW 
agency is aware of this in advance of entry to the MTW demonstration 
program. One or more

[[Page 8060]]

cohort-specific waivers may be associated with a particular cohort of 
MTW agencies. It is possible that the specific policy changes to be 
tested through a given cohort would not need any cohort-specific 
waivers. Cohort-specific waivers and the associated MTW activities may 
only be used to the extent allowed under the applicable evaluative 
framework provided by HUD in the applicable Selection Notice.
    More detail on the specific statutory and regulatory citations will 
be included in the final Operations Notice, which will be published 
later this summer. Please note that certain regulations will be 
interpreted to protect Fair Housing and Civil Rights laws and 
regulations.

Specific Areas for Comment on Waivers

    HUD is seeking comment on the general waivers and conditional 
waivers presented in Appendix A and Appendix B. HUD is specifically 
seeking comment on the following questions regarding waivers:
     Does the list of general waivers, MTW activities, and 
parameters in Appendix A and Appendix B contain the needed flexibility 
to achieve the three MTW statutory objectives? If not, what waivers, 
activities, and/or parameters are missing?
     Are there any MTW activities and/or waivers that should 
not be included as general waivers, available to all MTW agencies 
without prior HUD approval?
     Are there any MTW activities and/or waivers that should 
not be included as conditional waivers but rather should be included as 
general waivers, or not included at all?
     Does the list of conditional waivers, MTW activities, and 
parameters in Appendix B contain the needed flexibility to implement 
any alternative income-based rent model? If not, what waivers, 
activities, and/or parameters are missing?

3. Term of Participation

    The term of each agency's MTW designation expires at the end of the 
MTW agency's Fiscal Year 2028. All general and conditional waivers 
provided through the Operations Notice expire at the end of the 
agency's term of participation. However, cohort-specific waivers 
provided to enable a cohort-specific policy change will be extended 
beyond the agency's term of participation with HUD's specific approval 
if HUD determines that additional time is needed to evaluate the policy 
change.
    The MTW agency must end all activities requiring MTW-specific 
waivers upon expiration of MTW participation, as HUD cannot guarantee 
that it will be able to extend any waivers beyond that point. For this 
reason, when entering into contracts with third-parties that draw upon 
MTW flexibility, the agency should disclose that such flexibility is 
only available during the term of the agency's participation in the MTW 
demonstration as permitted in this notice. An exception is third-party 
contracts that relate to the cohort-specific policy change and 
associated waiver(s), if HUD determines that additional time beyond the 
end of the PHA's MTW term is needed to evaluate the policy change and 
specifically approves an extension of the cohort-specific waiver(s).
    It is the MTW agency's responsibility to plan for the expiration of 
its MTW agreement and associated waivers. HUD recommends that MTW 
agencies begin transition planning\10\ at least one year in advance of 
the expiration of its MTW designation. Not later than nine months prior 
to the agency's expiration date, the agency must submit a transition 
plan to HUD that describes the agency's plans for phasing out the MTW-
specific waivers that it is using, and describes the agency's plans for 
re-establishing regular reporting to HUD on a standard schedule. After 
submitting the transition plan to HUD, MTW agencies will begin drafting 
changes to their policies and procedures documents, notifying 
participants of any changes to the terms of their residency or rent 
calculation, planning for the submission of standard data to HUD, and 
re-training PHA staff as needed.
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    \10\ https://portal.hud.gov/hudportal/documents/huddoc?id=DOC_10542.pdf.
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Specific Areas for Comment on MTW Term of Participation

    With respect to the term of MTW participation, HUD is specifically 
seeking comment on the following questions:
     Assuming all cohorts are selected between 2017 and 2020, 
is the end of each MTW agency's Fiscal Year 2028 an appropriate 
timeframe for MTW participation, and understanding that HUD may extend 
cohort-specific waivers to accommodate evaluation of MTW activities 
that require additional time?
     Is there a preferable length or structure for the term of 
MTW participation?
    HUD will develop additional guidance on the required elements of 
the transition plan and a recommended transition process via PIH 
Notice. HUD is specifically seeking comment on:
     What elements of the MTW agency's transition plan should 
be mandatory?
     What elements of the transition process should HUD require 
in order to protect participants from potential harm and minimize 
disruptions to agency operations?

4. Funding, MTW Block Grant, and Financial Reporting

    During the term of the demonstration, HUD will provide the MTW 
agencies designated pursuant to the 2016 MTW Expansion Statute with 
public housing Operating Fund subsidies, public housing Capital Fund 
program (CFP) grants, and Section 8 HCV assistance, as provided in this 
notice. CFP grants may include Formula grants, Demolition or 
Disposition Transitional Funding (DDTF, included in regular Formula 
grants) as well as Replacement Housing Factor (RHF) grants (superseded 
by DDTF). The funding amount for MTW agencies may be increased by 
additional allocations of vouchers or by replacement public housing 
units to which the agency is awarded over the term of its participation 
in the MTW demonstration.
    MTW agencies will have the flexibility to apply fungibility between 
public housing operating, public housing capital, and HCV assistance 
into an agency-wide funding source referred to as the ``MTW Block 
Grant.'' The agency must complete an annual audit pursuant to the 
Single Audit Act requirements set forth in 2 CFR 200 Subpart F, 
including any applicable Compliance Supplement(s), as determined by the 
auditor, to be relevant to MTW and other programs. The Single Audit 
Act-compliant audit must be submitted to HUD in accordance with HUD 
regulations.
a. Level of Funding
    The 1996 MTW Statute and the 2016 MTW Expansion Statute prohibit 
MTW agencies from receiving any more or any less funding than they 
would receive if they were not participating in the MTW demonstration.
    The 1996 MTW Statute states, in part, that, ``The amount of 
assistance received under section 8, section 9, or pursuant to section 
14 by a public housing agency participating in the demonstration under 
this part shall not be diminished by its participation.'' In addition, 
the 2016 MTW Expansion Statute states, in part, that, ``No PHA granted 
this designation through this section shall receive more funding under 
sections 8 or 9 of the 1937 Act than they otherwise would have received 
absent this designation.''

[[Page 8061]]

b. Calculation of Funding
i. Public Housing Operating Fund Subsidy
    (a) The calculation of an MTW PHA's Operating Fund subsidy 
eligibility will continue in accordance with operating subsidy formula 
law, regulations, and appropriations act requirements.
    (b) The agency may use these funds for any eligible activity 
permissible under Section 9(e)(1) of the 1937 Act or, if the agency 
proposes to use the funding as part of the MTW Block Grant, it may use 
these funds for any eligible activity permissible under Section 8(o), 
9(d)(1) and 9(e)(1) and as specified in this Notice.
    (c) For operating subsidy funding provided in years prior to the 
designation of the agency as an MTW agency, the agency may use any 
accumulated operating reserves for eligible MTW purposes, subject to 
applicable provisions of this Notice, subsequent legislation, including 
appropriations acts, and HUD and other federal requirements.
ii. Public Housing Capital Fund Formula and Grants
    (a) The agency's Public Housing Capital Fund formula 
characteristics and grant amounts, including DDTF and RHF, will 
continue to be calculated in accordance with public housing law, 
regulations, and appropriations act requirements. Capital Funds will be 
disbursed in accordance with standard HUD procedures for disbursement 
of public housing Capital Fund grants, provided however that the agency 
may not accelerate drawdown of funds in order to fund reserves.
    (b) In requisitioning Capital Fund grant funds, the MTW agency will 
not be required to provide line item detail in HUD's Line of Credit 
Control System (LOCCS), but will request the funds using a single MTW 
line item with the exception of grant funds required for payment of 
debt service pursuant to the Capital Fund Financing Program (CFFP). The 
agency will provide to HUD information on all capital activities funded 
by the MTW Block Grant as necessary to ensure compliance with 
requirements outside the scope of MTW, including environmental review 
requirements and Energy and Performance Information Center (EPIC) 
reporting requirements.
    (c) The agency may use these funds for any eligible activity 
permissible under Section 9(d)(1) of the 1937 Act or, if the agency 
proposes to use the funding as part of the MTW Block Grant, it may use 
these funds for any eligible activity permissible under Section 8(o), 
9(d)(1) and 9(e)(1) and as specified in this Notice. CFP funds not 
included in the MTW Block Grant are subject to all requirements 
relevant to non-MTW agency CFP funding, including eligible activities 
and cost limits.
    (d) For Capital Funds provided in years prior to the designation of 
the agency as an MTW agency, the agency may use such funds for eligible 
MTW purposes, subject to applicable provisions of this Notice, 
subsequent legislation, including appropriations acts, and HUD and 
other federal requirements.
    (e) The agency remains subject to the requirements of Section 9(j) 
of the 1937 Act with respect to Capital Fund grants. Section 9(d) funds 
remain subject to the obligation and expenditure deadlines and 
requirements provided in Section 9(j) despite the fact that they are 
combined in a single block grant fund. Capital Funds awarded to MTW 
agencies must be obligated within two years and expended within four 
years of award. Funds not obligated or expended within those timeframes 
will be subject to recapture. As with all PHAs, an MTW PHA may 
requisition CFP funds from HUD only when such funds are due and 
payable, unless HUD approves another payment schedule.
iii. Housing Choice Voucher (HCV) Funding
    (a) For the calendar year after the MTW agency joins the MTW 
demonstration (the ``Initial Year''), an agency's HCV HAP renewal 
funding will be calculated based on the previous CY's HAP expenses 
reported in VMS that originated from HAP funds adjusted by any 
applicable inflation factor and national proration, in accordance with 
the funding formula in the appropriations act used for all HCV 
agencies. This adjusted amount will be the agency's Annual Voucher 
Budget Authority (AVBA) for the initial year of MTW participation.
    (b) For subsequent years, the HCV HAP renewal funding will be 
calculated as follows:
    (i) HCV HAP Renewal funding will be calculated based on (i) the 
previous CY's HAP expenses reported in VMS that originated from HAP 
funds plus (ii) the previous CY's eligible non-HAP MTW expenses 
(subject to the conditions and percentage limitations described below) 
and (iii) the eligible non-HAP MTW commitments and obligations (subject 
to the conditions, percentage limitations and utilization requirements 
described below), the sum of which will be adjusted by any applicable 
inflation factor appropriate for the HAP and non-HAP expenses and 
national proration for the current CY. The resulting adjusted amount is 
the agency's AVBA for the current CY. The amount of non-HAP expenses 
and the amount of commitments and obligations that may be included in 
the above calculation are subject to percentage limitations and 
utilization requirements described below.
    (ii) An MTW agency is required to spend at least 90% of its CY AVBA 
on eligible HAP expenses each year. If the MTW agency meets this 
requirement but the actual HAP expenses did not exceed 100% of its CY 
AVBA, then the agency's eligible non-HAP MTW expenses and the agency's 
commitments and obligations will be included in its renewal funding 
eligibility for the next CY as described herein. The amount of eligible 
non-HAP MTW expenses, commitments, and obligations that will be 
included in the renewal calculation is limited to the lower of: (a) The 
amount of AVBA expended, committed, or obligated for eligible non-HAP 
MTW expenses as reported and validated in VMS, or (b) the amount of 
AVBA that was not used for HAP expenses, or (c) 10% of AVBA.
    (iii) Only HAP expenses that originated from HAP Funds (including 
HAP reserves) are included in the HAP renewal funding formula. Public 
Housing Operating funds and Capital funds, and Section 8 Administrative 
Fee funds that may have been used for HAP expenses as part of MTW 
flexibility will not be included in the following calendar year's 
renewal funding formula.
    (iv) If an MTW agency expends 100% or more of its AVBA in HAP 
expenses in a given year, the total HAP expenses will be used for the 
next CY's Renewal funding formula to the extent that the HAP expenses 
originated from HAP or HAP reserves. However, none of the funds 
provided in the renewal formula may be used to fund a total number or 
unit months under lease which exceeds the MTW agency's authorized level 
of unit months available under the MTW agency's ACC, in accordance with 
the funding formula used for non-MTW agencies.
    (c) Additional details about the HCV Renewal funding formula are 
provided below:
    (i) Budget Utilization Requirement. Starting in the Initial Year of 
MTW funding, and for the duration of its participation in the MTW 
demonstration, the MTW agency must spend at least 90 percent of each 
CY's MTW AVBA on HCVP eligible HAP expenses in the funded year. 
Eligible HAP expenses are defined in HUD's

[[Page 8062]]

Voucher Management System (VMS) guidebook (or the guidebook of any 
successor system). HUD's VMS (or its successor system) will be the data 
source to verify compliance with the HCVP budget utilization 
requirement throughout the duration of participation in the MTW 
demonstration. If performance below the 90% utilization requirement 
persists, HUD may take appropriate corrective actions including, but 
not limited to, the restriction of uses of funds, other administrative 
actions, including the termination of the MTW agency's participation in 
the MTW demonstration.
    (ii) HAP-Originated Reserves. Any reserves the MTW agency has 
accumulated prior to the start of the Initial Year may be used for any 
eligible MTW activity. If pre-existing reserves before the start of the 
Initial Year are used for HAP expenses, those expenses will be included 
in the subsequent year's funding formula to the extent those funds 
originated from HAP. Any sum generated by the MTW agency in the 
Restricted Net Position (RNP) account or HUD-held reserves after the 
effective date that the MTW agency receives MTW designation shall 
remain available and may be used for all eligible MTW activities, 
subject to applicable provisions of this Notice, subsequent 
legislation, including appropriations acts, and other HUD requirements. 
HAP-Originated reserves accumulated after the effective date that the 
MTW agency receives MTW designation will be included in the subsequent 
year's funding formula if spent on HAP expenses.
    (iii) Limitation of Amount of HUD-Held Reserves. The maximum HAP-
Originated funds in HUD-held reserves cannot exceed 100% of AVBA. If 
the total amount of HAP-Originated reserves at CY end exceeds 100% of 
AVBA, any reserves originated from HAP in excess of this amount will be 
reduced from the subsequent year's funding formula.
    (iv) Cash Management Requirements Apply. All undisbursed HAP funds 
including HAP-Originated reserve funds will be held as HUD-held 
reserves per OMB cash management requirements and can be requested by 
the MTW agency when HAP (or non-HAP) immediate need exceeds the 
scheduled HAP and Fee monthly disbursements, but only after 
consideration of available MTW agency-held RNP or unrestricted net 
position (UNA), respectively. Any sum held by the MTW agency as excess 
administrative fee funds (Unrestricted Net Position) shall remain 
available to the MTW agency. All excess administrative fee funds may be 
used for any eligible MTW activities.
    (v) Commitments/Obligations of Funds. Commitments and obligations 
of funds that will be used for eligible MTW activities in the future 
will receive consideration in the HCV Renewal funding formula as 
described above. Committed and obligated funds remain part of HUD-held 
reserves until drawn down and all cash management requirements and 
other rules applicable to reserve amounts apply. In addition, committed 
and obligated funds may be subject to HUD reserve offsets as part of 
future Congressional Appropriations Bills.
     Commitments. A commitment is the setting aside or 
earmarking of undisbursed and unobligated funds to be used for eligible 
MTW activities in the future. An MTW agency may commit funds to planned 
future MTW eligible uses, as evidenced in the MTW Supplement to the 
Annual Plan which must be adopted by the board. For commitments to 
qualify for consideration in the Renewal funding formula, an MTW agency 
must describe its future plans to use the funds for a certain type of 
MTW eligible use with sufficient supporting detail in the MTW 
Supplement to the Annual PHA Plan. Such detail may include the program 
type (i.e., public housing, housing voucher, both, or local, non-
traditional), development number/name, description of work or activity, 
quantity, estimated cost, anticipated timeline, and other information 
as applicable. Committed unspent MTW funds must be reported in VMS in 
the Unspent MTW Funds section (see VMS User's Manual for more details). 
An MTW agency may update and revise commitments as necessary, in 
response to changing local conditions.
     Obligations. An obligation is a legally binding agreement 
that will require an outlay or expenditure of funds, immediately or in 
the future. An example of an obligation is an executed construction 
contract between the MTW agency and a construction company. Obligated 
unspent MTW funds must be reported in VMS in the Unspent MTW Funds 
section (see VMS User's Manual for more details). HUD intends to 
exclude obligated funds in HUD-held reserves from Congressional offset 
to the extent that future statutory language would allow such 
exclusion.
    (vi) Administrative Fees. The administrative fee rates used to 
calculate fee eligibility for MTW agencies shall be established 
according to the same methodology used to establish administrative fee 
rates for all other public housing agencies. Administrative fees will 
be paid on the basis of units leased as of the first day of each month; 
this data will be extracted from VMS at the close of each reporting 
cycle. Administrative fees for MTW agencies are also subject to the 
national proration factor and any other appropriations act requirements 
to the total eligibility amount.
    (vii) Incremental Vouchers. If the MTW agency receives incremental 
HCVP vouchers and funding (including tenant protection vouchers), other 
than special purpose vouchers (described in (x) below), renewal funding 
for those vouchers will be included in the MTW HCV renewal funding 
eligibility calculation for the following year. (See Section 8 of this 
Operations Notice for further discussion of tenant protection and other 
special purpose vouchers.) The MTW agency's renewal funding eligibility 
(which includes renewal funding associated with these vouchers) remains 
subject to the budget utilization requirement detailed above. The 
renewal amount is based on the MTW per unit cost (PUC), any months not 
covered by initial increment, and adjusted by the inflation factor. 
Incremental vouchers included in the MTW agency's renewal funding 
eligibility will be funded pursuant to the current year's per unit 
funding amount.
    (viii) Adjustments for the first-time renewal of certain vouchers. 
HUD will also make adjustments to the renewal funding for the first-
time renewal of certain vouchers that are included in the MTW HAP 
renewal calculation when the funding increment will expire during the 
CY.
    (ix) Applicable inflation factor and proration. The same applicable 
inflation factor that applies for non-MTW agencies will be applied each 
CY to determine the MTW agency's HAP funding renewal eligibility. 
Likewise, the MTW agency's HAP funding renewal eligibility is subject 
to the same national proration as non-MTW agencies' renewal 
eligibility, based on the total eligibility of all MTW agencies 
compared to the actual amount appropriated for HAP renewal funding for 
the CY.
    (x) Rental Assistance Demonstration (RAD). Any vouchers received as 
part of a RAD component I conversion shall be added to the ACC for the 
remainder of the CY in which they are awarded. HUD will issue a new 
increment of voucher funding in support of those vouchers for the first 
full CY following a RAD component I conversion. In subsequent years, 
voucher funding for RAD converted units will be renewed under the MTW 
HCV renewal funding

[[Page 8063]]

calculation, based on a weighted MTW per unit cost (PUC), plus 
inflation factor and the applicable proration factor. RAD component II 
conversions are funded in accordance with the incremental voucher 
section above. Administrative fees for RAD vouchers will be established 
based on the same methodology used to establish administrative fees in 
(vi) of this section. Fees for RAD vouchers will be prorated at the 
same level that applies to all non-MTW agencies.
    (xi) Voucher Programs Not Included in MTW Program. Vouchers and 
funding provided for the following special purpose vouchers, whether 
for new allocations or renewal of existing increments, shall not be 
included in the HCV MTW Program renewal calculation: Five Year 
Mainstream, Moderate Rehabilitation renewals, Veterans Affairs 
Supportive Housing (VASH), Non-Elderly Disabled (NED), and Family 
Unification Program (FUP). These vouchers will be renewed under the 
regular voucher renewal requirements as provided under the 
appropriations acts. Special purpose vouchers are discussed in more 
detail in Section 8 of this Operations Notice.
c. MTW Block Grant and Flexibility
    An agency participating in the MTW demonstration program may 
combine public housing Operating and Capital Funds provided under 
Sections 9(d) and 9(e) of the 1937 Act and voucher program funds 
provided under Section 8 of the 1937 Act as the MTW Block Grant. 
Certain provisions of Sections 8 and 9 of the 1937 Act and 24 CFR 982 
are waived as necessary, to implement the MTW Block Grant. MTW Block 
Grant flexibility is optional and does not require prior HUD approval.
    The agency may use MTW Block Grant funds for any eligible activity 
under Sections 9(d)(1), 9(e)(1) and Section 8(o) of the 1937 Act and 
for the local, non-traditional activities specified in this Notice, 
including Appendix A and B. Within the scope of the permissible 
eligible activities, the agency can carry out the purposes of the MTW 
demonstration program to provide flexibility in the design and 
administration of housing assistance to eligible families; (1) To 
reduce cost and achieve greater cost effectiveness in federal 
expenditures, (2) to give incentives to families with children where 
the head of household is working, seeking work, or is preparing for 
work by participating in job training, educational programs, or 
programs that assist people to obtain employment and become 
economically self-sufficient, and (3) to increase housing choices for 
low-income families.
    The agency may use MTW Block Grant funds to support the evaluation 
of MTW activities subject to reasonable cost requirements set forth in 
2 CFR part 200.
d. Financial Reporting and Auditing
    MTW agencies must submit year-end unaudited and audited financial 
information to the Department using the Financial Data Schedule (FDS) 
contained in the Real Estate Assessment Center's (REAC) Financial 
Assessment Subsystem (FASS-PH), or its successor system. Financial 
reporting requirements for MTW agencies are currently posted on the 
REAC Web site at http://www.hud.gov/offices/reac/products/fass/fass_pdf/mtw-reporting.pdf.
    An MTW agency must submit unaudited financial information into 
REAC's FASS-PH, or its successor system, within 60 days of the end of 
its fiscal year, and audited financial information with nine months of 
the end of its fiscal year. REAC reviews financial submissions for 
basic financial soundness (e.g., cash balances, accounts receivable and 
accounts payable, quick ratio, current ratio, etc.). The MTW agency 
will keep project level budgeting and accounting and report financial 
information in the FDS. The MTW agency will abide by project level 
management reviews in accordance with Asset Management guidance 
contained in PIH Notice 2007-9, or any successor guidance. The MTW 
agency will conform to the cost requirements of 2 CFR 200 and any HUD 
implementation thereof.
    The MTW agency must procure an Independent Public Accountant (IPA) 
to perform an annual audit pursuant to federal requirements at 2 CFR 
part 200 and 24 CFR 990.190, or successor, as well as any audit 
compliance supplements developed specifically for use with the MTW 
demonstration. An MTW agency that may be otherwise exempt from a single 
audit will be required to perform an annual financial statement audit 
as a condition of becoming an MTW agency under the MTW Expansion.
    Completed IPA audits must be submitted to HUD in accordance with 
current HUD regulations. HUD will review the IPA audits of MTW agencies 
to determine appropriate action relative to any findings, prepare 
recommendations for audit finding resolution, and follow up with MTW 
agencies to assure finding closure. If there are audit findings related 
to the MTW program itself, HUD will monitor the resolution of all audit 
findings.

Specific Areas for Comment on Funding, MTW Block Grant, and Financial 
Reporting

    With respect to funding, MTW Block Grant, and financial reporting, 
HUD is specifically seeking comment on the following questions:
     Is a 90 percent HAP budget utilization requirement the 
appropriate amount?
     What sanctions or restrictions should HUD consider using 
should an MTW agency continue to fail to meet the budget utilization 
requirement?
     Are there other methods for calculating HCV funding that 
HUD should consider?
     Are there other factors HUD should consider in the 
calculation of funding?
     Are there any comments or clarifications needed in 
relation to funding, the MTW Block Grant, or financial reporting?

5. Evaluation

    As a condition of participating in the MTW demonstration, MTW 
agencies agree to cooperate fully with HUD and its contractors in the 
monitoring and evaluation of the MTW demonstration, to keep records, 
and to submit reports and other information as required by HUD. This 
includes any data collection required for the use of waivers (e.g., 
conditional waivers) and any evaluation efforts that HUD undertakes for 
the cohort-specific policy changes.
    MTW is a demonstration that provides PHAs flexibilities to innovate 
and try different approaches to housing assistance in order to achieve 
at least one of the three statutory objectives laid out in the 1996 MTW 
Statute. At its core, the demonstration is an opportunity for PHAs, 
participants, HUD, stakeholders and the general public to learn from 
different approaches to providing federal housing assistance to low-
income families. This includes learning from approaches that are 
effective and produce desired outcomes, and from approaches that are 
less effective than anticipated and where results may have unintended 
consequences.
    Because PHAs have the ability to use different flexibilities 
calling on multiple MTW waivers that serve local populations in various 
parts of the country, interpreting PHA-reported performance metrics 
data on the effects of an individual MTW activity is not always clear-
cut. Consequently, and while adhering to the guiding principles for the 
expansion (simplify, learn, and apply), HUD will create and develop an

[[Page 8064]]

evaluation system that will tell the story of the MTW demonstration 
through the lens of the three statutory objectives relating to cost 
effectiveness, self-sufficiency, and housing choice.
    HUD envisions two types of evaluation--program-wide evaluation and 
cohort-specific evaluation. Through this notice, HUD is seeking 
feedback on each of these evaluation types.
a. Program-Wide Evaluation
    Program-wide evaluation would seek to assess whether or not, and to 
what extent, MTW agencies use Federal dollars more efficiently, help 
residents find employment and become self-sufficient, and increase 
housing choices for low-income families. HUD intends to develop 
performance metrics for program-wide evaluation that are based, to the 
extent possible, on information already being collected from MTW 
agencies through existing HUD administrative data systems. HUD may 
determine and require that some additional reporting is necessary to 
effectively evaluate MTW.
    The following are examples of potential performance metrics that 
could be used for each statutory objective; the list is not exhaustive 
and will be revised further with feedback from this notice and 
additional internal evaluation:

------------------------------------------------------------------------
        MTW statutory objective:          Potential performance metrics
------------------------------------------------------------------------
1. Reduce cost and achieve greater cost   Administrative cost
 effectiveness in federal expenditures.   savings per unit in direct
                                          program administration (HCVP
                                          and public housing) and
                                          indirect costs.
                                          Changes in rental
                                          revenue.
                                          Changes in number of
                                          families served.
2. Give incentives to families with       Changes in employment
 children where the head of household     rates or hours worked.
 is working; is seeking work; or is       Changes in earned
 preparing for work by participating in   income levels since entering
 job training, educational programs, or   the program.
 programs that assist people to obtain    Changes in rent
 employment and become economically       burden.
 self-sufficient.                         Changes in number of
                                          households receiving
                                          supportive services aimed to
                                          increase self-sufficiency.
3. Increase housing choices for           Changes in the quality
 eligible low-income families.            and type of housing stock
                                          accessible to extremely low-
                                          income, very low-income, and
                                          low-income households.
                                          Changes in the
                                          percentage of households
                                          moving to or living in areas
                                          with lower rates of poverty.
                                          Changes in occupancy
                                          rates in public housing and
                                          utilization rates of housing
                                          vouchers.
                                          Changes in average
                                          applicant time on waiting
                                          list.
------------------------------------------------------------------------

b. Cohort-Specific Evaluation
    The 2016 MTW Expansion Statute requires HUD to direct all the 
agencies in a cohort to implement one specific policy change and to 
conduct a rigorous evaluation of the one specific policy change. The 
MTW Research Advisory Committee has considered input from the public 
and advised HUD on the policy changes to be tested through the new 
cohorts of MTW agencies and on the methods of research and evaluation.
    The cohort-specific policy change and evaluation methods will be 
described in the applicable Selection Notice so that the MTW agency is 
aware, in advance of application to the MTW demonstration program, of 
the policy it will be required to implement and the evaluation 
requirements. The specific evaluation methods (and requirements for 
participating MTW agencies) will vary based on the policy changes to be 
tested. Some cohorts of MTW agencies may be required to participate in 
Randomized Control Trials (RCTs), while others may be required to 
participate in detailed process studies or ethnographic research. HUD's 
Office of Policy Development and Research is seeking funding for 
evaluating cohort-specific policy changes. In all cases, the purpose of 
the evaluation will be to measure the outcomes associated with the 
specific policy change(s) in order to offer policy recommendations for 
implementing the policy change(s) across all PHAs.
    HUD will determine the length and timeframe for the evaluation 
based on the recommendations of the MTW Research Advisory Committee. In 
some cases, the evaluation timeframe may extend beyond the agency's 
term of MTW participation. The MTW agency is required to participate in 
the evaluation for the full timeframe designated by HUD. HUD intends to 
extend waivers beyond the agency's term of participation to the extent 
that those waivers are needed to support the evaluation of the specific 
policy change and HUD determines that additional time is needed to 
evaluate the policy change.

Specific Areas for Comment on Evaluation

    With respect to the program-wide evaluation, HUD is specifically 
seeking comment on the following questions:
     Is there any information not captured in HUD 
administrative data systems that would provide informative data points 
or performance metrics for evaluating the MTW demonstration?
     What are measures of MTW activities that ``reduce cost and 
achieve greater cost effectiveness in Federal expenditures'' that can 
apply to and are either being reported in existing HUD systems or can 
be reported by every MTW agency?
     What are measures of MTW activities that ``give incentives 
to families with children where the head of household is working, 
seeking work, or is preparing for work by participating in job 
training, educational programs, or programs that assist people to 
obtain employment and become economically self-sufficient'' that can 
apply to and are either being reported in existing HUD systems or can 
be reported by every MTW agency?
     Should HUD standardize a definition of ``self-
sufficient''? If so what elements of self-sufficiency should be 
included in HUD's definition?
     What are measures of MTW activities that ``increase 
housing choices for low-income families'' that can apply to and are 
either being reported in existing HUD systems or can be reported by 
every MTW agency?
     What is the best way to capture and report exit data on 
families exiting the Public Housing, HCV, and local non-traditional 
housing programs? What are the appropriate exit reasons to capture?
     Is there any information not captured in HUD 
administrative data systems that would be informative data points or 
performance metrics in terms of evaluating the MTW demonstration?
     In the list of performance metrics provided above, should 
any be clarified or removed?
     Are there any alternative or additional metrics that would 
enhance

[[Page 8065]]

performance evaluation on the MTW demonstration?
    With respect to the cohort-specific evaluation, HUD will consider 
the advice provided by the MTW Research Advisory Committee.

6. Program Administration and Oversight

    In general, MTW agencies will be subject to the same planning and 
reporting protocols as non-MTW agencies, including the PHA Plan (5-Year 
Plan and Annual Plan) and Capital Fund planning. MTW agencies must also 
report data in HUD data systems, as required.
    New protocols and instruments will be developed for assessing MTW 
PHA performance, and incorporated into HUD's Public Housing Assessment 
System (PHAS) and Section Eight Management Program (SEMAP), or 
successor assessment systems. In addition, HUD will employ standard 
program compliance and monitoring approaches including assessment of 
relative risk and on-site monitoring conducted by HUD or by entities 
contracted by HUD
a. Planning and Reporting
i. The PHA Plan
    MTW agencies must adhere to Public Housing Agency Plan regulations 
at 24 CFR part 903, any implementing HUD Notices and guidance, as well 
as any succeeding regulations. The PHA Plan consists of the 5-Year Plan 
that a PHA must submit to HUD once every five PHA fiscal years and the 
Annual Plan that the PHA must submit to HUD for each PHA's fiscal year. 
Any HUD assistance that the PHA is authorized to use under the MTW 
demonstration must be used in accordance with the PHA's Annual Plan, as 
applicable.
    Annual and 5-Year Plans must be submitted in a format prescribed by 
HUD. Currently, submission format requirements are outlined in Notice 
PIH 2015-18 (HA), issued October 23, 2015, which is effective until 
amended, superseded or rescinded. The MTW agency must submit:

 HUD-50075-5Y, the 5-Year Plan
 HUD-50075-HP, the Annual Plan for high performing agencies, 
along with supporting documents
[cir] HUD 50077-ST-HCV-HP
[cir] HUD-50077-SL
[cir] Resident Advisory Board (RAB) comments received
[cir] Any challenged elements of the Plan
 MTW Supplement to the Annual Plan (under development)

    As an MTW agency, all PHA Plan information must be provided in the 
context of the PHA's participation in the MTW demonstration. This 
includes taking into account the waivers and flexibilities afforded to 
the MTW agency. To this end, the MTW agency will provide and HUD will 
make available to the public, an MTW Supplement to the Annual Plan, in 
a format to be developed by HUD. HUD anticipates that MTW agencies 
would use the MTW Supplement to the Annual Plan to:
    (a) Indicate the MTW activities and associated waivers that the 
agency will undertake in the Annual Plan year that require general 
waivers (Appendix A) using a check-box or other simple format.
    (b) Indicate the MTW activities and associated waivers that the 
agency will undertake in the Annual Plan year that require conditional 
waivers (Appendix B) using a check-box or other simple format.
    (c) Indicate the MTW activities that the agency will undertake in 
the Annual Plan year that require cohort-specific waivers (as 
applicable and identified in each cohort's Selection Notice), and the 
cohort-specific waivers to be used, using a check-box or other simple, 
non-narrative format.
    (d) Submit specific information or data required by HUD for any 
conditional waiver(s) the agency intends to use for the first time in 
the Annual Plan year.
    (e) Submit data or reporting required for the ongoing use of any 
MTW waivers from the preceding year.
    (f) Submit data required for HUD's verification of the MTW agency's 
compliance with the five statutory requirements established under the 
1996 MTW Statute.
    (g) Request HUD approval for any MTW activities and waivers that 
the MTW agency seeks to implement in the Annual Plan year that are 
outside of the lists of general, conditional, and cohort-specific 
waivers.
    Non-MTW PHAs with a combined unit total of 550 or less public 
housing units and vouchers and that are not designated as troubled 
under PHAS and that do not have a failing score under SEMAP are exempt 
from the requirement to submit the Annual Plan. Per this Operations 
Notice, MTW agencies with a combined unit total of 550 or less public 
housing units and vouchers would be required, at a minimum, to submit 
the MTW Supplement to the Annual Plan on an annual basis.
    MTW agencies must submit to HUD the Annual PHA Plan, including any 
required attachments and the MTW supplement, no later than seventy-five 
(75) days prior to the start of the agency's fiscal year.\11\ Before 
submission to HUD, the PHA must have a 45-day public review period and 
a public hearing. PHAs must consider, in consultation with the RABs, 
all the comments received at the public hearing. The recommendations 
received must be submitted by the PHAs as a required attachment to the 
Plan. PHAs must also include a narrative describing their analysis of 
the recommendations and the decisions made on these recommendations. 
PHAs must also obtain the proper signed certifications and board 
certification.
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    \11\ It is understood that the requirements in the remainder of 
this section refer to the Annual Plan and the MTW Supplement if the 
MTW agency is required to submit the Annual Plan and only to the MTW 
Supplement if the MTW agency is not required to submit an Annual 
Plan as discussed in the previous paragraph.
---------------------------------------------------------------------------

    HUD will notify the MTW agency in writing if HUD objects to any 
provisions or information in the Annual Plan or the MTW supplement. 
When the MTW agency submits its Plan seventy-five (75) days in advance 
of its fiscal year, HUD will respond to the MTW agency within 75 days. 
If HUD does not respond to the MTW agency within 75 days after an on-
time receipt of the Annual Plan, the agency's Annual Plan (and MTW 
Supplement) is approved. If HUD does not receive the agency's Annual 
Plan on time, the Plan is not approved until HUD responds.
ii. Admissions and Continued Occupancy Policy (ACOP) and Administrative 
Plan
    The MTW agency must update its ACOP and Administrative Plan to be 
consistent with the MTW activities and related waivers that it 
implements. The agency may not implement an MTW activity or waiver 
until the relevant sections of the ACOP and/or Administrative Plan are 
updated. MTW agencies must provide HUD with electronic versions of the 
ACOP and Administrative Plan upon request. If the MTW agency implements 
an activity using the local, non-traditional uses of funds waiver, the 
MTW agency must create and update an implementing document specifically 
for such activity.
    In addition, the PHA must review its Administrative Plan, ACOP, and 
other selection and admissions related policies to ensure that they 
comply with Departmental regulations and other directives concerning 
the use of criminal records and other criminal activity in admissions 
and continued occupancy decisions. The PHA's policies and procedures 
may not permit the automatic exclusion of an applicant

[[Page 8066]]

or participant on the basis of the record of a criminal arrest alone. 
The same applies to policies and procedures concerning prospective 
tenant screening by landlords and other third parties. HUD may review 
the PHA's admissions and continued occupancy policies to ensure 
compliance with HUD requirements concerning criminal records and 
criminal activity. For more information, see the related letter from 
HUD's Office of General Counsel at: https://portal.hud.gov/hudportal/documents/huddoc?id=HUD_OGCGuidAppFHAStandCR.pdf and PIH's related 
notice at https://portal.hud.gov/hudportal/documents/huddoc?id=PIH2015-19.pdf.
iii. Capital Planning and Reporting
    MTW agencies must adhere to CFP regulations at 24 CFR part 905, any 
implementing HUD Notices and guidance, as well as any succeeding 
regulations.
    As noted previously, MTW agencies are funded in accordance with CFP 
regulations and formula funds are calculated and distributed in the 
same manner as non-MTW agencies.
    MTW agencies have the authority and flexibility to combine CFP 
funds with other funds as part of the MTW Block Grant. HUD will award a 
Capital Fund grant to the MTW agencies, in keeping with the standard 
process for all PHAs. The Field Office will spread the funds in LOCCs 
to the MTW agencies in the same manner as for the non-MTW agencies. As 
with other PHAs, an MTW PHA may requisition Capital Funds from HUD only 
when such funds are due and payable, unless HUD approves another 
payment schedule. To the extent that the MTW agency places CFP funding 
in the MTW Block Grant, the CFP funding would be recorded on Budget 
Line Item (BLI) 1492 (Moving to Work) on form HUD-50075.1. CFP funds 
entered on BLI 1492 would not need to be broken out and itemized in the 
part II supporting pages of the HUD-50075.1. However, an MTW PHA may 
not accelerate drawdowns of funds in order to fund reserves.
    An MTW agency is not required to include all or a portion of its 
CFP grant in the MTW Block Grant. To the extent that the MTW agency 
wishes to dedicate all or a portion of its CFP grant to specific 
capital improvements, the agency may record CFP funding on any BLI on 
form HUD-50075.1 other than BLI 1492.
iv. Inventory Management System (IMS)/PIH Information Center (PIC) 
Reporting
    Data from HUD's Inventory Management System (IMS) and PIH 
Information Center (PIC), or successor systems, is critical to all 
aspects of program administration, including HUD monitoring and 
tracking of MTW agency progress in meeting the MTW statutory 
objectives. IMS/PIC data is used to establish funding eligibility 
levels for both Operating Subsidy and Capital Fund grants. Further, HUD 
relies on IMS/PIC data to provide a thorough and comprehensive view of 
PHA program performance and compliance.
    MTW agencies are required to submit the following information to 
HUD via IMS/PIC (or its successor system):
     Family data to IMS/PIC using Form HUD-50058 or Form HUD-
50058 MTW (or successor forms) and in compliance with HUD's 50058 or 
50058 MTW submission requirements for MTW agencies. HUD will identify 
which form the MTW agencies will submit for families in the publication 
of the final Operations Notice. MTW agencies must report information on 
all families receiving some form of tenant-based or project-based 
housing assistance, either directly or indirectly, as well as all 
public housing families, to at least a 95 percent level.
     Current building and unit information in the development 
module of IMS/PIC (or successor system).
     Basic data about the PHA (address, phone number, email 
address, etc.).
    HUD will monitor MTW agency reporting to IMS/PIC (or successor 
system) to ensure compliance and provide technical assistance to MTW 
agencies as needed.
v. Voucher Management System (VMS) Reporting
    MTW agencies are required to report voucher utilization in the 
Voucher Management System (VMS), or its successor system. There are 
several areas in which VMS reporting is different for MTW agencies. 
These areas are highlighted in the VMS User's Manual (http://portal.hud.gov/hudportal/documents/huddoc?id=instructions.pdf) which 
details the VMS reporting requirements.
    HUD will monitor each MTW agency's VMS reporting to ensure 
compliance and provide technical assistance to MTW agencies as needed.
vi. General Reporting Requirement
    In addition to the reporting requirements outlined in this 
Operations Notice, MTW agencies are required to comply with any and all 
HUD reporting requirements not specifically waived by HUD for 
participation in the MTW demonstration program, including the 
requirement (discussed in Section 5) to comply with HUD's evaluation of 
the specific-policy changes being implemented by cohort.
b. Performance Assessment
    Assessing the performance of PHAs (both MTW and non-MTW) helps the 
delivery of services in the public housing and voucher programs and 
enhances trust among PHAs, public housing participants, HUD, and the 
general public. To facilitate this effort, HUD will provide management 
tools for effectively and fairly measuring the performance of a PHA in 
essential housing operations.
    Currently, HUD uses PHAS and SEMAP to assess risk and identify 
underperforming PHAs in the traditional public housing and voucher 
programs. However, since some of the MTW flexibilities make it 
difficult to accurately depict the performance of MTW agencies under 
the existing systems, HUD will develop alternative, MTW-specific 
performance indicators in consultation with MTW agencies and 
incorporate them into PHAS and SEMAP (or successor assessment 
system(s)). MTW agencies may not opt out of the MTW-specific successor 
system(s).
i. Public Housing Assessment System (PHAS)
    MTW agencies are scored in PHAS but they can elect not to receive 
the overall score (MTW agencies continue to receive PHAS sub-scores 
even if they elect not to receive the overall score). If an MTW agency 
elects to receive its overall PHAS score, the agency must continue to 
be scored for the duration of the demonstration, or until the agency is 
assessed under performance indicators designed specifically for MTW 
agencies in a successor system(s) to PHAS, whichever comes first. Once 
developed, MTW agencies that elect not to receive an overall PHAS score 
must be assessed under the MTW-specific successor system(s).
    Per the 1996 MTW statute, when providing public housing, the MTW 
agency must ensure that the housing is safe, decent, sanitary, and in 
good repair, according to the physical inspection protocols established 
and approved by HUD. Thus, MTW agencies continue to be subject to HUD 
physical inspections. To the extent that HUD physical inspections 
reveal deficiencies, the MTW agency must continue to

[[Page 8067]]

address these deficiencies in accordance with existing physical 
inspection requirements. If an MTW agency does not maintain public 
housing adequately, as evidenced by the physical inspection performed 
by HUD and is determined to be troubled in this area, HUD will 
determine appropriate remedial actions. The actions to be taken by HUD 
and the PHA will include actions statutorily required and such other 
actions as may be determined appropriate by HUD. These actions may 
include developing and executing a Memorandum of Agreement (MOA) with 
the MTW agency, suspension or termination of the MTW ACC amendment, or 
other agreement to be determined by HUD, in accordance with the 
provisions therein, or such other actions legally available to the 
Department.
    MTW agencies must continue to submit year-end financial information 
into the Financial Data Schedule (FDS) or successor system, as 
discussed earlier.
ii. Section 8 Management Assessment System (SEMAP)
    MTW agencies are scored in SEMAP but they can elect not to receive 
the overall score. If an MTW agency elects to receive its overall SEMAP 
score, the agency must continue to be scored for the duration of the 
demonstration, or until the agency is assessed under an assessment 
system designed specifically for MTW agencies, whichever comes first. 
Once developed, MTW agencies that opt out of SEMAP must be assessed 
under the MTW-specific successor system(s).
iii. MTW-specific Assessment
    HUD will develop new performance indicators for evaluating MTW 
agencies and for measuring the relative progress of assisted families 
toward self-sufficiency. Such MTW-specific performance indicators will 
be incorporated into PHAS and SEMAP (or successor system(s)) for 
purposes of MTW agencies and will address PHA performance (general 
public housing and Section 8 HCV management, as well as MTW-specific 
activities) and PHA risk associated with MTW.
c. Monitoring and Oversight
    MTW agencies remain subject to the full range of HUD monitoring and 
oversight efforts including, but not limited to, annual risk 
assessments, on-site monitoring reviews, monitoring reviews relating to 
VMS reporting and rent reasonableness, review of the accuracy of data 
reported into HUD data systems, use of HUD data systems to assess PHA 
program performance, among other activities.
i. MTW Statutory Requirements
    Throughout participation in the MTW demonstration program, all MTW 
agencies must continue to meet five statutory requirements established 
under the 1996 MTW Statute. HUD will monitor and determine MTW 
agencies' compliance with these five requirements as follows:

------------------------------------------------------------------------
       MTW statutory requirement:           HUD verification approach:
------------------------------------------------------------------------
1. MTW agencies must ensure that at      HUD will verify this
 least 75 percent of the families         requirement by pulling Public
 assisted are very low income families,   Housing and HCV data from PIC,
 as defined in section 3(b)(2) of the     or its successor system, and
 1937 Act..                               the MTW agency will provide
                                          income data for its families
                                          served through local, non-
                                          traditional housing programs,
                                          if any, in the MTW Supplement
                                          to the Annual Plan.
2. MTW agencies must establish a         HUD will verify this
 reasonable rent policy..                 requirement through its review
                                          of the MTW Supplement to the
                                          Annual Plan.
3. MTW agencies must continue to assist  HUD will verify this
 substantially the same total number of   requirement in accordance with
 eligible low-income families as would    the calculation in Notice PIH-
 have been served had the amounts not     2013-02, Baseline Methodology
 been combined..                          for MTW agencies, or successor
                                          notice.
4. MTW agencies must maintain a          HUD will verify this
 comparable mix of families (by family    requirement by pulling Public
 size) as would have been provided had    Housing and HCV data from PIC,
 the amounts not been used under the      or successor system.
 demonstration..
5. MTW agencies must ensure that         HUD will verify this
 housing assisted under the               requirement through its review
 demonstration meets housing quality      of PHAS Physical scores, or
 standards established or approved by     successor assessment system.
 the Secretary..
------------------------------------------------------------------------

ii. Income Integrity and Enterprise Income Verification System (EIV) 
Reviews
    MTW agencies are required to comply with the final rule regarding 
EIV issued December 29, 2009, and utilize EIV for all income 
verifications. EIV has been modified for MTW agencies so that family 
information submitted in PIC will not expire for 40 months, in order to 
accommodate agencies choosing to extend recertification periods for up 
to three years.
    MTW agencies are subject to HUD review to ensure compliance with 
EIV requirements as well as monitor the accuracy and integrity of the 
MTW agencies' income and rent determination policies, procedures, and 
outcomes.
iii. MTW Site Visit
    HUD will periodically conduct a site visit to provide guidance, 
discuss the MTW agency's MTW activities, and offer needed technical 
assistance regarding its program. The purpose of the site visit will be 
to confirm reported agency MTW activities, to review the status and 
effectiveness of the agency's MTW strategies, and to identify and 
resolve outstanding MTW related issues.
    The MTW agency shall give HUD access, at reasonable times and 
places, to all requested sources of information including access to 
files, access to units and an opportunity to interview agency staff and 
assisted participants.
    Where travel funding or staff resources are not available to 
facilitate in-person site visits, HUD may exercise the option to 
conduct remote site visits via telephone, videoconference, or webinar.
    To the extent possible, HUD will coordinate the MTW site visit with 
other site visits to be conducted by HUD.
iv. Housing Choice Voucher Utilization
    HUD will monitor HCV utilization at MTW agencies and it will ensure 
that HCV funds are fully utilized, subject to Section 6(a)(iii)(c) of 
this notice. Where leasing levels are inconsistent, HUD may take 
appropriate actions to work with the MTW agency to increase leasing and 
utilization.
v. Public Housing Occupancy
    HUD will monitor public housing occupancy rates for MTW agencies. 
In instances where the MTW agency's public housing occupancy rate falls

[[Page 8068]]

below 96 percent, HUD may require, at its discretion, that the MTW 
agency enter into an Occupancy Action Plan to address the occupancy 
issues. The Occupancy Action Plan will include the cause of the 
occupancy issue, the intended solution, and reasonable timeframes to 
address the cause of the occupancy issue.
vi. Additional Monitoring and Oversight
    HUD may, based on the MTW agency's risks and at HUD's discretion, 
conduct management, financial, or other reviews of the MTW agency. The 
MTW agency shall respond to any findings with appropriate corrective 
action(s).
    In addition, HUD will make use of all HUD data systems and 
available information to conduct ongoing remote monitoring and 
oversight actions for MTW agencies, consistent with the results of the 
PIH risk assessment.

Specific areas for comment on Program Administration and Oversight

    With respect to planning and reporting requirements for MTW 
agencies, HUD is specifically seeking comment on the following 
questions:
     Is the MTW Supplement to the Annual Plan, as described, an 
appropriate mechanism for HUD to track MTW agencies' activities and use 
of waivers? Are there specific elements that should be included in the 
MTW Supplement to the Annual Plan?
     Should MTW agencies with a combined unit total of 550 or 
less public housing units and Section 8 vouchers be exempt from the 
requirement to submit the Annual Plan? If so, how should HUD collect 
information on the activities and waivers implemented over the course 
of the demonstration?
     Do you have suggestions for how HUD can strengthen the 
public engagement process to ensure that participants have an 
opportunity to offer meaningful input in the selection and 
implementation of MTW activities?
    With respect to public housing and voucher program performance 
assessment for MTW agencies, HUD is specifically seeking comment on the 
following questions:
     How could HUD measure public housing and voucher program 
performance for MTW agencies and incorporate those measures into PHAS 
and SEMAP?
     Are there MTW-specific indicators that should be included 
in a revised PHAS and SEMAP assessment?
     Should an MTW agency retain its high-performer status in 
PHAS or SEMAP until MTW specific indicators are developed?
    With respect to monitoring and oversight for MTW agencies, HUD is 
specifically seeking comment on the following questions:
     Are HUD's monitoring and oversight efforts sufficient for 
MTW agencies?
     What are the specific areas of risk that should be 
considered for MTW agencies?
     Are there additional areas that should be monitored for 
MTW agencies?

7. Rental Assistance Demonstration (RAD) Program

    MTW agencies converting public housing program units to Section 8 
assistance under the Rental Assistance Demonstration (RAD) program are 
able to retain MTW regulatory and statutory flexibilities in the 
management of those units, subject to RAD requirements, if the 
conversion is to Section 8 Project-Based Voucher (PBV) assistance. MTW 
agencies converting projects under RAD to PBV may continue to undertake 
flexibilities except to the extent limited by RAD, as described in the 
RAD Notice, PIH-2012-32, REV-2 or its successor notice.\12\
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    \12\ Notices and laws related to RAD can be found at http://portal.hud.gov/hudportal/HUD?src=/RAD/library/notices.
---------------------------------------------------------------------------

8. Applying MTW Flexibilities to Special Purpose Vouchers

    Special Purpose Vouchers (SPVs) are specifically provided for by 
Congress in line item appropriations which distinguish them from 
regular vouchers. Generally, SPVs are not part of the MTW 
demonstration. Following is guidance on how MTW flexibilities may be 
applied to specific types of SPVs, which can be found on the MTW Web 
site\13\.
---------------------------------------------------------------------------

    \13\ https://portal.hud.gov/hudportal/documents/huddoc?id=DOC_10495.pdf.
---------------------------------------------------------------------------

a. Veteran Affairs Supportive Housing (HUD-VASH)
    HUD-VASH vouchers have separate operating requirements and must be 
administered in accordance with the requirements listed at www.hud.gov/offices/pih/programs/hcv/vash. The operating requirements waive and 
alter many of the standard HCV statutes and regulations at 24 CFR 982. 
Unless stated in the HUD-VASH operating requirements, however, the 
regulatory requirements at 24 CFR 982 and all other HUD directives for 
the HCV program are applicable to HUD-VASH vouchers. PHAs may submit a 
request to HUD to operate HUD-VASH vouchers in accordance with MTW 
administrative flexibilities.
b. Family Unification Program (FUP)
    The FUP NOFA language allows vouchers to be administered in 
accordance with MTW operations unless MTW provisions are inconsistent 
with the appropriations act or requirements of the FUP NOFA. In the 
event of a conflict between the Final Operations Notice and the 
appropriations act or FUP NOFA language, the act and NOFA govern.
c. Non-elderly Persons with Disabilities (NED) Vouchers
    The NED NOFA language allows vouchers to be administered in 
accordance with operations unless MTW provisions are inconsistent with 
the appropriations act or requirements of the NED NOFA. In the event of 
a conflict between the Final Operations Notice and the appropriations 
act or FUP NOFA language, the act and NOFA govern.
d. Enhanced Vouchers and Tenant Protection Vouchers
    Enhanced and tenant protection vouchers funds will be fungible one 
year after a family receives the voucher. The family must still be 
provided assistance until the end of the initial protection period 
which lasts until the family moves out of the residence where the 
voucher was originally received or is terminated from the program. Once 
the initial protection period ends, the enhanced or tenant protection 
voucher becomes a regular voucher. MTW agencies must follow the 
procedures described in PIH Notice 2013-27, or its successor notice, 
when the recipient of an enhanced voucher voluntarily agrees to 
relinquish such assistance in exchange for the provision of PBV 
assistance.

9. Regionalization

    The 2016 MTW Expansion Statute states that:
     The Secretary may, at the request of an MTW agency and one 
or more adjacent PHAs in the same area, designate that MTW agency as a 
regional agency.
     An MTW agency may be selected as a regional agency if the 
Secretary determines that unified administration of assistance under 
sections 8 and 9 by that agency across multiple jurisdictions will lead 
to a) efficiencies and to b) greater housing choice for low-income 
persons in the region.
     A regional MTW agency may administer the assistance under 
sections 8 and 9 of the 1937 Act for the participating agencies within 
its region pursuant to the terms of its MTW ACC

[[Page 8069]]

amendment, or other agreement to be determined by HUD, with HUD.
     The Secretary may agree to extend the term of the ACC 
amendment, or other agreement to be determined by HUD, and to make any 
necessary changes to accommodate regionalization.
    HUD will operationalize this regionalization provision through the 
same terms and conditions as the MTW Operations Notice. HUD will issue 
a separate PIH Notice addressing the criteria for designation as a 
regional MTW agency, the mechanisms for administration by the regional 
MTW agency on behalf of participating agencies, and the procedures for 
extending or modifying MTW activities to accommodate regionalization.

Specific Areas for Comment on Regionalization

    In anticipation of the guidance that HUD plans to issue on 
regionalization, HUD seeks comment on the following issues:
     How should ``adjacent'' be defined for the purposes of 
identifying which PHAs should be allowed to be part of an MTW agency's 
regional agency designation? Should regional MTW agencies extend across 
state borders?
     What flexibilities should the regional MTW agency be able 
to administer on behalf of its regional partners? Should the partner 
PHAs have full flexibility in the use of funds?
     How should regional partners be included in the MTW 
evaluation process? What data should they need to submit in conjunction 
with the MTW agency?
     What form of governance structure, if any, should be 
formed between the regional MTW agency and its partner PHAs?
     What form should the agreement (i.e., contract, memorandum 
of understanding, partnership agreement, etc.) take between the 
regional MTW agency and its PHA partners?
     Should the criteria for regionalization be the same for 
current MTW agencies and PHAs that join under the expansion?
     Should HUD issue a revised Public Housing and Voucher 
Consortia Rule to further the regionalization concept?

10. Applicability of Other Federal, State, and Local Requirements

    Notwithstanding the MTW waivers described in this Operations 
Notice, the following provisions of the 1937 Act continue to apply to 
MTW agencies and the assistance received pursuant to the 1937 Act:
    i. The terms ``low-income families'' and ``very low-income 
families'' shall continue to be defined by reference to Section 3(b)(2) 
of the 1937 Act (42 U.S.C. 1437a(b)(2));
    ii. Section 12 of the 1937 Act (42 U.S.C. 1437j), as amended, shall 
apply to housing assisted under the demonstration, other than housing 
assisted solely due to occupancy by families receiving tenant-based 
assistance; and
    iii. Section 18 of the 1937 Act (42 U.S.C. 1437p, as amended by 
Section 1002(d) of Public Law 104-19, Section 201(b)(1) of Public Law 
104-134, and Section 201(b) of Public Law 104-202), governing 
demolition and disposition, shall continue to apply to public housing 
notwithstanding any use of the housing under MTW.
    iv. Section 8(r)(1) of the 1937 Act on HCV portability shall 
continue to apply unless provided as a cohort-specific waiver and 
associated activity(s) in an evaluative cohort as necessary to 
implement comprehensive rent reform and occupancy policies. Such a 
cohort-specific waiver and associated activity(s) would contain, at a 
minimum, exceptions for requests to port due to employment, education, 
health and safety and reasonable accommodation.
    Notwithstanding any requirement contained in this Notice or any MTW 
waiver granted herein, other federal, state and local requirements 
applicable to public housing or HCV assistance will continue to apply. 
The ACC Amendment, or agreement to be determined by HUD, will place in 
HUD the authority to determine if any future law or future regulation 
conflicts with any MTW-related agreement or Notice. If a future law 
conflicts, the law shall be implemented, and no breach of contract 
claim, or any claim for monetary damages, may result from the conflict 
or implementation of the conflicting law or regulation.
    If any requirement applicable to public housing, outside of the 
1937 Act, contains a provision that conflicts or is inconsistent with 
any MTW waiver granted by HUD, the PHA remains subject to the terms of 
that non-1937 Act requirement. Such requirements include, but are not 
limited to:
     Requirements for Federal Funds: Notwithstanding the 
flexibilities described in this Notice, the public housing and voucher 
funding provided to MTW agencies remain federal funds and are subject 
to any and all other federal requirements outside of the 1937 Act 
(e.g., including but not limited to competitive HUD NOFAs under which 
the MTW agency has received an award, state and local laws, federal 
statutes other than the 1937 Act (including appropriations acts), and 
OMB Circulars and requirements), as modified from time to time. The MTW 
agency's expenditures must comply with 2 CFR part 200 and other 
applicable federal requirements, which provide basic guidelines for the 
use of federal funds, including the requirements of this Notice.
     National Environmental Policy Act (NEPA): MTW agencies 
must comply with NEPA, 24 CFR part 50 or Part 58, as applicable, and 
other related federal laws and authorities identified in 24 CFR part 50 
or Part 58, as applicable.
     Fair Housing and Equal Opportunity: As with the 
administration of all HUD programs and all HUD-assisted activities, 
fair housing and civil rights issues apply to the administration of MTW 
demonstration programs. This includes actions and policies that may 
have a discriminatory effect on the basis of race, color, sex, national 
origin, religion, disability, or familial status (see 24 CFR part 1 and 
part 100 subpart G) or that may impede, obstruct, prevent, or undermine 
efforts to affirmatively further fair housing. PHA Plans must include a 
civil rights certification required by Section 5A of the 1937 Act and 
implemented by regulation at 24 CFR 903.7(o) and 903.15, as well as a 
statement of the PHA's strategies and actions to achieve fair housing 
goals outlined in an approved Assessment of Fair Housing consistent 
with 24 CFR 5.154. If the PHA does not have a HUD accepted AFH, it must 
still provide a civil rights certification and statement of the PHA's 
fair housing strategies, which would be informed by the corresponding 
jurisdiction's AFH or Analysis of Impediments to Fair Housing Choice 
and the PHA's assessment of its own operations.
    All PHAs, including MTW agencies, are obligated to comply with non-
discrimination and equal opportunity laws and implementing regulation, 
including those in 24 CFR 5.105. Specific laws and regulations must be 
viewed in their entirety for full compliance, as this Operations Notice 
does not incorporate a complete discussion of all legal authorities. 
For example, PHAs, including MTW agencies, are required to comply with 
the Fair Housing Act, Title VI of the Civil Rights Act of 1964, Section 
504 of the Rehabilitation Act of 1973, Title II of the Americans with 
Disabilities Act of 1990, Architectural Barriers Act of 1968, Executive 
Order 11063: Equal Opportunity in Housing, Executive Order 13166: 
Improving Access to

[[Page 8070]]

Services for Persons with Limited English Proficiency, HUD's Equal 
Access Rule (24 CFR 5.105(a)(2), Age Discrimination Act of 1975, and 
Title IX of the Education Amendments Act of 1972, as well as HUD and 
government-wide regulations implementing these authorities.. PHAs 
should review PIH Notice 2011-31 for more details.
     Court Orders and Voluntary Compliance Agreements: MTW 
agencies must comply with the terms of any applicable court orders or 
Voluntary Compliance Agreements that are in existence or may come into 
existence during the term of the ACC Amendment, or other agreement as 
determined by HUD, The PHA must cooperate fully with any investigation 
by the HUD Office of Inspector General or any other investigative and 
law enforcement agencies of the U.S. Government.

11. MTW Agencies Admitted Prior to 2016 MTW Expansion Statute

    The 39 MTW agencies that entered the MTW demonstration prior to the 
2016 MTW Expansion Statute adhere to an administrative structure 
outlined in the Standard MTW Agreement, a contract between each current 
PHA and HUD. The 2016 MTW Expansion Statute extended the term of the 
Standard MTW Agreement for these existing MTW agencies through each 
PHA's 2028 fiscal year.
    Some PHAs that entered the MTW demonstration prior to the 2016 MTW 
Expansion Statute may wish to opt out of their Standard MTW Agreement 
and join the MTW Expansion. HUD will support an existing MTW PHA's 
request to join the MTW Expansion provided that:
     The PHA makes the change at the end of its fiscal year, so 
that it does not have part of a fiscal year under the Standard 
Agreement and part under the new framework;
     The PHA follows the same public comment and Board 
resolution process as would be required for amending the Standard MTW 
Agreement; and
     The PHA agrees to all the terms and conditions that apply 
to MTW agencies admitted pursuant to the 2016 MTW Expansion Statute, 
including all of the provisions of this Operations Notice and the 
accompanying ACC amendment, or other agreement as determined by HUD.
    The only difference between an MTW agency admitted pursuant to the 
2016 MTW Expansion Statute and an existing MTW PHA that elects to join 
the new framework will be that the existing MTW PHA joining the 
framework described in this Operations Notice will not be required to 
implement the specific policy change associated with each cohort of 
post-2016 MTW agencies and will not be required to participate in the 
evaluation of that specific policy change.

Specific areas for comment on MTW Agencies Admitted Prior to 2016 MTW 
Expansion Statute

    With respect to MTW agencies admitted prior to the 2016 MTW 
Expansion Statute, HUD is specifically seeking comment on the following 
questions:
     Is it appropriate to permit existing MTW agencies to come 
under the framework of this Operations Notice and associated ACC 
amendment, or other agreement as determined by HUD?
     Should these existing PHAs be subject to any different or 
supplemental requirements?

12. Sanctions, Terminations and Default

    If the MTW agency violates any of the requirements outlined in this 
Notice, HUD is authorized to take any corrective or remedial action. 
Sanctions, terminations, and default are covered in the PHA's MTW ACC 
amendment, or other agreement as determined by HUD.

III. Environmental Impact

1. Purpose and Applicability

    A Finding of No Significant Impact (FONSI) with respect to the 
environment has been made in accordance with HUD regulations in 24 CFR 
part 50 that implement section 102(2)(C) of the National Environmental 
Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The FONSI will be available 
for public inspection on www.regulations.gov.

    Dated: January 13, 2017.
Jemine A. Bryon,
General Deputy Assistant, Secretary for Public and Indian Housing.

[[Page 8071]]



                                           Appendix A--General Waivers
----------------------------------------------------------------------------------------------------------------
                                                          Regulations        Available
          Waiver name             Waiver description        waived          activities           Parameters
----------------------------------------------------------------------------------------------------------------
                        Activities Related to Public Housing and Housing Choice Vouchers
----------------------------------------------------------------------------------------------------------------
Limited Lease Terms...........  The Agency may         Certain           Limited Lease     Successful
                                 develop and adopt a    provisions of     Term Housing      participants must be
                                 program to limit the   Sections 3, 4,    Program (PH):     eligible to transfer
                                 term of assistance     5, 6, 8, and 9    The Agency may    into regular public
                                 in Section 8 and 9     of the 1937 Act   create a          housing/HCV
                                 programs in order to   and 24 CFR 966    limited lease     programs; must not
                                 create a new limited   Subpart A, 960    term housing      have disparate
                                 lease term housing     Subpart B, and    program with      impact on a
                                 program. Successful    982.303.          reasonable        protected class or
                                 participants in                          conditions in     other protected
                                 these programs will                      its public        characteristic;
                                 be eligible for                          housing program.  policies,
                                 transfer to the                         Limited Lease      procedures, and
                                 Agency's public                          Term Housing      programs must be
                                 housing or HCV                           Program (HCV):    consistent with
                                 programs. The Agency                     The Agency may    applicable
                                 will ensure that                         create a          nondiscrimination
                                 these programs do                        limited lease     and equal
                                 not have a disparate                     term housing      opportunity
                                 impact on protected                      program with      authorities,
                                 classes, and will be                     reasonable        including but not
                                 operated in a manner                     conditions in     limited to Section
                                 that is consistent                       its HCV program.  504 of the
                                 with the                                                   Rehabilitation Act;
                                 requirements of                                            participants are not
                                 nondiscrimination                                          required to
                                 and equal                                                  participate in
                                 opportunity                                                services targeted to
                                 authorities,                                               persons with
                                 including but not                                          disabilities;
                                 limited to Section                                         admission is not
                                 504 of the                                                 conditioned on a
                                 Rehabilitation Act.                                        diagnosis or
                                 More specifically,                                         specific disability
                                 under no                                                   of an applicant or
                                 circumstances will                                         participant family.
                                 residents of such                                          The term of
                                 programs be required                                       assistance may not
                                 to participate in                                          be shorter than 6
                                 supportive services                                        months. Agencies
                                 that are targeted at                                       seeking to create a
                                 persons with                                               limited lease term
                                 disabilities in                                            program that goes
                                 general, or persons                                        beyond the
                                 with any specific                                          activities listed in
                                 disability. In                                             this waiver may
                                 addition, admission                                        propose an activity
                                 to any of the                                              under the Local Non-
                                 programs or priority                                       Traditional
                                 for supportive                                             Activities Rental
                                 services developed                                         Subsidy Program
                                 under this section                                         Waiver located in
                                 will not be                                                the Conditional
                                 conditioned on a                                           Waivers.
                                 diagnosis or
                                 specific disability
                                 of a member of an
                                 applicant or
                                 participant family.
                                 This section is not
                                 intended to govern
                                 the designation of
                                 housing that is
                                 subject to Section 7
                                 of the 1937 Act.
Homeownership Program.........  The Agency is          Certain           Homeownership     Inventory removal of
                                 authorized to use      provisions of     (Both): The       current public
                                 the Section 8          Sections 5, 9,    Agency may        housing units must
                                 Homeownership          24, 32, 35,       create a          be approved in
                                 Program as the basis   8(o)(15) and      homeownership     advance by HUD. The
                                 for providing          8(y) of the       program that      Agency is required
                                 homeownership          1937 Act, 24      includes soft     to submit a Section
                                 opportunities to       CFR 905, 906,     second            32 homeownership
                                 families who are low-  24 CFR 982.625    mortgages or      application to HUD
                                 income, including      through 982.643.  down payment      via the Inventory
                                 public housing                           assistance to     Removal Submodule of
                                 residents, HCV or                        low income        IMS/PIC. If the
                                 PBV tenants, or                          families          Agency is seeking to
                                 other low-income                         including PH      waive portions of 24
                                 families.                                residents, PBV    CFR 906, then the
                                 Participants in this                     and HCV           Agency must include
                                 Homeownership                            families in       those regulations as
                                 Program will be                          lieu of monthly   part of the Section
                                 subject to the                           HAP.              32 Homeownership
                                 Section 8 occupancy                                        application. Note
                                 and admission                                              that the disposition
                                 requirements.                                              requirements of
                                 Subject to subsidy                                         Section 18 and 24
                                 layering review, the                                       CFR Part 970 do not
                                 Agency is authorized                                       apply to the sale of
                                 to apply the Section                                       public housing units
                                 8 Homeownership                                            in accordance with
                                 requirements to                                            the Section 32
                                 families who are low-                                      homeownership plan.
                                 income, including                                          Assistance under
                                 public housing and                                         this waiver is still
                                 other low-income                                           subject to subsidy
                                 families. The                                              layering review.
                                 Section 8                                                  Recruitment,
                                 Homeownership                                              eligibility, and
                                 requirements can be                                        selection policies
                                 modified to provide                                        and procedures must
                                 soft second                                                be consistent with
                                 mortgages or down                                          the Department's
                                 payment assistance                                         nondiscrimination
                                 to participating low-                                      and equal
                                 income families or                                         opportunity
                                 to provide monthly                                         requirements.
                                 HAP payments to HCV
                                 recipients.

[[Page 8072]]

 
Authorizations Related to       The Agency is          Certain           Waive Operating   .....................
 Family Self Sufficiency.        authorized to          provisions of     a Required FSS
                                 operate any of its     Section 23 of     Program (Both):
                                 existing self-         the 1937 Act      The Agency is
                                 sufficiency and        and 24 CFR 984.   authorized to
                                 training programs,                       waive its
                                 including its Family                     requirement to
                                 Self-Sufficiency                         operate the
                                 (FSS) Program and                        traditional FSS
                                 any successor                            program.
                                 programs exempt from                    Alternative to
                                 certain HUD program                      Program
                                 requirements. If the                     Coordinating
                                 Agency receives                          Committee
                                 dedicated funding                        (Both): The
                                 for an FSS                               Agency is
                                 coordinator, such                        authorized to
                                 funds must be used                       create an
                                 to employ a self-                        alternative
                                 sufficiency                              structure for
                                 coordinator. In                          securing local
                                 developing and                           resources to
                                 operating such                           support an FSS
                                 programs, the Agency                     program.
                                 is authorized to
                                 establish strategic
                                 relationships and
                                 partnerships with
                                 local private and
                                 public agencies and
                                 service providers to
                                 leverage expertise
                                 and funding. In
                                 implementing this
                                 waiver, the Agency
                                 must execute a
                                 contract of
                                 participation, or
                                 other locally
                                 developed agreement,
                                 that is at least 5
                                 years but no more
                                 than 10 years.
                                 However,
                                 notwithstanding the
                                 above, any funds
                                 granted pursuant to
                                 a competition must
                                 be used in
                                 accordance with the
                                 NOFA and the
                                 approved application
                                 and work plan.
                                .....................  ................  Alternative       Recruitment,
                                                                          Family            eligibility, and
                                                                          Selection         selection policies
                                                                          Procedures        and procedures must
                                                                          (Both): The       be consistent with
                                                                          Agency is         the Department's
                                                                          authorized to     nondiscrimination
                                                                          develop its own   and equal
                                                                          recruitment and   opportunity
                                                                          selection         requirements. Agency
                                                                          procedures for    may not require
                                                                          its FSS           families to
                                                                          program(s).       participate in the
                                                                                            program as a
                                                                                            condition of
                                                                                            receiving housing
                                                                                            assistance. Agency
                                                                                            may not include
                                                                                            current work status,
                                                                                            work history and/or
                                                                                            source of income as
                                                                                            part of the
                                                                                            selection criteria.
                                                                                            ``Family'' is not
                                                                                            limited to families
                                                                                            with a member who is
                                                                                            able to work full
                                                                                            time, but is defined
                                                                                            broadly so as not to
                                                                                            exclude families
                                                                                            with a member who is
                                                                                            disabled but able to
                                                                                            work, disabled but
                                                                                            unable to work, or
                                                                                            working as a
                                                                                            caregiver for a
                                                                                            family member with a
                                                                                            disability.
                                .....................  ................  Modify or         The Agency may modify
                                                                          Eliminate the     the terms of the
                                                                          Contract of       contract of
                                                                          Participation     participation to
                                                                          (Both): The       align with
                                                                          Agency is         adjustments made to
                                                                          authorized to     its FSS program(s)
                                                                          modify the        using MTW
                                                                          terms of, or      flexibility.
                                                                          eliminate the     Further, the Agency
                                                                          contract of       may discontinue use
                                                                          participation,    of the contract of
                                                                          in lieu of a      participation and
                                                                          local form.       instead employ a
                                                                                            locally-developed
                                                                                            agreement that
                                                                                            codifies the terms
                                                                                            of participation.

[[Page 8073]]

 
                                .....................  ................  Policies for      Consistent with the
                                                                          Addressing        goals and structure
                                                                          Increases in      of its MTW FSS
                                                                          Family Income     program, the Agency
                                                                          (Both): The       can set policies for
                                                                          Agency is         whether income
                                                                          authorized to     increases are
                                                                          set its own       recognized for
                                                                          policies for      purposes of
                                                                          addressing        increasing rent or
                                                                          increases in      changing the amount
                                                                          family income     of funds moved to
                                                                          during            escrow/savings
                                                                          participation     through the program.
                                                                          in the FSS        The Agency may not
                                                                          program.          use income increases
                                                                                            during participation
                                                                                            in the FSS program
                                                                                            to change a family's
                                                                                            eligibility status
                                                                                            for purposes of
                                                                                            participation in the
                                                                                            FSS program or for
                                                                                            the receipt public
                                                                                            housing or HCV
                                                                                            assistance.
                                .....................  ................  Calculating FSS   The Agency may set
                                                                          Credits (Both):   policies to defer
                                                                          The Agency is     income increases to
                                                                          authorized to     savings OR to allow
                                                                          create            participants to earn
                                                                          alternative       savings deposits
                                                                          methods for       based on meeting
                                                                          computing the     certain program
                                                                          family's FSS      milestones. Such
                                                                          credit.           policies must be
                                                                                            made clear to
                                                                                            participants in
                                                                                            writing prior to
                                                                                            starting their
                                                                                            participation in the
                                                                                            program.
                                .....................  ................  Disbursement of   Consistent with the
                                                                          Savings (Both):   goals and structure
                                                                          The Agency may    of its MTW FSS
                                                                          set its own       program, the Agency
                                                                          policies for      can set policies for
                                                                          when savings      when savings are
                                                                          funds can be      disbursed to
                                                                          disbursed to      participants. This
                                                                          participants.     could mean all funds
                                                                                            are disbursed at
                                                                                            once, or at certain
                                                                                            key points of
                                                                                            participation. Such
                                                                                            policies must be
                                                                                            made clear to
                                                                                            participants in
                                                                                            writing prior to
                                                                                            starting their
                                                                                            participation in the
                                                                                            program.
----------------------------------------------------------------------------------------------------------------
                                      Activities Related to Public Housing
----------------------------------------------------------------------------------------------------------------
PH--Initial, Annual and         The Agency is          Certain           Alternate         Reexaminations must
 Interim Income Review Process.  authorized to          provisions of     Reexamination     occur at least every
                                 restructure the        sections          Schedule for      three years. Must
                                 initial, annual and    3(a)(1) and       Workable          allow at least one
                                 interim review         3(a)(2) of the    Households        interim adjustment
                                 process in the         1937 Act and 24   (PH): The         at the request of
                                 public housing         CFR 966.4 and     Agency may        the household per
                                 program in order to    960.257.          establish an      year.
                                 affect the frequency                     alternate        Reexaminations must
                                 of the reviews and                       reexamination     occur at least every
                                 the methods and                          schedule for      four years. Must
                                 process used to                          workable          continue to allow
                                 establish the                            households.       interim adjustments
                                 integrity of the                        Alternate          at the request of
                                 income information                       Reexamination     the household.
                                 provided. In                             Schedule for     The Agency must
                                 addition, the Agency                     Elderly/          determine the
                                 is expressly                             Disabled          eligibility of a
                                 authorized to adopt                      Households        families in
                                 a local system of                        (PH): The         accordance with 24
                                 income verification                      Agency may        CFR 5.609. Prior to
                                 in lieu of the                           establish an      the implementation
                                 current HUD system.                      alternate         of the activity a
                                 For example, the                         reexamination     hardship policy and
                                 Agency may implement                     schedule for      impact analysis must
                                 alternate time                           elderly and/or    be developed and
                                 frames for validity                      disabled          adopted in
                                 of verification or                       households.       accordance with MTW
                                 adopt policies for                      Alternate          guidance.
                                 verification of                          Verification
                                 income and assets                        Policy (PH):
                                 through sources                          The Agency may
                                 other than those                         verify
                                 currently allowed                        information
                                 under the 1937 Act.                      provided by the
                                 The terms ``low-                         participant in
                                 income families''                        alternate ways.
                                 and ``very low-
                                 income families''
                                 shall continue to be
                                 defined by reference
                                 to Section 3(b)(2)
                                 of the 1937 Act (42
                                 U.S.C. 1437a(b)(2)).
                                 HUD has defined
                                 ``Annual Income'' at
                                 24 CFR 5.609 and MTW
                                 Agencies must
                                 determine the
                                 eligibility of the
                                 family in accordance
                                 with provisions of
                                 24 CFR 5.609.
----------------------------------------------------------------------------------------------------------------

[[Page 8074]]

 
                                  Activities Related to Housing Choice Vouchers
----------------------------------------------------------------------------------------------------------------
HCV--Operational Policies and   The Agency is          Certain           Alternate         Reexaminations must
 Procedures.                     authorized to          provisions of     Reexamination     occur at least every
                                 define, adopt and      Section           Schedule for      three years. Must
                                 implement a            8(o)(5),          Workable          allow at least one
                                 reexamination          8(o)(7) and       Households        interim adjustment
                                 program that differs   8(o)(13)(F) of    (HCV): The        at the request of
                                 from the               the 1937 Act      Agency may        the household per
                                 reexamination          and 24 CFR        establish an      year. The Department
                                 program currently      982.516 and       alternate         will develop a rider
                                 mandated in the 1937   982.162(b).       reexamination     to the HAP contract
                                 Act and its                              schedule for      that reflects MTW
                                 implementing                             workable          authorizations that
                                 regulations. The                         households.       adjust the current
                                 terms ``low-income                                         elements of the HAP
                                 families'' and                                             contract.
                                 ``very low-income
                                 families'' shall
                                 continue to be
                                 defined by reference
                                 to Section 3(b)(2)
                                 of the 1937 Act (42
                                 U.S.C. 1437a(b)(2)).
                                .....................  ................  Alternate         Reexaminations must
                                                                          Reexamination     occur at least every
                                                                          Schedule for      four years. Must
                                                                          Elderly/          continue to allow
                                                                          Disabled          interim adjustments
                                                                          Households        at the request of
                                                                          (HCV): The        the household. The
                                                                          Agency may        Department will
                                                                          establish an      develop a rider to
                                                                          alternate         the HAP contract
                                                                          reexamination     that reflects MTW
                                                                          schedule for      authorizations that
                                                                          elderly and/or    adjust the current
                                                                          disabled          elements of the HAP
                                                                          households.       contract.
                                .....................  ................  Alternate         The Agency must
                                                                          Verification      determine the
                                                                          Policy (HCV):     eligibility of a
                                                                          The Agency may    families in
                                                                          verify            accordance with 24
                                                                          information       CFR 5.609. Prior to
                                                                          provided by the   the implementation
                                                                          participant in    of the activity a
                                                                          alternate ways.   hardship policy and
                                                                                            impact analysis must
                                                                                            be developed and
                                                                                            adopted in
                                                                                            accordance with MTW
                                                                                            guidance. The
                                                                                            Department will
                                                                                            develop a rider to
                                                                                            the HAP contract
                                                                                            that reflects MTW
                                                                                            authorizations that
                                                                                            adjust the current
                                                                                            elements of the HAP
                                                                                            contract.
HCV--Leasing Incentives.......  The Agency is          Certain           Vacancy Loss      The Agency must
                                 authorized to          provisions of     (HCV): The        update its
                                 determine a damage     Section           Agency may        Administrative Plan
                                 claim and/or vacancy   8(o)(9), of the   provide           to reflect vacancy
                                 loss policy and        1937 Act and 24   landlords with    loss claim policy.
                                 payment policy for     CFR 982.311.      vacancy loss      In order to
                                 occupied units that                      payments up to    incentivize
                                 differs from the                         3 months.         landlords to lease
                                 policy requirements                                        to HCV families an
                                 currently mandated                                         Agency may provide
                                 in the 1937 Act and                                        vacancy loss
                                 its implementing                                           payments to
                                 regulations. Damage                                        landlords whether or
                                 and vacancy                                                not a family is
                                 authority are                                              terminated.
                                 subject to state and
                                 local laws.
                                .....................  ................  Damage Claims     The Agency must
                                                                          (HCV): The        update its
                                                                          Agency may        Administrative Plan
                                                                          provide           to reflect damage
                                                                          landlords with    claim policy. In
                                                                          compensation in   implementing this
                                                                          the event that    activity, the
                                                                          a tenant leaves   tenant's security
                                                                          the unit with     deposit should first
                                                                          significant       be used to cover
                                                                          damage.           damages before the
                                                                                            Agency provides
                                                                                            compensation to a
                                                                                            landlord.
----------------------------------------------------------------------------------------------------------------

[[Page 8075]]

 
PBV--Unit Cap Percentage        The Agency is          Section           Raise PBV Unit    The Agency is subject
 Waiver.                         authorized to use      8(o)(13)(B) of    Cap (PBV): The    to the PBV Section
                                 for project-based      the 1937 Act      Agency may        of PIH Notice 2015-
                                 assistance up to 50%   and 24 CFR        project-base up   05 or any successor
                                 of its total           983.6.            to 50% of its     notice and/or
                                 authorized units as                      authorized        guidance. If more
                                 long as units are                        units.            than 20% of the
                                 located in census                                          total authorized
                                 tracts with no more                                        units are project
                                 than 20% poverty                                           based, the
                                 rate and/or house at-                                      additional units
                                 risk populations                                           must meet one of the
                                 defined as an                                              following criteria:
                                 individual or family                                       house people who
                                 that does not have                                         meet the HUD
                                 sufficient resources                                       definition of
                                 or support networks                                        homeless; house
                                 immediately                                                vulnerable
                                 available to prevent                                       populations; house
                                 them from moving to                                        veterans; provide
                                 an emergency shelter                                       supportive housing
                                 or lacks a fixed,                                          for elderly or
                                 regular, and                                               disabled; or be
                                 adequate nighttime                                         located in areas of
                                 residence.                                                 high-opportunity.
                                                                                            Agency must comply
                                                                                            with Fair Housing
                                                                                            and Civil Rights
                                                                                            requirements. The
                                                                                            Agency is subject to
                                                                                            Notice 2013-27.
PBV--Development Percentage     The Agency is          Section           Raise PBV Cap     The Agency is subject
 Waiver.                         authorized to          8(o)(13)(B) of    Within a          to the PBV Section
                                 determine the          the 1937 Act      Development to    of PIH Notice 2015-
                                 percentage of units    and 24 CFR        50% PBV (PBV):    05 or any successor
                                 within a development   983.56.           The Agency may    notice and/or
                                 that can be project-                     raise the PBV     guidance. If more
                                 based that differs                       cap within a      than 20% of the
                                 from the percentage                      development to    units in a
                                 currently mandated                       50%.              development are
                                 in the 1937 Act and                     Raise PBV Cap      project-based, the
                                 its implementing                         Within a          additional units
                                 regulations. In                          Development to    must meet one of the
                                 using this                               75% PBV (PBV):    following criteria:
                                 authorization, the                       The Agency may    house people who
                                 Agency must place                        raise the PBV     meet the HUD
                                 units in locally                         cap within a      definition of
                                 defined areas of                         development to    homeless; house
                                 opportunity.                             75%.              vulnerable
                                                                         Raise PBV Cap      populations; house
                                                                          Within a          veterans; provide
                                                                          Development to    supportive housing
                                                                          100% (PBV): The   for elderly or
                                                                          Agency may        disabled; is located
                                                                          raise the PBV     in an area of high
                                                                          cap within a      opportunity; or is a
                                                                          development to    market-rate rental
                                                                          100%.             property owned by
                                                                                            the Agency. The
                                                                                            Agency must comply
                                                                                            with Fair Housing
                                                                                            and Civil Rights
                                                                                            requirements. Agency
                                                                                            is subject to Notice
                                                                                            PIH 2013-27.
PBV--Elimination of             Subject to subsidy     Certain           Eliminate PBV     The Agency is still
 Competitive Process.            layering review, the   provisions of     Competitive       subject to the PBV
                                 Agency is authorized   Sections          Process (PBV):    Section of Notice
                                 to project-base        8(o)(13)(B and    The Agency may    PIH 2015-05 or any
                                 Section 8 assistance   D) of the 1937    eliminate the     successor notice and/
                                 at properties owned    Act and 24 CFR    competitive       or guidance. Agency
                                 by a single asset      982.1, 982.352    process in the    is subject to Notice
                                 entity of the Agency   and 24 CFR Part   award of PBVs     PIH 2013-27. This
                                 that are not public    983 Subpart B.    to properties     waiver does not
                                 housing properties,                      owned by a        waive Part 983,
                                 subject to HUD's                         single asset      Subpart B in its
                                 requirements                             entity of the     entirety and Agency
                                 regarding subsidy                        Agency that are   must still comply
                                 layering. Project-                       not public        with 24 CFR 983.57
                                 based assistance for                     housing.          and 983.59(b) which
                                 such owned units                                           requires that HQS
                                 does not need to be                                        inspections be
                                 competitively bid,                                         completed by
                                 nor are the owned                                          independent
                                 units subject to any                                       entities.
                                 required assessments
                                 for voluntary
                                 conversion. Agency
                                 still needs to
                                 complete site
                                 selection
                                 requirements. This
                                 waiver does not
                                 waive 24 CFR 983.57
                                 despite reference to
                                 Part 983, Subpart B.
                                 This waiver also
                                 does not waive the
                                 requirement of 24
                                 CFR 983.59(b) that
                                 HQS inspections be
                                 performed by an
                                 independent entity.

[[Page 8076]]

 
PBV--Alternate Competitive      The Agency is          Certain           Establish         Agency is subject to
 Process.                        authorized to          provisions of     Alternate PBV     PBV Section of
                                 establish a            24 CFR 983.51.    Competitive       Notice PIH 2015-05
                                 reasonable                               Process (PBV):    or any successor
                                 competitive process                      The Agency may    notice and/or
                                 or utilize an                            establish an      guidance. Agency is
                                 existing local                           alternate         subject to Notice
                                 competitive process                      competitive       PIH 2013-27.
                                 for project-basing                       process in the
                                 leased housing                           award PBVs.
                                 assistance at units
                                 that meet existing
                                 Housing Quality
                                 Standards and that
                                 are owned by non-
                                 profit, for-profit
                                 housing entities, or
                                 a single asset
                                 entity of the Agency.
PBV--Operational Policies and   The Agency is          Certain           Add Units to PBV  The anniversary and
 Procedures.                     authorized to          provisions of     HAP Contract      expiration date for
                                 determine the time     Sections          (PBV): The        any additional units
                                 period for amending    8(o)(7)(a),       Agency may add    added to a PBV HAP
                                 the PBV HAP contract   8(o)(13)(F) and   units to a PBV    contract must be the
                                 to add units           8(o)(13)(G) of    HAP contract at   same as that for the
                                 thereto, the length    the 1937 Act      any time.         original units under
                                 of the lease period,   and 24 CFR 983                      the PBV HAP
                                 when vouchers          Subpart F.                          contract.
                                 expire, and when
                                 vouchers will be
                                 issued or reissued.
----------------------------------------------------------------------------------------------------------------


                                         Appendix B--Conditional Waivers
----------------------------------------------------------------------------------------------------------------
                                                     Regulations
  No.       Waiver name      Waiver description        waived        Available activities        Parameters
----------------------------------------------------------------------------------------------------------------
                                      Activities Related to Public Housing
----------------------------------------------------------------------------------------------------------------
1......  PH--Leases......  The Agency is          Certain           Establish Community    Agency may only
                            authorized to          provisions of     Rules through Local    implement changes to
                            develop and adopt a    Section 6(l) of   Lease (PH): The        the lease under this
                            new form of local      the 1937 Act      Agency may establish   activity that do not
                            lease and establish    and 24 CFR        community rules        require either a
                            community rules and    966.4.            through a local        regulatory or
                            reasonable tenant                        lease.                 statutory waiver.
                            fees based on proven                    Establish Reasonable    Fair Housing and
                            private management                       Fees through Local     other civil rights
                            models (subject to                       Lease (PH): The        requirements
                            State and local                          Agency may charge      continue to apply.
                            laws), provided that                     fees that are         An appeals process
                            no-cause evictions                       reasonable and cost    and hardship policy
                            are not permitted                        effective through a    must be put in
                            and the Agency                           local lease.           place. The hardship
                            allows for grievance                                            policy must be
                            procedures.                                                     developed and
                                                                                            adopted in
                                                                                            accordance with MTW
                                                                                            guidance.
2......  PH--Rent          The Agency is          Certain           Rent Policies (PH):    The rent bands must
          Policies.         authorized to          provisions of     Income bands--The      be set in accordance
                            determine family       Section           Agency may implement   with bedroom size. A
                            payment, including     3(a)(2),          changes to the rent    hardship policy must
                            the total tenant       3(a)(3)(A) and    calculation in order   be put in place. The
                            payment, the minimum   Section 6(l) of   to create a system     hardship policy must
                            rent, utility          the 1937 Act      based upon rent        be developed and
                            reimbursements and     and 24 CFR        bands. Such rent       adopted in
                            tenant rent. The       5.603, 5.611,     policies are           accordance with MTW
                            Agency is authorized   5.628, 5.630,     structured using two   guidance.
                            to adopt and           5.632, 5.634      variables: (1)
                            implement any          and 960.255 and   Income bands, or
                            reasonable policies    966 Subpart A.    ranges, that assign
                            for setting rents in                     dollar increments
                            public housing,                          that have been
                            including but not                        determined locally
                            limited to:                              by the Agency, and
                            Establishing                             (2) bedroom size. In
                            definitions of                           a table, the y-axis
                            income and adjusted                      lists the income
                            income or earned                         bands and the x-axis
                            income disallowance                      lists the various
                            that differ from                         bedroom sizes. In
                            those in current                         creating this
                            statues and                              system, the Agency
                            regulations. Agency                      may also adopt a
                            must comply with                         flat rent policy
                            Section 3(b)(2) of                       within each income
                            the Act to determine                     band instead of
                            eligibility.                             calculating rent
                                                                     based on adjusted
                                                                     income. The income
                                                                     bands may result in
                                                                     total tenant payment
                                                                     being more than 30%.
                                                                    Rent Policies (PH):    .....................
                                                                     Flat Rents--The
                                                                     Agency may establish
                                                                     flat rents based on
                                                                     bedroom size.
                                                                    Rent Policies (PH):    Minimum rent may not
                                                                     Minimum Rent--The      exceed $250. Tenant
                                                                     Agency may implement   rents may be
                                                                     a minimum rent         calculated between
                                                                     policy that is         25% to 50% of
                                                                     targeted towards       adjusted income.
                                                                     work able families.    Hardship policy,
                                                                                            impact analysis, and
                                                                                            any other
                                                                                            information required
                                                                                            by HUD for the
                                                                                            oversight of this
                                                                                            policy must be
                                                                                            provided to HUD upon
                                                                                            request.
                                                                    Rent Policies (PH):    .....................
                                                                     Other Income-Based
                                                                     Rent Model--The
                                                                     Agency may calculate
                                                                     rent at an
                                                                     alternative adjusted
                                                                     income.
                                                                    Rent Policies (PH):    The gross income
                                                                     Gross Income Rents--   calculation may not
                                                                     The Agency may         exceed 40% of rent
                                                                     calculate rent as a    burden for working
                                                                     percentage of gross    families and 27% for
                                                                     income that does not   elderly and/or
                                                                     include income         disabled households.
                                                                     deductions and/or
                                                                     exemptions.
                                                                    Rent Policies (PH):    The Agency should
                                                                     Alternative Utility    review its schedule
                                                                     Allowance--The         of utility
                                                                     Agency may create a    allowances each
                                                                     utility schedule(s)    year, and must
                                                                     for all units based    revise its allowance
                                                                     upon bedroom size,     for a utility
                                                                     the property           category if there
                                                                     location and/or the    has been a change of
                                                                     types of utilities     10 percent or more
                                                                     paid by resident.      from the prior year.
                                                                                            The Agency must
                                                                                            maintain information
                                                                                            supporting its
                                                                                            annual review of
                                                                                            utility allowances
                                                                                            and any revisions
                                                                                            made in its utility
                                                                                            allowance schedule.

[[Page 8077]]

 
3......  PH--Work          The Agency is          Certain           Work Requirement       Residents must have
          Requirements.     authorized to          provisions of     (PH): The Agency may   the opportunity to
                            implement a            Section 3 of      implement a work       utilize the
                            requirement that a     the 1937 Act      requirement for        provisions of the
                            specified segment of   and 24 CFR        public housing         Agency's Grievance
                            its public housing     960.206.          residents between      Procedure to resolve
                            residents work as a                      the ages of 18 and     a dispute regarding
                            condition of tenancy                     54. The requirement    a determination that
                            subject to subject                       shall be no less       a resident has
                            to all applicable                        than 15 hours of       failed to comply
                            Fair Housing                             work per week and no   with the work
                            Requirements and the                     more than 30 hours     requirement. The
                            mandatory admission                      of work per week.      Agency must update
                            and prohibition                          Work requirements      its ACOP to include
                            requirements imposed                     shall not be applied   a description of the
                            by sections 576-578                      to exclude, or have    circumstances in
                            of the Quality                           the effect of          which residents
                            Housing and Work                         excluding, the         shall be exempt for
                            Responsibility Act                       admission of or        the requirement and
                            of 1998 and Section                      participation by       hardship policies.
                            428 of Public Law                        persons with           The ACOP should
                            105-276. Those                           disabilities or        include a
                            individuals exempt                       families that          description of what
                            from the Community                       include persons with   is considered work
                            Service Requirement                      disabilities. Work     as well as other
                            in accordance with                       requirements shall     activities that
                            Section 12(c)(2)(A),                     not apply to person    shall be considered
                            (B), (D) and (E) of                      with disabilities or   acceptable
                            the 1937 Act are                         families that          substitutes for
                            also exempt from the                     include persons with   work. Services, or
                            Agency's work                            disabilities.          referrals to
                            requirement.                             However, persons       services, must be
                                                                     with disabilities      provided by the
                                                                     and families that      Agency to support
                                                                     include persons with   preparing families
                                                                     disabilities must      to comply with this
                                                                     have equal access to   requirement. The
                                                                     the full range of      hardship policy in
                                                                     program services and   the ACOP should
                                                                     other incentives.      apply to residents
                                                                                            who are actively
                                                                                            trying to comply
                                                                                            with the Agency's
                                                                                            work requirement,
                                                                                            but are having
                                                                                            difficulties
                                                                                            obtaining work or an
                                                                                            acceptable
                                                                                            substitute. The ACOP
                                                                                            should also describe
                                                                                            the consequences of
                                                                                            failure to comply
                                                                                            with the work
                                                                                            requirement.
                                                                                            Agencies may not
                                                                                            implement the PH-
                                                                                            Work Requirements
                                                                                            Waiver on
                                                                                            individuals exempted
                                                                                            from the Community
                                                                                            Service Requirement
                                                                                            under Section
                                                                                            12(c)(2)(A), (B),
                                                                                            (D) and (E).
                                                                                           While the work
                                                                                            requirements do not
                                                                                            apply to persons
                                                                                            with disabilities or
                                                                                            families that
                                                                                            include a person
                                                                                            with disabilities,
                                                                                            such persons and
                                                                                            families are not
                                                                                            precluded from
                                                                                            working or engaging
                                                                                            in substitute
                                                                                            activities (such as
                                                                                            caring for a family
                                                                                            member who is
                                                                                            disabled).
                                                                                            Regardless of the
                                                                                            level of engagement
                                                                                            with work or
                                                                                            substitute
                                                                                            activities, persons
                                                                                            and families that
                                                                                            include persons with
                                                                                            disabilities must
                                                                                            have equal access to
                                                                                            services or referral
                                                                                            to services to
                                                                                            support their
                                                                                            efforts to obtain
                                                                                            work or an
                                                                                            acceptable
                                                                                            substitute, and any
                                                                                            other services or
                                                                                            other incentives
                                                                                            associated with the
                                                                                            program.
4......  PH--Term Limits.  The Agency is          Certain           Term Limits (PH): The  The term of
                            authorized to adopt    provisions of     Agency may limit the   assistance may not
                            and implement term     Section           duration for which a   be shorter than 5
                            limits for its         3(a)(3)(A) and    family receives        years except in the
                            Public Housing         Section 6(l) of   housing assistance.    case of short-term
                            program.               the 1937 Act                             transitional housing
                                                   and 24 CFR                               programs. Services,
                                                   5.603 and 966                            or referrals to
                                                   Subpart A.                               services, must be
                                                                                            provided by the
                                                                                            Agency to support
                                                                                            preparing families
                                                                                            for the termination
                                                                                            of assistance. A
                                                                                            hardship policy must
                                                                                            also be created to
                                                                                            address extenuating
                                                                                            circumstances.
                                                                                            Hardship information
                                                                                            and any other
                                                                                            information required
                                                                                            by HUD for the
                                                                                            oversight of this
                                                                                            policy must be
                                                                                            provided to HUD upon
                                                                                            request. Agency must
                                                                                            also conduct an
                                                                                            impact analysis
                                                                                            prior to the
                                                                                            implementation of
                                                                                            this activity. An
                                                                                            Agency may not
                                                                                            retroactively apply
                                                                                            the 5-year term
                                                                                            limit to families
                                                                                            currently residing
                                                                                            in public housing.
5......  PH--Income        The Agency is          Certain           Elimination of         The Agency must
          Deductions and    authorized to          provisions of     Deduction(s) (PH):     determine the
          Exclusions.       restructure the        sections          The Agency may         initial eligibility
                            initial, annual and    3(a)(1) and       eliminate one, some    of a families in
                            interim review         3(a)(2) of the    or all deductions.     accordance with 24
                            process in the         1937 Act and 24  Standard Deductions     CFR 5.609. Prior to
                            public housing         CFR 5.611,        (PH): The Agency may   the implementation
                            program in order to    966.4 and         replace existing       of the activity a
                            affect the income      960.257.          deduction(s) with a    hardship policy and
                            deductions and                           standard               impact analysis must
                            exclusions. The                          deduction(s).          be developed and
                            terms ``low-income                      Alternate Income        adopted in
                            families'' and                           Inclusions/            accordance with MTW
                            ``very low-income                        Exclusions (PH): The   guidance. Agencies
                            families'' shall                         Agency may establish   are required to
                            continue to be                           alternate policies     follow 24 CFR
                            defined by Section                       to include or          5.609(c) and other
                            3(b)(2) of the 1937                      exclude certain        federal statutes
                            Act (42 U.S.C.                           forms of participant   that specifically
                            1437a(b)(2)). HUD                        income during the      exclude certain
                            has defined ``Annual                     income review and      income sources from
                            Income'' at 24 CFR                       rent calculation       being counted as
                            5.609 and MTW                            process. These         income.
                            Agencies must                            alternate policies
                            determine the                            must be consistent
                            eligibility of the                       with the inclusions
                            family in accordance                     and exclusions at 24
                            with provisions of                       CFR 5.609.
                            24 CFR 5.609.
----------------------------------------------------------------------------------------------------------------
                                  Activities Related to Housing Choice Vouchers
----------------------------------------------------------------------------------------------------------------
1......  HCV--Earned       The Agency must        Certain           EID (HCV): The Agency  .....................
          Income            comply with Section    provisions of     may eliminate the
          Disregard.        3(b)(2) of the Act     Sections 16(b)    Earned Income
                            to determine           of the 1937 Act   Disregard from the
                            eligibility. The       and 24 CFR        calculation of the
                            Agency may calculate   5.603, 5.609,     tenant's share of
                            the tenant's share     5.611, 5.628,     the rent.
                            of rent in a manner    982.516,         EID (HCV): The Agency
                            other than that        982.201 and 982   may create an
                            required by statute    Subpart E.        alternative to the
                            and regulation in                        Earned Income
                            order to eliminate                       Disregard in order
                            or create an                             to calculate the
                            alternative Earned                       tenant's share of
                            Income Disregard                         the rent.
                            which may not be
                            used to determine
                            eligibility or
                            recertification.
                            Rent calculations
                            must comply with
                            Fair Housing and
                            Civil Rights
                            requirements.

[[Page 8078]]

 
2......  HCV & PBV--       The Agency is          Certain           Elimination of         The Agency must
          Reexamination     authorized to          provisions of     Deduction(s) (HCV):    determine the
          Policies and      define, adopt and      Section           The Agency may         eligibility of a
          Lease Terms.      implement a            8(o)(5),          eliminate one, some    families in
                            reexamination          8(o)(7) and       or all deductions.     accordance with 24
                            program that differs   8(o)(13)(F) and  Standard Deductions     CFR 5.609. Prior to
                            from the               (G) of the 1937   (HCV): The Agency      the implementation
                            reexamination          Act and 24 CFR    may replace existing   of the activity a
                            program currently      982.516 and       deduction(s) with a    hardship policy and
                            mandated in the 1937   982.162(b).       standard               impact analysis must
                            Act and its                              deduction(s).          be developed and
                            implementing                            Alternate Income        adopted in
                            regulations. The                         Inclusions/            accordance with MTW
                            terms ``low-income                       Exclusions (HCV):      guidance. The
                            families'' and                           The Agency may         Department will
                            ``very low-income                        establish alternate    develop a rider to
                            families'' shall                         ways to include or     the HAP contract
                            continue to be                           exclude participant    that reflects MTW
                            defined by reference                     income.                authorizations that
                            to Section 3(b)(2)                                              adjust the current
                            of the 1937 Act (42                                             elements of the HAP
                            U.S.C. 1437a(b)(2)).                                            contract.
                           The Agency is          Certain           Length of HAP          Agencies implementing
                            authorized to          provisions of     Contract (HCV &        revised lease terms,
                            determine the length   Sections          PBV): The Agency may   including length of
                            of the HAP contract,   8(o)(7)(a),       change the term of a   lease period for HCV
                            the length of the      8(o)(13)(F) and   HAP contract.          and PBV families,
                            lease period, when     8(o)(13)(G) of   Alteration of HAP       must demonstrate how
                            vouchers expire, and   the 1937 Act      Contract (HCV &        the altered lease
                            when vouchers will     and 24 CFR 983    PBV): The Agency may   terms, including
                            be issued or           Subpart F.        alter the length of    length, benefit the
                            reissued.                                the lease period,      tenant. The
                                                                     when vouchers expire   anniversary and
                                                                     and when vouchers      expiration date for
                                                                     will be issued or      any additional units
                                                                     reissued.              added to a PBV HAP
                                                                                            contract must be the
                                                                                            same as that for the
                                                                                            original units under
                                                                                            the PBV HAP
                                                                                            contract. The
                                                                                            Department develop a
                                                                                            rider to the HAP
                                                                                            contract that
                                                                                            reflects MTW
                                                                                            authorizations that
                                                                                            adjust the current
                                                                                            elements of the HAP
                                                                                            contract.
3......  HCV & PBV--       The Agency is          Certain           Term Limits (HCV &     The term of
          Tenant Term       authorized to          provisions of     PBV): The Agency may   assistance may not
          Limits.           implement term         Section 8(o)(7)   limit the duration     be shorter than 5
                            limits for HCV and     and 8(o)(13)(F)-  for which a family     years except in the
                            PBV units designated   (G) of the 1937   receives housing       case of short-term
                            as part of the MTW     Act and 24 CFR    assistance.            transitional housing
                            Demonstration.         982 Subpart L                            programs. Services,
                                                   and 983 Subpart                          or referrals to
                                                   E.                                       services, must be
                                                                                            provided by the
                                                                                            Agency to support
                                                                                            preparing families
                                                                                            for the termination
                                                                                            of assistance. A
                                                                                            hardship policy must
                                                                                            also be created to
                                                                                            address extenuating
                                                                                            circumstances.
                                                                                            Hardship information
                                                                                            and any other
                                                                                            information required
                                                                                            by HUD for the
                                                                                            oversight of this
                                                                                            policy must be
                                                                                            provided to HUD upon
                                                                                            request. Agency must
                                                                                            also conduct an
                                                                                            impact analysis
                                                                                            prior to the
                                                                                            implementation of
                                                                                            this activity.
4......  HCV & PBV--Rent   The Agency is          Certain           Rent Policies (HCV &   A hardship policy
          Policies.         authorized to adopt    provisions of     PBV): Payment          must also be created
                            and implement any      Sections          Standards--The         to address
                            reasonable policy to   8(o)(2)(A),       Agency is authorized   extenuating
                            establish payment      8(o)(2)(B),       to adopt and           circumstances.
                            standards, rents or    8(o)(3),          implement any          Hardship information
                            subsidy levels for     3(a)(1),          reasonable policy to   and any other
                            tenant-based           8(o)(2)(C), and   establish payment      information required
                            assistance that        8(o)(13)(H)-(I)   standards that do      by HUD for the
                            differ from the        of the 1937 Act   not exceed 200% of     oversight of this
                            currently mandated     and 24 CFR        the FMR. This may      policy must be
                            program requirements   982.508,          include the setting    provided to HUD upon
                            in the 1937 Act and    982.503 and       of payment standards   request.
                            its implementing       982.518.          outside of the basic
                            regulations. The                         range, and creating
                            Agency is authorized                     multiple payment
                            to adopt and                             standards based on
                            implement any                            variations in the
                            reasonable policies                      local rental market.
                            to calculate the
                            tenant portion of
                            the rent that differ
                            from the currently
                            mandated program
                            requirements in the
                            1937 Act and its
                            implementing
                            regulations.
                                                                    Rent Policies (HCV &   A hardship policy
                                                                     PBV): Income Bands--   must also be created
                                                                     The Agency may         to address
                                                                     implement changes to   extenuating
                                                                     the rent calculation   circumstances.
                                                                     in order to create a   Hardship information
                                                                     system based upon      and any other
                                                                     rent bands. Such       information required
                                                                     rent policies are      by HUD for the
                                                                     structured using two   oversight of this
                                                                     variables: (1)         policy must be
                                                                     Income bands, or       provided to HUD upon
                                                                     ranges, that assign    request.
                                                                     dollar increments
                                                                     that have been
                                                                     determined locally
                                                                     by the Agency, and
                                                                     (2) bedroom size. In
                                                                     a table, the y-axis
                                                                     lists the income
                                                                     bands and the x-axis
                                                                     lists the various
                                                                     bedroom sizes. In
                                                                     creating this
                                                                     system, the Agency
                                                                     may also adopt a
                                                                     flat rent policy
                                                                     within each income
                                                                     band instead of
                                                                     calculating rent
                                                                     based on adjusted
                                                                     income.
                                                  Certain           Rent Policies (HCV &   A hardship policy
                                                   provisions of     PBV): Initial Rent     must also be created
                                                   Sections          Burden--The Agency     to address
                                                   8(o)(1),          may waive the          extenuating
                                                   8(o)(2),          maximum family share   circumstances.
                                                   8(o)(3),          at initial occupancy   Hardship information
                                                   8(o)(10) and      of 40% of the          and any other
                                                   8(o)(13)(H)-(I)   family's adjusted      information required
                                                   of the 1937 Act   monthly income.        by HUD for the
                                                   and 24 CFR                               oversight of this
                                                   982.508.                                 policy must be
                                                                                            provided to HUD upon
                                                                                            request. Agency must
                                                                                            also conduct an
                                                                                            impact analysis.
                                                  Certain           Rent Policies (HCV &   Rent increases may
                                                   provisions of     PBV): Stepped Rent--   not occur more than
                                                   Sections          The Agency may         once per year. This
                                                   8(o)(1),          create a stepped       activity may only
                                                   8(o)(2),          rent model that        apply to non-elderly
                                                   8(o)(3),          alters the family's    and/or non-elderly
                                                   8(o)(10) and      rent payment on a      and disabled
                                                   8(o)(13)(H)-(I)   fixed schedule in      residents. Agency
                                                   of the 1937       both frequency and     must implement a
                                                   Act, 24 CFR       amount.                grace period policy
                                                   982.518,          Implementation of      for HCV families
                                                   982.308,          this activity may      that reach zero HAP
                                                   982.451, 983      only occur if the      through this
                                                   Subpart E,        Stepped Rent           activity. The grace
                                                   982.508, and      activity is combined   period would allow
                                                   982.503.          with another Rent      families to receive
                                                                     Policy waiver          zero HAP for at
                                                                     identified in HCV-     least six months
                                                                     Rent Policies          before being
                                                                     Available Activities.  transitioned off the
                                                                                            HCV program.
                                                  Certain           Rent Policies (HCV &   Minimum rent may not
                                                   provisions of     PBV): Minimum Rent--   exceed $250. Tenant
                                                   Sections          The Agency is          rents may be
                                                   8(o)(1),          authorized to adopt    calculated between
                                                   8(o)(2),          and implement any      25% to 50% of
                                                   8(o)(3),          reasonable policies    adjusted income.
                                                   8(o)(10) and      to calculate the       Hardship policy,
                                                   8(o)(13)(H)-(I)   tenant portion of      impact analysis, and
                                                   of the 1937 Act   the rent that differ   any other
                                                   and 24 CFR        from the currently     information required
                                                   982.518.          mandated program       by HUD for the
                                                                     requirements in the    oversight of this
                                                                     1937 Act and its       policy must be
                                                                     implementing           provided to HUD upon
                                                                     regulations.           request.

[[Page 8079]]

 
                           The Agency is          Certain           Rent Policies (HCV &   A family's rents may
                            authorized to          provisions of     PBV): Contract         be calculated
                            determine contract     Sections          Rents--The Agency is   between 25% to 50%
                            rents and increases    8(o)(1)(B) and    authorized to          of adjusted income.
                            and to determine the   8(o)(13)(H) of    determine contract     Any lease
                            content of the HAP     the 1937 Act      rents and increases    alteration(s) must
                            contract that differ   and 24 CFR        and to determine the   comply with State
                            from the currently     982.308,          content of the HAP     and local law. A
                            mandated program       982.451 and 983   contracts that         hardship policy must
                            requirements in the    Subpart E.        differ from the        be put in place. The
                            1937 Act and its                         currently mandated     hardship policy must
                            implementing                             program requirements   be developed and
                            regulations.                             in the 1937 Act and    adopted in
                                                                     its implementing       accordance with MTW
                                                                     regulations.           guidance.
5......  HCV & PBV- Rent   The Agency is          Certain           Rent Reasonableness    Agencies must
          Reasonableness.   authorized to          provisions of     (HCV & PBV): The       provide, for HUD's
                            develop a local        Section           Agency is authorized   approval, an
                            process to determine   8(o)(10) of the   to develop a local     alternative measure
                            rent reasonableness    1937 Act and 24   process to determine   to determine that
                            that differs from      CFR 982.507.      rent reasonableness    rents charged by
                            the currently                            that differs from      owners to voucher
                            mandated program                         the currently          participants are
                            requirements in the                      mandated program       reasonable.
                            1937 Act and its                         requirements in the
                            implementing                             1937 Act and its
                            regulations. Agency                      implementing
                            must determine that                      regulations.
                            rents charged by
                            owners are
                            reasonable before
                            entering into a HAP
                            contract.
6......  HCV & PBV--Work   The Agency is          Certain           Work Requirement (HCV  The Agency must
          Requirements.     authorized to          provisions of     & PBV): The Agency     update its
                            implement a            Sections          may implement a work   Administrative Plan
                            requirement that a     8(o)(7)(a),       requirement for HCV    to include a
                            specified segment of   8(o)(13)(F),      and PBV residents      description of the
                            its HCV and PBV        and 8(o)(13)(G)   between the ages of    circumstances in
                            residents work as a    of the 1937 Act   18 and 54. The         which families shall
                            condition of tenancy   and 24 CFR        requirement shall be   be exempt from the
                            subject to all         982.303,          no less than 15        requirement. The
                            applicable Fair        982.309 and 983   hours of work per      Administrative Plan
                            Housing Requirements.  Support F.        week and no more       must also include a
                                                                     than 30 hours of       hardship policy. The
                                                                     work per week. The     Administrative Plan
                                                                     Agency shall provide   should include a
                                                                     supportive services    description of what
                                                                     to assist families     is considered work
                                                                     obtain employment or   as well as other
                                                                     an acceptable          activities that
                                                                     substitute. Work       shall be considered
                                                                     requirements shall     acceptable
                                                                     not be applied to      substitutes for
                                                                     exclude, or have the   work. Services, or
                                                                     effect of excluding,   referrals to
                                                                     the admission of or    services, must be
                                                                     participation by       provided by the
                                                                     persons with           Agency to support
                                                                     disabilities or        preparing families
                                                                     families that          for the termination
                                                                     include persons with   of assistance. The
                                                                     disabilities. Work     hardship policy in
                                                                     requirements shall     the Administrative
                                                                     not apply to persons   Plan should apply to
                                                                     with disabilities or   families who are
                                                                     families that          actively trying to
                                                                     include persons with   comply with the
                                                                     disabilities.          Agency's work
                                                                     However, persons       requirement, but are
                                                                     with disabilities      having difficulties
                                                                     and families that      obtaining work or an
                                                                     include persons with   acceptable
                                                                     disabilities must      substitute. The
                                                                     have equal access to   Administrative Plan
                                                                     the full range of      should also describe
                                                                     program services and   the consequences of
                                                                     other incentives.      failure to comply
                                                                                            with the work
                                                                                            requirement.
7......  PBV Unit Types..  Subject to subsidy     Certain           PBV Unit Types: As     The Agency must
                            layering review, the   provisions of     long as units are      provide a transition
                            Agency is authorized   Section 8(p) of   rental housing and     plan to both the
                            to determine           the 1937 Act      meet HQS, the Agency   affected residents
                            property eligibility   and 24 CFR        may attach and pay     and HUD prior to the
                            criteria, including    983.53(a)-(b)     PBV assistance for     end of the
                            types of units         and 982           units in various       demonstration. If
                            currently prohibited   Subparts H and    types of housing       the Agency places a
                            by Section 8           M.                including housing      PBV unit in a public
                            regulations so long                      described at 24 CFR    housing project,
                            as these units are                       983.53(a)(3), (5)      then the Agency will
                            rental housing and                       and (6).               not receive
                            meet HQS.                                                       operating funds for
                                                                                            that PH unit. PBV
                                                                                            units must comply
                                                                                            with HQS and be
                                                                                            consistent with fair
                                                                                            housing
                                                                                            deconcentration
                                                                                            requirements. This
                                                                                            waiver is subject to
                                                                                            subsidy layering
                                                                                            review.
----------------------------------------------------------------------------------------------------------------
                                  Activities Related to Local, Non-Traditional
----------------------------------------------------------------------------------------------------------------
1......  Local Non-        The Agency is          N/A.............  Rental Subsidy         Agency is subject to
          Traditional       authorized to use                        Programs: The Agency   Notice PIH 2011-45
          Activities--Ren   MTW funds to provide                     may provide funds      or any successor
          tal Subsidy       rental subsidy to a                      for supportive         notice and/or
          Programs.         third-party entity.                      housing programs and   guidance. Any MTW
                                                                     services.              funds awarded to a
                                                                    Rental Subsidy          third party provider
                                                                     Programs: The Agency   must be
                                                                     may provide funds      competitively bid.
                                                                     for homeless/
                                                                     transitional housing
                                                                     programs and
                                                                     services.
                                                                    Rental Subsidy
                                                                     Programs: The Agency
                                                                     may provide funds
                                                                     for the creation of
                                                                     a local rental
                                                                     subsidy program that
                                                                     addresses special
                                                                     needs populations.
2......  Local Non-        The Agency is          N/A.............  Service Provision:     Agency is subject to
          Traditional       authorized to use                        The Agency may         Notice PIH 2011-45
          Activities--Ser   MTW funds to provide                     provide services for   or any successor
          vice Provision.   supportive services                      residents of other     notice and/or
                            to eligible                              Agency owned or        guidance. Any MTW
                            participants.                            managed low-income     funds awarded to a
                                                                     housing that is not    third party provider
                                                                     public housing or      must be
                                                                     Housing Choice         competitively bid.
                                                                     Voucher assistance.
                                                                    Service Provision:
                                                                     The Agency may
                                                                     provide services for
                                                                     low-income non-
                                                                     residents.
                                                                    Service Provision:
                                                                     The Agency may
                                                                     provide supportive
                                                                     services subsidies
                                                                     or budgets for low-
                                                                     income families.
                                                                    Service Provision:
                                                                     The Agency may
                                                                     contract with a
                                                                     third party provider
                                                                     for the provision of
                                                                     services to eligible
                                                                     participants.
3......  Local Non-        The Agency is          N/A.............  LIHTC Development:     Agency is subject to
          Traditional       authorized to                            The Agency may         Notice PIH 2011-45
          Activities--Hou   contribute MTW funds                     contribute MTW funds   or any successor
          sing              to the development                       towards a Low Income   notice and/or
          Development       of affordable                            Housing Tax Credit     guidance. The use of
          Programs.         housing outside of                       project.               federal funds must
                            Sections 8 and 9.                       Affordable Housing      be consistent with
                                                                     Development: The       the requirements of
                                                                     Agency may             2 CFR 200 and other
                                                                     contribute MTW funds   basic federal
                                                                     towards the            principles.
                                                                     development of
                                                                     housing for low-
                                                                     income families.
----------------------------------------------------------------------------------------------------------------

Appendix C--Public Comments To Be Solicited Through MTW Operations 
Notice



------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                                 Waivers
------------------------------------------------------------------------
Does the list of general waivers, MTW activities, and parameters in
 Appendix A and Appendix B contain the needed flexibility to achieve the
 three MTW statutory objectives? If not, what waivers, activities, and/
 or parameters are missing?
Are there any MTW activities and/or waivers that should not be included
 as general waivers, available to all MTW agencies without prior HUD
 approval?
Are there any MTW activities and/or waivers that should not be included
 as conditional waivers but rather should be included as general
 waivers, or not included at all?

[[Page 8080]]

 
Does the list of conditional waivers, MTW activities, and parameters in
 Appendix B contain the needed flexibility to implement any alternative
 income-based rent model? If not, what waivers, activities, and/or
 parameters are missing?
------------------------------------------------------------------------
                          Term of Participation
------------------------------------------------------------------------
Assuming all cohorts are selected between 2017 and 2020, is the end of
 each MTW agency's Fiscal Year 2028 an appropriate timeframe for MTW
 participation, and understanding that HUD may extend cohort-specific
 waivers to accommodate evaluation of MTW activities that require
 additional time?
Is there a preferable length or structure for the term of MTW
 participation?
What elements of the MTW agency's transition plan should be mandatory?
What elements of the transition process should HUD require in order to
 protect residents from potential harm and minimize disruptions to
 agency operations?
------------------------------------------------------------------------
          Funding, Single Fund Budget, and Financial Reporting
------------------------------------------------------------------------
Is a 90 percent HAP budget utilization requirement the appropriate
 amount?
What sanctions or restrictions should HUD consider using should an MTW
 agency continue to fail to meet the budget utilization requirement?
Are there other methods for calculating HCV funding that HUD should
 consider?
Are there other factors HUD should consider in the calculation of
 funding?
Are there any comments or clarifications needed in relation to funding,
 the MTW Block Grant, or financial reporting?
------------------------------------------------------------------------
                               Evaluation
------------------------------------------------------------------------
Is there any information not captured in HUD administrative data systems
 that would provide informative data points or performance metrics for
 evaluating the MTW demonstration?
What are measures of activities that ``reduce cost and achieve greater
 cost effectiveness in Federal expenditures'' that can apply to and are
 either being reported in existing HUD systems or can be reported by
 every MTW agency?
What are measures of activities that ``give incentives to families with
 children where the head of household is working, seeking work, or is
 preparing for work by participating in job training, educational
 programs, or programs that assist people to obtain employment and
 become economically self-sufficient'' that can apply to and are either
 being reported in existing HUD systems or can be reported by every MTW
 agency?
Should HUD standardize a definition of ``self-sufficient''? If so what
 elements of self-sufficiency should be included in HUD's definition?
What are measures of MTW activities that ``increase housing choices for
 low-income families'' that can apply to and are either being reported
 in existing HUD systems or can be reported by every MTW agency?
What is the best way to capture and report exit data on families exiting
 the Public Housing, HCV, and local non-traditional housing programs?
 What are the appropriate exit reasons to capture?
Is there any information not captured in HUD administrative data systems
 that would be informative data points or performance metrics in terms
 of evaluating the MTW demonstration?
In the list of performance metrics provided above, should any be
 clarified or removed?
Are there any alternative or additional metrics that would enhance
 performance evaluation on the MTW demonstration?
------------------------------------------------------------------------
                  Program Administration and Oversight
------------------------------------------------------------------------
Is the MTW Supplement to the Annual Plan, as described, an appropriate
 mechanism for HUD to track MTW agencies' activities and use of waivers?
 Are there specific elements that should be included in the MTW
 Supplement to the Annual Plan?
Should MTW agencies with a combined unit total of 550 or less public
 housing units and Section 8 vouchers be exempt from the requirement to
 submit the Annual Plan? If so, how should HUD collect information on
 the activities and waivers implemented over the course of the
 demonstration?
Do you have suggestions for how HUD can strengthen the public engagement
 process to ensure that residents have an opportunity to offer
 meaningful input in the selection and implementation of MTW activities?
How could HUD measure public housing and voucher program performance for
 MTW agencies and incorporate those measures into PHAS and SEMAP?
Are there MTW-specific indicators that should be included in a revised
 PHAS and SEMAP assessment?
Should an MTW agency retain its high-performer status in PHAS or SEMAP
 until MTW specific indicators are developed?
Are HUD's monitoring and oversight efforts sufficient for MTW agencies?
What are the specific areas of risk that should be considered for MTW
 agencies?
Are there additional areas that should be monitored for MTW agencies?
------------------------------------------------------------------------
                             Regionalization
------------------------------------------------------------------------
How should ``adjacent'' be defined for the purposes of identifying which
 PHAs should be allowed to be part of an MTW agency's regional agency
 designation? Should regional MTW agencies extend across state borders?
What flexibilities should the regional MWT agency be able to administer
 on behalf of its regional partners? Should the partner PHAs have full
 flexibility in the use of funds?
What form of governance structure, if any, should be formed between the
 regional MTW agency and its partner PHAs?
What form should the agreement (i.e., contract, memorandum of
 understanding, partnership agreement, etc.) take between the regional
 MTW agency and its PHA partners?
Should the criteria for regionalization be the same for current MTW
 agencies and PHAs that join under the expansion?
Should HUD issue a revised Public Housing and Voucher Consortia Rule to
 further the regionalization concept?
------------------------------------------------------------------------
        MTW Agencies Admitted Prior to 2016 MTW Expansion Statute
------------------------------------------------------------------------
Is it appropriate to permit existing MTW agencies to come under the
 framework of this Operations Notice and associated MTW agreement?
Should these existing PHAs be subject to any different or supplemental
 requirements?
------------------------------------------------------------------------

[FR Doc. 2017-01310 Filed 1-19-17; 8:45 am]
 BILLING CODE 4210-67-P