[Federal Register Volume 87, Number 95 (Tuesday, May 17, 2022)]
[Rules and Regulations]
[Pages 30020-30057]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-09528]
[[Page 30019]]
Vol. 87
Tuesday,
No. 95
May 17, 2022
Part II
Department of Housing and Urban Development
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24 CFR Parts 887 and 984
Streamlining and Implementation of Economic Growth, Regulatory Relief,
and Consumer Protection Act Changes to Family Self-Sufficiency Program;
Final Rule
Federal Register / Vol. 87 , No. 95 / Tuesday, May 17, 2022 / Rules
and Regulations
[[Page 30020]]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Parts 887 and 984
[Docket No. FR-6114-F-03]
RIN 2577-AD09
Streamlining and Implementation of Economic Growth, Regulatory
Relief, and Consumer Protection Act Changes to Family Self-Sufficiency
(FSS) Program
AGENCY: Office of the Assistant Secretary for Public and Indian Housing
and Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, Department of Housing and Urban Development (HUD).
ACTION: Final rule.
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SUMMARY: This final rule amends HUD's regulations to implement changes
to the Family Self-Sufficiency (FSS) program made by the Economic
Growth, Regulatory Relief, and Consumer Protection Act (``the Economic
Growth Act'' or ``the Act''). Section 306 of the Act made multiple
amendments to the FSS program, including changes to the methodology for
determining the size of the FSS program, expanding the definition of
eligible families to include tenants of certain privately owned
multifamily properties subsidized with Project-Based Rental Assistance
(PBRA), updating the FSS Contract of Participation (CoP), reducing
burdens on Public Housing Agencies (PHAs) and multifamily assisted
housing owners, clarifying escrow account requirements, and updating
the FSS Action Plan requirements. After consideration of public
comments, this final rule incorporates these changes, responds to
public comments, and further revises HUD's FSS regulations to further
streamline the program for PHAs, multifamily property owners, and
eligible families, including providing that families participating in
the Housing Choice Voucher Homeownership Program and all Section 8
programs can participate in the FSS program, revising certain
definitions that apply to the program to align with commenters'
suggestions, making changes to the CoP provisions, revising the lists
of activities for which forfeited escrow funds may be used, and making
changes to portability provisions.
DATES:
Effective date: June 16, 2022.
Compliance date: Public Housing Authority and Owner compliance with
this rule is required no later than November 14, 2022.
FOR FURTHER INFORMATION CONTACT: For Public and Indian Housing (PIH)
FSS contact Anice S. Chenault, Office of Public and Indian Housing,
U.S. Department of Housing and Urban Development, 451 7th Street SW,
Room 4120, Washington, DC 20410; telephone number 502-618-6163 (this is
not a toll-free number); and for Multifamily FSS contact Elizabeth
Fernandez, Office of Multifamily Housing Programs, U.S. Department of
Housing and Urban Development, 451 7th Street SW, Room 6182,
Washington, DC 20410; telephone number 202-402-6763 (this is not a
toll-free number). The public is encouraged to email questions to
[email protected] or MF_[email protected].
SUPPLEMENTARY INFORMATION:
I. Background
In 1990, section 554 of the Cranston Gonzalez National Affordable
Housing Act (Pub. L. 101-625, approved November 28, 1990) amended the
United States Housing Act of 1937 by adding a new section 23 (42 U.S.C.
1437u) to create the FSS program. The FSS program requires that PHAs
and Indian Housing Authorities \1\ use Public and Indian Housing
assistance and Section 8 Housing assistance rental voucher programs,
together with public and private resources, to provide supportive
services, case management, and an escrow account to participating
families, with the intent to help families achieve economic
independence and self-sufficiency. The program's goal is to enable
participating low-income families to increase their earned income,
achieve economic stability, and reduce or eliminate their need for
welfare assistance and rental subsidies. FSS Program Coordinators
create plans with participating families to achieve goals and connect
them with services that will assist the family in making progress
toward economic security. As the family's earnings increase, the
difference between the original rent and the increased rent due to
increased earned income is credited to an interest-bearing escrow
account on the family's behalf. Families that meet program requirements
and successfully complete the FSS program receive their accrued FSS
escrow funds, plus interest. No regulatory restrictions exist on the
use of the escrowed funds. Many families use the funds to help with the
purchase of a home, debt reduction, post-secondary education, or to
start a new business.
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\1\ The Native American Housing Assistance and Self
Determination Act of 1996 (25 U.S.C. 4101 et seq.) (NAHASDA) removed
the application of the FSS program to Indian Housing Authorities.
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On May 24, 2018, the Economic Growth, Regulatory Relief, and
Consumer Protection Act (the ``Economic Growth Act'' or ``the Act'')
was signed into law (Pub. L. 115-174), and section 306 of title III of
the Act, Protections for Veterans, Consumers, and Homeowners, amended
the United States Housing Act of 1937 (42 U.S.C. 1437, et seq.), FSS
program, which required HUD to issue regulations to update its program
requirements and provide new provisions for private owners of
multifamily assisted housing to set up their own FSS programs.
Additional details about the FSS program may be found in the background
of the ``Streamlining and Implementation of Economic Growth, Regulatory
Relief, and Consumer Protection Act Changes to Family Self-Sufficiency
(FSS)'' at 85 FR 59234 (September 21, 2020).
II. The September 21, 2020, Proposed Rule
On September 21, 2020 (85 FR 59234), HUD published a proposed rule
to implement changes required by the Economic Growth Act and streamline
the FSS program. The public comment period closed on November 20, 2020,
and HUD received 105 public comments. The proposed rule makes changes
to the existing FSS regulations at 24 CFR part 984 and adds a new 24
CFR part 887 to address the FSS program for owners of multifamily
assisted housing. The proposed rule also updates references to PHAs and
owners and clarifies the provisions that would apply to both when
operating an FSS program. Owners would be subject to the requirements
only if they are operating an FSS program.
The changes include updating the mandatory size of a PHA's required
FSS program and available exceptions; updating the definition of
eligible families; allowing family members other than the Head of
Household for rental assistance purposes to sign the Contract of
Participation (CoP) and to meet the employment obligation; amending the
definition of supportive services; changing the term of the CoP;
amending the requirements pertaining to the management of the escrow
account, including the requirements for forfeiture of the escrow funds;
and, amending reporting requirements. Also, the Economic Growth Act
provided new provisions for private owners of multifamily assisted
housing to set up their own FSS program or enter into a Cooperative
Agreement with another private owner or PHA to offer an FSS
[[Page 30021]]
program to the owner's assisted residents. For more information about
the specific proposed changes to conform with the Economic Growth Act
see the background of the ``Streamlining and Implementation of Economic
Growth, Regulatory Relief, and Consumer Protection Act Changes to
Family Self-Sufficiency (FSS)'' at 85 FR 59234 (September 21, 2020).
HUD also proposed changes, that were not statutorily required, to
streamline the program, including removing references to the
establishment of mandatory programs; requiring an FSS Program
Coordinator as a Program Coordinating Committee (PCC) member; requiring
that at least one resident participant from each HUD-assisted program
served by FSS is a member of the PCC; revising the amount of time a
family must be independent from welfare assistance prior to expiration
of the CoP; expanding the definition of ``good cause'' for a contract
extension to include the active pursuit of a goal that will further
self-sufficiency, such as a college degree or credit repair program;
removing the provision that automatically completes the FSS contract
when thirty percent (30%) of the family's adjusted monthly income
equals or exceeds the Fair Market Rent (FMR); requiring that
nullification would occur when the PHA or owner and participant
determine that services integral to an FSS family's advancement towards
self-sufficiency are unavailable or when the head of FSS family becomes
permanently disabled and unable to work or dies during the period of
the contract, with exceptions; differentiating between ``determining
the FSS escrow amount'' and ``crediting that FSS escrow amount'' to a
family's FSS escrow account and requiring that, during the term of the
FSS contract, the PHA or owner credits the escrow amount to each
Family's FSS escrow account on a monthly basis; revising the provision
concerning reduction of amounts due by the FSS family; and revising
several provisions concerning FSS families that move with continued
housing choice voucher (HCV) assistance from the jurisdiction of one
PHA to the jurisdiction of another PHA under portability. HUD also
reminded PHAs and owners that they may not establish mandatory goals or
requirements for all participants other than the two mandatory goals
set in regulation (seek and maintain suitable employment, and be
independent from welfare assistance), and that all other goals must be
set on an individual basis.
After the publication of the proposed rule, HUD determined that
changes to the information collection requirements described in it
would be necessary. As a result, on November 15, 2021, at 86 FR 62964,
HUD published a supplemental notice of proposed rulemaking re-opening
the public comment period on the information collection requirements in
the September 21, 2020, proposed rule. HUD received only one comment,
which spoke about affordable housing generally and not about FSS or
information collection requirements.
III. Changes Made at the Final Rule Stage
In response to public comments, a discussion of which is presented
in Section IV, and in further consideration of issues addressed at the
proposed rule stage, HUD is publishing this final rule adopting the
September 21, 2020, proposed rule as final with the following changes.
A. Purpose, applicability, and scope. As part of this final rule,
HUD updates the list of public housing and voucher programs through
which families can participate in the FSS program in Sec. 984.101.
Public commenters noted that the change in the Economic Growth Act
provided HUD with further flexibility to allow participants beyond
those being funded under 8(o) of the U.S. Housing Act of 1937. After
further consideration, HUD amends Sec. 984.101 to provide that
families participating in the HCV Homeownership Program under section
8(y) of the U.S. Housing Act of 1937 will also be allowed to
participate in the FSS program. Additionally, this final rule includes
Moderate Rehabilitation and Moderate Rehabilitation Single Room
Occupancy for homeless individuals under 24 CFR part 882 in the list of
programs under which families can participate in FSS, as these are also
Section 8-assisted housing. The final rule also explicitly identifies
Family Unification Program (FUP) assistance under section 8(x) of the
1937 Act as a program under which families can participate in FSS; the
proposed rule did not adequately distinguish that FUP is not a section
8(o) program, unlike other special purpose vouchers.
This final rule also clarifies in Sec. 984.101 that participation
in the FSS program, or lack thereof, may not be used as cause to
terminate rental assistance.
B. Definitions. In Sec. 984.103, this final rule maintains the
current definition of ``effective date of the Contract of
Participation'' which currently is the first day of the month following
the month in which the FSS family and the PHA or owner entered into the
Contract of Participation, rather than finalize the proposed rule
definition that would have made this the date the parties sign the
contract. HUD revises the definition slightly so the effective date
will be the first day of the month following the date in which the FSS
family and the PHA or owner entered into the Contract of Participation
for clarity, but the change is not substantive. HUD is maintaining the
current definition because many commenters requested that the CoP
continue to conform with other rental assistance processes that operate
on a monthly cycle.
Additionally, this final rule revises the definition of ``FSS
family in good standing'' as recommended by some commenters to mean an
FSS family that is in compliance with their FSS CoP, has satisfied or
is current on any debts owed the PHA or owner, and is in compliance
with the regulations regarding participation in the relevant rental
assistance program. The definition under the proposed rule provided
that an FSS family is in good standing if it is not in eviction
proceedings and is otherwise in compliance with any repayment agreement
and the FSS CoP and did not include language noting that the family
must also be in compliance with regulations for the relevant assistance
program. This final rule also expands the definition of ``Personal
welfare'' in Sec. 984.103 to include health, dental, mental health and
health insurance services.
C. Cooperative Agreements. In response to public comment, this
final rule specifies in Sec. Sec. 887.107 and 984.106 that Cooperative
Agreements between PHAs and owners of multifamily properties must
include processes for the entities to communicate with each other about
changes in their Action Plans to ensure continued coordination between
the participating entities in administering their program.
D. FSS award funds formula. This final rule removes language in
Sec. Sec. 887.111 and 984.107 of the proposed rule that stated notice
of, and changes to, the FSS Award Funds Formula will be published in
the Federal Register, as the formula will continue to be published in
Notices of Funding Opportunities (NOFO).\2\ HUD believes that adding
the publication of the funding formula in the Federal Register would
duplicate the inclusion of the formula that would also need to be
[[Page 30022]]
included in the NOFO. This final rule adds the statutory formula to
HUD's regulations in Sec. 984.107 for clarity.
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\2\ HUD currently uses the term Notices of Funding Opportunity
or ``NOFO'' for documents that would previously have been referred
to as Notice of Funding Availability or ``NOFAs.'' This change is
based on the terminology used in Office of Management and Budget
Management in its Guidance for Grants and Agreements (85 FR 49506,
August 13, 2020).
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E. FSS Action Plans. Section 984.201 of this final rule includes
examples of policies over which PHAs/owners have discretion. These may
be included in the FSS Action Plan to help HUD determine the soundness
of the PHA or owner's FSS program.
F. FSS appropriated funds. This final rule revises Sec. 984.302 to
clarify that FSS appropriated funds awarded pursuant to this statute
may be used by PHAs or owners for eligible FSS costs, including when an
owner operates an FSS program through a Cooperative Agreement or on its
own. Additionally, to ensure that there is no confusion about funding
available to PBRA owners who operate an FSS program, this final rule
adds a provision at Sec. 887.113(a), that states that owners may also
or alternatively use residual receipts to pay for reasonable FSS
program operation costs, including hiring an FSS Program Coordinator or
coordinators for their FSS program. This new regulatory text implements
statutory language of section 23(l) of the U.S. Housing Act of 1937, as
amended by the Economic Growth Act, which states that PBRA owners may
access funding from any residual receipt accounts for the property to
hire an FSS Program Coordinator(s) for their program.
G. Contract of Participation. In Sec. 984.303, which covers the
``Contract of Participation,'' this final rule makes various changes
and revisions. This clarifies that there will only be one CoP per
household, and there may be an Individual Training and Services Plan
(ITSP) for as many members of the household that wish to participate,
which will be incorporated into the CoP. The rule also revises the
regulatory text in paragraph (b)(3) to clarify that all considerations
allowed for other residents for repayment agreements and other matters
shall also be allowed for FSS participants. The rule revises Sec.
984.303(b)(2) to state that being independent from welfare assistance
will be a mandatory final goal instead of an interim goal.
Additionally, the rule revises paragraph (b)(4)(iii) to note that
the determination of suitable employment will be made with the
agreement of the affected participant, so that the affected participant
has input into this matter along with the PHA or owner, and expands the
regulation to include that the determination will involve consideration
of the receipt of other benefits of the participant, to ensure that new
employment will not cause the loss of necessary supports, in addition
to the skills, education, and job training of that participant.
Further, in paragraph (a) this final rule eliminates the requirement
from the proposed rule that the family consult with the PHA or owner in
designating the head of FSS family, as HUD believes that it is
generally in the best interests of assisted households to choose the
head of FSS family that is most suitable for their individual household
circumstances.
This final rule also revises paragraph (d) to clarify that the
determination of good cause for a Contract extension can include
circumstances beyond the control of the FSS family that impede the
family's ability to complete the CoP obligations and can include any
circumstance that the PHA or owner determines warrants an extension, as
long as the PHA or owner is consistent in its determinations. Further,
this final rule provides in paragraph (k) that while the CoP will be
terminated, escrow can be disbursed to the family when services that
the PHA or owner and the FSS family have agreed are integral to the FSS
family's advancement towards self-sufficiency are unavailable. Under
the proposed rule language, only the PHA or owner made that
determination.
This final rule revises paragraph (f) to clarify that modifications
to the CoP must be in writing and signed by the PHA/owner as well as
the head of FSS family. Additionally, this final rule revises paragraph
(j) to clarify that only non-HUD funds or non-HUD restricted funds can
be used by PHAs and owners to offer supportive services to former FSS
families that have left assisted housing.
Lastly, this final rule provides in paragraph (k) that a CoP will
be terminated but escrow can be disbursed to the family rather than
forfeited, if an FSS family in good standing moves outside the
jurisdiction of the PHA for good cause, as determined by the PHA, and
continuation of the CoP after the move, or completion of the CoP prior
to the move, is not possible.
H. FSS escrow account. This final rule removes from Sec. 984.305
language that would permit a PHA or owner to set a policy to either
conduct a new re-examination of income before the effective date of the
FSS contract, or to use the amounts on the family's last income re-
examination when setting a participant's baseline rent. This final rule
will instead require the PHA or owner to use the amounts on the most
recent rent certification. HUD believes this is more in line with
congressional intent.
Additionally, this final rule expands the list of eligible
activities for which forfeited escrow funds may be used to include
other costs related to achieving obligations outlined in the CoPs of
remaining FSS participants and adds to the list of ineligible
activities ``general administrative costs of the FSS program.'' HUD has
made this change to eliminate any incentive PHAs may have had not to
graduate participating families so as to recapture the forfeited escrow
funds and to ensure forfeited funds are used to advance participants'
goals and not for the overall implementation of the FSS program.
This final rule does not contain language from the proposed rule
that would have provided for escrow disbursement to an estate if the
head of the FSS family dies before a CoP is completed, as HUD
determined that there is no legal authority for this. However, if the
head of the FSS family dies before the CoP is completed, another member
of the FSS family may take over the CoP.
This final rule also clarifies how the increase in the family's
monthly rent is determined when computing the FSS credit amount for
Section 8 Moderate Rehabilitation (Mod Rehab) and PBRA families and
that, as is the case with Project-Based Vouchers (PBVs), it is the
difference between the baseline monthly rent and the current gross
rent.
I. HCV portability requirement. Due to the fact that PBVs are
allocated to a specific unit, a family with a PBV does not have the
right to take that rental assistance and move. Generally, after having
a PBV for 12 months, the family may apply for and receive Tenant-Based
Rental Assistance (TBRA, also known as a Tenant-Based Voucher) if it is
available. The proposed rule did not discuss an FSS family's right to
move after transitioning from a PBV to TBRA. In Sec. 984.306, this
final rule clarifies that a PBV family that has been enrolled in the
FSS program for 12 months, and who exercises its right to transfer from
the PBV unit to tenant-based rental assistance in accordance with 24
CFR 983.261, may move outside of the jurisdiction of the initial PHA in
accordance with standard portability regulations. The PHA's discretion
to allow portability moves for TBRA FSS participants within the 12
months following the effective date of the CoP also applies to PBV
families who become Tenant-Based voucher families.
Additionally, this final rule provides that a receiving PHA that is
already serving the number of families identified in its FSS Action
Plan and determines it does not have the resources to manage the
additional FSS contract is not required to enroll a porting family. In
such cases, the initial PHA must discuss with the family
[[Page 30023]]
options available to the family, such as modification of the FSS
contract, termination of the FSS contract and forfeiture of escrow,
termination of the contract and the release of escrow if the initial
PHA determines there is good cause for the move, or locating a
receiving PHA that has the capacity to enroll the family into its FSS
program. HUD has made this change after considering public comments and
determining that a lack of capacity to serve a ported FSS family would
be a reasonable justification for a receiving PHA to deny enrollment of
the ported FSS family into its FSS program.
Further, in response to comments, this final rule allows a family
that was not an FSS participant at the initial PHA to enroll in a
receiving PHA's program when the receiving PHA bills the initial PHA if
the initial PHA agrees, and the initial PHA manages an FSS program.
Under the proposed rule, if the receiving PHA bills the initial PHA, a
family that was not an FSS participant at the initial PHA would not
have been able to enroll in the receiving PHA's FSS program.
J. Basic requirements of FSS (for multifamily FSS programs). This
final rule revises Sec. 887.105 to provide that where a Program
Coordinating Committee (PCC) is available, owners can either work with
that PCC or create their own, either by themselves, or in conjunction
with other owners. This adds flexibility to the language that was in
the proposed rule that said owners must work with a PCC when one is
available and did not mention an option for such owners to create their
own PCCs.
Additionally, under this final rule, multifamily owners are not
exempt from the family selection procedures in Sec. 984.203. HUD makes
this change from the proposed rule in order to give the owner the
option of using certain selection preferences and motivational
screening factors and make it easier for an owner to operate an FSS
program through a Cooperative Agreement with a PHA that uses selection
preferences or motivational screening factors.
K. Additional grammatical and technical changes. This final rule
makes additional grammatical and technical changes throughout, such as
clarifying the usage of the word ``jurisdiction'' so that it is only
used when referring to a PHA's jurisdiction, and not also the community
where a PBRA property is located; clarifying that PBRA owners may
develop their own FSS Action Plans; including ``Head of Household'' in
the list of definitions defined in part 5 of HUD's regulations; and
other minor changes for clarity and conformance.
L. Delayed compliance date. This final rule includes a compliance
date that provides PHAs and owners with up to six months from the date
of publication of this rule to comply with its provisions. HUD
encourages PHAs and owners to comply with this new rule's provisions as
soon as possible. This means that all FSS Action Plans must be updated
by the compliance date. HUD intends to provide guidance on that process
and encourages PHAs and Owners to visit the FSS Resources web page at:
https://www.hud.gov/program_offices/public_indian_housing/programs/hcv/fss and to subscribe to HUD's FSS listserv at https://public.govdelivery.com/accounts/USHUDPIH/signup/30989. The requirements
in this rule may apply to CoPs that are signed after the effective date
of the rule but before the compliance date if the PHA or Owner is in
compliance with the new rule. PHAs and Owners may reach an agreement
with FSS participants covered by existing CoPs to modify those CoPs on
a family-by-family basis, so those contracts are governed by this final
rule.
IV. Public Comments
The public comment period for the September 21, 2020, proposed rule
closed on November 20, 2020. HUD received and reviewed 105 comments on
the proposed rule from a wide variety of interested entities,
including: Individuals, public housing agencies, affordable housing
organizations, housing associations, community development
corporations, and investment companies. This section addresses
significant issues raised by the public comments and is organized by
the proposed rule section, with summaries of the issues followed by
HUD's responses. There were also numerous comments received both in
support of and opposition to the proposed rule generally, as well as
comments that did not address one specific section of the proposed
rule. Those comments are organized into general categories and
responded to accordingly. Following are the issues raised by the public
comments and HUD's responses.
General Support
Commenters generally supported the proposed rule as beneficial to
program participants and to beneficiaries. A commenter supported
updating FSS rules so that PHAs do not have to ignore outdated
language.
HUD Response: HUD appreciates this feedback and the time taken to
review the proposed rule.
Section 984.101: Purpose, Applicability, Scope
Section 8 Participants Eligibility
A commenter asked HUD to clearly state that all Section 8
participants are eligible to participate in FSS, including those with
Non-Elderly Disabled (NED), Veterans Affairs Supportive Housing (VASH),
and Mainstream Vouchers. The commenter also asked HUD to provide
specific instructions on reporting through the PIH Information Center
(PIC) and Voucher Management System (VMS), noting that there is no
clear direction on how to assist families on Mainstream 5 and the funds
used for escrows need to be backed out and submitted as Housing
Assistance Payments (HAP) in the Mainstream 5 VMS line. The commenter
said when they asked HUD, they were told Mainstream 5 participants were
not eligible to participate in FSS as the funds are from the Section
811 Supportive Housing for Persons with a Disability program.
HUD Response: As stated in the proposed and this final rule,
families assisted under Section 8 voucher programs are eligible to
participate in FSS. This includes any applicable special purpose
voucher considered rental assistance under section 8(o) or 8(x) of the
U.S. Housing Act of 1937 (1937 Act) (such as Family Unification Program
(FUP), Foster Youth Initiative (FYI), Veterans Affairs Supportive
Housing (VASH), and Mainstream Vouchers). Based on comments received
concerning the eligibility of Housing Choice Vouchers (HCV)
homeownership families for FSS, HUD has revised the regulatory text to
clarify and allow HCV homeownership families to participate in FSS.
Additionally, this final rule includes Section 8 Moderate
Rehabilitation for low-income families and Moderate Rehabilitation
Single Room Occupancy for homeless individuals under 24 CFR part 882 in
the list of programs under which families can participate in FSS, as
these are also Section 8-assisted housing. For further explanation
concerning this change, see the discussion of public comments on Sec.
984.103. As it relates to the reporting concerns raised by a commenter,
HUD is in the process of updating VMS to allow PHAs to properly report
FSS escrow deposits and forfeitures for Mainstream Voucher participants
and will share guidance when it is available.
Non-Participation
Commenters supported HUD's addition of language clarifying that a
family's rental assistance shall not be
[[Page 30024]]
delayed or terminated by reason of a family electing not to participate
in the FSS program because families may, despite best efforts, fail to
meet the obligations and objectives of the CoP, which would
disincentivize participation. A commenter stated that the non-
participation clause was too narrow and suggested HUD should
affirmatively state that rental assistance cannot be terminated for
non-compliance with the FSS program to avoid ambiguity and conform with
the statute.
HUD Response: This final rule revises Sec. 984.101(d) to be clear
that participation in the FSS program, or lack thereof, may not be used
as cause to terminate rental assistance. This final rule also revises
Sec. 887.101(d) to be clear that assistance under Section 8 Housing
assistance payments programs cannot be refused, delayed or terminated
because a family chooses not to participate in an FSS program.
Mandatory and Voluntary Programs
A commenter stated HUD should leave the language as is and allow
the PHA to decide if they want to keep the program voluntary or make it
mandatory.
HUD Response: As used in the proposed rule and this final rule, the
terms ``voluntary'' and ``mandatory'' refer to whether PHAs are
required to institute an FSS program, not whether residents must
participate. All FSS programs must be voluntary for participants.
Section 984.102: Program Objectives
Graduation Timing
A commenter requested that HUD add a provision allowing a client to
graduate at time of verification of full-time/suitable employment or at
the time the new wages/income from employment is added to the Form HUD-
50058 Family Report.
HUD Response: As explained in Sec. 984.303, the CoP is considered
completed and a family's participation in the program is considered
concluded when the FSS family has fulfilled all of its obligation under
the CoP, on or before the expiration of the Contract term. Section
984.303(b) requires that the head of FSS family under the CoP seek and
maintain suitable employment during the term of the contract, but the
family may have other obligations under the CoP, as described in Sec.
984.303. Participants may graduate at any time their obligations under
the CoP are met. The national average time in the program for graduates
is less than four years. HUD notes that the goal of FSS is self-
sufficiency; therefore, a participant being hired for their first job
may in fact be only at the beginning of what they can achieve while in
the FSS program.
Performance Measures
Commenters recommended that HUD allow the public the opportunity to
comment on any performance standards. A commenter said any performance
standards that will impact new, or renewal funding and incentives
should be subject to public comments prior to the effective date. A
commenter said that there were issues with HUD's attempt to implement
new performance metrics in the past and asked that HUD's scoring system
not place excessive weight on increased earned income, which may
negatively impact FSS program participants that are enrolled in
lengthier training and educational programs compared to participants
that focus specifically on employment. A commenter said any weighing of
graduation rates and earnings performance should be equal to reflect
their equal importance. Other commenters expressed concern that the
``Composite Score'' methodology does not give credit for programs or
participants who enter educational pursuits prior to entering
employment. Another commenter recommended that the performance measures
and criteria for awarding incentives include an FSS family's successful
move to homeownership when graduating.
A commenter stated that HUD received criticism for attempting to
implement the performance measurement system and that HUD found
inexplicable anomalies between consecutive years of scoring of certain
housing authorities. The commenter said that Congress specifically
prohibited HUD in an appropriations act from using funding to consider
FSS performance measures or scores in determining funding awards. The
commenter stated that the system does not account for the diversity of
households in educational levels, skills, and employability at
enrollment, and that HUD's own contractor recommended that HUD tailor
its performance measurement system to fit the stated structure and
goals of the program. The commenter suggested HUD devise a system that:
Is not implemented retroactively; does not fail to award points to all
the educational, employment and supportive services allowed by statute
for program participants; does not score performance until FSS
contracts are completed; does not penalize non-metropolitan areas who
may have a dearth of employment opportunities in their markets; does
not penalize PHAs that are voluntarily administering an FSS program
with no FSS Program Coordinator funding from HUD; and does not prevent
PHAs from administering the FSS program at the local level. The
commenter also said HUD lacks authority to determine how participants
and PHAs will devise their contracts under FSS, and that if HUD wants
to limit pre-employment services and educational/job training, it
should seek a statutory change. This commenter asked HUD to remove from
the final rule the explicit language related to HUD's proposed
measurement system factors--namely graduation from the program,
increased earned income, and program participation--since no such
language is included in section 306 of the Economic Growth, Regulatory
Relief, and Consumer Protection Act.
Two commenters stated the proposed rule is silent about how
performance standards would affect coordinator funding awards and said
HUD should comply with Congress' directive by specifying that funding
for renewed and additional coordinator positions would be subject to
performance criteria. One commenter said it would not be fair to
provide agencies serving more families than they are required
additional points as other programs may be serving families and
individuals that may require more time with a coordinator. Another
commenter stated the ``Composite Score'' accurately evaluates the
success of the FSS program outcomes, and that when one looks at the
outcomes achieved and not the process then it becomes clear what is
being evaluated.
A commenter said it has no objection to HUD using a PIC driven
``Composite Score'' to evaluate its FSS program but asked that HUD
provide detailed reporting guidelines on how and when the data is mined
from PIC to ensure they are reporting accurately. Another commenter
said that the HUD-commissioned MDRC National FSS Evaluation will
provide rich information about FSS program operations and that any
changes in evaluation measurements should wait until the results of
this study are published so that they may inform best practices for
performance measurement. One commenter stated a concern that the
proposed rule would not give credit to a program for graduating
participants who have never received Temporary Assistance for Needy
Families (TANF) or whose wages remained steady throughout the five-year
FSS contract. The commenter was also concerned that the performance
measure did not address the number of program
[[Page 30025]]
participants who did not have TANF within the time of their FSS
contract.
Another commenter expressed concern about the potential for
developing a tool that is not flexible enough to reflect the
complicated nature of the participants in the FSS program, the outside
forces that directly impact their ability to meet and reach their ITSP
goals, and the non-quantifiable impact of services and supports on
their long-term economic stability. The commenter opposed the
development of a tool that is applied the same way to all programs, if
that tool cannot account for the impact of region, participant
enrollment characteristics, short- and medium-term economic realities
and changing government priorities.
Commenters stated that the proposed rule did not reference Moving
to Work (MTW) agencies as being covered by such an evaluation system,
but it also did not indicate that MTW agencies will be exempt or
subject to different criteria. The commenters said that the scoring
criteria in the proposed rule should not apply to MTW agencies without
engaging the MTW Collaborative and the individual MTW PHAs in a
collaborative process to develop the tool, ensuring that in drafting
scoring criteria HUD will consider the unique circumstances of MTW
agencies operating alternative FSS programs. A commenter said that the
Form HUD-50058/PIC does not allow for accurate reporting for MTW
agencies, and if HUD intends to use Form HUD-50058-MTW for FSS
performance scoring, HUD must fix the existing technical issues.
HUD Response: The Proposed Family Self-Sufficiency Performance
Measurement System (``Composite Score'') Notice requesting public
comment was published on December 12, 2017 (82 FR 58434). The Final
Notice was published in the Federal Register on November 15, 2018 (83
FR 57493). HUD wishes to note that the Performance Management System,
as published, is not structured to include MTW agencies, unfunded FSS
programs or PBRA FSS programs. The majority of the comments above
commented on the current Performance Measurement System, not the
proposed rule.
Section 984.103: Definitions
Baseline Annual Earned Income
A commenter agreed with HUD's proposed definition of ``Baseline
Annual Earned Income,'' stating it aligns with the new Housing
Opportunity through Modernization Act (HOTMA) proposal of removing
Earned Income Disallowance (EID). One commenter agreed that disregarded
income associated with self-sufficiency incentives should no longer be
excluded in calculating baseline annual earned income because families
who previously could not build escrow could now do so even if they are
in a waiver program. Another commenter stated that instructing PHAs and
owners to add back any disregard of earned income associated with self-
sufficiency initiatives would have a punitive effect and likely deter
rather than encourage participation for the persons with disabilities
who could most benefit from FSS. This commenter said that just as HUD
is proposing greater consistency across the board by allowing FSS
families the opportunity to continue participation during the six-month
Zero-HAP window rather than automatically graduating families who meet
the 30% rule, HUD should maintain consistency across programs by
continuing to extend the EID in calculating the baseline income for FSS
CoP purposes.
Commenters requested that HUD clarify the definition and asked
specifically about the meaning of ``disregard of earned income
associated with self-sufficiency initiatives.'' One commenter asked if
it referenced EID, Jobs Plus, or others, and, if so, that HUD provide a
citation to the source of these initiatives so PHAs may easily
reference them. Another commenter asked HUD to clarify whether the
self-sufficiency initiatives HUD is in the process of implementing from
the HOTMA would impact the calculation of FSS escrow.
HUD Response: As explained in the proposed rule's preamble, adding
back any disregarded earned income associated with self-sufficiency
initiatives at the time that the PHA or owner determines the baseline
annual earned income (that is, when the PHA or owner is determining the
amount of earned income when the family enrolls in the program), helps
ensure that escrow amounts are the result of increases in earned income
while the family is in the FSS program. Otherwise, the family's earned
income would be lower at baseline resulting in potential for higher
escrow credits based on increases in earned income that happened prior
to FSS enrollment. It does not mean that this will necessarily result
in all families with a disregard not being able to escrow, but rather,
that the calculation will more accurately reflect increases in escrow
that are the result of increases in earned income while the family is
in FSS. Based on this, HUD has determined not to change the proposed
regulatory language. Currently, ``self-sufficiency initiatives''
includes programs that include financial incentives including the Jobs
Plus Earned Income Disregard and the standard Earned Income Disregard.
HUD's proposed rule implementing sections 102, 103, and 104 of HOTMA
(published on September 17, 2019 at 84 FR 48820) would eliminate the
standard Earned Income Disregard. Additionally, that proposed rule
would change rent calculation, but would not introduce new ``self-
sufficiency initiatives'' (with financial incentives). HUD is not
including the name of specific self-sufficiency initiatives in the
rule, as we do not wish to limit ``self-sufficiency initiatives'' to
those that exist at present. However, this final rule revises the
definition to note that disregarded earned income ``or other
adjustments associated with self-sufficiency initiatives'' may be
applied when calculating baseline annual earned income, to account for
``self-sufficiency initiatives.'' This final rule also clarifies that
any disregarded earned income ``and other adjustments associated with
self-sufficiency initiatives'' will be included in calculations of
current annual earned income.
Certification/Documentation of Goal Attainment and Completion
A commenter stated the certification standard should be consistent
with the HCV program of self-certification, and PHAs should strive to
get third-party verification to confirm CoP goals were met. Another
commenter recommended that HUD reduce unnecessary administrative
burdens on housing providers and demonstrate trust in families by
clarifying that self-certification is permissible for documenting: (1)
Completion of ITSP Goals; and (2) being independent from cash welfare
assistance. This commenter recommended that under Sec. 984.305(c), HUD
explicitly state that self-certification of goal completion is
sufficient evidence.
One commenter asked that HUD further clarify the certification
definition to include a verification hierarchy to track ITSP goals with
evidence provided by participants, such as third-party authentic
documents, to help keep clear, concise record keeping. This commenter
supported self-certification only in situations where third-party
verification would be difficult.
HUD Response: The definition of certification, as written, and 24
CFR 984.305(c)(1) and (2) allows for PHAs and owners to accept self-
certification of being independent from welfare assistance from FSS
participants and 24 CFR 984.305(c)(4) also gives PHAs and owners the
discretion to require third party verification. This final rule notes
[[Page 30026]]
that the requirements for the documentation of attainment of ITSP goals
will be left to the PHA or owner to determine, and the policy may be
included in their FSS Action Plan.
Current Monthly Rent
A commenter recommended that HUD allow the current definition of
family rent to remain, to decrease the uncertainty FSS Program
Coordinators may have when explaining what family rent is to an FSS
participant when determining the escrow calculation.
HUD Response: HUD declines to accept the commenter's
recommendation. The proposed rule does not define ``family rent.'' The
definitions of ``baseline monthly rent'' and ``current monthly rent''
were updated in the proposed rule and this final rule to reflect the
evolution of rent options and nuances since the original regulations
were written. The definition in the current regulation does not
encompass the current realities.
Effective Date of the Contract of Participation (CoP) (Question 1)
Several commenters supported the proposed change to the effective
date of the CoP. Commenters suggested that this could cause less
confusion about the FSS program start date. One commenter supported the
change but noted that software changes may need to be implemented to
track these new dates. Two commenters supported the change to define
this as the day the head of FSS family and PHA or owner execute the
CoP. One commenter stated the current definition creates unnecessary
delays for families interested in enrolling in the program. A commenter
suggested applying this change prospectively rather than retroactively,
as that would cause undue confusion for all parties.
Many commenters opposed the proposed change to the CoP effective
date. Commenters stated that the change would make recordkeeping and
escrow reporting more complicated, creating an administrative burden.
Other commenters said it would be harder to track and monitor progress
and end dates for FSS program participants. A commenter requested the
option of keeping the effective date as the first of the following
month.
Several commenters opposed defining the date of the CoP as the date
it is executed, stating the CoP should continue to begin the next first
of the month from the date of signing the contract.
Other commenters noted that the change would be inconsistent with
rent calculations, which are generally effective the first day of the
month. One commenter noted that Section 8 actions could affect an FSS
program participant's income on the day that the Contract of
Participation is signed, or the time directly afterwards.
A commenter said there are some Form HUD-50058 (Family Report)
actions that are not processed due to household changes, but Contract
rent increases or change of unit due to extenuating circumstances such
as fire, flooding, or owner possession of unit, and asked how this
would impact the CoP start date.
A commenter stated that because the tenant file comes from the
Section 8 population to the FSS program, there have always been issues
with actions that are in process by the current occupancy specialist
and the FSS reporting timelines. For FSS Program Coordinators that do
not process their own actions or in some cases do not even have access
to those functions in the HCV software, this must be coordinated with
the Occupancy Specialist. In the case of the proposed rule, the FSS
enrollment addendum, for example, would be entered for the October 15th
enrollment date and the pending action would still need to be deleted
and reprocessed to include the FSS progress enrollment, so either way
there is additional data entry to be done and clear communication with
other staff if one is not processing the actions in the software.
Another commenter suggested an option to keep the effective date of
the CoP on the first of the following month after signing to allow for
easier tracking and PIC submission purposes.
A commenter said that starting the CoP on the date the contract is
executed may pose a challenge if the participant has submitted an
interim recertification for a rent decrease that has not yet been
processed at the time of enrollment. The commenter asked if a
recertification that occurred before the execution of the CoP but
processed after the execution of the CoP would count as the first
recertification of income for the purpose of the CoP? Would the
baseline rent be the last rental amount paid by the family or the next
rental payment which would reflect the interim recertification? The
commenter stated that it is unclear if a family graduates from the
program mid-month as to whether an agency would be required to pro-rate
the family's escrow credit for the month or not.
One commenter stated that if the effective date of the contract is
changed from the date of signing, this affects the monthly rent roll
and landlord payments, which would trigger the system to pro-rate
payments that were already issued for that month. A commenter said a
new workaround may need to be created to overcome this issue.
HUD Response: HUD appreciates the comments on the proposal. Many
commenters opposed the change and requested that the CoP continue to
conform with other rental assistance processes that operate on a
monthly cycle. This final rule does not include the provision to change
the effective date to the same date as the enrollment date. The CoP
effective date will remain the first of the month following execution
of the CoP. HUD does not believe that the rent roll or landlord
payments should be impacted by the Contract effective date. The new
statute and proposed and final regulation state that the CoP will end
no later than 5 years after the first recertification of income after
the execution date of the CoP. Therefore, a change in rent due to
``contract rent increases or change of unit due to extenuating
circumstances such as fire, flooding, or owner possession of unit'' as
suggested by a commenter, would not impact the start date or the length
of the CoP. HUD notes that while the statute uses the term
``recertification,'' these regulations use the term ``re-examination,''
and these two terms have the same meaning in this rule.
Eligible Families
Commenters requested that HUD not limit eligible voucher recipients
to ``section 8(o)'' program participants in the proposed definition of
``eligible families'' and should replace this with ``Housing Choice
Voucher program participants, including families with project-based
vouchers and homeownership vouchers.'' These commenters said that HUD
does not explain why the proposed definition excludes these voucher
participants. The commenters stated that a HUD Q&A clarifies that
families receiving rental assistance through the Family Unification
Program, other special purpose vouchers or Tenant Protection Vouchers
would still be eligible to participate in FSS.\3\ The commenters said
the statute does not prohibit these categories of families, and
families utilizing the HCV homeownership program still pay income-based
rent and could benefit from the additional savings available through
the FSS program. These commenters stated HUD would also need to
eliminate the
[[Page 30027]]
proposed definition of ``section 8(o)'' and make parallel changes in
the definition of ``FSS family'' and elsewhere in the new regulations.
Another commenter advocated that anyone of any income-based program
should be eligible for this opportunity because the FSS program's
objective is to help people become independent of welfare assistance
and work their way up to homeownership.
---------------------------------------------------------------------------
\3\ U.S. Department of Housing and Urban Development, Family
Self-Sufficiency Program Proposed Rule Questions & Answers (Q&A),
https://www.hud.gov/sites/dfiles/PIH/documents/QA_on_FSS_Proposed%20Rule_-clean.pdf.
---------------------------------------------------------------------------
A commenter recommended this definition be changed to allow
families participating in the HCV homeownership program to have the
opportunity to participate in FSS. Another commenter disagreed that
those FSS participants who move into homeownership could or should
remain on the FSS Program because most of the homeownership programs in
their area offer assistance programs in case homeowners face hardship.
A commenter recommended that Homeownership participants not be allowed
to participate in FSS once they meet their CoP requirements.
A commenter supported the proposed rule change allowing residents
at Rental Assistance Demonstration (RAD)-converted properties to
participate in the FSS program. Another commenter stated that FSS
authorizing documents do not fully support the intentions of the FSS
program, especially in RAD-converted properties. The commenter said
there is conflicting information regarding the eligibility of former
PHA relocated residents within a PHA's FSS Action Plan between the
continuum of RAD Notices, the 2020 FSS Renewal Notice of Funding
Availability (NOFA), and HUD's proposed rule. The commenter said that
the NOFA language seemed punitive to the resident and inconsistent with
the program's intentions and asked that HUD consider consistent
language to allow continuous resident participation so long as the PHA
and post-RAD conversion owner enter into a Cooperative Agreement and
that residents be allowed into the program at any time after
relocation. The commenter also asked that any new residents to the RAD-
converted property also have the option to enroll into FSS and that the
NOFA acknowledge these as eligible families.
HUD Response: As it concerns the eligibility of HCV homeownership
families (under section 8(y) of the U.S. Housing Act of 1937) to
participate in FSS, HUD has considered the comments received, which are
almost unanimously supportive of such participation. HUD has also
determined that while section 23 of the 1937 Act prior to the Economic
Growth Act amendments prevented an HCV homeownership family from
participating in FSS, changes to the definition of eligible families
under section 23(c)(1) as amended by the Economic Growth Act mean that
participants receiving HCV homeownership assistance may also be
included in this definition; the statutory definition of FSS eligible
families under the Economic Growth Act includes Section 8 participants
broadly rather than being limited to Section 8 rental certificate or
rental voucher program participants. HUD revised Sec. 984.101 of this
rule accordingly, so that participants of the HCV homeownership option
are eligible to participate in FSS. Additionally, HUD revised the
definition of Section 8 programs to include multifamily assisted
housing; tenant-based and project-based rental assistance under section
8(o) of the 1937 Act; the HCV homeownership option under section 8(y)
of the 1937 Act; Family Unification Program (FUP) assistance under
section 8(x) of the 1937 Act; and Moderate Rehabilitation for low-
income families and Moderate Rehabilitation Single Room Occupancy for
homeless individuals under 24 CFR part 882. Tenant-based and project-
based rental assistance under section 8(o) of the 1937 Act includes any
applicable special purpose voucher considered rental assistance under
section 8(o) of the 1937 Act (such as FYI, VASH, and Mainstream
Vouchers).
The comment about conflicting information regarding eligibility for
residents at RAD-converted properties refers to the FY20 Notice of
Funding Availability (NOFA). The FY20 NOFA reflects the eligibility of
RAD-affected public housing residents prior to the new statute being
implemented. The final rule will allow PBRA residents in RAD-converted
properties to be served by PHAs with FSS appropriated funds if the PBRA
owner enters into a Cooperative Agreement with the PHA and this will be
reflected in future NOFOs following implementation of the final rule.
Family Self-Sufficiency (FSS) Program
A commenter stated that the definition of ``FSS program'' is
established within its own jurisdiction and the language should be left
as is because it gives the PHA more flexibility in defining and
managing the program.
Commenters noted that the definition referred to ``a program
established by a PHA or owner within its jurisdiction'' but the phrase
``within its jurisdiction'' has no applicability to owners and could be
read to indicate that a PBRA owner is somehow within the jurisdiction
of the local PHA, and therefore recommended deleting the phrase
``within its jurisdiction'' from this definition.
HUD Response: HUD has clarified its usage of the word
``jurisdiction'' throughout this rule. In the proposed rule,
``jurisdiction'' was sometimes used to refer to the community where a
PBRA property is located. In this final rule, ``jurisdiction'' is only
used when referring to a PHA's jurisdiction.
Supportive Services
A commenter stated support for HUD's clarification that PHAs are
only required to coordinate the availability of supportive services,
not actually provide them, but requested that HUD clarify in its
definition that PHAs and owners may directly provide supportive
services, such as a childcare center or health clinic. Another
commenter asked if, because of this provision, PHAs should no longer
provide credit and financial services, even though PHAs are supposed to
be trained in them in case an FSS participant faces those obstacles.
Lastly, a commenter suggested that the final rule provide the
flexibility for services to be conducted onsite or virtually, due to
the COVID-19 pandemic.
A commenter suggested that HUD keep intact the full list of
services as distinctly listed by Congress so as not to minimize the
importance of any one specific service by combining it with other
services. The commenter stated that the system fails to account for
achievement such as obtaining a college degree and favors an approach
that moves participants quickly to employment.
A commenter asked HUD to integrate health as part of the necessary
conditions that promote and advance self-sufficiency because a health
condition often prevents otherwise eligible families from participating
in the FSS program. Before paragraph (ix) (Other services) of the
definition, the commenter suggested adding the following: ``(ix) Health
management and empowerment--where available, the coordination with a
Community Health Worker (CHW) as may be necessary to improve the health
of the FSS participant, so long as the FSS participant consents in
writing. The FSS participant may also withdraw consent, in writing, at
any time.''
Another commenter questioned whether FSS families could participate
in first-time homebuyer programs while they are in the FSS program and
what protections would the regulations provide to protect against
possible discrimination while transitioning into homeownership.
[[Page 30028]]
HUD Response: PHAs and owners may provide FSS services directly
using non-FSS appropriated funding, in accordance with the eligible
activities of those funds. The FSS program does not impose any
restrictions as to the location or modality of the services.
The definition of Supportive Services in the final rule at Sec.
984.103 includes all services as defined in the statute and adds
clarifying language. Both education and employment-related supportive
services are included, as in the statute. This final rule expands the
definition of ``Personal welfare'' to include health, dental, mental
health, and health insurance services.
FSS families may, and often do, participate in first-time homebuyer
programs while they are in the FSS program. Participating in a first-
time homebuyer program, receiving housing counseling services, or
participating in any form of homebuyer education or advocacy program
should have no adverse effect on an FSS family's participation in FSS.
Participation in the FSS program would not curtail or impact in any way
the protections against discrimination that cover all families.
Section 984.105: Minimum Program Size
Extension of HUD-Approved Exception (Question 2)
A number of commenters supported the proposed change to extend the
duration for a HUD-approved exception to five years. A commenter
suggested that an annual report should be submitted by the PHAs to HUD
concerning the use of the exception. Another commenter stated that the
duration of any HUD-approved exception should be left at the PHA's
discretion. When a PHA submits the request for an exception, the PHA
should provide a good cause for the requested timeframe since FSS
participant family profiles vary between PHAs as well as local
circumstances.
HUD Response: HUD appreciates the comments received in response to
this question and, will keep the five-year limit on exceptions as
stated in the proposed rule. In the interest of consistency in HUD's
administration of the FSS program, HUD will not leave the time period
of an exception up to each PHA. Under section 23 of the 1937 Act, as
amended by the Economic Growth Act, HUD does not have the discretion to
grant a permanent exception to the implementation of a Mandatory
Program.
Proposed Changes to Minimum Program Size
A commenter opposed the proposed change to the minimum program
size. A commenter disagreed with the proposal that when determining the
minimum program size, the relevant figure is the total number of Public
Housing units plus the total number of HCV units because even within
the context of a unified FSS program, the calculation of program size
for HCV participants should be calculated independently of the total
number of public housing units. This commenter said that this has the
potential to negatively impact the Section Eight Management Assessment
Program (SEMAP) scores of PHAs that are working to comply with
mandatory FSS requirements and whose current SEMAP scores derive from
their performance serving HCV program participants. This commenter
asked whether this change would impact current FSS obligations or would
only apply to future obligations.
A commenter asked for more clarification for PHAs to accurately
track their mandatory size. A commenter asked HUD to clarify whether
HUD will be providing PHAs with the accurate number of required
families to be served as of May 24, 2018, and whether all participants
who have graduated since October 21, 1998, still reduce the May 24,
2018, mandatory number. Another commenter requested that the final rule
provide additional clarification for FSS programs that reduced their
size according to existing regulations because the proposed rule does
not make it clear as to whether a program that reduces its program size
after May 24, 2018, but before the final rule is implemented will be
required to revert their program back to the size it was on May 24,
2018, or maintain its current minimum program size. The commenter
recommended that HUD allow the minimum size of an FSS program to be
either what it was on May 24, 2018, or the lesser amount if, as allowed
by current regulations, a family graduated after May 24, 2018, and the
FSS program opted not to refill that spot.
HUD Response: HUD will calculate each PHA's minimum program size as
of May 24, 2018, by calculating the original minimum program size
(including public housing and Section 8) and reducing that number by
the number of graduations reflected in PIC since October 21, 1998, to
date. HUD plans to communicate these through the Field Offices to PHAs
and provide additional forthcoming guidance.
Section 984.106: Cooperative Agreements (Question 3)
Several commenters stated that the list of requirements for PHAs
entering into a Cooperative Agreement with owners of multifamily
properties to voluntarily make an FSS program available to the owner's
assisted tenants was comprehensive. One commenter noted that the
requirement is being expanded without adequate appropriations to fund
the FSS program, which would create an administrative burden for PHAs
taking on an additional caseload for eligible families covered under a
Cooperative Agreement with owners of multifamily properties. Another
commenter opposed the change stating that it makes more sense to have
the staff providing direct services to the client track and be
knowledgeable about their escrow account, and that having separate
hands involved with service coordination and escrow tracking creates an
administrative burden on staff. One commenter recommended defining the
word ``serve'' and the statement ``FSS funds'' to clarify that funds
cannot be used for additional service provision like activities or
incentives.
HUD Response: HUD appreciates commenter feedback on the proposed
list's comprehensiveness and notes that the preponderance of commenters
felt it was comprehensive. HUD notes the concerns raised by a commenter
regarding coordination between FSS Program Coordinators and staff who
track client escrows when these functions are not performed by the same
staff; however, HUD does not feel that such challenges are
insurmountable, or should prevent a PHA from choosing to serve PBRA
residents via Cooperative Agreement. The PBRA owner is ultimately
responsible for managing the Federal funds provided through their PBRA
contract, for rent calculation, and for the amounts placed in escrow
and distributed to FSS families. The rule requires that the Cooperative
Agreement between a PHA and an owner set forth the procedures for the
sharing of escrow information between the PHA and the owner. HUD
recommends that these procedures include the role of the FSS Program
Coordinators. Each PHA may choose whether to enter into a Cooperative
Agreement with a multifamily owner, assessing its own capacity to take
on new participants by expanding the program or integrating them into
their current program size. PBRA residents served by a PHA are already
incorporated into the ``number of residents served'' as part of the
NOFO funding process. HUD does not believe
[[Page 30029]]
it is necessary to define the words ``serve'' or ``FSS funds'' in the
rule.
Section 984.107: FSS Award Funds Formula
Incorporation of Formula in the Final Rule
Commenters stated that HUD should incorporate a formula in the
final FSS rule addressing how HUD will approach the discretionary
authorities provided in 42 U.S.C. 1437u(i), created by the Economic
Growth Act. The commenters encouraged HUD to specify in the final rule
the other criteria which may be considered in determining eligibility
for base or additional awards, which should include factors such as the
planned enrollment level for a new or growing program, or the historic
enrollment level for an existing program which may be experiencing a
temporary dip in enrollment. One commenter stated that this requirement
is mandatory, rather than discretionary.
A commenter urged HUD to detail funding formulas in the final rule,
as well as address how it will approach other discretionary funding
authorities to give housing providers and service coordinators a clear
understanding of the funding parameters and allow them to better
prepare for the future.
``Base Awards'' Threshold and Prorating the Award Amount
Commenters suggested that the Secretary use discretion, under the
Economic Growth Act to determine the policy concerning awards for
eligible entities serving fewer than 25 participants (the threshold for
a ``base award'') and suggested that such a policy could include
prorating the award amount or allowing such entities to combine
programs.
A commenter suggested that HUD should clarify that the first
priority encompasses only the renewal of the full costs of the same
number of full-time and part-time coordinators as were funded by FSS
awards in the prior year, with appropriate adjustments for local
staffing costs and for year-to-year cost-of-living increases; and that
the second priority encompasses all other funding requests, whether for
new coordinators, incremental increases from part-time to full-time
coordinators, or for existing coordinators not previously funded with
FSS award funding.
Criteria for Determining Additional Awards of FSS Program Coordinator
Funding
Commenters urged HUD to address its intended approach to
determining awards of ``new or incremental coordinator funding'' under
the second priority and urged HUD to use fair and reasonable ``general
principles.'' The commenter suggested additional funds appropriated by
Congress should be used for program expansion and deploying additional
service coordinators.
Commenters recommended that HUD commit in the rule to implementing
competitive processes that provide fair and reasonable access to
funding for both programs operated by PHAs and programs operated by
PBRA owners; and a reasonable balance between incremental awards for
existing programs and new awards for previously unfunded programs.
HUD Response: This final rule adds the statutory funding formula in
regulation. The new statute codifies the formula that HUD has used in
NOFOs (previously called ``NOFAs'') for many years. All of the areas
that are at HUD's discretion (criteria for funding, policy on award for
eligible entities that are serving fewer than 25 participations,
amounts available, etc.) in the new statute have been and will continue
to be addressed in standard NOFOs. The statute provides that First
Priority funding goes to FSS Program Coordinators that qualify as
renewals. Beyond that, Second Priority will fund new programs or
additional coordinators for renewal grantees. The distribution and
priority under the Second Priority will be published in the NOFO each
year. HUD has determined that it would be duplicative to publish the
funding formula in both the NOFO, which is available to the public on
Grants.gov, and also in a separate Federal Register Notice.
Additionally, publishing the formula in a separate Federal Register
Notice could potentially delay funding awards, and since funding is
annual, it is critical that awards be made by December 31 of the year
in which it was appropriated. Therefore, this final rule removes
language from the proposed rule that provides that HUD will publish a
separate notice in the Federal Register. Each year, within the bounds
of the statute, the implementation of the funding award formula may
change slightly to reflect best practices, lessons learned, the needs
of the day, etc. All criteria for making awards are shared, in
conformance with the HUD Reform Act, with the applicant community via
the NOFO.
Incentives for Innovation and High Performance
Commenters said that the final rule should address HUD's
implementation of new subsection (i)(6) of 42 U.S.C. 1437u(i), created
at section 306(a)(11) of the Economic Growth Act, which authorizes the
Secretary to reserve up to 5 percent of FSS appropriated funding for
use as ``incentives for innovation and high performance.''
Commenters recommended that the authorized incentives for
innovation and high performance be incorporated within a competitive
funding process for allocation of funding to ``second priority''
requests for new or incremental coordinator funding. The commenters
noted that the ``incentive'' funding under this section, unlike all
other funding authorized in subsection (i), is not specifically
restricted to use for FSS Program Coordinators, but is more flexibly
defined as ``to provide support or to reward'' FSS programs; and urged
HUD to provide in the final rule that it may employ this authority to
provide support to innovative or high-performing FSS programs for costs
other than coordinator costs, which could include the costs of IT
systems, participant incentives, or other costs. Commenters recommended
that HUD support programs to establish innovation, cross-sector
partnerships to help strengthen the types and quality of services
offered to FSS participants (such as partnerships with employers,
workforce and career development programs, colleges, etc.). A commenter
encouraged flexibility for program providers and the possibility of
incentives that may allow them to pursue innovative efforts, which
could complement the service coordinators' work and improve resident
outcomes. The commenter suggested that incentive payments permitted
under the rules should only be considered after renewals are fully
funded.
HUD Response: HUD appreciates the comments. At the current time,
HUD is focused on Priorities One and Two as stated in the Statute. If
HUD chooses to avail itself of the option for Incentives for Innovation
and High Performance, we will issue a separate notice. However, at this
time, HUD is not including it in this final rule.
Section 984.201: Action Plan
A commenter requested that HUD state the exact ``slight changes''
it is making especially since they are not easily identifiable in
section 306 of the Economic Growth Act.
HUD Response: Compared to the current regulation (24 CFR 984.201),
the final rule at Sec. 984.201: (1) Expands requirements for
consultation on the FSS Action Plan, as required by section 23, as
amended; (2) removes language around FSS Action Plan submission
requirements for mandatory programs
[[Page 30030]]
(there are no new mandatory programs); (3) adds language to clarify
that all voluntary programs are required to have an approved FSS Action
Plan, regardless of whether they receive funding (this is not a change,
just a clarification); (4) deletes references to outdated programs that
no longer exist (e.g., the Job Opportunities and Basic Skills Training
Program under part F of title IV of the Social Security Act has been
replaced by the Workforce Innovation and Opportunity Act); and (5)
removes requirements for policies around ``terminating or withholding
Section 8 assistance'' (as this provision has been removed per other
areas of statute). In the final rule, HUD is also adding to Sec.
984.201(d)(13) providing that optional additional information is such
other information that would help HUD determine the soundness of the
proposed FSS program. Examples of policies that may be included in the
FSS Action Plan include:
Policies related to the modification of goals in the ITSP;
The circumstances in which an extension of the Contract of
Participation may be granted;
Policies on the interim disbursement of escrow, including
limitations on the use of the funds (if any);
Policies regarding eligible uses of forfeited escrow funds
by families in good standing;
Policies regarding the re-enrollment of previous FSS
participants, including graduates and those who exited the program
without graduating;
Policies on requirements for documentation of goal
completion;
Policies on documentation of the household's designation
of the ``head of FSS family;'' and
Policies for providing an FSS selection preference for
porting families (if the PHA elects to offer such a preference).
Section 984.202: Program Coordinating Committees (PCCs)
A commenter said they support the proposal to include service
coordinators on PCCs because the committee should have a deep
understanding of resident needs, and service coordinators are uniquely
skilled at building relationships with residents to understand the
complex challenges they may be facing and then swiftly connect them to
essential resources. Another commenter agreed that the PCC should
include at least one participating FSS family member and an FSS staff
coordinator, and stated their agency already includes these individuals
as committee members. Another commenter stated it can be difficult to
have a resident participant from a FUP voucher holder group as persons
housed with a FUP voucher have multiple ongoing challenges and little
time for goals not closely related to their own welfare.
HUD Response: HUD appreciates these comments. The requirement is
that one participant per type of rental assistance served in the FSS
program must be included in the PCC--Public Housing, Housing Choice
Vouchers, and/or Multifamily Housing. It is not required that each type
of voucher (FUP, VASH, etc.) be represented.
Section 984.203: FSS Family Selection Procedures
A commenter objected to Sec. 984.203(d)'s use of ``motivation'' as
a factor in screening candidates, as it would reinforce negative and
untrue stereotypes about families. Another commenter suggested leaving
the current language regarding ``motivation'' as is to make sure
everyone has an opportunity to participate in the program, and the PHA
should be able to determine if a participant is motivated.
HUD Response: The original regulation and proposed rule both
allowed a PHA (and owner, in the proposed rule) to screen for
motivation as an option. There was no change to the original regulation
in the proposed rule and HUD is not changing the final regulation as it
relates to motivation as a screening factor in this final rule.
Section 984.302: FSS Funds
Two commenters stated that Sec. 984.302(c) is somewhat ambiguous
and urged HUD to revise it so that it explicitly conveys PBRA owners'
eligibility to access FSS appropriated funds for independently operated
FSS programs, consistent with the statutory language and intent. The
commenters suggested either deleting the phrase ``including through a
Cooperative Agreement in accordance with Sec. 984.106;'' or adding at
the end of the section a new phrase ``or through an independently
operated PHA or PBRA FSS program.''
HUD Response: Subject to funding priorities in section 23(i)(3) and
HUD appropriations, HUD may award FSS appropriated funds directly to
PBRA owners operating FSS programs independently or in partnership with
another PBRA owner. To clarify this, HUD revises Sec. 984.302 to state
that FSS appropriated funds may be used by an owner when it operates an
FSS program ``through a Cooperative Agreement or on its own.'' As long
as it is permitted in the NOFO, an owner may choose to subcontract
awarded funding to another entity such as another owner or a PHA with
whom the owner has a Cooperative Agreement. To ensure that there is no
confusion about funding available to PBRA owners who operate an FSS
program, HUD added a regulatory provision at Sec. 887.113(a) that
states that owners may also use residual receipts to pay for reasonable
FSS program operation costs, including hiring an FSS Program
Coordinator(s) for their program.
Section 984.303: Contract of Participation
A commenter said ``Seek Employment'' should include a requirement
for the FSS participant and FSS Program Coordinator to certify that the
participant has completed these defined activities, and that any false
certification is reason for termination, because in auditing FSS files,
this is often an undocumented component.
Another commenter said the new final sentence in Sec.
984.303(b)(3) is confusing and should be rewritten as follows to
provide more clarity: ``All considerations allowed for other assisted
residents for repayment agreements, etc., shall also be allowed for FSS
participants.'' The commenter also stated Sec. 984.303(i) is mostly
repetitive of Sec. 984.303(b)(5). A commenter said that, to make the
regulations easier to read, HUD should add the right to a hearing from
Sec. 984.303(i) to Sec. 984.303(b)(5) and delete Sec. 984.303(i).
HUD Response: HUD appreciates the recommendations provided by
commenters for regulatory text changes to clarify requirements and
streamline the regulations. HUD has revised the regulatory text in
Sec. 984.303(b)(3) as suggested by a commenter. HUD has also revised
Sec. 984.303(b)(5), which addresses the form and content of the CoP,
to cross-reference Sec. 984.303(i), which addresses actions PHAs may
take for non-compliance with the CoP, instead of restating the
requirements. As it concerns requiring the FSS participant and
coordinator to certify that the Family has completed its defined
activities and goals, under current requirements, which continue to
apply under this rule, PHAs are already responsible for ensuring that
the Family complies with the CoP, including the goals and activities
defined in the Family's ITSP and the final rule includes an option that
the PHA include in its FSS Action Plan the policies on documentation of
goal completion. See 24 CFR 984.201(d)(13).
[[Page 30031]]
Allowing Any Adult Member of the FSS Family, and Not Solely the Head of
Household for Rental Assistance Purposes, To Execute the CoP (Question
4)
Many commenters agreed with the proposed change. A commenter noted
that allowing any adult to be head of FSS family may increase
participation at their PHA. Commenters stated this is a positive change
for the program that will make it easier to serve families. A commenter
noted this would allow access to the FSS program where the head of
household is disabled and unable to work.
A number of commenters said that the proposed change needed more
revisions. One commenter suggested guidance on the number of adult
members in a family that may be eligible to execute a CoP and the
number of times a household can participate in the FSS program. Some
commenters stated that without clarity, this could cause confusion as
to who was the head of the household under various circumstances. Other
commenters said there could be confusion when there are disagreements
concerning the beneficiary of the escrow account.
One commenter questioned if PHAs would have discretion on the
implementation of this new rule. The commenter also questioned if the
head of FSS family successfully completes the FSS contract, and the
Head of Household for rental assistance purposes is behind on rent or
noncompliant with the lease; can the PHA hold the head of FSS family
responsible? One commenter requested explicit guidance on how the
proposed change would be operationalized, specifically regarding
changes in household composition and distribution of escrow. The
commenter further stated that the proposed change could put FSS staff
in the position of having to arbitrate as to which household member is
the primary FSS participant who signs the CoP. A commenter asked if the
HCV Head of Household would be required to sign an addendum to the CoP
that states they have designated the other adult member as the head of
FSS family.
One commenter recommended that any adult family member who
expresses interest in joining the FSS program, and is ultimately
enrolled first, be considered the head and designated as the individual
allowed to execute the contract and requested guidance on when a family
fails to designate an adult family member.
A commenter noted the proposed revision seemed to be missing the
following: who would receive the disbursement; what would happen if the
adult family members left the assisted household; if another adult
household member could enroll to participate after the Head of
Household enrolled and completed FSS; and if consent from the Head of
Household would be required regarding who would be entitled to escrow.
One commenter opposed the proposed change. A commenter was
concerned that there could be circumstances in which this might not be
advisable, such as when there is a coercive dynamic in a household
relationship. Another commenter warned that if the head of FSS family
is not the Head of Household, they may not have decision-making power
over who gets on the lease and lives in the household, including those
who may be receiving cash welfare; and therefore, the ability to
graduate may be beyond the head of FSS family's control.
HUD Response: The change from only the Head of Household for rental
assistance purposes being able to sign the CoP to any adult household
member being eligible to sign a CoP is statutory. The final rule will
reflect a change to clarify that there will be only one CoP per
household at any one time. There may be an unlimited number of ITSPs
for each Family. The proposed rule stated that the head of FSS family
is ``as designated by the Family.'' The final rule will eliminate ``in
consultation with the PHA or the owner.'' The PHA may make itself
available to consult with families on this decision. HUD recognizes
that financial disagreements between household members may cause
significant distress, and that sometimes such conflicts rise to the
level of financial abuse. However, HUD believes that as a general
policy, it is in the best interests of assisted households to choose
the head of FSS family that is most suitable for their individual
household circumstances. While a head of FSS family who is not also the
Head of Household for rental assistance purposes will not have control
over some decisions, such as to who joins the household, they may still
be the best choice to serve as head of FSS family; that choice should
be made by the household, informed by their greater knowledge of their
own circumstances. FSS Program Coordinators may provide information on
resources for people experiencing abuse where appropriate. The PHA or
owner may make a policy in the FSS Action Plan regarding documentation
of that decision.
The escrow will be disbursed to the head of FSS family. The number
of times a family can participate in the FSS program and other policies
on re-enrollment have been and will remain policies to be determined at
the local level. Please see the Promising Practices Guidebook for more
discussion.\4\ If the head of FSS family leaves the household, as with
any CoP, a determination will be made regarding whether that person is
eligible to graduate before they leave. If they do not graduate, as is
the case now, another family member may step in as head of FSS family
and continue with the CoP. While generally the Head of Household for
rental assistance purposes, which may be different than the head of FSS
family, would be responsible for debts incurred by the family in
connection with the rental assistance program, such debts are
subtracted from the escrow balance prior to disbursement of escrow at
graduation.
---------------------------------------------------------------------------
\4\ U.S. Department of Housing and Urban Development,
Administering an Effective Family Self-Sufficiency Program: A
Guidebook Based on Evidence and Promising Practices, https://www.hudexchange.info/resource/5241/administering-an-effective-fss-program-guidebook/.
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Time Period That a Family Must Be Independent From Welfare (Questions
5, 6, and X \5\)
---------------------------------------------------------------------------
\5\ Note: This question was labeled as ``Question X'' in the
proposed rule.
---------------------------------------------------------------------------
Many commenters supported removing the 12-month requirement or
changing the requirement to being independent from welfare assistance
at the time of their Contract of Participation expiring or graduation
instead. These commenters stated: This would lead to better outcomes,
allow flexibility for clients finishing school or training; this would
assist families dealing with the ``benefits cliff'' in a more gradual
and welcoming manner; this would reduce the need for FSS escrow
accounts to be forfeited by participants who would be otherwise
eligible to receive any remaining escrow; this would ease the
administrative burden for FSS staff; often the end date for being
independent from welfare assistance is out of the participants' hands
as they usually have transitional benefits after becoming employed; and
the current 12-month period has prevented otherwise qualified
participants from graduating and leads to artificially forfeiting
accumulated escrow for families who are employed but had a period of
time on public assistance. Commenters stated that the 12-month
requirement was punitive, would needlessly frustrate families' attempt
to graduate, and did not incentivize families to graduate. Many
commenters supported, for the
[[Page 30032]]
same reasons, allowing PHAs to set the requirement at their discretion.
Some commenters did not recommend giving PHAs discretion and
requested that HUD keep this uniform to the program, while others
supported PHAs having discretion while maintaining a certain maximum.
Some commenters opposed the proposed change and agreed with the 12-
month requirement, seeing no issue or undue burden a PHA would
experience with the timeframe. The commenters suggested that, given the
confirmation requirement, effective organizations should have a data
sharing agreement with the appropriate entities to determine the FSS
participants' welfare assistance status regardless of the requisite
time period. The commenters believed that without a timeline, there
could be a lack of motivation for families to gradually become
independent from welfare. The commenters stated that a participant must
be free from cash assistance over a period to adjust financially to
being self-sufficient and the proposed change defeats the purpose of
the program. Commenters noted that the CoP can be extended to allow a
participant time to become free of assistance, so this is not typically
a barrier to successful program completion. The commenters added that
if a participant is not free of cash assistance after seven years of
participating in the program, they likely are not in a place or time in
their life to become self-sufficient. A commenter suggested adding
extra resources to help the families reach that 12-month goal,
including PHA discretion, and warned that it would also be detrimental
to external stakeholders in the long run with the possibility of having
to reallocate more funds to the welfare system to continue the
programs.
Some commenters supported changing the rule so that welfare
independence is only required for the participating member of the
family in the FSS program, not the entire household because the
participation in TANF or other welfare programs should not reflect the
progress and eligibility for graduation of the participating member.
Some commenters said that this should have no impact on TANF
requirements. Commenters stated that TANF is not a good indicator of
welfare self-sufficiency. One commenter stated that accessing TANF
within a specified time should not preclude completion of the program
and the emphasis on utilization of TANF is a deficit-based requirement
that does little to promote self-sufficiency because families encounter
a range of changing life circumstances where they may need to access
TANF assistance to sustain their livelihood. Another commenter noted
that after moving into the work components of the TANF program,
families can continue receiving benefits for up to 24 months and there
are instances where the continuation of welfare helps families offset
increased costs due to a decrease in other income-based supports.
One commenter stated that some participants decide to not enroll in
the program for fear of losing or being denied other benefits. The
commenter suggested that the rule clearly state that the savings held
in escrow is only contingently available to families and would not be
counted as an asset or resource for other state or Federal benefits. A
commenter stated that reducing or eliminating the time would allow for
families to successfully complete the Contract and collect escrow even
if a family member has needed access to TANF in the past 12 months. One
commenter stated there is nothing to preclude a family from returning
to TANF after graduation from FSS. A few commenters noted that the TANF
(Family Investment Program (FIP)) income eligibility guidelines are so
low that most working families would not be eligible for TANF benefits.
Some commenters suggested alternative time requirements, because
requiring participants to be free from TANF for a full 12 months poses
undue hardship for many families and leaves little room for
flexibility. Commenters suggested a 3- or 6-month requirement off TANF
as a reasonable timeframe that would allow participants to demonstrate
stable employment and financial self-sufficiency prior to graduating
from the FSS program. They added that requiring participants to
maintain stable employment for 3 months rather than abstain from TANF
benefits for 3 months would be a better indicator of participants'
ability to demonstrate long term self-sufficiency and positive steps
toward goal achievement. They urged HUD to consider revising the FSS
work requirement in addition to, or in lieu of, the TANF requirement.
One commenter stated that a required time limit off TANF before
program end could be beneficial if clients used their time in the
program to work on the areas which are hindering them from holding down
a successful position that would eliminate the need for TANF. Some
commenters said the requirement to be independent from TANF should
follow the same requirements as being independent from other welfare,
and most participants are aware that TANF is temporary. While another
commenter said that requiring participants to be TANF free should be
required, and that not receiving welfare assistance is a sign of self-
sufficiency and would enhance their independence from government
assistance. Another commenter stated that by keeping the 12-month rule,
FSS Program Coordinators can work in conjunction with TANF staff to
provide transitional services to the participant.
Commenters supported the proposed change and stated that removing
the 12-month requirement would decrease incentive for FSS participants
from exiting the program permanently. A number of commenters stated
that the application of the welfare requirement in FSS will not impact
participants' decision to permanently stay off welfare. Another
commenter said that removing the 12-month requirement increases FSS
family access to escrow account balances that can be used for asset
building activities. Two commenters answered ``no,'' saying that many
of their participants are not receiving ``cash'' welfare assistance
anyway.
A commenter stated FSS participants will still be required to be
independent from welfare assistance at the time their CoP ends, so the
incentive to be independent from welfare assistance remains without a
static timeframe. A few commenters said that most participants
transition off welfare assistance as they increase their income, so
this is a good complement to the FSS Goals. One of these commenters
said the PHA's ability to work with an individual to define
``suitable'' employment will take care of the rare exceptions.
One commenter suggested that HUD reconsider using terms such as
``incentive'' when describing the decisions a household may make
regarding their receipt of welfare assistance or other forms of public
assistance because this language reinforces negative and untrue
stereotypes about people who receive welfare and/or housing assistance.
HUD Response: HUD thanks commenters for responses to Questions 5,
6, and X. This final rule maintains the language as it was in the
proposed rule, eliminating the requirement to be independent from
welfare assistance for 12 months prior to graduation. The requirement
will be for the household to be independent from welfare assistance on
the day of graduation. The requirement to be independent from welfare
assistance in Sec. 984.303(b)(2) will be revised to reflect that it
will be a required final goal, as opposed to an interim goal. In
addition to the explanation provided in the preamble to
[[Page 30033]]
the proposed rule, HUD is attempting to prevent a scenario when, for
instance, a participant is unable to graduate because they have met all
of their goals with the exception of being independent from welfare
assistance for 12 months but is ineligible for an extension on their
CoP. With regard to other benefits, the only other entitlement program
to which FSS directly relates is TANF and it is a contingency of the
HUD program that participants be free from TANF. Until the escrow funds
are disbursed, they are the property of the PHA and cannot impact any
eligibility of the FSS family for any benefit or entitlement. HUD
cannot speak to the impact of the escrow, once disbursed, on other
Federal, state, or local programs. The Internal Revenue Service has
determined that escrow disbursements do not qualify as income and are
not taxable and do not require a Form 1099. See: https://www.hud.gov/sites/documents/FSSESCROWTAX_IRSOPINION.PDF.
Section 984.303(b)(1)
Two commenters interpreted the change to Sec. 984.303(b)(1) to
mean that PHAs and owners would have the discretion to use a CoP in the
form of their choosing, and supported this change, as it would enable
programs to streamline the CoP, revise it to use more plain and
straightforward language, and make it available in other languages
besides English. The commenters recommended that HUD require all PHAs
and owners to make available and to accept electronic execution of the
CoP in whatever form in use. Another commenter said there needs to be
some standard parameters on the wording of each Agency's CoP and
perhaps each Agency's proposed CoP should be reviewed by their FSS
Field Office.
HUD Response: The CoP form itself (including ITSP) will be revised
as part of the Paperwork Reduction Act package that is published with
the final rule. PHAs or owners may translate the CoP into any
applicable language and may revise the structure of the CoP as long as
the information and content included in the CoP is the same as on the
HUD form. Along with producing documents in translated formats, PHAs
and owners must also provide any other necessary language assistance
services to ensure meaningful access for persons with limited English
proficiency in compliance with Title VI of the Civil Rights Act. PHAs
and owners that provide access to CoP forms in printed format or an
electronic format and accept electronic submissions and signatures must
ensure that such forms and procedures are language accessible and
accessible with respect to the communications needs of persons with
disabilities. PHAs and owners must ensure effective communication with
individuals with disabilities in accordance with Section 504 of the
Rehabilitation Act of 1973 (Section 504) and the Americans with
Disabilities Act (ADA), which includes providing the CoP form
(including ITSP) in accessible formats. Furthermore, PHAs and owners
must provide reasonable accommodations and modifications for
individuals with disabilities consistent with applicable Federal
nondiscrimination laws.
Section 984.303(b)(2): FSS Family Goals
Commenters agreed with prohibiting the PHA or owner from modifying
or adding additional required activities that must be completed by
every participant. According to the commenters, one of the fundamental
strengths of the FSS program is its flexibility: Each participant can
set and make progress toward the particular goals that matter to them
and make sense in their particular situation. Commenters said that if a
PHA or owner can require other mandatory goals beyond the parameters of
the terms and conditions prescribed by HUD, it would serve only to
curtail participation and participant success in the program. Another
commenter noted that a minimum income limit from wages for FSS
graduation would enhance the program. A commenter stated that any
household member completing the ITSP goals would accomplish the FSS
program's purpose. Another commenter recommended that only completion
of ITSP goals by the head of FSS family should be evaluated for
purposes of determining completion of graduation requirements including
meeting the employment obligation. A commenter stated that this
clarification is not new, and that it has been in the NOFA for several
years. A commenter suggested that the ITSP should be updated to allow
the PHA flexibility to change the format.
HUD Response: Thank you for your comments on this topic. As stated,
this is a continuation of the current policy that does not allow for
program-wide graduation requirements/enhancements (beyond the two
required by regulation: I.e., to complete the FSS program, the head of
the FSS family must seek and maintain employment and the family must be
independent of welfare assistance). All ITSP goals for all family
members with ITSPs become part of the CoP and must be completed in
order for the family to graduate. This final rule revises Sec.
984.303(g) to clarify the requirement that all family members' ITSPs
that are part of the CoP must be completed on or before the expiration
of the contract term.
Regarding the ITSP format, as stated above regarding the CoP (of
which the ITSP is a part), PHAs or owners may translate the ITSP into
any applicable language and may revise the structure of the ITSP as
long as the information and contents included in the ITSP is the same
as on the HUD form. This includes translating into an electronic format
and accepting electronic signatures. PHAs and owners must ensure
effective communication with individuals with disabilities in
accordance with the Section 504 and the ADA, which includes providing
the CoP form (including ITSP) in accessible formats.
Section 984.303(b)(4): Employment Obligation
A commenter said the family member who signed the CoP should be
employed at the time of Contract termination, and the PHA should also
have flexibility to mandate some requirement that would support Self-
Sufficiency, such as opening a savings account and saving a reasonable
amount that is suitable for the family, such as saving $20 a month.
HUD Response: Any goals other than the two mandatory goals of being
employed and independent from welfare assistance, such as establishing
a bank account and contributing to it may be negotiated on a person-by-
person basis and may not be mandated for all participants. HUD will not
mandate additional requirements, as they may be unnecessary or
infeasible for some families.
Section 984.303(b)(4)(iii): Suitable Employment
Two commenters said the ``suitable employment'' definition gives
PHAs and owners too much authority in determining what is suitable and
can be applied arbitrarily and without substantiation, leading to
unequal rules across and possibly within FSS programs. The commenters
recommended that the proposed language be refined such that the FSS
participant defines ``suitable employment.'' The commenters believed
goal setting and goal defining should be a mutual effort to include the
coordinator's knowledge and expertise in the field, as well as the
client's right to self-determination. Another commenter stated an
expert in the field should provide the definition after a thorough
assessment. A commenter asked if it was possible to include ``achieving
a local living wage'' in
[[Page 30034]]
``Determination of Suitable Employment'' as there are several sources
readily available to determine what a living wage is for communities
across the U.S. One commenter suggested that HUD should consider
implementing a minimum income for wages similar to the homeownership
program.
HUD Response: The final rule revises paragraph (b)(4)(iii) of the
proposed rule to note that the determination of suitable employment
will be made ``with the agreement of the affected participant,'' so
that the affected participant has input into this matter along with the
PHA or owner, and that the determination will be based on the receipt
of other benefits of the participant, in addition to the skills,
education, and job training of that participant. When making the
determination of ``suitable employment'' it is critical to be aware of
how increased income may affect other benefits such as Social Security
Disability, Medicare, Medicaid, etc. which may be in the best interest
of the participant to keep rather than increasing income beyond
eligibility limits.
Good Cause for a Contract Extension (Question 7)
Several commenters supported expanding the ``good cause''
definition to include additional circumstances, like a natural
disaster, serious illness, or involuntary loss of employment,
especially during the COVID-19 pandemic. One commenter recommended that
the definition include any other circumstance that the PHA determines
is preventing the family from achieving their goal within the five-year
timeframe, on a case-by-case basis. Another commenter suggested that
the definition include a natural disaster. One commenter questioned how
the Health Insurance Portability and Accountability Act (HIPAA)
impacted this rule, when ``serious illness'' would consider an
additional circumstance for ``good cause.'' A commenter questioned how
a PHA would verify ``involuntary loss of employment'' when employers
are not required to disclose why an employee was terminated. One
commenter noted that the definition concerning ``involuntary loss of
employment'' may need to be revised, as it may not consider
circumstances where individuals voluntarily leave employment based on
not being able to afford increases in childcare if the FSS participant
is not receiving childcare assistance. Another commenter encouraged HUD
to clarify and define new circumstances to now be considered ``good
cause'' to extend a family's contract. Another commenter recommended
clarifying the definition to include additional circumstances,
including active pursuit of a goal that furthers self-sufficiency.
One commenter opposed establishing a definition for ``good cause''
for a Contract extension, suggesting that individual circumstances
should be considered and left to the PHA's discretion. One commenter
suggested that reasons for ``good cause'' should be at the FSS Program
Coordinator's discretion because they are familiar with the clients'
needs and goals. One commenter suggested adding some language that
advises that the two-year extension period is a guideline not an
absolute, as every reason for an extension does not require an
automatic two-year extension. Another commenter suggested that the FSS
participant must have already met at least one goal to qualify for such
an extension.
A commenter recommended that HUD codify that declared disasters or
emergencies recognized by local, State, or Federal government should
qualify as good cause categorically, instead of relying on case-by-case
waivers such as the one provided for this section under PIH Notice
2020-13, PH and HCV-6: Family Self-Sufficiency (FSS) Contract of
Participation: Contract Extension, dated July 2, 2020.\6\
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\6\ U.S. Department of Housing and Urban Development, PIH Notice
2020-13 (HA), REV-1, https://www.hud.gov/sites/dfiles/OCHCO/documents/2020/13pihn.pdf.
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One commenter believed the proposed definition is sufficient, and
does not require any further clarification, as the examples provided
communicate intent, while allowing the PHA or owner flexibility to
assess on a case-by-case basis.
HUD Response: The final Contract of Participation (CoP) regulations
at Sec. 984.303(d) state that ``good cause'' to extend the CoP is
determined on a case-by-case basis by the PHA or owner. HUD declines to
define and limit ``good cause,'' but the final rule expands the
examples of ``good cause'' to include more than circumstances beyond
the participant's control, including active pursuit of a current or
additional goal that will result in furtherance of self-sufficiency
during the period of the extension.
The final rule has also been revised to include that the PHA or
owner can grant the extension as long as the PHA or owner is consistent
in its determination as to which circumstances warrant an extension.
The participant must request an extension, so any information shared by
the family in pursuit of that goal will be voluntarily shared.
Additionally, unless the PHA or owner employs medical staff, HIPAA does
not apply in this situation.
Removal of the Automatic Completion Provision (AKA ``30% Rule'')
(Question 8)
Several commenters supported removing the automatic completion
provision. Commenters noted that removing the automatic completion
provision would lead to more consistency between programs and fairness
for all participants, and that removing this provision would also be
more administratively efficient because PHAs would not have to track
automatic completion. One commenter noted that additional time is
helpful for the FSS Program Coordinator to work with the FSS family in
completing any remaining subgoals and provide additional support for
maintaining the employment as well as building confidence with
financial literacy so the family can positively manage the additional
income. Another commenter stated it doesn't exclude the other way to
graduate and provides a clear ``look at the math'' definition of
graduation for cases where a family's graduation is in dispute. Some
commenters stated it would allow for true independence from rental
assistance when 30% of income fully covers contract rent and the family
successfully leaves both the FSS and Section 8 programs.
Commenters asked for clarification on how the proposal would
operate when the HAP contract is terminated after the six-month grace
period after a family's last housing assistance payment is made if
their goals are not met. Commenters expressed concern that the six
months was not enough time for families to complete their goals.
Commenters recommended that a family graduate automatically at the end
of this grace period because the family has reached independence.
A commenter suggested that regulations should be established to
prevent the family from reporting losses of income immediately after
escrow disbursement to maintain the housing assistance or decrease
tenant portion of rent.
Commenters suggested that HUD include a provision that allows for
automatic graduation when an FSS participant moves to market rate
housing and releases their housing subsidy under positive
circumstances.
Two commenters asked HUD to clarify whether families were allowed
to
[[Page 30035]]
retain the escrow immediately after graduation.
Another commenter asked if the 30% rule is removed, will ongoing
Contracts of Participation be grandfathered since the CoP does include
the 30% rule as a way to graduate FSS? One commenter asked HUD to
elaborate further and asked if the 30% would be replaced by a different
percentage.
HUD Response: Based on the commenters' support for removal of the
automatic FSS graduation provision (the 30% rule), HUD will move
forward with such removal as proposed. Under HCV and PBV regulations,
zero-HAP voucher families (i.e., families for which no HAP payments are
made), are automatically terminated from the housing assistance program
180 calendar days after the last HAP payment. Under current FSS
requirements, which continue to apply under this rule, once housing
assistance is terminated, FSS participation also terminates. However,
Zero-HAP families may continue to escrow during this 180-day period if
they have not surpassed the Low-Income threshold (80% of Area Median
Income (AMI)). Also, the 180-day period gives the family and the FSS
Program Coordinator time to review the ITSP and make changes, if
necessary, to put the family on a path to graduation prior to the
expiration of the 180-days.
Escrow Funds in the Case of Nullification (Question 9)
A number of commenters supported adding the language regarding the
handling of escrow funds in the case of nullification. One commenter
supported the change and noted that these situations are currently
handled through a waiver process which can be time-consuming and
administratively burdensome for all parties involved. One commenter
questioned whether the nullification would be considered a CoP
Completion or Termination for purposes of keying #8 Recertification
into PIC, as these are the only two choices that are given when
completing a #8 Exit for FSS Participants. Commenters suggested that
the proposed rule clarify who the beneficiaries of the escrow account
would be when the CoP has been nullified. One commenter noted that FSS
Participants in good standing who find themselves disabled and unable
to work should be able to receive the funds if there is no household
member who could take over the FSS CoP and complete it to receive the
family's escrow funds.
A commenter suggested this can be managed in two different ways:
the CoP can be terminated and the funds can be passed on to a member in
the household who was appointed by the head of FSS family, or the CoP
can continue if there is an adult member in the household who can
continue and fulfill the CoP, and during the enrollment period the head
of FSS family should assign the person whom these funds can go to in
case something such as death happens.
Commenters suggested that escrow management should be managed on a
case-by-case basis, dependent upon the circumstances for nullification.
Another commenter suggested that if the reason for nullification is
that the family was considered ``not in good standing'' due to eviction
or non-compliance with the agreement, then the escrow funds should be
liquidated and belong to the PHA for funding housing repairs, unpaid
rent, support for tenants in good standing, or improvements where
needed. Another commenter suggested that if a CoP is nullified the PHA
must document and report to HUD its reasonable efforts to discover the
availability of these services.
Some commenters said that the language of the escrow distribution
should allow an FSS program participant to reject the distribution in
such cases where their SSA benefits would be in jeopardy by obtaining
such a resource. Another commenter suggested that HUD should add
language stating that following such a disbursement, the family member
and/or any other household member may not re-enroll in an FSS program
at a later date. Two commenters suggested allowing the ITSP or CoP to
be amended rather than nullified, such as by allowing an adult member
who is able and agrees to take over the CoP.
Other commenters opposed the change. Commenters noted that
releasing escrow funds upon nullification of the FSS CoP does not align
with the FSS program's goal, and the escrow funds should remain an
incentive to achieve self-sufficiency or to use towards achieving self-
sufficiency. Other commenters stated that this will create an
additional administrative burden to track and pay out monies for
participants that have not completed the program regardless of why the
CoP was nullified and will require the FSS Program Coordinator to seek
out heirs in the case of a deceased single-person family.
One commenter asked how nullifying would affect performance
measures. A commenter said that even with this change, HUD should
ensure families have the right to be consulted about and appeal adverse
determinations by a PHA or owner that unavailable supportive services
are integral to the family's success.
HUD Response: The regulation will be changed in Sec. 984.303 to
reflect that the FSS family will be consulted in the determination that
services are not available, before the CoP is terminated and FSS escrow
is disbursed. HUD notes that this final rule removes the term
``nullification'' and related references to the CoP being ``null and
void'' from the regulations and instead refers to ``terminations with
FSS escrow disbursement.'' For a contract to be ``null'' or ``void''
means it has no legal validity, force, or effect. Contracts are voided
in rare circumstances, such as when the contract was entered into under
duress or its terms are unconscionable. This does not align with the
use of ``nullification'' in the existing FSS regulations or in the
proposed rule. HUD has determined there are situations when a family
should receive escrow funds, even when they haven't completed the CoP.
The CoP will still be ``terminated,'' but the family will get escrow
funds in those situations. This preamble retains the term
``nullification'' when discussing public comments, but the term will no
longer appear in HUD's FSS regulations.
This final rule does not contain language from the proposed rule
that would have provided for escrow disbursement to an estate if the
head of FSS family dies before a CoP is completed. Section 23 of the
1937 Act, as amended by the Economic Growth Act, states that amounts in
the escrow account may be withdrawn by the participating family after
the family ceases to receive income assistance under Federal or State
welfare programs, upon successful performance of the obligations of the
family under the contract of participation entered into by the family
under subsection (d), as determined according to the specific goals and
terms included in the contract, and under other circumstances in which
the Secretary determines an exception for good cause is warranted. The
statute states that escrows may be ``withdrawn by the participating
family.'' An estate cannot be considered a ``participating family.''
Therefore, FSS escrow cannot be disbursed to an estate. There may be
situations where there is good cause to disburse escrow to a remaining
FSS family member when the head of FSS family dies. While the general
rule is that the escrow is only withdrawn if the FSS family completes
the CoP, the Economic Growth Act allows HUD to provide exceptions to
this general rule when ``good cause is warranted.'' However, HUD cannot
make a blanket finding of ``good cause'' in all cases when an FSS
participant
[[Page 30036]]
dies before completing the CoP. There may be instances where good cause
is warranted (e.g., when an FSS participant is close to completing the
CoP and they die), but not always (e.g., when an FSS participant is a
recent enrollee in the program and has not completed much of the CoP).
Therefore, this final rule cannot provide for escrow disbursement any
time the head of FSS family dies before a CoP is completed. Where good
cause for an escrow disbursement to a family member may be warranted
when the head of FSS Family dies, HUD will consider waiver requests, as
has been the case prior to this rulemaking.
HUD notes that the regulations continue to provide that if the head
of FSS family is unable to complete the CoP, and the family wishes,
another household member may take over the CoP. The disposition of
forfeited escrow funds is addressed later in this document in the
discussion about Question 14.
Section 984.303(g), (h), (j), and (k)
Some commenters recommended that HUD require PHAs and owners to
offer the heads of FSS families the opportunity to pause participation
in the program to deal with family crises and challenges without
jeopardizing their escrow. These commenters stated that under the rules
of some FSS programs, families may be terminated or denied coordination
services for not complying with a required engagement schedule. The
commenters said they had heard feedback from FSS participants that it
would be helpful to have the option to ``pause'' their participation in
the FSS program, citing reasons, such as health or family crisis, that
are similar to why a participant might request an extension of their
participation. Under current rules, these types of challenges
contribute to increased terminations. These commenters said that
suspending expectations for participating in services and accumulation
of escrow and extending the CoP end date by the same period of time
that the participant pauses their participation, would help to
strengthen program participation and graduation rates, and support
participants to maximize their escrow accumulation. Another commenter
stated this may be a good idea but that allowing pausing would bring up
a lot of questions that would need to be addressed and clarified. A
commenter recommended HUD modify Sec. 984.303(h)(2) to be consistent
with the final portability changes in Sec. 984.306.
HUD Response: The length of the CoP is statutory. Therefore, HUD
has no discretion to extend it. An initial five years (or longer,
depending on the timing of the next recertification after effective
date), plus a two-year extension should be long enough to cover most
family circumstances, even emergencies, and ``pauses'' in pursuing
education and/or employment goals. PHAs and owners also are at liberty
to add goals around basic needs and crisis response, if that is what is
needed and agreed to by the family. It is the purview of each PHA or
owner to set goals regarding ``engagement'' with each participant. It
is up to the PHA or owner to revise those goals as agreed to by the
family, to respond to family needs.
As explained later in the discussion of Sec. 984.306, this final
rule revises Sec. 984.303(h) and (k), in addition to Sec. 984.306, to
provide that if PHAs make a determination that an FSS family in good
standing moves outside the jurisdiction of the PHA and continuation of
the CoP after the move or completion of the CoP prior to the move is
not possible, the CoP may be terminated with FSS escrow disbursement.
Additionally, this final rule revises Sec. 984.303(j) to clarify
that only non-HUD funds or non-HUD-restricted funds can be used by PHAs
and owners to offer supportive services to former FSS families that
have left public housing, Section 8 housing, or other assisted housing.
This clarification is dictated by statute. In addition to appropriated
FSS funds, PHAs and owners may use, subject to funding restrictions,
public housing operating funds, public housing non-rental income,
public housing section 18 proceeds, section 8 administrative fees, and
PBRA residual receipts to pay for FSS coordinators. However, none of
these funding sources can be used to assist families who are not public
housing or section 8 participants. Therefore, to the extent a PHA or
owner wishes to coordinate services for former FSS families that have
left assisted housing, the PHA or owner must do so using only funding
sources that are not HUD funds or HUD-restricted funds. If a PHA or
owner chooses to provide service coordination to unassisted families,
the PHA or owner will need to calculate the FSS coordinator's time
spent on such coordination and prorate funding accordingly.
Notwithstanding, PHAs or owners may permit former FSS families that
have left assisted housing to attend FSS activities or functions (e.g.,
job fairs) that predominantly serve public housing residents or section
8 participants without proration of funding.
Section 984.304: Amount of Rent Paid by FSS Family and Increases in
Family Income
Changes to the Adjusted Income Threshold
Commenters supported the proposed change to the adjusted income
threshold because it would allow FSS families to continue to increase
their escrow accounts. A commenter stated that participants should be
given maximal opportunities to acquire as much escrow as possible
during their term in the program.
HUD Response: HUD thanks commenters for their feedback, and notes
that these changes are statutory.
Section 984.305: FSS Escrow Account
Individual Escrow Accounts for Families
A commenter asked whether the intent of the proposed rule was that
each participating family will have their own escrow account, because
under Sec. 984.305, ``each family's escrow account'' seems to be
contrary to Sec. 983.303 (a)(1): ``[t]he PHA shall deposit account
funds of all families participating in PHA's FSS program in a single
depository account.''
HUD Response: Escrow for all families will still be deposited in a
single depository account, but accounted for separately, as
demonstrated by the reference to ``each family's escrow account.'' This
is not a change from the current regulation or practice.
Interim Disbursements
A commenter recommended HUD require all FSS programs to allow
interim disbursements, under Sec. 984.305(c)(2)(ii), and to permit
PHAs and owners some discretion to determine the frequency and
conditions by which an interim disbursement would be permitted, and
that participants be entitled to a formal grievance process if their
request for an interim disbursement is denied.
A commenter stated that the current economic hardship resulting
from the COVID-19 pandemic demonstrated that interim disbursements from
an FSS escrow account can be a powerful tool for families. The
commenter suggested that in paragraph (c)(2)(ii), HUD should require
all FSS programs to allow interim disbursements consistent with the
rule rather than leaving this important component of the program to
local discretion and make clear that families have hearing rights if a
PHA or owner rejects a request for an interim disbursement.
Additionally, the
[[Page 30037]]
commenter suggested that HUD should take the opportunity to learn from
the likely increased use of interim disbursements during the pandemic
to add other examples of grounds for families to receive an interim
disbursement.
HUD Response: Participants are entitled to a grievance or hearing
per the PHA's or owner's grievance policy as specified in the FSS
Action Plan. It is a best practice to allow for interim disbursements,
but HUD will not make them mandatory at this time. For further
discussion of Interim Disbursements and considerations around making
this policy, please see the HUD FSS Promising Practices Guidebook.\7\
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\7\ See supra footnote 3.
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Frequency of Depositing Escrow Amounts to a Family's FSS Escrow Account
(Question 10)
Many commenters supported the proposed monthly escrow deposits into
a family's FSS escrow account, where some are already doing it.
Commenters said monthly calculating and crediting of escrow makes it
easier to double check the escrow credit worksheet against the escrow
deposit, prevent administrative backlog and delays in customer service
for providing balance information to clients, and helps to maximize
interest and the compounding effect of interest for the benefit of the
FSS participant.
One commenter generally opposed monthly escrow deposits, opting for
annual deposits. Another commenter said the escrow calculation does not
need to be done at every re-examination, and it should be left to the
coordinator's discretion as to the frequency of escrow deposits.
Another commenter suggested that PHAs should have flexibility in the
frequency of depositing escrow to allow for quarterly deposits. A
commenter stated that smaller programs may operate sufficiently with
greater flexibility in these timelines.
Commenters stated that annual statements should continue to be
provided to FSS participants, and balance inquiries can be provided at
any time.
A commenter stated that the statement for multi-family properties
should be monthly or upon receipt of HUD rent subsidies, because that
maximizes cash flow for the owner, in the event HUD rental subsidy
payments are delayed.
A commenter suggested the frequency of deposits should be
determined based on the client's income at the start of their program.
A commenter stated a family should be able to have limited access
to their account, including limits on the amount and times the account
is accessed.
HUD Response: Commenters largely supported the proposal for monthly
escrow deposits and explained that this will prevent administrative
backlogs and delays in customer service, as well as maximize interest
for the FSS participants' benefit. HUD has determined, in consideration
of the comments received, to move forward with the change as proposed.
As a point of clarification, the PHA is not required to calculate the
escrow amount monthly; rather, the escrow amount is re-determined at
each re-examination of family income. As explained in the proposed
rule's preamble, the requirement to provide an FSS escrow account
report to the family, at least annually, has not changed; however, a
family may inquire about their FSS escrow balance at any time.
Whether the Family's FSS Escrow Account Should Be Credited for Late
Payments (Question 11)
Some commenters agreed with the proposed change that escrow
accounts be credited on a monthly basis, and that if there are cases
where a tenant owes a landlord or housing authority unpaid rent at the
end of a term, these should be subtracted from the escrow at the time
of a final escrow payout. One commenter agreed that escrow should be
credited for late payments, stating that by crediting the account the
program acknowledges the family's efforts to adhere to tenant
obligations and is incentivizing follow through with rental payments. A
commenter opposed the proposed change, stating a goal of self-
sufficiency and stating that crediting late rent payments
disincentivizes prompt rent payments and may negatively impact the
owner and property operations. The commenter said any rent payments
greater than 7 days late should not be credited to incentivize prompt
rent payment.
Many commenters opposed the proposed change, stating it would be an
administrative burden; that landlords generally do not inform the PHA
of late payments; that the person paying rent might not be the person
participating in the program; and that it does not align with the
obligations of the HCV or FSS program. Commenters also said that
policies should be consistent across programs, and that there are other
negative consequences for late rent payments. A commenter stated that
PHAs would potentially have to deposit escrow credits into FSS escrow
accounts at different times every month if some households pay rent on
time while others are late. The commenter said money owed by an FSS
family to a PHA is already required to be deducted from the family's
escrow account at the end of the FSS CoP. Commenters stated that a
landlord's best course of action is to enforce their lease with the
tenant if the tenant is not in compliance with any part of the lease
agreement. A commenter said changing the escrow calculation to mirror
re-certs or annual exams for Section 8 may cause additional work for
the Housing Specialist, but still may have no bearing on whether a
client is paying their rent on time, and that FSS Program Coordinators
requesting the client to provide a rent payment history monthly would
assist with knowing if rent is paid on time.
Commenters suggested adding language to allow FSS clients to be
credited with an escrow deposit, as long as an FSS client pays their
rent, even if they are late and they pay late fees.
A commenter suggested that before escrow credit disbursement, the
FSS participant family should certify that there is no outstanding
balance regarding paying the owner any portion of the rent to owner
that is not covered by the PHA housing assistance payment. A commenter
said that escrow should not be credited if a tenant does not pay rent
for a month from their own funds (for example, if paid by a rental
assistance agency), but agreed that upon completion of the FSS CoP any
funds owed to the PHA should be deducted from the final escrow
disbursement. A commenter suggested that the rule further define the
parameters for when late payments would and would not impact escrow
credits, as there would likely be late payments outside the
participant's control and/or could be considered to have good cause. A
commenter said that if an FSS family is not paying their rent on time,
a more appropriate approach is referring them to financial counseling,
and the PHA's certified Homeownership Counselor or a partner from the
PCC committee could provide this supportive service. A commenter
suggested that the proposed change should be at the PHA's discretion.
The commenter further suggested that the FSS escrow should not be
applied to debts owed by the participant, because escrow is received
from HAP funds; if escrow is used to compensate for debts owed this
reduces the housing assistance payment funding available to unassisted
families who have applied for housing. Commenters suggested two payment
plans for FSS families that are late on their rent: (a)
[[Page 30038]]
The PHA or owner could work together with the family on a payment plan
where the family pays the rent in small increments throughout the
month; and (b) a payment plan is aligned with the days the paycheck is
received.
A commenter stated that, if this provision were implemented, HUD
would need to consider cases where partial rent is paid and whether
that would result in a partial escrow credit or in cases where rent was
paid on time but not credited to the individual's account in a timely
manner. The commenter said this provision would be particularly
problematic in PBRA FSS programs because escrow credits are billed to
HUD one month prior to rent being due; therefore, the housing provider
is already in receipt of the escrow funds before rent is even due,
which could result in additional retroactive adjustments and opens the
door to even further potential errors in maintaining accurate escrow
balances, which is already challenging enough for FSS programs to do.
HUD Response: HUD appreciates the comments received on this issue
and has determined, in consideration of such comments, not to implement
a policy to stop escrow credits when the family is late in paying rent.
HUD agrees with commenters that such a policy would be administratively
burdensome, particularly for voucher families where the PHA is
generally not the landlord and may not readily know that the family is
late in paying rent, and because it would result in the PHA having to
pause and resume escrow deposits for such families during the Contract
term. Additionally, the rule already requires the family's FSS escrow
balance to be reduced at the time of graduation by amounts owned by the
FSS family for rent, or other amounts, that were due under the housing
assistance program.
In response to the commenter who said ceasing escrow credits when a
family is late in paying rent is a good policy because crediting late
rent payments disincentives prompt rent payments, HUD appreciates this
perspective. However, besides the reasons described above for not
instituting this policy, HUD agrees with commenters that a more
effective approach for the FSS program would be to refer such families
to the supports needed to ensure that rent payments are made on time
and have landlords use other mechanisms already available to them to
enforce the lease.
Conducting a New Income Recertification (Question 12)
A commenter sought clarification regarding the income
recertification because the FY19 NOFA removed this requirement, and it
is still removed on the FY20 NOFA but is still on the current FSS CoP
form. The commenter was concerned that there be consistency across the
board for all program participants. Another commenter agreed with
removing the 120-day requirement, as it would be less of an
administrative burden.
A commenter supported decisions made at the local level in favor of
local objectives and conditions. In general, the commenter noted this
would not appear to be a significant issue since increases in income
must be reported by households (unless the agency has a policy that
states otherwise), and agencies must conduct a re-examination of income
if the household has a decrease in income (unless the agency has a
policy that states otherwise).
A commenter opposed the proposed change, stating it would be an
administrative burden and potentially create a barrier for a family to
accrue escrow, and noted that since HUD has decided to waive the 120-
day requirement to ease barriers to enrollment in the program, it would
be counter-productive to allow discretion.
Some commenters suggested that multifamily owners should have the
same discretion as PHAs regarding this issue. Another commenter said
that this change should be available across the board to all families
participating in the HCV program. A commenter suggested eliminating the
120-day recertification requirement, using its MTW waiver flexibility,
and believed this change strengthened the program, both
administratively by eliminating the requirement of a recertification,
and programmatically for the participants, by streamlining the process
and creating a straight line from interest to enrollment.
Commenters suggested that the final rule remove PHA or owner
discretion in deciding whether to conduct a new income examination
prior to the execution of a CoP because such discretion, if exercised,
would limit a household's potential to optimize the accrual of escrow
and effectively reinstate the 120-day rule which was eliminated in the
FY19 FSS Program Renewal NOFA. These commenters stated the pandemic
crisis has further demonstrated the importance of HUD maintaining its
commitment to ``ease barriers to participation'' by stating plainly in
the regulation, without the housing provider's discretion, that the
income and rents amounts to be used in the CoP shall be taken from the
amounts on the last certification, re-examination, or interim
determination in effect at the time the family enrolls in the FSS
Program. The commenters said they saw significant delays for families
who wanted to enroll but could not because they needed to complete an
additional re-examination before enrollment. A commenter said that this
requirement also creates an additional administrative burden on housing
providers. Additionally, commenters said this rule makes it so that
people need to re-certify even if they do not have a change in income,
and sometimes housing authorities do not allow for a recertification if
there was no income change.
A commenter supported HUD's proposal to lift the requirement that a
PHA or owner must perform a recertification for a resident to enroll in
the FSS program if it has been greater than 120 days since the
resident's most recent recertification and permit the administrators of
FSS programs to determine whether to use the resident's most recent
annual recertification or whether to perform an additional
recertification as more effective and efficient.
According to a commenter, the final rule should ensure tenants have
the right to request an interim income recertification or full re-
examination at the time of enrollment if their income has decreased
since the last recertification.
A commenter suggested that the proposed rule should include
language requiring PHAs or owners to conduct a re-examination if the
family requests it based on a loss of income since the last re-
examination and should make it clear that a new or recent interim rent
adjustment may be relied on to determine baseline earned income.
HUD Response: Upon reviewing the Joint Explanatory Statement for
FY21 Appropriations, HUD interprets the language to indicate that a
policy requiring a recertification immediately prior to FSS enrollment
is not consistent with Congressional intent. Thus, the regulation will
be revised to require the PHA or owner, when setting a participant's
baseline rent, to use the amounts on the most recent rent certification
(with no discretion to do otherwise.) All standard rent certification
regulations must be followed, including honoring a resident's request
for a recertification due to loss of income, if that is a standard
option.
[[Page 30039]]
Escrow Calculation (Question 13)
Several commenters supported the proposed streamlined escrow
calculation, stating that removing the difference in the calculation of
escrow between very low-income and low-income families should provide a
degree of simplification that can be enhanced by other proposed changes
in the calculation.
Commenters supported the proposed escrow calculation worksheet
because they said it would be more user friendly. A commenter said the
proposed change is easier, but in doing a case study against the
current worksheet, the calculated outcomes are not coming up the same.
Some commenters opposed the proposed change, stating that it
further complicates escrow calculations.
A commenter stated the Multifamily FSS Escrow Credit Worksheet
still has escrow deducted if the family is over the very-low-income
limit, and that this deduction was to be eliminated with the proposed
rule. The commenter opposed the proposed change, stating that
eliminating this for only HCV/PH and not PBRA is not an equitable
representation of the families on the programs that are designed to
mirror one another. Additionally, the commenter stated that this
deduction is taken away from the maximum escrow amount versus the
``preliminary escrow credit,'' which amounts to a double penalty for
increasing earned income.
A commenter suggested adding the line item from the 50058s to the
spreadsheet to ease input and auditing. A commenter stated that the
proposed rule provides a slightly streamlined escrow calculation, but
requires users to calculate a monthly escrow cap and to obtain data to
determine if the family's adjusted monthly income exceeds 80% of AMI.
In addition, the commenter said that the proposed rule effectively
continues to limit escrow to lower income families and provides a
monthly cap, further limiting escrow potential. The commenter suggested
a more streamlined escrow calculation process, where all escrow
calculations are done the same way for all participants, eliminating
the low-income check. The commenter stated that this would make it
easier to explain to tenants and staff alike and has the benefit of
offering all FSS participants the same access to escrow.
Some commenters opposed the escrow cap where the family's adjusted
monthly income exceeds 80% of AMI.
A commenter suggested that the final rule contemplate the growth of
wages earned specifically by the head of FSS family. Another commenter
suggested the calculation should be based on the difference between the
baseline and current 30% of monthly earned income, as that is the true
reflection of the participants' growth in a work incentive program. A
commenter suggested that the escrow calculation software should have a
drop down for payment standards for the jurisdiction for which the
participant resides, as many FSS Program Coordinators do not conduct
recertifications. A commenter suggested a slight modification to the
formula for the escrow credit worksheet, since on some calculations,
under ``Calculation of Escrow'' do not round up to the nearest dollar,
including the final escrow credit.
Commenters stated the FSS escrow worksheet appears to work well for
some of the more challenging escrow calculation situations, but that it
would need to include reference to the line item for Form 50059 and
identify which lines wouldn't apply to multifamily. The commenters said
it is not clear whether there is a separate escrow credit worksheet for
multifamily using the proposed guidelines. The commenters suggested
that the line number of Form 50058 or Form 50059 accordingly be
referenced for all items entered in the escrow sheet, to reduce
confusion and allow the calculation to be better automated by software.
The commenters said that currently, the instructions for (8) and (11),
80% AMI and Applicable Payment Standard (for HCV families), suggest
that the number be collected from an external link. The commenters
further stated that if this number does not appear on Form 50058, the
commenters recommended identifying another standard place from the
recertification process where this number can be found to not require
an external search.
HUD Response: After consideration of comments received concerning
the proposed escrow calculation, HUD determined not to make changes to
the proposed requirements. Without specific details concerning how some
commenters found that the proposed calculation further complicated
escrow calculations, HUD is unable to determine which areas of the
calculation could be revised or improved. As a reminder, parts of the
proposed changes were based on statutory changes (such as a very low-
income family's escrow no longer capped) and the formula now
incorporates other programmatic considerations not previously
contemplated in the regulation (such as capping escrow for zero-HAP HCV
families at the lower of the gross rent or payment standard and capping
escrow for zero-HAP PBV, Mod Rehab, or Mod Rehab SRO families at the
difference between the baseline monthly rent and current gross rent).
Regarding opposition to the escrow cap where the family's adjusted
monthly income exceeds 80% of AMI, HUD has no discretion to modify this
statutory requirement, which has been in place since the FSS program's
enactment. Regarding the suggestion that the calculation should be
based on the difference between the baseline and current 30% of monthly
earned income, the statute requires an increase in the amount of rent
paid by the family (not just an increase in earned income); therefore,
HUD has no authority to change this part of the calculation. As to
commenters' technical suggestions concerning the escrow calculation
worksheet (i.e., adding the line item from Form 50058s to the
spreadsheet to ease input and auditing; rounding up to the nearest
dollar; and incorporating the payment standard and 80% of AMI into the
escrow calculation worksheet). HUD will consider the feasibility of
these suggestions as it finalizes the escrow worksheet.
Definition of ``Good Standing'' and List of Eligible Activities for
Forfeited Escrow Funds (Question 14)
Good Standing
A commenter supported establishing the definition of ``good
standing'' in the regulations and not leaving it to an individual PHA
or owner's discretion because the definition of good standing can vary
significantly on a subjective basis, even within the same program, and
is confusing and frustrating for participants. This commenter said that
under these new regulations, the head of FSS family who signs the CoP
may not be the Head of Household for rental assistance purposes and
therefore may not be able to control compliance with a repayment
agreement since it is the Head of Household for rental assistance
purposes who enters into a repayment agreement. A commenter stated the
language should be left as is and the PHA should be allowed to continue
to define good standing.
Commenters opposed the proposed definition of ``good standing'' for
unfairly penalizing families who are in current eviction proceedings.
These commenters said it could exclude families facing eviction without
cause. These commenters stated that some landlords initiate eviction
proceedings as a means of terminating leases of voucher holders without
cause. These commenters said HUD does not define
[[Page 30040]]
the phrase ``eviction proceedings,'' which is inherently unclear. These
commenters stated that a family's compliance with FSS and HUD program
requirements would not be affected simply by the landlord's initiation
of an eviction action. Commenters also stated it would be unduly
burdensome to PHAs and owners to have to determine whether pending
eviction proceedings are likely to affect a family's standing in the
FSS program.
Some commenters suggested that the final rule should clearly define
``good standing'' as families who: Are in compliance with their FSS
CoP; have either satisfied or are current on any debts owed the PHA;
and are in compliance with the PHA's regulations regarding
participation in the HCV program, including rent and restitution
payments. A commenter suggested adding language to the definition, to
read: ``FSS family in good standing means, for purposes of this part,
an FSS family that is not in current eviction proceedings or have open
lease violations that may lead to eviction if left uncured and is
otherwise in compliance with any repayment agreement and the FSS CoP.''
Commenters suggested ``good standing'' should also include participants
who have documented progress towards their goals or self-sufficiency,
such as communication with the FSS, coordinator, paystubs for work,
class schedule if working on post-secondary education, etc. Only
participants who are in ``good standing' should benefit from forfeited
escrow for eligible activities. A commenter suggested that the
definition of ``good standing'' should simply be any family who has not
been found to be in non-compliance with FSS requirements. A commenter
suggested that ``good standing'' should mean any FSS that is not in the
termination process.
HUD Response: As recommended by commenters, this final rule defines
``good standing'' as an FSS family that is in compliance with their FSS
CoP; has either satisfied or are current on any debts owed the PHA or
owner; and is in compliance with the regulations regarding
participation in the relevant rental assistance program, including rent
payments.
Eligible Activities
Commenters supported the proposal to allow forfeited escrow funds
to be used for FSS participants in good standing. Commenters also
supported the proposed rule's definition of ``eligible activities.''
Commenters said the proposed definition would enable Coordinators and
participants to access resources to address significant barriers
families face in achieving their goals.
Commenters suggested that the proposed rule should add items to the
eligible activities list for which forfeited escrow may be used.
Commenters made the following suggestions: Childcare and citizenship
costs; a catch-all that would allow PHAs to determine ``other eligible
activities,'' potentially in consultation with the Secretary; staff
training; educational expenses for FSS participants in good standing;
items or expenses needed for self-sufficiency advancement; hosting job
fairs; employment driven activities; mock interviews; counseling
agencies; bus passes; obtaining or renewing state identification cards
and driver's licenses; unpaid rent expenses; needed repairs or updates;
food or clothing vouchers; families within the program that demonstrate
the most need; gardening or recreational programs for their tenants;
gas to go to a job interview; cost of interview clothing; homeownership
bonus; scholarship funds; emergency funds; source for interim
disbursement funds for participants who don't have escrow accrued;
stipends for participants who are part of the PCC or Client Advisory
Board (CAB); conferences expenses for FSS Program Coordinators;
emergency medical co-pays; emergency transportation; a grant fund
resource to assist participants with meeting their goals; and
meaningful graduation ceremonies.
A commenter suggested using the list of allowable uses of interim
escrow disbursements as a model for allowable use of forfeited funds to
help program participants. Commenters stated that this is especially
important now, within the context of the COVID-19 pandemic and
subsequent barriers to access digital technology, which is essential to
take classes and work from home or at an off-site location.
A commenter recommended that HUD explore adding incentives like
gift cards or bonus escrow earnings for participants in good standing
who complete big achievements (example: Graduating with a degree,
paying off large debts, etc.). Another commenter suggested that for a
participant to access incentives or activities funded by forfeited
escrow funds, they would be required to have an existing goal or create
a new goal related to the use of funding.
Commenters suggested that the proposed rule also include a list of
ineligible activities and provide discretion to PHAs regarding eligible
activities. Specifically, some commenters suggested that the proposed
rule state that funds cannot be used for general administrative costs
of PHAs or owners.
A commenter suggested that forfeited escrow should go to good
standing participants who need the money for a good cause and the FSS
Programs, such as: laptops or books for participants pursuing an
education; car repairs for participants who need a vehicle for
employment purposes; registration fees for education purposes or short-
term certifications.
A commenter suggested that housing providers have a clear
definition of how these funds will be used up front, perhaps in the
Action Plan, to avoid subjective or discriminatory disbursement of
these funds. A commenter warned that allowable activities must be
equally available for all FSS participants in a given program and
should not be allowed to be used as a resource for individual
participants, but instead should be equally available to people
consistent with the purposes of the FSS program.
A commenter also suggested that the final rule should include as
safe harbor allowances: educational programs and workshops for
participants, and down payment assistance for families who graduate and
choose to exit subsidized housing.
A commenter stated escrow funds are HAP funds and any funds that
are forfeited should be returned to HAP funds to benefit all HCV
participants and applicants.
A commenter stated that the bookkeeping process for these funds
must be carefully developed because PHAs do not have accounts in place
to separate escrow funds assigned to participants from forfeited FSS
escrow funds and asked how PHAs would account for FSS forfeitures on
the balance sheet.
A commenter stated that when FSS escrows are forfeited, in the case
of a Cooperative Agreement, the funds should go to the FSS
administering entity (PHA or owner) and that administering entity is
responsible to utilize the funds as defined as allowable uses.
HUD Response: This final rule adds ``and other costs related to
achieving obligations outlined in the Contract of Participation'' to
eligible activities, and ``general administrative costs of the FSS
program'' to ineligible activities. HUD revised this final rule (1) to
eliminate any incentive PHAs may have had not to graduate participating
families so as to recapture the forfeited escrow funds and (2) to
ensure forfeited funds are used to advance participants' goals and not
for the overall implementation of
[[Page 30041]]
the FSS program. Additionally, consistent with Section 23(e)(3) of the
1937 Act, as amended by the Economic Growth Act, HUD revises the final
rule to clarify that forfeited escrow accounts must be used for the
benefit of FSS participants, and not for the FSS program more broadly.
Section 984.306: HCV Portability Requirements
Proposed Changes to HCV Portability Requirements (Question 15)
Several commenters supported the proposed changes to the porting
requirements. A commenter opposed HUD making changes regarding
portability because these provisions are not addressed in the act, and
the title of the proposed rule does not mention revisions to existing
regulations. A commenter recommended HUD be consistent with current
program regulations and require denying portability moves use existing
provisions outlined under PIH Notice 2016-09, Section (6), Denying
Family Requests to Move, and Section (7) Denying Family Requests to
Move--Insufficient Funding.\8\
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\8\ U.S. Department of Housing and Urban Development, Notice PIH
2016-09 (HA), https://www.hud.gov/sites/documents/16-09PIHN.PDF.
---------------------------------------------------------------------------
HUD Response: While the Economic Growth Act does not specifically
address portability in the FSS context, HUD exercised its authority to
issue regulations to amend and clarify the existing FSS portability
regulatory provisions. This regulatory section addresses portability
provisions as they are applicable to the FSS program specifically and
are not meant to replace portability requirements that are applicable
to all HCV families (whether or not they are also participating in the
FSS program). HCV portability requirements, as established in
regulation at 24 CFR part 982, subpart H, and clarified in PIH Notice
2016-09, continue to apply.
HUD also took the opportunity to clarify the intersection between
the family right to move from the PBV unit with continued tenant-based
rental assistance (in accordance with 24 CFR 983.261) and the FSS
portability requirements. While portability requirements do not apply
to the PBV program, if the PBV family exercises its right to move with
continued tenant-based rental assistance and is offered a tenant-based
voucher, portability provisions apply. This final rule clarifies that a
PBV family who has been enrolled in the FSS program for 12 months, and
who exercises its right to move from the PBV unit with continued
tenant-based rental assistance, may move outside of the jurisdiction of
the initial PHA in accordance with portability requirements.
Additionally, the PHA's discretion to allow portability moves within
the 12 months following the effective date of the CoP also applies to
such PBV families.
Porting of FSS Family Where Both PHAs Have FSS Programs
Commenters diverged regarding whether the receiving PHA should be
required to absorb the family into its FSS program. Several commenters
specifically supported encouraging or requiring the receiving PHA to
absorb the porting FSS family into the receiving FSS Program, which
would ease administrative burdens. Commenters suggested that receiving
PHAs should be required to absorb the family if the initial PHA vouched
for the family. Commenters specifically noted the burden of management
of an escrow account, and the inability of most software programs to
account for a family that is not in the system for rent calculation
purposes, as a reason that the receiving PHA should be required to
administer the escrow. Commenters stated it is especially burdensome
when PHAs, especially small PHAs, must continue providing participating
families with FSS assistance when the family may be two or more hours
away. A commenter said that the receiving PHA would receive the credit
when a family graduates even though the initial PHA did all the work. A
commenter objected that it is not clear what the process is for sending
and receiving escrow funds for families that port and are absorbed.
Other commenters opposed requiring the receiving PHA to enroll
families that port and preferred it be left to the discretion of the
receiving PHA. Commenters stated that the involved PHAs, who must work
together in the portability procedure, should come to an agreement at
their discretion. Commenters also asked what would happen if the
receiving PHA is at full FSS capacity, especially for agencies with
only a part-time position. A commenter suggested that receiving PHAs
(RHAs) should be required to enroll the FSS family into their FSS
program only if the initial PHA (IHA) ``vouches'' for the family.
Some commenters opposed the continuation of FSS at all when a
family ports. A commenter urged HUD to allow nullification where the
PHA does not or cannot absorb the voucher. This commenter noted that
absorptions are not determined based on FSS determinations but on the
receiving PHA's financial condition and the family size of the voucher.
Another commenter stated that the goal should be to graduate families
before porting if possible.
HUD Response: Some commenters stated that it should be left to the
discretion of the receiving PHA (RHA) whether to enroll the ported FSS
family into its FSS program. Other commenters were supportive of
requiring RHAs to enroll FSS families into their FSS program HUD
considered these comments and determined that lack of capacity to serve
the ported FSS family (because the RHA is already serving the number of
FSS families identified in its FSS Action Plan) would be a reasonable
justification for a RHA to deny enrollment of the ported FSS family
into its FSS program. Therefore, while the RHA would generally be
required to enroll the ported FSS family into its FSS program, the RHA
has discretion to make determinations concerning the family's
enrollment if it lacks the capacity to manage the FSS contract. In such
cases, the initial PHA (IHA) must inform the family of the potential
impacts and options available to the family, as described in the
regulatory text.
As to the suggestion that RHAs should be required to enroll the FSS
family into their FSS program only if the IHA ``vouches'' for the
family, the rule already provides that the RHA is required to enroll
the FSS family into its FSS program only if the FSS family is in good
standing. The final rule defines good standing as an FSS family that is
in compliance with their FSS CoP; has either satisfied or are current
on any debts owed the PHA; and is in compliance with the regulations
regarding participation in the relevant rental assistance program,
including rent payments.
In response to comments about the burden of managing an escrow
account, HUD notes that in cases where the RHA is absorbing the FSS
family into its HCV program, the RHA would be the one managing the
escrow account and all escrow balances are transferred by the IHA to
the RHA. The commenters' concern would only apply where the RHA is
billing the IHA for the ported family. HUD considered these comments
and determined that transferring the responsibility of managing the
escrow account to the RHA may add another level of complexity to the
process. The IHA's annual contributions contract (ACC) funds the escrow
account in a portability billing scenario, and all HAP (including FSS
escrow amounts) is provided by HUD to the IHA. Also, the
[[Page 30042]]
IHA is responsible for reporting such escrow expenses to HUD in the
Voucher Management System (VMS). Based on this, having the RHA manage
the escrow account would not only require a transfer of information
between agencies, but also a transfer of funds, including changes to
transfer amounts each time that the escrow changes, and other
complexities. In addition to this, placing the responsibility of escrow
account management on the IHA in a portability billing scenario is a
long-standing policy and the systems concern raised by commenters
should be manageable through the modification of system specifications
to match program requirements.
Another commenter suggested that the FSS contract should be
nullified if the RHA does not absorb the FSS family into its voucher
program. HUD disagrees with terminating the contract and disbursing FSS
escrow in all instances where the RHA does not absorb the FSS family
into its voucher program. Instead, the IHA must work with the family to
determine whether continuation of the CoP after the move, or completion
of the CoP prior to the move, is possible. As discussed below, in
instances where such continuation or completion is not possible, this
final rule allows CoPs to be terminated and accumulated escrow to be
disbursed if an FSS family in good standing is moving for good cause,
as determined by the IHA. A commenter stated that the goal should be to
graduate families before porting if possible. HUD agrees that this
should be the goal, however, the final rule establishes the
requirements when graduation prior to the port is not possible.
FSS Family Moves To Receiving PHA That Does Not Administer an FSS
Program
A commenter supported the proposal to not allow a family to
continue in the IHA's FSS program when they port to an RHA that does
not have an FSS program. Commenters agreed that RHAs not administering
the FSS program should not have to commit to providing FSS services.
Other commenters wanted to allow IHAs to choose to let a family
continue with the IHA's FSS program if the IHA chose to, or if the IHA
and RHA agreed. A commenter suggested that this would be no different
than staying with the IHA where the RHA does have an FSS program, as
HUD proposed. A commenter stated that the IHA should continue to
administer an FSS program only so that the families may keep their
escrow with the IHA and work to complete their goals so they can
graduate with escrow. Another commenter stated that the IHA should be
required to continue with the family if the family chooses. Other
commenters stated that the family should be allowed to graduate if
feasible. A commenter suggested that HUD should allow the IHA and the
family to work together to find a solution to remain in the program or
graduate early so that the family is not punished for moving. A
commenter suggested that HUD should allow graduation or termination if
there are 12 or fewer months remaining on the CoP. Another commenter
suggested that if an RHA does not offer the FSS program, the RHA should
refer the family to a PHA that administers an FSS program or administer
the program itself.
HUD Response: As explained in the proposed rule's preamble, in
order for a porting family to continue in FSS, it is not only important
to know whether the RHA has an FSS program. It is also critical that
the PHA that administers the rental assistance must have an FSS
program. If the RHA absorbs the voucher, the RHA must have an FSS
program in order for the participant to continue. If the RHA
administers the voucher (bills the IHA) then the IHA must have an FSS
program in order for the FSS participant to continue. It would be
burdensome to require any PHA that does not administer an FSS program
to manage such tasks even for a small number of FSS families,
especially in light of the administrative complexity of a portability
move, and the shared FSS responsibilities between PHAs.
Additionally, the proposed rule already addresses the options
available to the family, including modifying the FSS contract, which is
already allowed under the regulation, so that the family may graduate
from the FSS program prior to the move. The final rule also allows CoPs
to be terminated and accumulated escrow to be disbursed if an FSS
family in good standing is moving for good cause, as determined by the
IHA, and where continuing the CoP after the move, or completing the CoP
prior to the move, is not possible. Good cause for the move may
include, but is not limited to, a housing opportunity in a lower-
poverty/higher opportunity neighborhood, an employment opportunity for
which the family has already obtained a job offer, the ability to be
closer to family or other support network, or a move needed to protect
health and safety of the family or family member. The IHA must discuss
the available options with the family, including whether modification
of the contract to allow for graduation prior to the move is a
possibility for the family. PHAs must be consistent in their
determinations of whether a family has good cause for a termination
with FSS escrow disbursement and cannot allow escrow disbursement for
some families but deny them for others if the families have the same or
a comparable reason for moving. PHA determinations are subject to the
nondiscrimination and equal opportunity requirements of the Fair
Housing Act, Title VI of the Civil Rights Act, Section 504 of the
Rehabilitation Act of 1973, and the Americans with Disabilities Act,
which prohibit discriminatory practices and practices that have a
discriminatory effect. One way a PHA can ensure consistency in
determining whether there is good cause to terminate a contract with
FSS escrow disbursement is to establish a written policy as to what the
PHA considers to be good cause, or what factors the PHA will consider
in making that determination and codifying it in the FSS Action Plan.
Non-FSS Family Moves To Receiving PHA That Does Administer an FSS
Program
A commenter supported the opportunity for families to join an RHA's
FSS program when they port from an IHA that does not have an FSS
program. Another commenter recommended that RHAs may continue to refuse
to enroll an FSS family if their program is full or does not have
capacity, or to use preferences as described in their respective FSS
Action Plan.
Commenters stated that HUD should not mandate that if the RHA
chooses to bill the IHA, the family cannot enroll in the RHA's FSS
program, and suggested that the complex issues related to porting
should be worked out by the agencies involved, not HUD, if the agencies
are willing and able to share responsibilities. A commenter suggested
that mandating otherwise would contradict the ``choice'' component of
the program.
HUD Response: The proposed rule addressed a new scenario (a non-FSS
family who moved to an RHA that administers FSS). Under the proposed
rule, the family could not enroll in the RHA's FSS program where the
RHA was billing the IHA.
After consideration of comments received, HUD agrees that RHAs
should have discretion to make determinations concerning FSS enrollment
of such families. However, the billed IHA must agree to such
enrollment, because the IHA would still be responsible for certain FSS
tasks. If the IHA does not administer an FSS program, similar to Sec.
984.306(c) of the rule, enrollment of
[[Page 30043]]
the non-FSS family in the RHA's FSS program would not be possible. This
is because the IHA would be responsible for certain FSS tasks after the
move (even if the family enrolls in the RHA's FSS program), and it
would be burdensome to require the IHA that does not administer an FSS
program to manage such tasks for a small number of FSS families,
especially in light of the administrative complexity of a portability
move, and the shared FSS responsibilities between PHAs.
FSS Family Moves to a New PHA and Wants To Re-Enroll
A commenter asked HUD to opine on enrollment in an RHA's FSS
program, asking particularly whether a household moving in the fourth
year of their FSS program should be eligible to receive their escrow
payment and then re-enroll in a new five-year FSS program.
HUD Response: If the family has completed the requirements of the
FSS program prior to porting, then the IHA must graduate the family.
The RHA should have policies in its FSS Action Plan regarding whether
families that have graduated from the FSS program may re-enroll. For
more information concerning policies on re-enrollment, please see the
HUD FSS Promising Practices Guidebook.\9\
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\9\ See supra note 3.
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Section 984.401: Reporting
Data on Curing Lease Violations
A commenter suggested that FSS Program Coordinator actions to
assist participants in curing lease violations should be reported, as
this information help to evaluate the efficiency of FSS programs.
HUD Response: HUD does not currently have an appropriate mechanism
for reporting this information, and it is not included in the
performance measures. In addition, while FSS Program Coordinators may
sometimes help households resolve lease violation issues in the course
of their work, this is not their primary function. Reporting and
performance measurement of FSS programs will continue to focus on core
FSS activities.
CoP Termination Reporting
A commenter suggested that in any case where a CoP termination
occurs, an FSS administrator should note the termination date and the
process used to substantiate the reason for termination, and report to
HUD, along with the number of terminations as part of the routine
reporting requirements.
HUD Response: A separate report of this nature would be
administratively burdensome. However, the reason for exit from the
program (including termination) for PIH programs is reflected on the
Form HUD-50058 and further investigation may be pursued by the HUD
field office on a case-by-case basis or upon monitoring review.
Section 887.101: Purpose, Scope, and Applicability
Commenters supported the proposal to extend FSS eligibility to
residents of PBRA-assisted properties and extend eligibility for FSS
Program Coordinator funding to independently operated PBRA FSS
programs. A commenter specifically supported mirroring the regulations
for multi-family programs to those in the Housing Choice Voucher
Program.
Two commenters supported making the program voluntary for residents
of PBRA properties. The commenters also recommended that HUD clarify
that an FSS program may automatically enroll households and permit
opting out of the program at any time.
HUD Response: HUD appreciates commenters' feedback and notes that
extending FSS eligibility to residents of PBRA properties and
eligibility for FSS Program Coordinator funding to PBRA FSS programs is
permitted by section 23 of the 1937 Act, as amended by the Economic
Growth Act. The proposed regulations are streamlined to apply all PIH
FSS regulations to PBRA owners with the few exceptions outlined in 24
CFR part 887, which was included in the proposed rule. As stated in
this preamble, all FSS programs are voluntary for participants.
Administering an FSS program is voluntary for PBRA owners as well.
HUD will not make the change regarding automatic enrollment and opt
out as part of this final rulemaking, but HUD appreciates the
suggestion and may consider it in the future.
Section 887.105: Basic Requirements for the FSS Program
Difficult To Consult in Some Areas
One commenter stated that, under paragraph (a)(4), requiring owners
to consult with a PCC may be difficult in rural or under-resourced
communities or communities situated far from a public housing agency.
HUD Response: HUD recognizes that fewer service partners are
available in some communities, and that smaller housing provider
entities may find it more difficult to establish partnerships with
service providers. However, HUD views the establishment of partnerships
as an essential component of FSS, even in communities where few
partners are available. Communities with few potential service partners
may find effective coordination even more crucial than those with more
resources, to ensure that the FSS program is making the most of every
available resource. The PCC also provides an important venue for
resident input on the ongoing implementation of the FSS program. HUD
has kept the requirements very flexible as to how the PCC operates to
avoid unnecessary burdens, allowing PCCs to be tailored to local needs
and circumstances. The PCC may meet frequently or may meet only once or
twice a year, depending on what the PCC feels is necessary for
effective coordination. The PCC may include many partners or only a few
key partners. Meetings may be held in person or remotely. HUD
encourages PBRA FSS programs to join an existing PCC if possible.
Should Operate Independent of a PHA
Commenters stated that owners should be able to operate their FSS
program(s) independent of any PHA and recommended that HUD remove this
requirement and instead strongly encourage owners to develop an
advisory group of FSS families to inform the services offered and
provided as part of the FSS program.
HUD Response: Multifamily owners are not required to work with a
PHA. Multifamily owners implementing an FSS program are encouraged, but
not required, to work with an existing PCC. However, where a local PCC
is available, they are required to work with the PCC or create their
own PCC, if they prefer. Once FSS grant funds are made available to
multifamily property owners, owners will be able to submit an
independent NOFO application for funds to start their own FSS program.
In this final rule, owners starting a voluntary FSS program, even those
without FSS grant funds, are subject to the final rule. Whether or not
an FSS program receives HUD FSS appropriated funding, housing providers
are strongly encouraged to engage with residents and FSS participants
regularly and to get their input on the property's Action Plan and
ongoing implementation of the FSS program. This can be done through
joining or creating a PCC, or by other means such as a resident
advisory group.
Owners Should Be Allowed To Form an Action Plan
Commenters stated that Sec. 887.105(a)(3) of the proposed rule
requires that a PBRA FSS program have an Action Plan approved by HUD,
as
[[Page 30044]]
described in Sec. 984.201; but Sec. 984.201(b) of the proposed rule
appears to provide authority for developing an Action Plan only to
PHAs. These commenters requested that HUD clarify that owners, too, are
authorized to develop Action Plans for their PBRA FSS programs.
HUD Response: All PHAs and owners are required to have an approved
FSS Action Plan before implementing the program. HUD has added a
clarification to the language regarding the development of Action Plans
to make it clear that PBRA owners who wish to implement an FSS program
are required to develop their own FSS Action Plans.
Exclusion or Inclusion of Requirements for Multifamily Assisted Housing
(Question 16)
Several commenters expressed support and agreement with the
exclusions and inclusions for multifamily assisted housing FSS
programs. A commenter said that their current Program Coordinating
Committee (PCC) includes HCV, PBV, and PH residents.
A commenter objected to HUD's reasoning to treat multifamily owners
differently than PHAs in the family selection process. The commenter
said that HUD states that the unequal treatment is due to the small
size of the multifamily FSS programs but did not provide any figures to
support or allow commenters to understand that justification.
A commenter suggested that HUD consider the same justifications
which apply to exclude multifamily owners from FSS requirements,
especially related to the size of the multifamily property, to small or
similarly sized PHAs. The commenter stated that small PHAs are
overregulated yet pose a small risk to HUD. This commenter asked HUD to
request such relief to small PHAs from Congress. The commenter stated
that small towns and rural areas do not have the same resources as
large towns and areas. This commenter asked HUD to exclude small PHAs
from the PCC requirement and the family selection process.
Some commenters stated that multifamily owners should be allowed,
or should be required, to be members of the PCC, and should be allowed
or required to attend regular meetings and contribute to oversight of
the program.
One commenter asked if a PBRA owner can collaborate with the PHA to
have one combined Action Plan.
HUD Response: HUD appreciates the feedback provided by commenters
on the exclusions and inclusions for multifamily assisted housing FSS
programs. HUD notes the concerns raised by commenters about the burden
imposed by the regulations on small PHAs, but believes that the
requirements are necessary to ensure that FSS families are well served
by the program, and further notes that many of the requirements are
statutory. In response to public comment, HUD has made a change in the
final rule so that multifamily owners are no longer exempt from the
family selection procedures in Sec. 984.203. This section gives the
owner the option of using certain selection preferences and
motivational screening factors; housing providers are not required to
use selection preferences or motivational screening factors, but HUD
believes that as multifamily FSS programs grow in the future, they may
wish to have these tools at their disposal for FSS waitlist management.
This may also make it easier for an owner to operate an FSS program
through a Cooperative Agreement with a PHA that uses selection
preferences or motivational screening factors, by allowing them to
align their family selection procedures. A PHA and PBRA owner may have
a combined FSS Action Plan as long as it covers the requirements for
both programs. If a housing provider chooses to establish a selection
preference or use motivational screening factors, such activities are
subject to Federal nondiscrimination and equal opportunity
requirements.
HUD excluded multifamily owners from the requirement to create a
PCC in the proposed rule because, while statutorily required for PHAs,
it was not required for owners in the FSS statute. HUD believes that
coordination with the type of partners that would typically make up a
PCC is essential to developing an Action Plan and successfully
implementing an FSS program. In particular, a PCC provides an important
opportunity for input from key service partners and from FSS
participants. Where an existing PCC is available, multifamily housing
owners who operate FSS programs are required by this rule to consult
with or join a nearby PCC or create their own PCC, either by
themselves, or in conjunction with other owners. In cases where the
multifamily housing owner is unable to consult with or join an existing
PCC, HUD encourages owners to establish their own PCC. If the owner
does not join an existing PCC or create their own, owners are strongly
encouraged to choose another avenue for receiving input from their
partners and FSS participants.
Section 887.107: Cooperative Agreements
Requirements for Owners Entering Into a Cooperative Agreement (Question
17)
A commenter stated the Cooperative Agreement should define
reporting expectations by both the PHA and the property manager. This
commenter suggested the Cooperative Agreement should also include a
written data sharing agreement between the owner and PHA, or between
owners. The commenter continued that appropriate release language
should be added to the CoP to ensure the FSS participant is providing
approval, and acknowledging said approval, for this new type of
information sharing, as some states may have laws that, without written
consent, may make such sharing illegal. The commenters stated that the
Cooperative Agreement should have language ensuring any changes made to
administering entities' Action Plan after the Cooperative Agreement is
completed, includes input from the owner, and that any Action Plans
should include owner's involvement under any Cooperative Agreements and
certifications by the PHA to HUD as part of the HUD Action Plan
approval process to ensure an owner does not get burdened by a
Cooperative Agreement in which it was not involved.
A commenter said that HUD should consider the consequences to PHAs
or owners who fail to comply with a Cooperative Agreement or who face
unresolved disputes.
HUD Response: HUD's intention is to allow flexibility in the
requirements for Cooperative Agreements, and will not require reporting
expectations, data sharing agreements, or release language to be
included in the Cooperative Agreement per the regulations, but will
consider including these topics in guidance. In response to public
comment, HUD has added a requirement that the Cooperative Agreement
must include process for entities to communicate about changes in the
Action Plan. If a PBRA property is being served through a Cooperative
Agreement, then at least one participant with assistance through PBRA
must be a member of the PCC. HUD notes the concern expressed in one
comment regarding the potential consequences to PHAs or owners who fail
to comply with a Cooperative Agreement or who face unresolved disputes.
HUD is not a party to the Cooperative Agreements so consequences and
resolutions should be addressed by the parties involved.
[[Page 30045]]
Technical or Technological Challenges
A commenter recommended that HUD remove #3 under Corrective Action
for Failure to Meet Family Responsibilities from the FSS Contract of
Participation, which allows the PHA to terminate HCV assistance where a
family fails to meet responsibilities under the FSS contract.
A commenter said the proposed rule would create an administrative
burden and potentially require a separate system or require software
adaptations to implement these changes for the reasons below.
A number of commenters stated that the proposed change allowing the
FSS head of household to be different from the HAP contract Head of
Household would impact software applications that are currently
designed to solely report on the Head of Household, and therefore these
applications will have to be redesigned or adjusted to accommodate the
required change in the Form 50058 addendum.
The FSS addendum currently requires a start and end date when
completing an enrollment From 50058; a fatal error occurs when an end
date is not added; this may require placing a temporary or place holder
date in the addendum or creating FSS addendum adjustments; the CoP end
date will need to remain blank until such time that the next
recertification is completed; and this type of back and forth would not
only be an administrative burden but also complicate the enrollment
process and general understanding of the program for those potentially
participating.
A commenter stated that all FSS programs are required to submit FSS
information through PIC at least one time per year, and MTW agencies
need to submit this information as an interim recertification. The
commenter further stated that FSS families that may qualify for bi-
annual reviews due to a disability still have an interim
recertification completed yearly strictly to send FSS information
through PIC. The commenter said that under the proposed rule the FSS
CoP would start for those families due to a PIC reporting requirement.
A commenter said their current escrow accrual process is based on a
strike point model and triggered when the enrollment Form 50058 is
added, and that a work around to this process will need to be created
to align with the new proposed rule.
HUD Response: HUD appreciates commenters' note regarding software
changes. HUD understands that changes in program rules may necessitate
changes in software to conform. HUD will review all Form 50058 flags
and fatal errors and adjust based on the new regulations. Please note
that an interim recertification is NOT required in order to submit an
FSS Progress Report into PIC.
Opposition to the Economic Growth Act Provision Regarding the Change in
Length of the Contract of Participation
A commenter opposed the provisions in the Economic Growth Act
itself, and by extension, the proposed rule, that require a CoP to
include a clause that each FSS family to fulfill their obligations no
later than five years after the first recertification of income after
the CoP's execution date. The commenter opposed the proposed change,
stating that it would create unintended and arbitrary inequities in the
length of time that program participants can accumulate escrow and
participate in certain programs. The commenter also stated that the
proposed change would result in inequities in how long households can
accrue escrow.
Some commenters suggested that participants would have differing
lengths of participation, whereby some participants would be given more
time to accrue escrow than others, which raise fairness and equality
concerns. A commenter was concerned that this change introduces varying
timelines for FSS participants based on their annual recertification
date, and said their programs operate on a two-year recertification
cycle, meaning that some households could potentially have close to two
years before their first recertification cycle, allowing for up to
seven years, nine years if maximum extension were granted, to fulfill
their obligations under the CoP. The commenter also said that this
would allow some households more time than others based on
recertification dates and allow for fewer opportunities for new FSS
participants to enroll in the program as caseload sizes are limited.
The commenter encouraged HUD to consider how it can implement this
statute in a way that minimizes these variances.
Commenters said it may be confusing to change to five years after
the first recertification of income after the execution date of the
contract. A commenter stated the current regulation is easier to
understand, execute, and follow.
A commenter stated the new recommendation may present errors in
CoPs because if the CoP effective date is changed to the following
renewal date after the CoP is signed it might create confusion. A
commenter said there would be three different dates which turn out to
be more information to look at, (the previous renewal date for
enrollment purposes, the date they sign the CoP and then the effective
CoP date which will be dated for following renewal).
A commenter stated there was no advantage in delaying the accrual
of escrow until the next annual reexamination for contracts locked in
after the annual re-examination. The commenter believed that the
Contract should remain a 5-year contract. The expansion of extending
the Contract for ``good reason'' gives the ability to the family to
continue pursuing their goals if necessary, beyond the 5 years.
HUD Response: The change in the length of the Contract of
Participation is statutory and therefore HUD does not have any
discretion to change it. HUD reminds all FSS practitioners that, beyond
any requirements of funding, PHAs may set the number of concurrent
enrollments themselves. Longer CoPs do not necessarily limit new
enrollments. Programs are encouraged to review the FSS Promising
Practices Guidebook and consider triaging their approach to case
management/coaching as opposed to a one-size fits all.
V. Findings and Certifications
Regulatory Review--Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health, and safety effects; distributive impacts; and equity).
Executive Order 13563 emphasizes the importance of quantifying both
costs and benefits, reducing costs, harmonizing rules, and promoting
flexibility.
Under Executive Order 12866 (Regulatory Planning and Review), a
determination must be made whether a regulatory action is significant
and; therefore, subject to review by the Office of Management and
Budget (OMB), in accordance with the requirements of the order. This
rule was determined to be a ``significant regulatory action'' as
defined in section 3(f) of the Executive order, but not an economically
significant regulatory action, as provided under section 3(f)(1) of
Executive Order 12866. Consistent with Executive Order 13563, this rule
implements the streamlining requirements of section 306 and provides
additional flexibility for PHAs and multifamily owners. HUD has
[[Page 30046]]
prepared a Regulatory Impact Analysis (RIA) that addresses the costs
and benefits of the final rule. HUD's RIA is part of the docket file
for this rule.
The docket file is available for public inspection on
regulations.gov and in the Regulations Division, Office of General
Counsel, Room 10276, 451 7th Street SW, Washington, DC 20410-0500. Due
to security measures at the HUD Headquarters building, please schedule
an appointment to review the docket file by calling the Regulations
Division at 202-402-3055 (this is not a toll-free number).
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3501-3520), an agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless the
collection displays a valid control number. The information collection
requirements contained in this final rule have been submitted to the
Office of Management and Budget (OMB) under the Paperwork Reduction Act
of 1995 (44 U.S.C. 3501-3520) and assigned OMB control number 2577-
0178. HUD is updating existing information collection requirements
along with this final rule. Additional requirements will become
effective when the revised collection is approved by OMB.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4; approved March 22, 1995) (UMRA) establishes requirements for Federal
agencies to assess the effects of their regulatory actions on State,
local, and tribal governments, and on the private sector. This rule
does not impose any Federal mandates on any State, local, or tribal
government, or on the private sector, within the meaning of the UMRA.
Environmental Review
This final rule does not direct, provide for assistance or loan and
mortgage insurance for, or otherwise govern or regulate, real property
acquisition, disposition, leasing (other than tenant-based rental
assistance), rehabilitation, alteration, demolition, or new
construction, or establish, revise or provide for standards for
construction or construction materials, manufactured housing, or
occupancy. Accordingly, under 24 CFR 50.19(c)(1), this final rule is
categorically excluded from environmental review under the National
Environmental Policy Act of 1969 (42 U.S.C. 4321, et seq.).
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.)
generally requires an agency to conduct a regulatory flexibility
analysis of any rule subject to notice and comment rulemaking
requirements unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
As has been discussed in this preamble, this rule will make changes to
HUD's regulations to implement the section 306 statutory changes and
streamline other requirements. HUD believes this rule will overall
reduce burden, including for small PHAs and multifamily owners. The
burden reduction anticipated is more fully discussed in the
accompanying Regulatory Impact Assessment (RIA). For these reasons, HUD
determined that this rule would not have a significant economic impact
on a substantial number of small entities.
Executive Order 13132, Federalism
Executive Order 13132 (entitled ``Federalism'') prohibits an agency
from publishing any rule that has federalism implications if the rule
either: (1) Imposes substantial direct compliance costs on State and
local governments and is not required by statute, or (2) preempts State
law, unless the agency meets the consultation and funding requirements
of section 6 of the Executive order. This final rule does not have
federalism implications and does not impose substantial direct
compliance costs on State and local governments nor preempt State law
within the meaning of the Executive order.
List of Subjects
24 CFR Part 887
Grant programs--housing and community development, Public housing,
Rent subsidies, Reporting and recordkeeping requirements
24 CFR Part 984
Grant programs--housing and community development, Grant programs--
Indians, Indians, Public housing, Rent subsidies, Reporting and
recordkeeping requirements.
Accordingly, for the reasons stated in the preamble, HUD amends 24
CFR chapters VIII and IX as follows:
0
1. Add part 887 to read as follows:
PART 887--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAMS--FAMILY
SELF-SUFFICIENCY PROGRAM
Sec.
887.101 Purpose, scope, and applicability.
887.103 Definitions.
887.105 Basic requirements of FSS programs.
887.107 Cooperative Agreements.
887.109 Housing assistance and total tenant payments and increases
in family income.
887.111 FSS award funds formula.
887.113 FSS funds.
Authority: 42 U.S.C. 1437u, and 3535(d).
Sec. 887.101 Purpose, scope, and applicability.
(a) Purpose. (1) The purpose of the Family Self-Sufficiency (FSS)
program is to promote the development of local strategies to coordinate
the use of Department of Housing and Urban Development (HUD) assistance
with public and private resources, to enable families eligible to
receive HUD assistance to achieve economic independence and self-
sufficiency.
(2) The purpose of this part is to implement the policies and
procedures applicable to operation of an FSS program under HUD's
Section 8 Housing assistance payments programs, as established under
section 23 of the 1937 Act (42 U.S.C. 1437u).
(b) Scope. Each owner may implement an FSS program independently or
by way of a Cooperative Agreement with a Public Housing Agency (PHA) or
another owner. Each owner that administers an FSS program must do so in
accordance with the requirements of this part.
(c) Applicability. This part applies to owners of multifamily
rental housing properties assisted by Section 8 Housing assistance
payments programs. See part 984 of this title for program regulations
applicable to PHAs.
(d) Non-participation. Tenant participation in an FSS program is
voluntary. Assistance under Section 8 Housing assistance payments
programs for a family that elects not to participate in an FSS program
shall not be refused, delayed or terminated by reason of such election.
Sec. 887.103 Definitions.
The definitions in Sec. 984.103 of this title apply to this part,
except that eligible families means tenant families living in
multifamily assisted housing.
Sec. 887.105 Basic requirements of FSS programs.
(a) An FSS program that is voluntarily established under this part
by an owner
[[Page 30047]]
must comply with the following requirements:
(1) Shall be operated in conformity with the regulations of this
part and other Section 8 regulations, codified in 24 CFR parts 5, 402,
880, 881, 883, and 884, respectively, and with FSS program objectives,
as described in Sec. 984.102 of this title;
(2) Shall coordinate supportive services as defined in Sec.
984.103 of this title;
(3) Shall have an Action Plan approved by HUD, as described in
Sec. 984.201 of this title, before operating an FSS program;
(4) When a Program Coordinating Committee (PCC), as described in
Sec. 984.202 of this title, is available, owners shall work with that
PCC or shall create their own PCC, either by themselves, or in
conjunction with other owners;
(5) Shall comply with the family selection procedures in Sec.
984.203 of this title;
(6) May make available and utilize onsite facilities, as described
in Sec. 984.204 of this title;
(7) Shall comply with the FSS funds provision, as described in
Sec. 984.302(c) of this title;
(8) Shall enter into Contracts of Participation with eligible
families, as described in Sec. 984.303 of this title;
(9) Shall establish and manage FSS escrow accounts as described in
Sec. 984.305 of this title;
(10) Shall report information to HUD as described in Sec. 984.401
of this title; and
(11) Shall be operated in compliance with applicable
nondiscrimination and equal opportunity requirements including, but not
limited to, those set forth in 24 CFR part 5.
(b) An owner may employ appropriate staff, including an FSS Program
Coordinator, to administer its FSS program, and may contract with an
appropriate organization to establish and administer parts of the FSS
program.
Sec. 887.107 Cooperative Agreements.
(a) An owner may enter into a Cooperative Agreement with:
(1) A local PHA that operates an FSS program, pursuant to Sec.
984.106 of this title; or
(2) Another owner that operates an FSS program, pursuant to this
section.
(b) Owners that enter into a Cooperative Agreement pursuant to this
part, must:
(1) Open any FSS waiting lists to all eligible families residing in
the properties covered by the Cooperative Agreement.
(2) Provide periodic escrow amounts to the FSS Program Coordinator
for FSS families covered by the Cooperative Agreement under this part.
The Cooperative Agreement must provide that each owner is responsible
for managing the escrow accounts of their participating families,
including calculating and tracking of escrow in accordance with Sec.
984.305 of this title, and set forth the procedures for the sharing of
escrow information between the PHA and the owner.
(3) The Cooperative Agreement must clearly specify the terms and
conditions of such agreement, including the requirements of this
section, and it must include a process for PHAs and owners to
communicate with each other about changes in their Action Plan.
Sec. 887.109 Housing assistance and total tenant payments and
increases in family income.
(a) Housing assistance payment. The housing assistance payment for
an eligible family participating in the FSS program under this part is
determined in accordance with the regulations set forth in Sec.
5.661(e) of this title.
(b) Total tenant payment. The total tenant payment for an FSS
family participating in the FSS program is determined in accordance
with Sec. 5.628 of this title.
(c) Increases in FSS family income. Any increase in the earned
income of an FSS family during its participation in an FSS program may
not be considered as income or an asset for purposes of eligibility of
the FSS family for other benefits, or amount of benefits payable to the
FSS family, under any other program administered by HUD.
Sec. 887.111 FSS award funds formula.
The Secretary may establish a formula by which funds for
administration of the FSS program are awarded consistent with 42 U.S.C.
1437u(i).
Sec. 887.113 FSS funds.
Owners may access funding from any residual receipt accounts for
the property to cover reasonable costs associated with operation of an
FSS program, including hiring an FSS Program Coordinator or
coordinators for their FSS program.
0
2. Revise part 984 to read as follows:
PART 984--SECTION 8 AND PUBLIC HOUSING FAMILY SELF-SUFFICIENCY
PROGRAM
Subpart A--General
Sec.
984.101 Purpose, applicability, and scope.
984.102 Program objectives.
984.103 Definitions.
984.104 Basic requirements of the FSS program.
984.105 Minimum program size.
984.106 Cooperative Agreements.
984.107 FSS award funds formula.
Subpart B--Program Development and Approval Procedures
984.201 Action Plan.
984.202 Program Coordinating Committee (PCC).
984.203 FSS family selection procedures.
984.204 On-site facilities.
Subpart C--Program Operations
984.301 Program implementation.
984.302 FSS funds.
984.303 Contract of Participation (CoP).
984.304 Amount of rent paid by FSS family and increases in family
income.
984.305 FSS escrow account.
984.306 HCV portability requirements for FSS participants.
Subpart D--Reporting
984.401 Reporting.
Authority: 42 U.S.C. 1437f, 1437u, and 3535(d).
Subpart A--General
Sec. 984.101 Purpose, applicability, and scope.
(a) Purpose. (1) The purpose of the Family Self-Sufficiency (FSS)
program is to promote the development of local strategies to coordinate
the use of Department of Housing and Urban Development (HUD or
Department) assistance with public and private resources, to enable
families eligible to receive HUD assistance to achieve economic
independence and self-sufficiency.
(2) The purpose of this part is to implement the policies and
procedures applicable to operation of an FSS program, as established
under section 23 of the 1937 Act (42 U.S.C. 1437u).
(b) Applicability. This part applies to Public Housing Agencies
(PHAs) administering a public housing program under section 9, a
project-based and/or tenant-based assistance program under section 8(o)
of the U.S. Housing Act of 1937 (1937 Act), a Housing Choice Voucher
(HCV) homeownership program under section 8(y) of the U.S. Housing Act
of 1937, or Section 8 Moderate Rehabilitation for low-income families
and Moderate Rehabilitation Single Room Occupancy for homeless
individuals under 24 CFR part 882. See part 887 of this title for
program regulations applicable to owners of multifamily assisted
housing.
(c) Scope. Each PHA that administers an FSS program must do so in
accordance with the requirements of this part. See Sec. 984.105 for
more information concerning PHAs that are required to administer an FSS
program.
[[Page 30048]]
(d) Non-participation. Participation in an FSS program is
voluntary. A family's admission to the public housing or Section 8
programs cannot be conditioned on participation in FSS. A family's
housing assistance cannot be terminated by reason of such election or
due to an FSS family's failure to comply with FSS program requirements
in this part.
Sec. 984.102 Program objectives.
The objective of the FSS program is to reduce the dependency of
low-income families on welfare assistance and housing subsidies. Under
the FSS program, HUD assisted families are provided opportunities for
education, job training, counseling, and other forms of social service
assistance, while living in assisted housing, so that they may obtain
the education, employment, and business and social skills necessary to
achieve self-sufficiency, as defined in Sec. 984.103. The Department
will evaluate the performance of a PHA's or owner's FSS program using a
scoring system that measures criteria, such as graduation from the
program, increased earned income, and program participation, as
provided by HUD through a Federal Register notice.
Sec. 984.103 Definitions.
(a) The terms 1937 Act, Fair Market Rent, Head of household, HUD,
Low income family, Public housing, Public Housing Agency (PHA), and
Secretary, as used in this part, are defined in part 5 of this title.
(b) As used in this part:
Baseline annual earned income means, for purposes of determining
the FSS credit under Sec. 984.305(b), the FSS family's total annual
earned income from wages and business income (if any) as of the
effective date of the FSS contract. In calculating baseline annual
earned income, all applicable exclusions of income must be applied,
except for any disregarded earned income or other adjustments
associated with self-sufficiency incentives that may be applicable to
the determination of annual income.
Baseline monthly rent means, for purposes of determining the FSS
credit under Sec. 984.305(b):
(i) The FSS family's total tenant payment (TTP), as of the
effective date of the FSS contract, for families paying an income-based
rent as of the effective date of the FSS contract; or
(ii) The amount of the flat or ceiling rent (which includes the
applicable utility allowance), and including any hardship discounts, as
of the effective date of the FSS contract, for families paying a flat
or ceiling rent as of the effective date of the FSS contract.
Certification means a written assertion based on supporting
evidence, provided by the FSS family or the PHA or owner, as may be
required under this part, and which:
(i) Shall be maintained by the PHA or owner in the case of the
family's certification, or by HUD in the case of the PHA's or owner's
certification;
(ii) Shall be made available for inspection by HUD, the PHA or
owner, and the public, as appropriate; and,
(iii) Shall be deemed to be accurate for purposes of this part,
unless the Secretary or the PHA or owner, as applicable, determines
otherwise after inspecting the evidence and providing due notice and
opportunity for comment.
Chief executive officer (CEO) means the elected official or the
legally designated official of a unit of general local government, who
has the primary responsibility for the conduct of that entity's
governmental affairs.
Contract of Participation (CoP) means a contract, in a form with
contents prescribed by HUD, entered into between an FSS family and a
PHA or owner operating an FSS program that sets forth the terms and
conditions governing participation in the FSS program. The CoP includes
all Individual Training and Services Plans (ITSPs) entered into between
the PHA or owner and all members of the family who will participate in
the FSS program, and which plans are attached to the CoP as exhibits.
For additional detail, see Sec. 984.303.
Current annual earned income means, for purposes of determining the
FSS credit under Sec. 984.305(b), the FSS family's total annual earned
income from wages and business income (if any) as of the most recent
re-examination of income which occurs after the effective date of the
FSS contract. In calculating current annual earned income, all
applicable exclusions of income will apply, including any disregarded
earned income and other adjustments associated with self-sufficiency
incentives or other alternative rent structures that may be applicable
to the determination of annual income.
Current monthly rent means, for purposes of determining the FSS
credit under Sec. 984.305(b):
(i) The FSS family's TTP as of the most recent re-examination of
income, which occurs after the effective date of the FSS contract, for
families paying an income-based rent as of the most recent re-
examination of income; or
(ii) The amount of the flat rent (which includes the applicable
utility allowance) or ceiling rent, including any hardship discounts,
as of the most recent re-examination of income which occurs after the
effective date of the FSS contract, for families paying a flat rent or
ceiling rent as of the most recent re-examination of income.
Earned income means income or earnings from wages, tips, salaries,
other employee compensation, and self-employment. Earned income does
not include any pension or annuity, transfer payments, any cash or in-
kind benefits, or funds deposited in or accrued interest on the FSS
escrow account established by a PHA or owner on behalf of a FSS family.
Effective date of Contract of Participation (CoP) means the first
day of the month following the date in which the FSS family and the PHA
or owner entered into the CoP.
Eligible families means current residents of public housing
(section 9) and current Section 8 program participants, as defined in
this section, including those participating in other local self-
sufficiency programs.
Enrollment means the date that the FSS family entered into the CoP
with the PHA or owner.
Family Self-Sufficiency (FSS) Program means the program established
by a PHA within its jurisdiction or by an owner to promote self-
sufficiency among participating families, including the coordination of
supportive services to these families, as authorized by section 23 of
the 1937 Act.
FSS escrow account (or, escrow) means the FSS escrow account
authorized by section 23 of the 1937 Act, and as provided by Sec.
984.305.
FSS escrow credit means the amount credited by the PHA or owner to
the FSS family's FSS escrow account.
FSS family means a family that resides in public housing (section
9) or receives Section 8 assistance, as defined in this section, and
that elects to participate in the FSS program, and whose designated
adult member (head of FSS family), as determined in accordance with
Sec. 984.303(a), has signed the CoP.
FSS family in good standing means, for purposes of this part, an
FSS family that is in compliance with their FSS CoP; has either
satisfied or are current on any debts owed the PHA or owner; and is in
compliance with the regulations in part 5 and chapters VIII and IX of
this title regarding participation in the relevant rental assistance
program.
FSS related service program means any program, publicly or
privately sponsored, that offers the kinds of supportive services
described in the
[[Page 30049]]
definition of ``supportive services'' set forth in this section.
FSS slots refers to the total number of families (as determined in
the Action Plan for mandatory programs in Sec. 984.105) that the PHA
will serve in its FSS program.
FSS Program Coordinator means the person(s) who runs the FSS
program. This may include (but is not limited to) performing outreach,
recruitment, and retention of FSS participants; goal-setting and case
management/coaching of FSS participants; working with the community and
service partners; and tracking program performance.
FY means Federal fiscal year (starting October 1 and ending
September 30, and year designated by the calendar year in which it
ends).
Head of FSS family means the designated adult family member of the
FSS family who has signed the CoP. The head of FSS family may, but is
not required to be, the head of the household for purposes of
determining income eligibility and rent.
Individual Training and Services Plan (ITSP) means a written plan
that is prepared by the PHA or owner in consultation with a
participating FSS family member (the person with for and whom the ITSP
is being developed), and which sets forth:
(i)(A) The final and interim goals for the participating FSS family
member;
(B) The supportive services to be provided to the participating FSS
family member;
(C) The activities to be completed by that family member; and,
(D) The agreed upon completion dates for the goals, and activities.
(ii) Each ITSP must be signed by the PHA or owner and the
participating FSS family member and is attached to, and incorporated as
part of the CoP. An ITSP must be prepared for each adult family member
who elects to participate in the FSS program, including the head of FSS
family who has signed the CoP.
Multifamily assisted housing (also known as project-based rental
assistance (PBRA)) means rental housing assisted by a Section 8 Housing
Payments Program, pursuant to 24 CFR parts 880, 881, 883, 884, and 886.
Owner means the owner of multifamily assisted housing.
Program Coordinating Committee (PCC) means the committee described
in Sec. 984.202.
Section 8 means assistance provided under section 8 of the 1937 Act
(42 U.S.C. 1437f). Specifically, multifamily assisted housing, as
defined in this section; tenant-based and project-based rental
assistance under section 8(o) of the 1937 Act; the HCV homeownership
option under section 8(y) of the 1937 Act; Family Unification Program
(FUP) assistance under section 8(x) of the 1937 Act; and the Section 8
Moderate Rehabilitation (Mod Rehab) for low-income families and
Moderate Rehabilitation Single Room Occupancy (Mod Rehab SRO) for
homeless individuals under 24 CFR part 882.
Self-sufficiency means that an FSS family is no longer receiving
Section 8, public housing assistance, or any Federal, State, or local
rent, homeownership subsidies, or welfare assistance. Achievement of
self-sufficiency, although an FSS program objective, is not a condition
for receipt of the FSS escrow account funds.
Supportive services means those appropriate services that a PHA or
owner will coordinate on behalf of an FSS family under a CoP, which may
include, but are not limited to:
(i) Child care. Child care (on an as-needed or ongoing basis) of a
type that provides sufficient hours of operation and serves an
appropriate range of ages;
(ii) Transportation. Transportation necessary to enable a
participating FSS family member to receive available services, or to
commute to their place(s) of employment;
(iii) Education. Remedial education; education for completion of
high school or attainment of a high school equivalency certificate;
education in pursuit of a post-secondary degree or certificate;
(iv) Employment supports. Job training, preparation, and
counseling; job development and placement; and follow-up assistance
after job placement and completion of the CoP;
(v) Personal welfare. Substance/alcohol abuse treatment and
counseling, and health, dental, mental health and health insurance
services;
(vi) Household management. Training in household management;
(vii) Homeownership and housing counseling. Homeownership education
and assistance and housing counseling;
(viii) Financial empowerment. Training in financial literacy, such
as financial coaching, training in financial management, asset
building, and money management, including engaging in mainstream
banking, reviewing and improving credit scores, etc.; and
(ix) Other services. Any other services and resources, including
case management, optional services, and specialized services for
individuals with disabilities, that are determined to be appropriate in
assisting FSS families to achieve economic independence and self-
sufficiency. Reasonable accommodations and modifications must be made
for individuals with disabilities consistent with applicable Federal
civil rights and nondiscrimination laws.
Unit size or size of unit refers to the number of bedrooms in a
dwelling unit.
Very low-income family is defined as set out in Sec. 813.102 of
this title.
Welfare assistance means (for purposes of the FSS program only)
income assistance from Federal (i.e., Temporary Assistance for Needy
Families (TANF) or subsequent program), State, or local welfare
programs and includes only cash maintenance payments designed to meet a
family's ongoing basic needs. Welfare assistance does not include:
(i) Nonrecurrent, short-term benefits that:
(A) Are designed to deal with a specific crisis or episode of need;
(B) Are not intended to meet recurrent or ongoing needs; and,
(C) Will not extend beyond four months;
(ii) Work subsidies (i.e., payments to employers or third parties
to help cover the costs of employee wages, benefits, supervision, and
training);
(iii) Supportive services such as child care and transportation
provided to families who are employed;
(iv) Refundable earned income tax credits;
(v) Contributions to, and distributions from, Individual
Development Accounts under TANF;
(vi) Services such as counseling, case management, peer support,
child care information and referral, financial empowerment,
transitional services, job retention, job advancement, and other
employment-related services that do not provide basic income support;
(vii) Amounts solely directed to meeting housing expenses;
(viii) Amounts for health care;
(ix) Supplemental Nutrition Assistance Program and emergency rental
and utilities assistance;
(x) Supplemental Security Income, Social Security Disability
Income, or Social Security; and
(xi) Child-only or non-needy TANF grants made to or on behalf of a
dependent child solely on the basis of the child's need and not on the
need of the child's current non-parental caretaker.
Sec. 984.104 Basic requirements of the FSS program.
(a) An FSS program established under this part shall be operated in
conformity with the requirements of this part, including the Action
Plan at Sec. 984.201, and:
(1) As applicable to voucher program participants:
[[Page 30050]]
(i) HCV regulations at 24 CFR part 982, for HCV program
participants; and
(ii) Project-based voucher (PBV) regulations at 24 CFR part 983,
for PBV program participants; and
(iii) HCV Homeownership regulations at 24 CFR 982.625 through
982.643, for HCV homeownership participants;
(2) As applicable to Mod Rehab and Mod Rehab SRO participants, 24
CFR part 882;
(3) As applicable to public housing program participants, the
applicable public housing regulations, including the regulations in 24
CFR parts 5, subpart F, 960, and 966; and,
(4) The applicable nondiscrimination and equal opportunity
requirements including, but not limited to, those set forth in 24 CFR
part 5.
(b) [Reserved]
Sec. 984.105 Minimum program size.
(a) FSS program size--(1) Minimum program size requirement. A PHA
must operate an FSS program of the minimum program size determined in
accordance with paragraph (b) of this section.
(2) Exceptions to program operation requirement or to operate a
smaller mandatory program. Paragraph (c) of this section states when
HUD may grant an exception to the program operation requirement, and
paragraph (d) of this section states when an exception may be granted
to operate a program that is smaller than the minimum program size.
(3) Option to operate larger FSS program. A PHA may choose to
operate an FSS program larger than the minimum program size.
(b) How to determine FSS minimum program size--(1) General
requirement. Each PHA that was required to administer an FSS program on
May 24, 2018 (enactment date of the Economic Growth, Regulatory Relief,
and Consumer Protection Act), shall continue to operate such program
for, at a minimum, the total number of families the PHA was required by
statute to serve as of May 24, 2018, subject only to the availability
of sufficient amounts for housing assistance under appropriations acts
and the provisions of paragraph (b)(2) of this section.
(2) Reduction of minimum program size. The minimum program size for
a PHA's FSS program is reduced by one slot for each family from any
rental assistance program (public housing or Section 8, including
multifamily assisted housing) for which the PHA administers FSS under
this section and that graduates from the FSS program by fulfilling its
FSS CoP on or after October 21, 1998. If an FSS slot is vacated by a
family that has not completed its FSS CoP obligations, the slot must be
filled by a replacement family which has been selected in accordance
with the FSS family selection procedures set forth in Sec. 984.203.
(c) Exception to program operation. (1) Upon approval by HUD, a PHA
will not be required to carry out an FSS program if the PHA provides to
HUD a certification, as defined in Sec. 984.103, that the operation of
such an FSS program is not feasible because of local circumstances,
which may include, but are not limited to, the following:
(i) Lack of supportive services accessible to eligible families,
including insufficient availability of resources for programs under
title I of the Workforce Innovation and Opportunity Act (29 U.S.C. 3111
et seq.);
(ii) Lack of funding for reasonable administrative costs;
(iii) Lack of cooperation by other units of State or local
government; or,
(iv) Lack of interest in participating in the FSS program on the
part of eligible families.
(2) A program operation exception will not be granted if HUD
determines that local circumstances do not preclude the PHA from
effectively operating an FSS program that is smaller than the minimum
program size.
(d) Exception to operate a smaller mandatory program. Upon approval
by HUD in its full discretion, a PHA may be permitted to operate an FSS
program that is smaller than the minimum program size if the PHA
requests an exception and provides to HUD a certification, as defined
in Sec. 984.103, that the operation of an FSS program of the minimum
program size is not feasible because of local circumstances, which may
include, but are not limited to:
(1) Decrease in or lack of supportive services available to
eligible families, including insufficient availability of resources for
programs under title I of the Workforce Innovation and Opportunity Act
(29 U.S.C. 3111 et seq.);
(2) Decrease in or lack of funding for reasonable administrative
costs;
(3) Decrease in or lack of cooperation by other units of State or
local government; or
(4) Decrease in or lack of interest in participating in the FSS
program on the part of eligible families.
(e) Expiration of exception. A full or partial exception to the FSS
minimum program size requirement (approved by HUD in accordance with
paragraph (c) or (d) of this section) expires five (5) years from the
date of HUD approval of the exception. If circumstances change and a
HUD-approved exception is no longer needed, the PHA is not required to
effectuate the exception for the full term of the exception. If a PHA
seeks to continue an exception after its expiration, the PHA must
submit a new request and certification to HUD for consideration.
(f) Review of certification records. HUD reserves the right to
examine, during its management review of the PHA, or at any time, the
documentation and data that a PHA relied on in certifying to the
unfeasibility of its establishing and operating an FSS program, or of
operating one of less than minimum program size.
Sec. 984.106 Cooperative Agreements.
(a) A PHA may enter into a Cooperative Agreement with one or more
owners to voluntarily make an FSS program available to the owner's
multifamily assisted housing tenants.
(b) A PHA and owner that enter into a Cooperative Agreement to make
an FSS program available pursuant to paragraph (a) of this section, are
subject to this part and the following requirements:
(1) The PHA must open its FSS waiting list to any eligible family
residing in the multifamily assisted housing covered by the Cooperative
Agreement.
(2) The owner must provide, at the request of the PHA, information
on escrow amounts for participating multifamily assisted housing
tenants. The Cooperative Agreement must provide that the owner is
responsible for managing the escrow account for participating
multifamily assisted housing tenants, including calculating and
tracking of escrow in accordance with Sec. 984.305. The Cooperative
Agreement must set forth the procedures that will be in place for the
exchange of escrow information between the PHA and the owner.
(3) The PHA may count multifamily assisted housing families served
pursuant to a Cooperative Agreement under this subpart as part of the
calculation of the FSS award under Sec. Sec. 984.107 and 984.302.
(4) The PHA may use FSS appropriated funds to serve multifamily
assisted housing tenants subject to a Cooperative Agreement under this
section.
(5) The Cooperative Agreement must clearly specify the terms and
conditions of such agreement, including the requirements of this
section, and it must include a process for entities for PHAs and owners
to communicate with each other about changes in their Action Plan.
[[Page 30051]]
Sec. 984.107 FSS award funds formula.
The Secretary may establish a formula by which funds for
administration of the FSS program are awarded consistent with 42 U.S.C.
1437u(i), which provides the following:
(a) Base award. A PHA or owner serving 25 or more participants in
the FSS program is eligible to receive an award equal to the costs, as
determined by the Secretary, of 1 full-time family self-sufficiency
coordinator position. The Secretary may, by notice (including a Notice
of Funding Opportunity (NOFO)), determine the policy concerning the
award for an eligible entity serving fewer than 25 such participants,
including providing prorated awards or allowing such entities to
combine their programs under this section for purposes of employing a
coordinator.
(b) Additional award. A PHA or owner that meets performance
standards set by the Secretary is eligible to receive an additional
award sufficient to cover the costs of filling an additional FSS
coordinator position if such entity has 75 or more participating
families, and an additional coordinator for each additional 50
participating families, or such other ratio as may be established by
the Secretary based on the award allocation evaluation under section
23(i)(2)(E) of the U.S. Housing Act of 1937.
(c) State and regional entities. For purposes of calculating the
award under this section, HUD may treat each administratively distinct
part of a State or regional entity as a separate entity.
(d) Determination of number of coordinators. In determining whether
a PHA or owner meets a specific threshold for funding pursuant to this
section, the Secretary shall consider the number of participants
enrolled by the PHA or owner in its FSS program as well as other
criteria determined by the Secretary.
(e) Renewals and allocation. FSS awards shall be allocated, as
established by the Secretary, in the following order of priority:
(1) First priority. Renewal of the full cost of all FSS
coordinators in the previous year at each PHA or owner with an existing
FSS program that meets applicable performance standards set by the
Secretary. If this first priority cannot be fully satisfied, the
Secretary may prorate the funding for each PHA or owner, as long as:
(i) Each PHA or owner that has received funding for at least 1
part-time coordinator in the prior fiscal year is provided sufficient
funding for at least 1 part-time coordinator as part of any such
proration; and
(ii) Each PHA or owner that has received funding for at least 1
full-time coordinator in the prior fiscal year is provided sufficient
funding for at least 1 full-time coordinator as part of any such
proration.
(2) Second priority. New or incremental coordinator funding.
(f) Recapture or offset. Any FSS awards allocated under this
section by the Secretary in a fiscal year that have not been spent by
the end of the subsequent fiscal year or such other time period as
determined by the Secretary may be recaptured by the Secretary and
shall be available for providing additional awards pursuant to
paragraph (b) of this section, or may be offset as determined by the
Secretary.
(g) Incentives for innovation and high performance. The Secretary
may reserve up to 5 percent of the appropriated FSS funds to provide
support to or reward FSS programs based on the rate of successful
completion, increased earned income, or other factors as may be
established by the Secretary.
Subpart B--Program Development and Approval Procedures
Sec. 984.201 Action Plan.
(a) Requirement for Action Plan. A PHA or owner must have a HUD-
approved Action Plan that complies with the requirements of this
section before the PHA or owner operates an FSS program, whether the
FSS program is a mandatory or voluntary program.
(b) Development of Action Plan. The Action Plan shall be developed
by the PHA or owner in consultation with the chief executive officer of
the applicable unit of general local government and the Program
Coordinating Committee. Consultation for the Action Plan by the PHA or
owner shall also include representatives of current and prospective FSS
program participants, any local agencies responsible for programs under
title I of the Workforce Innovation and Opportunity Act (29 U.S.C. 3111
et seq.), other appropriate organizations (such as other local welfare
and employment or training institutions, child care providers,
financial empowerment providers, nonprofit service providers, and
private businesses), and any other public and private service providers
affected by the operation of the PHA's or owner's program.
(c) Plan submission--(1) Voluntary program. The PHA or owner must
submit its Action Plan and obtain HUD approval of the plan before the
PHA or owner carries out a voluntary FSS program, including a program
that exceeds the minimum size for a mandatory program, regardless of
whether the voluntary program receives HUD funding.
(2) Revision. Following HUD's initial approval of the Action Plan,
no further approval of the Action Plan is required unless the PHA or
owner proposes to make policy changes to the Action Plan or increase
the size of a voluntary program; or HUD requires other changes. In such
cases, the PHA or owner must submit such changes to the Action Plan to
HUD for approval.
(d) Contents of Plan. The Action Plan shall describe the policies
and procedures for the operation of a PHA's or owner's FSS program, and
shall contain, at a minimum, the following information:
(1) Family demographics. A description of the number, size,
characteristics, and other demographics (including racial and ethnic
data), and the supportive service needs of the families expected to
participate in the FSS program;
(2) Estimate of participating families. A description of the number
of eligible FSS families who can reasonably be expected to receive
supportive services under the FSS program, based on available and
anticipated Federal, tribal, State, local, and private resources;
(3) Eligible families from other self-sufficiency programs. If
applicable, the number of families, by program type, who are
participating in other local self-sufficiency programs and are expected
to agree to execute an FSS CoP;
(4) FSS family selection procedures. A statement indicating the
procedures to be utilized to select families for participation in the
FSS program, subject to the requirements governing the selection of FSS
families, set forth in Sec. 984.203. This statement must include a
description of how the selection procedures ensure that families will
be selected without regard to race, color, religion, sex (including
actual or perceived gender identity and sexual orientation),
disability, familial status, or national origin;
(5) Incentives to encourage participation. A description of the
incentives that will be offered to eligible families to encourage their
participation in the FSS program (incentives plan). The incentives plan
shall provide for the establishment of the FSS escrow account in
accordance with the requirements set forth in Sec. 984.305, and other
incentives, if any. The incentives plan shall be part of the Action
Plan;
(6) Outreach efforts. A description of:
(i) The efforts, including notification and outreach efforts, to
recruit FSS participants from among eligible families; and,
[[Page 30052]]
(ii) The actions to be taken to assure that both minority and non-
minority groups are informed about the FSS program, and how this
information will be made available;
(7) FSS activities and supportive services. A description of the
activities and supportive services to be coordinated on behalf of
participating FSS families and identification of the public and private
resources which are expected to provide the supportive services;
(8) Method for identification of family support needs. A
description of how the FSS program will identify the needs and
coordinate the services and activities according to the needs of the
FSS families;
(9) Program termination; withholding of services; and available
grievance procedures. A description of all policies concerning
termination of participation in the FSS program, or withholding of
coordination of supportive services, on the basis of a family's failure
to comply with the requirements of the CoP; and the grievance and
hearing procedures available for FSS families;
(10) Assurances of non-interference with rights of non-
participating families. An assurance that a family's election not to
participate in the FSS program will not affect the family's admission
to public housing or to the Section 8 program or the family's right to
occupancy in accordance with its lease;
(11) Timetable for program implementation. A timetable for
implementation of the FSS program, as provided in Sec. 984.301(a)(1),
including the schedule for filling FSS slots with eligible FSS
families, as provided in Sec. 984.301;
(12) Certification of coordination. A certification that
development of the services and activities under the FSS program has
been coordinated with programs under title I of the Workforce
Innovation and Opportunity Act (29 U.S.C. 3111 et seq.), and other
relevant employment, child care, transportation, training, education,
and financial empowerment programs in the area, and that implementation
will continue to be coordinated, in order to avoid duplication of
services and activities; and
(13) Optional additional information. Such other information that
would help HUD determine the soundness of the proposed FSS program.
This may include, and is not limited to:
(i) Policies related to the modification of goals in the ITSP;
(ii) The circumstances in which an extension of the Contract of
Participation may be granted;
(iii) Policies on the interim disbursement of escrow, including
limitations on the use of the funds (if any);
(iv) Policies regarding eligible uses of forfeited escrow funds by
families in good standing;
(v) Policies regarding the re-enrollment of previous FSS
participants, including graduates and those who exited the program
without graduating;
(vi) Policies on requirements for documentation for goal
completion;
(vii) Policies on documentation of the household's designation of
the ``head of FSS family;'' and
(viii) Policies for providing an FSS selection preference for
porting families (if the PHA elects to offer such a preference).
(e) Eligibility of a combined program. A PHA or owner that wishes
to operate a joint FSS program with a PHA or owner may combine its
resources with one or more PHAs or owners to deliver supportive
services under a joint Action Plan that will provide for the
coordination of a combined FSS program that meets the requirements of
this part.
(f) Single Action Plan. A PHA or owner may submit one Action Plan
that covers all applicable rental assistance programs (Section 8
vouchers, PBRA, Mod Rehab, and public housing) served by the FSS
program.
Sec. 984.202 Program Coordinating Committee (PCC).
(a) General. Each participating PHA (or joint FSS program) must
establish a PCC whose functions will be to assist the PHA in securing
commitments of public and private resources for the operation of the
FSS program within the PHA's jurisdiction, including assistance in
developing the Action Plan and in operating the program.
(b) Membership--(1) Required membership. The PCC must include
representatives of the PHA, including one or more FSS Program
Coordinators, and one or more participants from each HUD rental
assistance program served by the PHA's FSS program. The PHA may seek
assistance from the following groups in identifying potential PCC
members:
(i) An area-wide or city-wide resident council, if one exists;
(ii) If the PHA operates in a specific public housing development,
the resident council or resident management corporation, if one exists,
of the public housing development where the public housing FSS program
is to be carried out; or
(iii) Any other resident group, which the PHA believes is
interested in the FSS program and would contribute to the development
and coordination of the FSS program (such as the Resident Advisory
Board or tenant association, as applicable).
(2) Recommended membership. Membership on the PCC may include
representatives of the unit of general local government served by the
PHA, local agencies (if any) responsible for carrying out programs
under title I of the Workforce Innovation and Opportunity Act (29
U.S.C. 3111 et seq.), and other organizations, such as other State,
local, or tribal welfare and employment agencies, public and private
primary, secondary, and post-secondary education or training
institutions, child care providers, financial empowerment
organizations, nonprofit service providers, private businesses, and any
other public and private service providers with resources to assist the
FSS program.
(c) Alternative committee. The PHA may, in consultation with the
chief executive officer of the unit of general local government served
by the PHA and one or more residents of each HUD-assisted program
served by the FSS program, utilize an existing entity as the PCC if the
membership of the existing entity consists, or will consist of, the
individuals identified in paragraph (b)(1) of this section, and it may
also include individuals from the same or similar organizations
identified in paragraph (b)(2) of this section.
Sec. 984.203 FSS family selection procedures.
(a) Preference in the FSS selection process. A PHA has the option
of selecting eligible families for up to fifty (50) percent of its FSS
slots in accordance with a written policy, provided in the PHA's FSS
Action Plan, who have one or more family members currently enrolled in
an FSS related service program or on the waiting list for such a
program. The PHA may limit the selection preference given to
participants in, and applicants for, FSS related service programs to
one or more eligible FSS related service programs. A PHA that chooses
to exercise the selection preference option must include the following
information in its Action Plan:
(1) The percentage of FSS slots, not to exceed fifty (50) percent
of the total number of FSS slots, for which it will give a selection
preference;
(2) The FSS related service programs to which it will give a
selection preference to the programs' participants and applicants; and
(3) The method of outreach to, and selection of, families with one
or more
[[Page 30053]]
members participating in the identified programs.
(b) Selection among families with preference. The PHA may use
either of the following to select among applicants on the FSS waiting
list with the same preference status:
(1) Date and time of application to the FSS program; or,
(2) A drawing or other random choice technique.
(c) FSS selection without preference. For those FSS slots for which
a selection preference is not applicable, the FSS slots must be filled
with eligible families in accordance with an objective selection
system, such as a lottery, the length of time living in subsidized
housing, or the date the family expressed an interest in participating
in the FSS program. The objective system to be used by the PHA must be
described in the PHA's Action Plan.
(d) Motivation as a selection factor--(1) General. A PHA may screen
families for interest, and motivation to participate in the FSS
program, provided that the factors utilized by the PHA are those which
solely measure the family's interest and motivation to participate in
the FSS program.
(2) Permissible motivational screening factors. Permitted
motivational factors include requiring attendance at FSS orientation
sessions or preselection interviews and assigning certain tasks which
indicate the family's willingness to undertake the obligations which
may be imposed by the FSS CoP. Any tasks assigned shall be those which
may be readily accomplishable by the family, based on the family
members' educational level, capabilities, and disabilities, if any.
Reasonable accommodations and modifications must be made for
individuals with disabilities, including, e.g., mobility, manual,
sensory, speech, mental, intellectual, or developmental disabilities,
consistent with applicable Federal civil rights and nondiscrimination
laws.
(3) Prohibited motivational screening factors. Prohibited
motivational screening factors include the family's educational level,
educational or standardized motivational test results, previous job
history or job performance, credit rating, marital status, number of
children, or other factors, such as sensory or manual skills, and any
factors which may result in the exclusion, application of different
eligibility requirements, or other discriminatory treatment or effect
on the basis of race, color, national original, sex (including actual
or perceived gender identity and sexual orientation), religion,
familial status, or disability.
Sec. 984.204 On-site facilities.
Each PHA or owner may, subject to the approval of HUD, make
available and utilize common areas or unoccupied dwelling units in
properties owned by the entity to provide or coordinate supportive
services under any FSS program.
Subpart C--Program Operations
Sec. 984.301 Program implementation.
(a) Voluntary program implementation. Unless otherwise required
under a funding notice, there is no deadline for implementation of a
voluntary program. A voluntary program, however, may not be implemented
before the requirements of Sec. 984.201 have been satisfied.
(b) Program administration. A PHA may employ appropriate staff,
including a service coordinator or FSS Program Coordinator to
administer its FSS program, and may contract with an appropriate
organization to establish and administer all or part of the FSS
program, including the FSS escrow account, as provided by Sec.
984.305.
Sec. 984.302 FSS funds.
(a) Public housing program. Subject to 42 U.S.C. 1437g, 24 CFR part
990, and appropriations by Congress, PHAs may use funds provided under
42 U.S.C. 1437g to cover reasonable and eligible administrative costs
incurred by PHAs in carrying out the FSS program.
(b) Section 8 program. Subject to 42 U.S.C. 1437f, 24 CFR part 982,
and appropriations by Congress, PHAs may use the administrative fees
paid to PHAs for costs associated with operation of an FSS program.
(c) FSS funds. FSS funds associated with operation of an FSS
program are established by the Congress and subject to appropriations.
FSS appropriated funds will be awarded to and used by PHAs or owners
for costs associated with families who are enrolled in an FSS program
under this part, including when an owner operates an FSS program
through a Cooperative Agreement or on its own.
Sec. 984.303 Contract of Participation (CoP).
(a) General. Each eligible family that is selected to participate
in an FSS program must enter into a CoP with the PHA or owner that
operates the FSS program in which the family will participate. There
will be no more than one CoP at any time for each family. There may be
an ITSP for as many members of the family as wish to participate. The
CoP shall be signed by a representative of the PHA or the owner and the
head of FSS family, as designated by the family. This head of FSS
family does not have to be the same as the official head of household
for rental assistance purposes.
(b) Form and content of contract--(1) General. The CoP, which
incorporates the ITSP(s), shall set forth the principal terms and
conditions governing participation in the FSS program. These include
the rights and responsibilities of the FSS family and of the PHA or
owner, the services to be provided to, and the activities to be
completed by, each adult member of the FSS family who elects to
participate in the program.
(2) FSS family goals. The ITSP, incorporated in the CoP, shall
establish specific interim and final goals by which the PHA or owner,
and the family, measures the FSS family's progress towards fulfilling
its obligations under the CoP and becoming self-sufficient. For any FSS
family that is a recipient of welfare assistance at the outset of the
CoP or that receives welfare assistance while in the FSS program, the
PHA or owner must establish as a final goal for each FSS participant
that every member of the family become independent from welfare
assistance before the expiration of the term of the CoP, including any
extension thereof. Also, see the employment obligation described in
paragraph (b)(4) of this section. Aside from the goals specifically
required in this section, PHAs or owners must work with each
participant to establish realistic and individualized goals and may not
include additional mandatory goals or mandatory modifications of the
two mandatory goals.
(3) Compliance with lease terms. The CoP shall provide that one of
the obligations of the FSS family is to comply with the terms and
conditions of the respective public housing or Section 8 lease.
However, all considerations allowed for other assisted residents for
repayment agreements, etc., shall also be allowed for FSS participants.
(4) Employment obligation--(i) Minimum requirement. Although all
members of the FSS family may seek and maintain suitable employment
during the term of the contract, only the head of FSS family shall be
required under the CoP to seek and maintain suitable employment during
the term of the contract and any extension thereof.
(ii) Seek employment. The obligation to seek employment means
searching for jobs, applying for employment, attending job interviews,
and otherwise following through on employment opportunities.
(iii) Determination of suitable employment. A determination of
[[Page 30054]]
suitable employment shall be made by the PHA or owner, with the
agreement of the affected participant, based on the skills, education,
job training, and receipt of other benefits of the household member,
and based on the available job opportunities within the jurisdiction
served by the PHA or in the community where the PBRA property is
located.
(5) Consequences of noncompliance with the contract. The CoP shall
specify the consequences of noncompliance with the CoP as described in
paragraph (i) of this section.
(c) Contract of Participation term. The CoP shall state that each
FSS family will be required to fulfill CoP obligations no later than 5
years after the first re-examination of income after the execution date
of the CoP.
(d) Contract of Participation extension. The PHA or owner shall, in
writing, extend the term of the CoP for a period not to exceed two (2)
years for any FSS family that requests, in writing, an extension of the
contract, provided that the PHA or owner finds that good cause exists
for granting the extension. The family's written request for an
extension must include a description of the need for the extension.
Extension of the CoP will entitle the FSS family to continue to have
amounts credited to the family's FSS escrow account in accordance with
Sec. 984.304. As used in this paragraph (d), good cause means:
(1) Circumstances beyond the control of the FSS family that impede
the family's ability to complete the CoP obligations, as determined by
the PHA or owner, such as a serious illness or involuntary loss of
employment;
(2) Active pursuit of a current or additional goal that will result
in furtherance of self-sufficiency during the period of the extension
(e.g., completion of a college degree during which the participant is
unemployed or under-employed, credit repair towards being homeownership
ready, etc.) as determined by the PHA or owner; or
(3) Any other circumstance that the PHA or owner determines
warrants an extension, as long as the PHA or owner is consistent in its
determination as to which circumstances warrant an extension.
(e) Unavailability of supportive services--(1) Good-faith effort to
replace unavailable services. If a social service agency fails to
deliver the supportive services identified in an FSS family member's
ITSP, the PHA or owner shall make a good faith effort to obtain these
services from another agency.
(2) Assessment of necessity of services. If the PHA or owner is
unable to obtain the services from another agency, the PHA or owner
shall reassess the family member's needs and determine whether other
available services would achieve the same purpose. If other available
services would not achieve the same purpose, the PHA or owner and the
family shall determine whether the unavailable services are integral to
the FSS family's advancement or progress toward self-sufficiency. If
the unavailable services are:
(i) Determined not to be integral to the FSS family's advancement
toward self-sufficiency, the PHA or owner shall revise the ITSP to
delete these services, and modify the CoP to remove any obligation on
the part of the FSS family to accept the unavailable services, in
accordance with paragraph (f) of this section; or,
(ii) Determined to be integral to the FSS family's advancement
toward self-sufficiency, the PHA or owner shall terminate the CoP and
follow the requirements in paragraph (k) of this section regarding FSS
escrow disbursement.
(f) Modification. The PHA or owner and the FSS family may mutually
agree to modify the CoP with respect to the ITSP and/or the contract
term in accordance with paragraph (d) of this section, and/or
designation of the head of FSS family. Modifications must be in
writing.
(g) Completion of the contract. The CoP is considered to be
completed, and a family's participation in the FSS program is
considered to be concluded when the FSS family has fulfilled all of its
obligations under the CoP, including all family members' ITSPs, on or
before the expiration of the contract term, including any extension
thereof.
(h) Termination of the contract. The CoP shall be terminated if the
family's housing assistance is terminated in accordance with HUD
requirements. The CoP may be terminated before the expiration of the
contract term, and any extension thereof, by:
(1) Mutual consent of the parties;
(2) The failure of the FSS family to meet its obligations under the
CoP without good cause. This includes an FSS family who has moved out
of multifamily assisted housing and families receiving tenant-based
assistance under section 8(o) of the 1937 Act who fail to comply with
the contract requirements because the family has moved outside the
jurisdiction of the PHA, and the PHA has not determined that there is
good cause terminate the CoP with FSS escrow disbursement in accordance
with paragraph (k)(1)(iii) of this section;
(3) The family's withdrawal from the FSS program;
(4) Such other act as is deemed inconsistent with the purpose of
the FSS program; or
(5) Operation of law.
(i) Option to terminate FSS participation or withhold the
coordination of supportive service assistance. The PHA or owner may
withhold the coordination of supportive services or terminate the FSS
family's participation in the FSS program, if the PHA or owner
determines, in accordance with the FSS Action Plan hearing procedures,
that the FSS family has failed to comply without good cause with the
requirements of the CoP in accordance with this section.
(j) Transitional supportive service assistance. A PHA or owner may
continue to offer to a former FSS family that has completed its CoP,
appropriate coordination of those FSS supportive services needed to
become self-sufficient if the family still resides in public housing or
Section 8 housing. If the family no longer resides in public housing,
Section 8, or other assisted housing, then a PHA or owner may continue
to coordinate supportive services for a former FSS family that
completed its CoP using only funding sources that are not HUD funds or
HUD-restricted funds.
(k) Termination with FSS escrow disbursement. (1) The CoP is will
be terminated with FSS disbursement when:
(i) Services that the PHA or owner and the FSS family have agreed
are integral to the FSS family's advancement towards self-sufficiency
are unavailable, as described in paragraph (e) of this section;
(ii) The head of the FSS family becomes permanently disabled and
unable to work during the period of the contract, unless the PHA or
owner and the FSS family determine that it is possible to modify the
contract to designate a new head of the FSS family; or
(iii) An FSS family in good standing moves outside the jurisdiction
of the PHA (in accordance with portability requirements at Sec.
982.353 of this chapter) for good cause, as determined by the PHA, and
continuation of the CoP after the move, or completion of the CoP prior
to the move, is not possible. PHAs must be consistent in their
determinations of whether a family has good cause for a termination
with FSS escrow disbursement under this paragraph (k).
(2) Upon termination of a CoP pursuant to paragraph (k)(1) of this
[[Page 30055]]
section, escrow funds must be handled consistent with Sec. 984.305.
Sec. 984.304 Amount of rent paid by FSS family and increases in
family income.
(a) Amount of rent paid by FSS family. The amount of rent paid by
an FSS family is determined in accordance with the requirements of the
applicable housing assistance program as specified in paragraphs (a)(1)
and (2) of this section.
(1) Public housing program: Calculation of total tenant payment.
Total tenant payment for an FSS family participating in the FSS program
is determined in accordance with the regulations set forth in 24 CFR
part 5, subpart F.
(2) Section 8 programs: Calculation of rent. (i) For the HCV
program, rent is determined in accordance with 24 CFR part 982, subpart
K; and
(ii) For the PBV program, rent is determined in accordance with 24
CFR part 983, subpart G.
(b) Increases in FSS family income. Any increase in the earned
income of an FSS family during its participation in an FSS program may
not be considered as income or an asset for purposes of eligibility of
the FSS family under any other program administered by HUD.
Sec. 984.305 FSS escrow account.
(a) Establishment of FSS escrow account--(1) General. The PHA or
owner shall deposit the FSS escrow account funds of all families
participating in an FSS program into a single interest-bearing
depository account. The PHA or owner must deposit the FSS escrow
account funds in one or more of the HUD-approved investments. The
depository account may be part of the PHA's or owner's overall accounts
or a separate account, as long as it is in compliance with paragraph
(a)(2) of this section. During the term of the CoP, the FSS escrow
account credit amount shall be determined in accordance with paragraph
(b) of this section at each re-examination of income occurring after
the effective date of the CoP. Such escrow credit amount must be
deposited each month by the PHA or owner to each family's FSS escrow
account within the PHA's or owner's depository account.
(2) Accounting for FSS escrow account funds--(i) Accounting
records. The total of the combined FSS escrow account funds will be
supported in the accounting records by a subsidiary ledger showing the
balance applicable to each FSS family.
(ii) Proration of investment income. The investment income for
funds in the FSS escrow account must be prorated and credited to each
family's FSS escrow account based on the balance in each family's FSS
escrow account at the end of the period for which the investment income
is credited.
(iii) Reduction of amounts due by FSS family. If the FSS family has
not paid the family contribution towards rent, or other amounts, if
any, due under the public housing or Section 8-assisted lease, the
balance in the family's FSS account shall be reduced by that amount (as
determined by the owner or reported by the owner to the PHA in the
Section 8(o) programs) at the time of final disbursement of FSS escrow
funds in accordance with paragraph (c) of this section. If the FSS
family has been found to have under-reported income after the baseline
annual earned income was set, the amount credited to the FSS escrow
account will be based on the income amounts originally reported by the
FSS family. If the FSS family is found to have under-reported income in
the re-examination used to set the baseline, the escrow for the entire
period of the CoP will be re-calculated using the correct income to set
the baseline and then calculate subsequent escrow amounts.
(3) Reporting on FSS escrow account. Each PHA or owner will be
required to make a report, at least once annually, to each FSS family
on the status of the family's FSS escrow account. At a minimum, the
report will include:
(i) The balance at the beginning of the reporting period;
(ii) The amount of the family's rent payment that was credited to
the FSS escrow account, during the reporting period;
(iii) Any deductions made from the account at the time of final
disbursement of FSS escrow funds (see paragraphs (a)(2)(iii) and (c) of
this section) for amounts due the PHA or owner;
(iv) The amount of interest earned on the account during the year;
and
(v) The total in the account at the end of the reporting period.
(b) FSS credit--(1) Determining the family's baseline information.
When determining the family's baseline annual earned income and the
baseline monthly rent amounts for purposes of computing the FSS escrow
credit, the PHA or owner must use the amounts on the family's last
income re-examination.
(2) Computation of amount. The FSS credit amount shall be the lower
of:
(i) Thirty (30) percent of one-twelfth (\1/12\) (i.e., two and a
half (2.5) percent) of the amount by which the family's current annual
earned income exceeds the family's baseline annual earned income; or
(ii) The increase in the family's monthly rent. The increase in the
family's monthly rent shall be the lower of:
(A) The amount by which the family's current monthly rent exceeds
the family's baseline monthly rent;
(B) For HCV families, the difference between the baseline monthly
rent and the current gross rent (i.e., rent to owner plus any utility
allowance) or the payment standard, whichever is lower; or
(C) For PBV, Mod Rehab, including Mod Rehab SRO, and PBRA families,
the difference between the baseline monthly rent and the current gross
rent (i.e., rent to owner or contract rent, as applicable, plus any
utility allowance).
(3) Ineligibility for FSS credit. FSS families who are not low-
income families (i.e., whose adjusted annual income exceeds eighty (80)
percent of the area median income) shall not be entitled to any FSS
credit.
(4) Cessation of FSS credit. The PHA or owner shall not make
additional credits to the FSS family's FSS escrow account:
(i) When the FSS family has completed the CoP, as described in
Sec. 984.303(g);
(ii) When the CoP is terminated; or
(iii) During the time an HCV family is in the process of moving to
a new unit, in accordance with HCV program requirements in part 982 of
this title, and is not under a lease.
(c) Disbursement of FSS escrow account funds--(1) General. The
amount in an FSS escrow account in excess of any amount owed to the PHA
or owner by the FSS family, as provided in paragraph (a)(2)(iii) of
this section, shall be paid to the head of FSS family when the CoP has
been completed as provided in Sec. 984.303(g), and if, at the time of
contract completion, the head of FSS family submits to the PHA or owner
a certification, as defined in Sec. 984.103, that to the best of his
or her knowledge and belief, no member of the FSS family is a recipient
of welfare assistance.
(2) Disbursement before expiration of contract term. (i) If the PHA
or owner determines that the FSS family has fulfilled its obligations
under the CoP before the expiration of the contract term, and the head
of FSS family submits a certification that, to the best of his or her
knowledge, no member of the FSS family is a recipient of welfare
assistance, the amount in the family's FSS escrow account, in excess of
any amount owed to the PHA or owner by the FSS family, as provided in
[[Page 30056]]
paragraph (a)(2)(iii) of this section, shall be paid to the head of FSS
family.
(ii) If the PHA or owner determines that the FSS family has
fulfilled certain interim goals established in the CoP and needs a
portion of the FSS escrow account funds for purposes consistent with or
in support of the CoP, such as completion of higher education (i.e.,
college, graduate school), job training, or to meet start-up expenses
involved in creation of a small business, the PHA or owner may, at the
PHA's or owner's sole discretion, disburse a portion of the funds from
the family's FSS escrow account to assist the family in paying those
expenses. Unless the interim disbursement was made based on fraudulent
information from the family, the family is not required to repay such
interim disbursements if the family does not complete the CoP.
(3) Disbursement in cases of termination of the CoP with
disbursement of escrow. The PHA or owner must disburse to the family
its FSS escrow account funds in excess of any amount owed to the PHA or
owner by the FSS family, as provided in paragraph (a)(2)(iii) of this
section, under circumstances in which HUD has determined good cause is
warranted. HUD determines that there is good cause when a CoP is
terminated in accordance with Sec. 984.303(k). Therefore, if the CoP
is terminated in accordance with Sec. 984.303(k), the PHA or owner
must disburse to the family its FSS escrow account funds in excess of
any amount owed to the PHA or owner by the FSS family, as provided in
paragraph (a)(2)(iii) of this section, as of the effective date of the
termination of the contract.
(4) Verification of family certification. Before disbursement of
the FSS escrow account funds to the family, the PHA or owner may verify
that the FSS family is no longer a recipient of welfare assistance by
requesting copies of any documents which may indicate whether the
family is receiving any welfare assistance and by contacting welfare
agencies.
(d) Succession of FSS escrow account. If the head of FSS family
ceases to reside with other family members in the public housing or the
Section 8-assisted unit, the remaining members of the FSS family, after
consultation with the PHA or owner, shall have the right to take over
the CoP or designate another family member to receive the funds in
accordance with paragraph (c) of this section.
(e) Use of FSS escrow account funds for homeownership. An FSS
family may use disbursed FSS escrow account funds, in accordance with
Sec. 984.305(c), after final disbursement for the purchase of a home,
including the purchase of a home under one of HUD's homeownership
programs, or other Federal, State, or local homeownership programs,
unless such use is prohibited by the statute or regulations governing
the particular homeownership program.
(f) Forfeiture of FSS escrow account funds--(1) Conditions for
forfeiture. Amounts in the FSS escrow account shall be forfeited upon
the occurrence of the following:
(i) The CoP is terminated, as provided in Sec. 984.303(h); or,
(ii) The CoP is completed by the family, as provided in Sec.
984.303(g), but the FSS family is receiving welfare assistance at the
time the CoP term expires, including any extension thereof.
(2) Treatment of forfeited FSS escrow account funds. FSS escrow
account funds forfeited by the FSS family must be used by the PHA or
owner for the benefit of the FSS participants.
(i) Specifically, such funds may be used for the following eligible
activities:
(A) Support for FSS participants in good standing, including, but
not limited to, transportation, child care, training, testing fees,
employment preparation costs, and other costs related to achieving
obligations outlined in the CoP;
(B) Training for FSS Program Coordinator(s); or
(C) Other eligible activities as determined by the Secretary.
(ii) Such funds may not be used for salary and fringe benefits of
FSS Program Coordinators; general administrative costs of the FSS
program, for housing assistance payments (HAP) expenses or public
housing operating funds; or any other activity determined ineligible by
the Secretary.
Sec. 984.306 HCV portability requirements for FSS participants.
(a) Initial period of CoP--(1) First 12 months. During the first 12
months after the effective date of the FSS CoP, an FSS family may not
move outside the jurisdiction of the PHA that first enrolled the family
in the FSS program. However, the PHA may approve an FSS family's
request to move outside of its jurisdiction under portability (in
accordance with Sec. 982.353 of this chapter) during this period. This
paragraph (a)(1) applies to a former PBV family who received tenant-
based rental assistance in accordance with Sec. 983.261 of this
chapter and exercised their right to move.
(2) After the first 12 months. After the first 12 months of the FSS
CoP, the FSS family with a tenant-based voucher may move outside the
initial PHA jurisdiction under portability regulations (in accordance
with Sec. 982.353 of this chapter). This paragraph (a)(2) applies to
former PBV families who received tenant-based rental assistance in
accordance with Sec. 983.261 of this chapter and exercised their right
to move.
(b) An FSS family moves to the jurisdiction of a receiving PHA that
administers an FSS program. (1) Whether the receiving PHA bills the
initial PHA or absorbs the FSS family into its HCV program, the
receiving PHA must enroll an FSS family in good standing in its FSS
program; unless
(i) The receiving PHA is already serving the number of FSS families
identified in its FSS Action Plan and determines that it does not have
the resources to manage the FSS contract; or
(ii) The receiving PHA and the initial PHA agree to the FSS
family's continued participation in the initial PHA's FSS program.
Prior to the PHAs agreeing to the continued participation, the initial
PHA must determine that the relocating FSS family has demonstrated
that, notwithstanding the move, it will be able to fulfill its
responsibilities under the initial or a modified CoP at its new place
of residence. For example, the FSS family may be able to commute to the
supportive services specified in the CoP, or the family may move to
obtain employment as specified in the contract.
(2) Where continued FSS participation is not possible in accordance
with paragraph (b)(1) of this section, the initial PHA must clearly
discuss the options that may be available to the family, depending on
the family's specific circumstances, which may include, but are not
limited to, modification of the FSS contract, termination of the FSS
contract and forfeiture of escrow, termination with FSS escrow
disbursement in accordance with Sec. 984.303(k)(1)(iii), or locating a
receiving PHA that has the capacity to enroll the family into its FSS
program.
(c) An FSS family moves to the jurisdiction of a receiving PHA that
does not administer an FSS program. If the receiving PHA does not
administer an FSS program, the FSS family may not continue
participation in the FSS program. The initial PHA must clearly discuss
the options that may be available to the family, depending on the
family's specific circumstances, which may include, but are not limited
to, modification of the FSS contract, termination with FSS escrow
disbursement in accordance with Sec. 984.303(k)(1)(iii), termination
of the FSS contract and forfeiture of escrow, or
[[Page 30057]]
locating a receiving PHA that administers an FSS program.
(d) Single FSS escrow account. Regardless of whether the FSS family
remains in the FSS program of the initial PHA or is enrolled in the FSS
program of the receiving PHA, the family will have only one FSS escrow
account. If the receiving PHA is billing the initial PHA, the account
will be maintained by the initial PHA. If an FSS family will be
absorbed by the receiving PHA, the initial PHA will transfer the
family's FSS escrow account funds to the receiving PHA and the
receiving PHA will maintain the funds in its FSS account.
(e) FSS program termination; loss of FSS escrow account. (1) If an
FSS family relocates to another jurisdiction, as provided under this
section, and is unable to fulfill its obligations under the CoP (or any
modifications thereto), the PHA, which is a party to the CoP, must
terminate the FSS family from the FSS program, and the family's FSS
escrow account will be forfeited. Termination of FSS program
participation and forfeiture of FSS escrow must be used only as a last
resort, after the PHA determines, in consultation with the family, that
the family would be unable to fulfill its obligations under the CoP
after the move, that the current CoP cannot be modified to allow for
graduation prior to porting, and that the current CoP cannot be
terminated with FSS escrow disbursement in accordance with Sec.
984.303(k)(1)(iii). When termination is the only option, the PHA must
clearly notify the family that the move will result in the loss of
escrow funds.
(2) In the event of forfeiture of the family's FSS escrow account
funds, the FSS escrow account funds will revert to the PHA maintaining
the FSS escrow account for the family.
(f) Contract of Participation (CoP). (1) If the FSS family enrolls
in the receiving PHA's FSS program pursuant to this section, the
receiving PHA will enter into a new CoP with the FSS family for the
term remaining on the contract with the initial PHA. The initial PHA
will terminate its CoP with the family.
(2) If the FSS family remains in the FSS program of the initial
PHA, pursuant to this section, the CoP executed by the initial PHA will
remain as the contract in place.
(g) New FSS enrollment into the receiving PHA's FSS program--(1)
Billing. If the receiving PHA bills the initial PHA, the receiving PHA
may, consistent with the receiving PHA's FSS enrollment policies,
enroll a family that was not an FSS participant at the initial PHA into
its FSS program, provided that the initial PHA manages an FSS program
and agrees to such enrollment. If the receiving PHA bills the initial
PHA, but the initial PHA does not manage an FSS program, the family may
not enroll in the receiving PHA's FSS program.
(2) Absorption. If the receiving PHA absorbs the family into its
HCV program, the receiving PHA may, consistent with the receiving PHA's
FSS enrollment policies, enroll a family that was not an FSS
participant at the initial PHA into its FSS program.
Subpart D--Reporting
Sec. 984.401 Reporting.
Each PHA or owner that carries out an FSS program shall submit to
HUD, in the form prescribed by HUD, a report regarding its FSS program.
The report shall include the following information:
(a) A description of the activities carried out under the program;
(b) A description of the effectiveness of the program in assisting
families to achieve economic independence and self-sufficiency,
including the number of families enrolled and graduated and the number
of established escrow accounts and positive escrow balances;
(c) A description of the effectiveness of the program in
coordinating resources of communities to assist families to achieve
economic independence and self-sufficiency; and
(d) Any recommendations by the PHA or owner or the appropriate
local Program Coordinating Committee for legislative or administrative
action that would improve the FSS program and ensure the effectiveness
of the program.
Marcia L. Fudge,
Secretary.
[FR Doc. 2022-09528 Filed 5-16-22; 8:45 am]
BILLING CODE 4210-67-P