HUD PIH Notice § 2022-18

Special Attention of:                               Notice PIH 2022-18 (HA)
Directors of HUD Regional and Field
Offices of Public Housing;                          Issued: June 13, 2022
Agencies that Administer the
Housing Choice Voucher Program                      Expires: This notice remains in effect until
                                                    amended, superseded, or rescinded.


                                                    Cross References: PIH Notice 2021-08
                                                                      PIH Notice 2015-17


SUBJECT: Use of Housing Choice Voucher (HCV) and Mainstream Voucher
Administrative Fees for Other Expenses to Assist Families to Lease Units

   1. Purpose. This notice provides guidance on the use of HCV and Mainstream voucher
      ongoing administrative fees for expenses related to assisting HCV and Mainstream
      Voucher families to lease units, including the costs of security deposit assistance and
      landlord incentive and retention payments.

      This notice supersedes section 3 of PIH Notice 2015-17 with respect to the description
      of the restricted use of administrative fees.

   2. Background. Administrative fees are authorized under Section 8(q) of the United
      States Housing Act of 1937, which provides that the Secretary shall establish fees for
      the costs of administering tenant-based rental assistance under the HCV program.
      Section 8(q) set forth the calculation for use in fiscal year 1991, and further provided
      that for subsequent fiscal years the Secretary would establish the amount of the fee
      based on changes in wage data or other objectively measurable data that reflects the
      costs of administering the program as determined by the Secretary. Administrative fees
      are covered by the HCV program regulations at 24 CFR 982.152.

      For a number of years Congress has in HUD’s appropriations Acts overridden the
      provisions of Section 8(q). Most recently, the Consolidated Appropriations Act, 2022
      (Public Law 117-103, referred to throughout this notice as “the 2022 Act”), enacted on
      March 15, 2022, provides $2,410,612,000 for both administrative and “other expenses”
      of public housing agencies (PHAs) in administering the HCV program. The 2022 Act
      further provides that no less than $2,380,612,000 of the amount provided in the
      administrative fee paragraph shall be allocated to public housing agencies for the calendar
      year 2022 funding cycle based on section 8(q) of the Act (and related Appropriation Act
      provisions) as in effect immediately before the enactment of the Quality Housing and Work



                                 www.hud.gov       espanol.hud.gov
   Responsibility Act of 1998 (Public Law 105–276). In addition, if the amounts made
   available are insufficient, the 2022 Act allows the Secretary to decrease the fees allocated to
   agencies by a uniform percentage applicable to all agencies.

   Prior to this notice, HUD has not previously provided guidance on which activities
   qualify as eligible “other” expenses. It has become increasingly clear, however, that in
   some rental markets, PHAs have needed to employ strategies and undertake activities
   beyond the mandatory administrative responsibilities to facilitate the successful leasing
   and use of housing vouchers by families, such as through the use of security deposit
   assistance and landlord recruitment and incentive payments.

   Recognizing these challenges, HUD has, consistent with express congressional
   authorization in various acts, permitted certain funding to be used for other expenses
   beyond administrative expenses. Specifically, PHAs administering the Emergency
   Housing Voucher (EHV) program are permitted to use EHV service fees to increase
   landlord recruitment efforts through landlord incentive payments and to assist families
   with some of their up-front costs such as security deposits. PHAs were also permitted to
   use CARES Act (Public Law 116-136) administrative fees and FY 2020 administrative
   fees (which under the CARES Act operated under the same flexibilities as the CARES
   Act administrative fees) for landlord incentive payments for their regular HCVs and
   Mainstream vouchers. PHAs are also permitted to use their Unrestricted Net Position
   (UNP, commonly referred to as the PHA administrative fee reserve) for these expenses.

   Given the number of tight and competitive rental markets around the country, the use of
   these strategies is increasingly becoming necessary to help families lease units. HUD has
   therefore revisited its current guidance on the eligible uses of administrative fees to
   determine if PHAs interested in implementing or expanding such activities could use
   administrative fee funding to cover these costs. HUD has determined that PHAs may use
   ongoing administrative fee funding for the activities described in this notice as they
   qualify as “administrative and other expenses in administering the section 8 tenant-based
   rental assistance program” under paragraph 3 under the heading “Tenant-Based Rental
   Assistance” (TBRA) in the 2022 Act. Furthermore, these costs will remain eligible
   administrative fee expenses in future years provided the appropriations Act language
   continues to include “other” expenses as an eligible use of administrative fee amounts.
   Consequently, HUD is providing updated guidance on the eligible use of administrative
   fees through this notice. If there are substantive changes in future appropriations Acts
   impacting the eligible uses of administrative fees, HUD will revise this notice.

3. Eligible Uses of HCV Administrative Fees. Under the appropriations Act, the eligible
   uses of HCV administrative fees include both (1) costs incurred by a PHA in carrying
   out administrative responsibilities under HCV program regulations and (2) other
   eligible expenses in administering the program which are described in this Notice:



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a. Administrative activities. These activities include front-line, day-to-day
   operational activities including but not limited to applicant intake, lease-up
   activities, income determinations and reexaminations, unit inspections,
   disbursing HAP to landlords, as well as policy and operational planning and
   implementation, financial management, and HCV record-keeping and reporting.
   These activities also include the indirect overhead activities associated with
   operating the HCV program including but not limited to PHA management,
   human resources, legal, finance, accounting and payroll, information
   technology, procurement, and quality control. PHAs that operate using HUD’s
   asset management central office cost center (COCC) are permitted to charge the
   HCV program to recover its central office costs, and those costs are eligible
   expenses of HCV administrative fees.

   Administrative activities also include housing search assistance activities such
   as pre-move counseling, helping a family identify and visit potentially available
   units during their housing search, helping a family find a unit that meets the
   household’s disability-related needs, providing transportation and directions,
   and assisting with the completion of rental applications. These activities also
   include post-lease up activities often related to housing search assistance efforts,
   such as post-move counseling and landlord/tenant mediation. These activities
   cover HCV owner recruitment and outreach activities, including the costs
   associated with materials or webpages specifically geared to owners, as well as
   landlord liaison staff and associated expenses.


b. Other eligible activities. PHAs are responsible for carrying out all their
   administrative responsibilities under the program. In addition to its typical
   administrative costs, a PHA may choose to incur other expenses for activities
   designed to help assist HCV families in leasing units under the program, which
   while not required by HUD HCV regulations, clearly will assist the PHA in
   achieving the mission and purpose of the HCV program. A PHA may use its
   administrative fees to support these other activities, including to recruit and
   retain owners to participate in the HCV program, should it have the resources
   available to do so.

   When undertaking these activities, a PHA must first adopt a policy in the PHA
   administrative plan that governs the terms and conditions of the activity,
   including any limitations or eligibility criteria for these activities (e.g., to
   support families leasing units in areas of opportunity, or to support vulnerable
   populations such as homeless families, etc.). PHAs are reminded that they may
   not create policies, criteria, or methods of administration that result in
   discrimination against individuals with protected characteristics under fair
   housing and civil rights laws and regulations. As such, PHAs need to provide
   reasonable accommodations when necessary to policies established for these

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activities to ensure equal access to their programs and activities by individuals
with disabilities. In addition, PHAs need to ensure policies, criteria, and the
administration thereof, provides meaningful language access for persons with
Limited English Proficiency (LEP).

Other eligible expenses related to the leasing of units and recruitment/retention
of HCV owners are as follows:

    i. Owner incentive and/or retention payments. The PHA may make
       incentive (e.g., signing bonuses) or retention payments to owners that
       agree to initially lease their unit to an HCV family and/or renew the lease
       of an HCV family. If a PHA chooses to offer incentive or retention
       payments, it must adopt a policy that governs when the offer of such
       payments is appropriate. The PHA may design the owner incentive
       payments to meet its specific needs (such as limiting the incentive
       payments to new owners or owners in high opportunity neighborhoods or
       structuring all or part of the payment as a damages or unpaid rent
       mitigation fund, where the owner receives the mitigation payment only if
       the security deposit is insufficient to cover damages and other amounts
       owed under the lease). The PHA may choose to condition the offer of
       the owner incentive/retention payment on the owner’s agreement to
       abide by certain terms and conditions. For example, these conditions
       may include working with the PHA (or intervention services providers
       partnering with the PHA) should lease violations or other tenant-related
       issues arise during the assisted tenancy before taking action to evict the
       tenant.

       Owner incentive/retention payments are typically made as a single
       payment at the beginning of the lease term (or at lease renewal if a
       retention payment). However, PHAs may establish the frequency upon
       when such payments may be made with the exception that owner
       incentive payments may not be made on an ongoing monthly basis.
       Owner incentive payments are not housing assistance payments, nor can
       they effectively serve to supplement ongoing, monthly housing
       assistance payments. Owner incentive payments are not part of the rent
       to owner, nor are they taken into consideration when determining
       whether the rent for the unit is reasonable.

       If the PHA chooses to make incentive payments over time to the owner
       (rather than a single payment) any agreement or understanding between
       the PHA and the owner must be separate and apart from the housing
       assistance payments (HAP) contract, and the HAP contract may not be
       conditioned or amended to make any reference to that agreement or any
       future landlord incentive or retention payment.

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                      ii. Security deposit assistance. The PHA may provide security deposit
                          assistance for the family. The amount of the security deposit assistance
                          may not exceed the actual security deposit required by the owner or the
                          maximum security deposit allowed under applicable state and/or local
                          law. The PHA may pay the security deposit directly to the owner or may
                          pay the assistance to the family provided the PHA verifies the family
                          paid the security deposit.1 The PHA may place conditions on the
                          security deposit assistance, such as requiring the owner or family to
                          return the security deposit assistance to the PHA at the end of the
                          family’s tenancy (less any amounts retained by the owner in accordance
                          with the lease). Security deposit assistance returned to the PHA remains
                          restricted to HCV administrative fee eligible uses (if returned before the
                          end of the PHA fiscal year in which the administrative fee used to fund
                          the deposit was received) or HCV administrative fee reserve eligible
                          uses, as applicable.

                     iii. Utility deposit assistance/utility arrears. The PHA may provide utility
                          deposit assistance for some or all of the family’s utility deposit expenses.
                          Assistance can be provided for deposits (including connection fees)
                          required for the utilities to be supplied by the tenant under the lease. The
                          PHA may choose to pay the utility deposit assistance directly to the
                          utility company or may pay the assistance to the family, provided the
                          PHA verifies the family paid the utility deposit.2 The PHA may place
                          conditions on the utility deposit assistance, such as requiring the utility
                          supplier or family to return the utility deposit assistance to the PHA at
                          such time the deposit is returned by the utility supplier (less any amounts
                          retained by the utility supplier.) In addition, some families may have
                          large balances with gas, electric, water, sewer, or trash companies prior
                          to admission to the HCV program that will make it difficult if not
                          impossible to establish services for tenant-supplied utilities. The PHA


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  If the PHA chooses to provide the security deposit assistance to the family, the family must sign an agreement that
the family will use the assistance for the security deposit, and that if any or all of the assistance is not used for a
security deposit, it will be returned promptly to the PHA. The agreement must also require the family to
acknowledge they have been informed that any amounts not returned to the PHA (including any requirements
related to the return of the security deposit assistance at the end of the family’s tenancy) are amounts owed to the
PHA in connection with the Section 8 program, and consequently would be grounds for denial or termination from
the HCV program in accordance with 24 CFR part 982.552(c)(1)(v). The family must sign similar agreements for
other actions under this section of the notice if the PHA chooses to make the assistance available to the family (such
as utility deposits). Failure to repay such amounts would be grounds for denial or termination of assistance, but it
would be at the PHA’s discretion as to take such action, and the family would have the right to an opportunity for an
informal hearing (for a termination action) or informal review (for a denial of admission) in accordance with 24
CFR 982.554 or 982.555, as applicable.
2
  If the PHA chooses to provide the utility deposit assistance directly to the family, the family must sign an
agreement, as discussed in footnote #1.

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                           may also provide the family with assistance to help address these utility
                           arrears to facilitate leasing and their admission to the HCV program.

                           Utility deposit assistance that is returned to the PHA remains restricted
                           to HCV administrative fee eligible uses (if returned before the end of the
                           PHA fiscal year in which the administrative fee used to fund the deposit
                           was received) or HCV administrative fee reserve eligible uses, as
                           applicable.

                      iv. Application fees/non-refundable administrative or processing
                          fees3/refundable application deposit assistance/broker fees. The PHA
                          may choose to assist the family with some or all of these expenses and
                          may limit the amount of assistance provided for each individual expense.

                      v. Holding fees. In some markets, it is not uncommon for an owner to
                         request a holding fee that is rolled into the security deposit after an
                         application is accepted but before a lease is signed. The PHA may cover
                         part or all of the holding fee for units where the fee is required by the
                         owner after a tenant’s application has been accepted but before the lease
                         signing. The PHA and owner must agree how the holding fee gets rolled
                         into the deposit and under what conditions the fee will be returned.
                         Furthermore, owners need to accept responsibility for making needed
                         repairs to a unit required by the initial housing quality standards (HQS)
                         inspection and can only keep the holding fee if the family is at fault for
                         not entering into the lease.

                      vi. Renter’s insurance if required by the lease. The PHA may assist the
                          family with some or all of the cost of renter’s insurance but only in cases
                          where the purchase of renter’s insurance is a condition of the lease and is
                          also required of unassisted families on the premises. PHAs need to
                          exercise caution with respect to the frequency of when the renter’s
                          insurance assistance payments are made when such assistance is
                          provided directly to the family.4 For example, providing such assistance
                          on a regular, recurring basis (such as on a monthly basis) to the family
                          would impact the family’s income calculation.

         Funds in the PHA administrative fee reserve may also be used for any of the above
         activities. In addition, the PHA may use outside sources of funds to cover these
         activities provided that these activities are eligible uses of those funds. Outside sources

3
  In some markets, non-refundable administrative fees are becoming more common as states pass laws limiting
application fees, or as an alternative to refundable deposits.
4
  If the PHA chooses to provide the renter’s insurance assistance directly to the family, the family must sign an
agreement, as discussed in footnote #1.


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   of funds would include non-restricted Federal funds, eligible State or local funds, and
   donations from philanthropic parties. For PHAs participating in the Moving-to-Work
   (MTW) program, fungible Public Housing Operating and Capital funds are also
   acceptable sources of funds for these activities (in accordance with MTW program
   requirements). Except for MTW PHAs, HCV housing assistance payments (HAP)
   funding may not be used to pay for these activities.

4. Mainstream Voucher Administrative Fees – Other Expenses. Paragraph (4) under
   the TBRA heading in the 2022 Act, which provides HAP and administrative fee
   funding for Mainstream vouchers, also makes reference to “other” expenses.
   Specifically, paragraph (4) provides that “administrative and other expenses of public
   housing agencies in administering the special purpose vouchers shall be funded under
   the same terms and be subject to the same pro rata reduction as the percent decrease for
   administrative and other expenses to public housing agencies under paragraph (3) of
   this section…” Consequently, PHAs are also authorized to use Mainstream
   administrative fees for the other eligible activities listed in section 3.b of this notice to
   assist Mainstream voucher families to lease units. Mainstream administrative fees may
   only be used for Mainstream vouchers. PHAs may not use Mainstream administrative
   fees to cover administrative expenses or other expenses of the PHA in administering
   regular vouchers or other special purpose vouchers. Likewise, PHAs may not use
   regular HCV administrative fees to cover Mainstream voucher administrative expenses
   or other expenses of the PHA in administering Mainstream vouchers. As is the case for
   regular HCV HAP funding, Mainstream HAP funding may not be used to pay for any
   of these other activities.

5. Reporting Other Expenses in the Voucher Management System (VMS) and
   Financial Assessment Subsystem for Public Housing (FASS-PH)/Financial Data
   Schedule (FDS).

       a. VMS reporting. The new authorized expenses listed in this notice that are
          incurred by the PHA each month and paid with ongoing administrative fees are
          reported as part of the total expenses in the VMS “Administrative Expense”
          field. There is no separate field currently for reporting these other expenses.

       b. FDS reporting. In general, the new authorized expenses listed in this notice are
          reported on FDS Line 92400 Tenant services – other. However, with respect to
          the fees used for deposits, a PHA may account for these deposits in different
          ways: as an expense to a balance sheet only transaction, or with the cash outlay
          for the deposits treated as an accounts receivable and allowance for doubtful
          accounts being established. The accounting treatment is typically based on the
          PHA’s and its auditor’s interpretation of Generally Accepted Accounting
          Principles (GAAP) for these deposit transactions and individual state law, with
          only limited deposits ever coming back to the PHA. Therefore, HUD will not


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           require any specific FDS reporting for ongoing administrative fees used for
           deposits as long as the accounting and reporting conforms to GAAP.

   For information on financial reporting requirements for HCVs and Mainstream
   vouchers that are submitted through FASS-PH and VMS, please see PIH Notice 2021-
   08.

6. Paperwork Reduction Act. The information collection requirements contained in this
   Notice have been approved by the Office of Management and Budget (OMB) in
   accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. §§ 3501-3520) and
   have been assigned the following OMB control numbers - Voucher Management
   System: 2577-0169; Financial Assessment Subsystem: 2535- 0107. 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.

7. Further Information. Questions concerning this notice should be submitted by email to the
   following Office of Housing Voucher Programs mailbox: HCVUtilization@hud.gov.




                                                _____________/s/____________________
                                                Dominique Blom
                                                General Deputy Assistant Secretary for
                                                Public and Indian Housing




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