HUD Announces Second Upcoming HCV Offset in Notice
On August 9, HUD published a notice titled “HCV 2024 HAP Funding – Second Offset Based on Excess HAP Reserves” (PIH Notice 2024-29). This notice states that HUD is planning another offset in 2024 of voucher Housing Assistance Payment (HAP) reserves. This is occurring to ensure that PHAs have enough funding to prevent the termination of assistance to Housing Choice Voucher (HCV) families. Although the 2024 appropriations act provides $200 million for HAP set-aside funding for this (and other) purposes, HUD estimates the shortfall need to exceed this amount this year. The offset will impact non-Moving to Work (MTW) agencies and MTW Expansion agencies.
The National Association of Housing and Redevelopment Officials (NAHRO) believes a significant reason that the second offset is occurring is because HUD changed the methodology for calculating the 2024 renewal funding inflation factors (RFIFs), although volatile rental markets may have also played a role. This change to the RFIF methodology was made without seeking public comment, and these new inflation factors were used to calculate the forecasted HAP need for 2024. The new inflation factors did not match the increase in per unit cost (PUC). For these reasons, before the change was implemented, NAHRO staff met with HUD staff and Congressional staff to ask them not to implement the change in methodology. Unfortunately, the methodological change was ultimately implemented.
The Department will take several factors into account in determining the amount it chooses to offset. These factors include the amount offset in the first offset this year; the reserve amount necessary to support voluntary transfers previously approved; and HAP reserves currently needed by the PHA based on the latest Voucher Management System (VMS) data and analysis in the Two-Year Tool (TYT) available to HUD. Agencies that did not have excess reserves in the first offset will not automatically necessarily be excluded from this second offset. The notice provides detailed information on the offset calculation in its appendix.
Additionally, the Department will notify PHAs whether they are being offset by email. This notification process will end by the week of August 12, 2024. The notification will show the PHA’s new renewal funding and total funding available in reserves after the second offset occurs.
Housing agencies that believe that a second offset will place them in a shortfall position based on voucher issuance and leasing or increased HAP costs will have an opportunity to provide HUD with updated information included in the offset email notification that they receive (i.e., the PHA will have the ability to appeal the offset). The Department will review the information and determine whether to cancel or reduce the second offset. While the notice does not provide a deadline for the appeal, the notice states that the deadline will be provided in the notification emailed to the PHA.
NAHRO strongly encourages members to log into the NAHRO Action Alert center and send elected officials the pre-written email regarding voucher funding, which asks Congress to appropriately fund the voucher accounts and instructs HUD to revert to the old methodology in calculating RFIFs.
The full notice may be read here.