Operations Notice for the Expansion of the Moving to Work Demonstration Program, 50387-50402 [2018-21723]

Download as PDF Federal Register / Vol. 83, No. 194 / Friday, October 5, 2018 / Notices DEPARTMENT OF HOMELAND SECURITY DEPARTMENT OF HOMELAND SECURITY DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Federal Emergency Management Agency Federal Emergency Management Agency [Docket No. FR–5994–N–03] [Internal Agency Docket No. FEMA–3403– EM; Docket ID FEMA–2018–0001] [Internal Agency Docket No. FEMA–4393– DR; Docket ID FEMA–2018–0001] Virginia; Amendment No. 1 to Notice of an Emergency Declaration North Carolina; Amendment No. 3 to Notice of a Major Disaster Declaration Federal Emergency Management Agency, DHS. AGENCY: ACTION: ACTION: Notice. This notice amends the notice of an emergency declaration for the Commonwealth of Virginia (FEMA– 3403–EM), dated September 11, 2018, and related determinations. SUMMARY: FOR FURTHER INFORMATION CONTACT: Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW, Washington, DC 20472, (202) 646–2833. Notice is hereby given that the incident period for this emergency is closed effective September 21, 2018. The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households In Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050, Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant. Brock Long, Administrator, Federal Emergency Management Agency. This notice amends the notice of a major disaster declaration for the State of North Carolina (FEMA–4393– DR), dated September 14, 2018, and related determinations. SUMMARY: This amendment was issued September 27, 2018. FOR FURTHER INFORMATION CONTACT: SUPPLEMENTARY INFORMATION: Notice. DATES: This amendment was issued September 27, 2018. DATES: Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW, Washington, DC 20472, (202) 646–2833. The notice of a major disaster declaration for the State of North Carolina is hereby amended to include the following area among those areas determined to have been adversely affected by the event declared a major disaster by the President in his declaration of September 14, 2018. SUPPLEMENTARY INFORMATION: Greene County for Individual Assistance and assistance for debris removal and emergency protective measures (Categories A and B), including direct Federal assistance, under the Public Assistance program. The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households In Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance— Disaster Housing Operations for Individuals and Households; 97.050 Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant. [FR Doc. 2018–21708 Filed 10–4–18; 8:45 am] Brock Long, Administrator, Federal Emergency Management Agency. BILLING CODE 9110–12–P [FR Doc. 2018–21709 Filed 10–4–18; 8:45 am] BILLING CODE 9111–11–P VerDate Sep<11>2014 17:11 Oct 04, 2018 Jkt 247001 PO 00000 Frm 00057 Fmt 4703 Sfmt 4703 Operations Notice for the Expansion of the Moving to Work Demonstration Program Office of Public and Indian Housing, HUD. ACTION: Notice. AGENCY: The Public Housing/Section 8 Moving to Work (MTW) demonstration program was first established under Section 204 of the Omnibus Consolidated Rescissions and Appropriations Act of 1996 to provide statutory and regulatory flexibility to participating public housing agencies (PHAs) under three statutory objectives. Those three statutory objectives are: To reduce cost and achieve greater cost effectiveness in Federal expenditures; to give incentives to families with children whose heads of household are either working, seeking work, or are participating in job training, educational or other programs that assist in obtaining employment and becoming economically self-sufficient; and to increase housing choices for lowincome families. This Operations Notice for the Expansion of the MTW Demonstration Program (Operations Notice) establishes requirements for the implementation and continued operation of the MTW demonstration program pursuant to the 2016 MTW Expansion Statute. DATES: Comment Due Date: November 19, 2018. SUMMARY: Federal Emergency Management Agency, DHS. AGENCY: daltland on DSKBBV9HB2PROD with NOTICES 50387 Submission of Comments Electronic Submission of Comments. HUD strongly encourages interested persons to submit comments electronically. Electronic submission of comments allows the commenter maximum time to prepare and submit a comment, ensures timely receipt by HUD, and enables HUD to make them immediately available to the public. Interested persons may submit comments electronically through the Federal eRulemaking Portal at www.regulations.gov. Comments submitted electronically through the www.regulations.gov website can be viewed by other commenters and interested members of the public. Commenters should follow the instructions provided on that site to submit comments electronically. Submission of Comments by Mail. Alternatively, interested persons may submit comments regarding this Notice to the Regulations Division, Office of General Counsel, Department of E:\FR\FM\05OCN1.SGM 05OCN1 50388 Federal Register / Vol. 83, No. 194 / Friday, October 5, 2018 / Notices Housing and Urban Development, 451 7th Street SW, Room 10276, Washington, DC 20410–0500. Communications must refer to the above docket number and title. Note: To receive consideration as public comments, comments must be submitted through one of the two methods specified above. Again, all submissions must refer to the docket number and title of the Notice. No Facsimile Comments. Facsimile (fax) comments are not acceptable. Public Inspection of Public Comments. All properly submitted comments and communications submitted to HUD will be available for public inspection and copying between 8 a.m. and 5 p.m. weekdays at the above address. Due to security measures at the HUD Headquarters building, an appointment to review the public comments must be scheduled in advance by calling the Regulations Division at 202–708–3055 (this is not a toll-free number). Individuals with speech or hearing impairments may access this number via TTY by calling the Federal Relay Service at 1–800–877– 8339 (this is a toll-free number). Copies of all comments submitted are available for inspection and downloading at www.regulations.gov. FOR FURTHER INFORMATION CONTACT: Marianne Nazzaro, Director, Moving to Work Demonstration Program, Office of Public and Indian Housing, Department of Housing and Urban Development, 451 7th Street SW, Room 4130, Washington, DC 20410; email address mtw-info@hud.gov. SUPPLEMENTARY INFORMATION: daltland on DSKBBV9HB2PROD with NOTICES I. Background Section 239 of the Fiscal Year 2016 Appropriations Act, Public Law 114– 113 (2016 MTW Expansion Statute), signed by the President in December 2015, authorizes HUD to expand the MTW demonstration program from the current size of 39 agencies to an additional 100 agencies over a period of 7 years. This Notice was originally published on January 23, 2017, in the Federal Register, entitled ‘‘Operations Notice for the Expansion of the Moving to Work Demonstration Program Solicitation of Comment.’’ On May 4, 2017, the Notice was republished with three technical revisions and an extension of the comment period. HUD took all comments received into consideration. Changes to this Notice have been made to incorporate feedback from the two previous publications and to reflect policy decisions. The primary changes are as follows: VerDate Sep<11>2014 17:11 Oct 04, 2018 Jkt 247001 • The term of participation has been set at 12 years from the year of designation in response to public comments for the term to be at least 10 years from the year of designation. • In response to public comments, the Department removed the General Waivers and Conditional Waivers categories and replaced them with a singular MTW Waivers category, which MTW agencies may implement without further approval from HUD. Æ In restructuring the MTW Waivers, the Notice now includes safe harbors, which are defined as the additional requirements, beyond those specified in the activity description, that the agency must follow in implementing activities without further HUD approval. Æ MTW Waivers now include specific guidance on impact analyses, hardship policies, and applicability of waivers to elderly/disabled families. Æ An additional MTW Waiver was added: ‘‘Increase Elderly Age,’’ which allows agencies to amend the definition of an elderly person to be an individual who is at least sixty-five. Æ The Homeownership Waiver was removed. Upon reviewing this waiver, the Department determined that the activities provided to agencies under the waiver were already available under the Section 32 Homeownership Program. • The 90 percent voucher utilization requirement was removed. The MTW Housing Assistance Payment (HAP) Renewal Formula has been revised to use as a base, all prior-year MTWeligible Housing Choice Voucher (HCV) funding expenses paid from HAP, including HAP expenses plus non-HAP expenses. • For a prospective agency to be eligible for selection to the MTW demonstration, it must be a high performer in either the Public Housing Assessment System (PHAS) or the Section Eight Management Assessment Program (SEMAP). • Regionalization was removed from the MTW Operations Notice and will be implemented through a separate forthcoming notice. • Agencies will formalize their MTW status with an amendment to their Annual Contributions Contract. • The monitoring of the requirement that an MTW agency designated pursuant to the 2016 MTW Expansion Statute continues to assist substantially the same number of families has been simplified. Compliance will be determined using a baseline ratio of total public housing and HCV HAP funding to families served. PO 00000 Frm 00058 Fmt 4703 Sfmt 4703 MTW Demonstration Program The MTW demonstration program was first established under Section 204 of Title II of section 101(e) of the Omnibus Consolidated Rescissions and Appropriations Act of 1996, Public Law 104–134, 110 Stat. 1321–281; 42 U.S.C. 1437f note (1996 MTW Statute) 1 to provide statutory and regulatory flexibility 2 to participating PHAs under three statutory objectives. Those three statutory objectives are to: • Reduce cost and achieve greater cost effectiveness in Federal expenditures; • give incentives to families with children where the head of household is working, seeking work, or is preparing for work by participating in job training, educational programs, or programs that assist people to obtain employment and become economically self-sufficient; and • increase housing choices for eligible low-income families. To achieve these objectives, PHAs selected for participation in the MTW demonstration are given exemptions from many existing public housing and HCV rules and offered more flexibility with how they use their Federal funds. MTW agencies use this opportunity presented by the MTW demonstration to better address local housing needs. HUD learns from the experience of MTW agencies to develop new housing policy recommendations that can positively impact assisted housing delivery for PHAs nationwide. In addition to statutory and regulatory relief,3 MTW agencies have the flexibility to apply fungibility among three core funding programs’ funding streams—public housing Operating Funds, public housing Capital Funds, and HCV assistance (to include both HAP and Administrative Fees)— hereinafter referred to as ‘‘MTW Funding.’’ 4 These flexibilities do not 1 PHAs currently operating an MTW demonstration program include PHAs with an active MTW agreement as of December 15, 2015. PHAs currently operating an MTW program do not include PHAs that previously participated in the MTW demonstration and later left the demonstration. 2 The MTW demonstration program may only provide certain flexibilities under the 1937 Act. For more information on the history of the MTW demonstration program, please go to: www.hud.gov/ mtw. 3 For more information about the MTW demonstration program and the specific activities of existing MTW agencies, please refer to the MTW website at www.hud.gov/mtw. 4 Funds awarded under Sections 8(o), 9(d), and 9(e) of the 1937 Act are eligible for expanded uses pursuant to MTW fungibility, with the exception of funds provided for specific non-MTW HCV subprograms. Other funds a PHA may receive (i.e., grant funds under another obligating document) are E:\FR\FM\05OCN1.SGM 05OCN1 Federal Register / Vol. 83, No. 194 / Friday, October 5, 2018 / Notices daltland on DSKBBV9HB2PROD with NOTICES negate the need for both the PHA and HUD to be able to account for the funding from its original source to the date of its ultimate eligible use 5 by the PHA, to comply with Federal grant and financial management requirements, and to use funds effectively and efficiently for their eligible purposes. As the Department continues to implement program-specific financial management policies in its core housing programs, MTW agencies will be subject to the same requirements and procedures as non-MTW agencies. Therefore, the requirements and procedures described in this Notice may change as new financial management policies are implemented over time. Throughout participation in the MTW demonstration program, MTW agencies must continue to meet five statutory requirements established under the 1996 MTW Statute. The five statutory requirements are: • At least 75 percent of the families assisted by participating demonstration public housing authorities shall be very low-income families, as defined in section 3(b)(2) of the United States Housing Act of 1937; • establishing a reasonable rent policy, which shall be designed to encourage employment and selfsufficiency by participating families, consistent with the purpose of this demonstration, such as by excluding some or all of a family’s earned income for purposes of determining rent; • continuing to assist substantially the same total number of eligible lowincome families as would have been served had the amounts not been combined; • maintaining a comparable mix of families (by family size) as would have been provided had the amounts not been used under the demonstration; and • assuring that housing assisted under the demonstration program meets housing quality standards established or approved by the Secretary. Currently, there are 39 agencies 6 participating in the MTW demonstration likewise not covered by MTW flexibilities and must be tracked and reported under the applicable rules and requirements. 5 The date of the ‘‘ultimate eligible use’’ means the date of disbursement by the PHA for an eligible purpose, which would remove the funding from the PHA’s account and the PHA’s control. 6 The 39 agencies are: Alaska Housing Finance Corporation; Atlanta Housing Authority; Housing Authority of the City of Baltimore; Boulder Housing Partners; Cambridge Housing Authority; Housing Authority of Champaign County; Charlotte Housing Authority; Chicago Housing Authority; Housing Authority of Columbus, Georgia; District of Columbia Housing Authority; Delaware State Housing Authority; Fairfax County Redevelopment and Housing Authority; Holyoke Housing Authority; Keene Housing; King County Housing VerDate Sep<11>2014 17:11 Oct 04, 2018 Jkt 247001 program. The administrative structure for these 39 agencies is outlined in the Standard MTW Agreement, a contract between each existing MTW agency and HUD. The 2016 MTW Expansion Statute extended the term of the Standard MTW Agreement through each of the existing MTW agencies’ 2028 fiscal year. 2016 Expansion of the MTW Demonstration Program As the 2016 MTW Expansion Statute directs, HUD is authorized to expand the MTW demonstration program from the current level of 39 agencies to an additional 100 agencies over a period of 7 years, ending in 2023. In expanding the MTW demonstration, HUD intends to build on the successes and lessons learned from the demonstration thus far. The vision for the MTW expansion is to learn from MTW interventions to improve the delivery of Federally assisted housing and promote selfsufficiency for low-income families across the Nation. Through the expansion, HUD will extend flexibility to a broader range of PHAs both in terms of size and geographic diversity and will balance the flexibility inherent in MTW with the need for measurement, evaluation, and prudent oversight. HUD will select the additional 100 PHAs in cohorts, with applications for each cohort to be sought via PIH Notice. For each cohort of agencies selected, the 2016 MTW Expansion Statute requires HUD to direct all the agencies within the cohort to implement one specific policy change, which HUD will evaluate rigorously. MTW agencies may implement policy changes in addition to the policy change directed by HUD as long as those policy changes do not conflict or interfere with the cohort study. As required by the 2016 MTW Expansion Statute, the HUD-appointed MTW Research Advisory Committee, described further below, advised HUD on the policy changes to be tested through the new cohorts of MTW Authority; Lawrence-Douglas County Housing Authority; Lexington-Fayette Urban County Housing Authority; Lincoln Housing Authority; Louisville Metropolitan Housing Authority; Massachusetts Department of Housing and Community Development; Minneapolis Public Housing Authority; Housing Authority of the City of New Haven; Oakland Housing Authority; Orlando Housing Authority; Philadelphia Housing Authority; Housing Authority of the City of Pittsburgh; Portage Metropolitan Housing Authority; Home Forward (Portland, OR); Housing Authority of the City of Reno; San Antonio Housing Authority; Housing Authority of the County of San Bernardino; San Diego Housing Commission; Housing Authority of the County of San Mateo; Housing Authority of the County of Santa Clara/ City of San Jose; Seattle Housing Authority; Tacoma Housing Authority; Housing Authority of Tulare County; and Vancouver Housing Authority. PO 00000 Frm 00059 Fmt 4703 Sfmt 4703 50389 agencies and the methods of research and evaluation. The 2016 MTW Expansion Statute also includes a provision allowing the Secretary to designate an MTW agency as a regional MTW agency—at the request of said agency—should the Secretary determine that unified administration of assistance ‘‘under sections 8 and 9 of the United States Housing Act of 1937 (42 U.S.C. 1437f and g)’’ by that agency across multiple jurisdictions will lead to (a) efficiencies and to (b) greater housing choice for low-income persons in the region. HUD will issue separate guidance regarding how an MTW agency may be designated as a regional MTW agency. Eligibility and Selection for the Expansion of the MTW Demonstration The 2016 MTW Expansion Statute provides that the 100 MTW agencies selected must be high performers in either HUD’s Public Housing Assessment System (PHAS) or its Section Eight Management Assessment Program (SEMAP) at the time of application to the demonstration, and represent geographic diversity across the country. Further, the 2016 MTW Expansion Statute states that of these 100 PHAs: • No less than 50 PHAs shall administer 1,000 or fewer aggregate housing voucher and public housing units; • no less than 47 PHAs shall administer 1,001–6,000 aggregate housing voucher and public housing units; • no more than 3 PHAs shall administer 6,001–27,000 aggregate housing voucher and public housing units; • no PHA shall be granted MTW designation if it administers more than 27,000 aggregate housing voucher and public housing units; and • five of the PHAs selected shall be agencies with a Rental Assistance Demonstration (RAD) portfolio award. HUD will issue separate PIH Notices, by cohort, soliciting applications from eligible PHAs for participation in the MTW demonstration. These Notices, when issued, will outline the specific application submission requirements, evaluation criteria, and process HUD will use when selecting PHAs for MTW designation. The PHA sizes eligible for participation in the MTW demonstration are statutory and were defined by Congress; therefore, HUD is unable to waive or modify those size restrictions. E:\FR\FM\05OCN1.SGM 05OCN1 50390 Federal Register / Vol. 83, No. 194 / Friday, October 5, 2018 / Notices daltland on DSKBBV9HB2PROD with NOTICES MTW Research Advisory Committee The 2016 MTW Expansion Statute required HUD to form and consult with a Federal MTW Research Advisory Committee (the Committee), established in May 2016. The Committee is governed by the Federal Advisory Committee Act (5 U.S.C. Appendix 2), which sets forth standards for the formation and use of advisory committees. The purpose of the Committee is to provide independent advice with respect to the policies to be studied through the MTW expansion and the related methods of research and evaluation. The Committee is charged with advising HUD on the following: • Policy proposals and evaluation methods for the MTW demonstration to inform the one specific policy change required for each cohort of agencies; • rigorous research methodologies to measure the impact of policy changes studied; • policy changes adopted by MTW agencies that have proven successful and can be applied more broadly to all PHAs; and • statutory and/or regulatory changes (specific waivers and associated activities, and program and policy flexibility) necessary to implement policy changes for all PHAs. The Committee has no role in reviewing or selecting the 100 PHAs to participate in the expansion of the MTW demonstration. The Committee members were appointed to a two-year term in June 2016 by the HUD Secretary and chosen to ensure balance, diversity, and a broad representation of ideas.7 In May 2018, HUD extended the Committee and the members’ appointments for another two-year term. As required by the 2016 MTW Expansion Statute, the Committee includes program and research experts from HUD; a representation of MTW agencies, including current and former residents; and independent subject matter experts in housing policy research. Based on the advice of the Committee, HUD will study, by cohort of MTW agencies, the following four policies (which are in no particular order except for the first two cohorts): • Impact of MTW Flexibility on Small and Medium PHAs: In this first cohort, HUD will evaluate the overall effects of MTW flexibility on a PHA and the residents it serves. The Committee 7 For more information on the establishment, purpose, members, and meeting content of the MTW Research Advisory Committee, please go to: https://portal.hud.gov/hudportal/HUD?src=/ program_offices/public_indian_housing/programs/ ph/mtw/expansion/rac. VerDate Sep<11>2014 17:11 Oct 04, 2018 Jkt 247001 recommended that PHAs with under 1,000 aggregate public housing and voucher units be included in this cohort. To date, only one of the existing MTW agencies has less than 1,000 aggregate units, while the majority of PHAs nationwide fit into this size category. • Rent Reform: In this second cohort, HUD will evaluate different rent reform models. Rent reform models may be income based and may include tiered rents and/or stepped-up rents. • Work Requirements: In this cohort, HUD will evaluate work requirements for residents/participants who are nonelderly, non-disabled, and at least 18 years old. • Landlord Incentives: In this cohort, HUD will evaluate how to improve landlord participation in the HCV program through incentives such as participation payments, vacancy payments, alternate inspection schedules and other methods. Operations Notice for the Expansion of the MTW Demonstration Through the MTW expansion, HUD seeks to design and test new approaches to providing and administering housing assistance and then to apply the lessonslearned nationwide, all within a framework of simplifying program administration. This is laid out in HUD’s guiding principles for the expansion, which are: (1) Simplify; (2) learn; and (3) apply. The Operations Notice is an embodiment of this vision. The Operations Notice describes a framework for the MTW demonstration that streamlines and simplifies HUD’s implementation of MTW status and the associated flexibilities of participating MTW agencies while providing for the rigorous evaluation of specific policy changes. This framework would apply to all PHAs designated as an MTW agency pursuant to the 2016 MTW Expansion Statute and to any previously-designated MTW agencies that agree to operate under the framework of the Operations Notice. These PHAs are referred to in the Operations Notice as ‘‘MTW agencies.’’ Participation in the MTW Expansion will be formalized by an amendment to the PHA’s Consolidated Annual Contributions Contract, which is called the MTW CACC Amendment.8 The Operations Notice is organized into 11 sections as follows: 1. Purpose and Applicability 2. Waivers a. MTW Waivers 8 The MTW Consolidated ACC Amendment amends the ACCs and the CACCs for the Public Housing and Section 8 Voucher programs. PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 b. Agency-Specific Waiver Requests c. Cohort-Specific Waivers 3. Term of Participation 4. MTW Funding Flexibilities and Financial Reporting a. MTW Funding Flexibility b. Calculation of Funding c. Financial Reporting and Auditing 5. Evaluation a. Program-Wide Evaluation b. Cohort-Specific Evaluation c. Ad-Hoc Evaluation 6. Program Administration and Oversight a. Planning and Reporting b. Performance Assessment c. Monitoring and Oversight 7. Rental Assistance Demonstration Program 8. Applying MTW Flexibilities to Special Purpose Vouchers a. HUD-Veterans Affairs Supportive Housing b. Family Unification Program c. Non-Elderly Persons With Disabilities Vouchers d. Enhanced Vouchers and Tenant Protection Vouchers 9. Applicability of Other Federal, State, and Local Requirements 10. MTW Agencies Admitted Prior to 2016 MTW Expansion Statute 11. Sanctions, Terminations, and Default II. Operations Notice 1. Purpose and Applicability The Operations Notice establishes requirements for the implementation and continued operation of the expansion of the MTW demonstration program pursuant to the 2016 MTW Expansion Statute. The Operations Notice also applies to all PHAs designated as MTW pursuant to the 2016 MTW Expansion Statute and to any previously-designated MTW agency that elects to operate under the terms of this Notice. Through the MTW CACC Amendment, an MTW agency agrees to abide by the program structure, flexibilities, and terms and conditions detailed in the Operations Notice for the term of the agency’s participation in MTW demonstration. Any significant updates to the Operations Notice by HUD will be preceded by a public comment period. HUD may supplement the Operations Notice with PIH Notices providing more detailed guidance, including with respect to implementing future appropriations act provisions and revisions to financial policies and procedures. Additionally, HUD will develop informational materials to address various program elements, which HUD will post on the MTW website. E:\FR\FM\05OCN1.SGM 05OCN1 Federal Register / Vol. 83, No. 194 / Friday, October 5, 2018 / Notices daltland on DSKBBV9HB2PROD with NOTICES Unless otherwise provided in the Operations Notice, an agency’s MTW program applies to all of the agency’s public housing units (including agencyowned properties and units comprising a part of mixed-income, mixed finance communities, tenant-based HCV assistance, project-based HCV assistance under Section 8(o), and Homeownership units developed using Section 8(y) HCV assistance. This Operations Notice does not apply to HCV assistance that is required: (i) To make payments to other PHAs under HCV portability billing procedures; (ii) To meet particular purposes for which HUD has expressly committed the assistance to the agency; 9 or (iii) to meet existing contractual obligations of the agency to a third party (such as Housing Assistance Payment (HAP) contracts with owners under the agency’s HCV program), unless a third party agrees to Project-Based Voucher (PBV) activities implemented under the MTW program with the agency. PHAs are reminded that the MTW demonstration program does not permit waivers related to statutes outside of the 1937 Act or regulations promulgated under authority outside of the 1937 Act, including any waivers to fair housing, nondiscrimination, labor standards, or environmental requirements. Other subject matter prohibited from waivers or restricted with respect to waivers is discussed elsewhere in this Notice. 2. Waivers Pursuant to the 1996 MTW Statute and 2016 MTW Expansion Statute, the Appendix of this Notice provides waivers of certain provisions of the 1937 Act as well as the implementing requirements and regulations. These waivers and associated activities afford MTW agencies the opportunity to use their MTW authority to pursue locallydriven policies, procedures, and programs in order to further the goals of the demonstration. In implementing MTW activities, agencies will ensure assisted families are made aware of the impacts the activity(s) may have to their tenancy. The following are the three categories of waivers that MTW agencies may pursue: (a) MTW Waivers; (b) Agency-Specific Waiver Requests; and (c) Cohort-Specific Waivers. MTW agencies may conduct any permissible activity in the MTW Waivers category within the provided safe harbors, as detailed in the Appendix, without 9 Mainstream Vouchers, Moderate Rehabilitation Renewals, HUD-Veterans Affairs Supportive Housing (HUD–VASH) Vouchers, Non-Elderly Disabled (NED) Vouchers, and Family Unification Program (FUP) Vouchers are not part of the MTW demonstration program. VerDate Sep<11>2014 17:11 Oct 04, 2018 Jkt 247001 additional approval from HUD. Agencies may make an Agency-Specific Waiver Request to implement additional activities not contained in the MTW Waivers, request to waive a statutory or regulatory requirement not waived in the MTW Waivers, and/or request to expand the safe harbors of an MTW Waivers activity. Agencies may also be provided with Cohort-Specific Waivers if they are necessary to allow for the implementation of the required cohort study. a. MTW Waivers The Appendix contains the available waivers and associated activities that MTW agencies may implement after they have been included in the MTW Supplement (described in Section 6 of this Notice) of an approved PHA Plan. The Appendix includes the waiver name, waiver description, statutes and regulations waived, permissible activities, and safe harbors. The waiver description defines the authorization provided to the MTW agency, subject to the terms of this Notice. The list of statutes and regulations waived details the citations of the 1937 Act requirements that may be waived by an MTW agency in order to implement an activity. The list of waivers and list of activities are organized by program type. The safe harbors section contains the additional requirements (beyond those specified in the activity description) that the agency must satisfy in implementing activities without further HUD approval. If an MTW agency wishes to implement additional activities not contained in the MTW Waivers, request to waive a statutory or regulatory requirement, and/or request the ability to go beyond an MTW activity’s safe harbor(s), the MTW agency must submit an Agency-Specific Waiver Request for approval from HUD as explained further in Section 2.b of this Notice. MTW agencies may implement any activity contained in the Appendix as long as it is included in the MTW Supplement of an approved PHA Plan and implemented within the associated safe harbor(s). The MTW agency will update the MTW Supplement annually, as described in Section 6 of this Notice, to reflect the new activities it plans to implement in the coming fiscal year and ongoing activities it has implemented in the prior year, which includes estimated costs/savings for planned activities that have a cost implication. While MTW activities are listed by specific waiver name, MTW agencies may use the MTW Supplement to combine activities together to create more comprehensive initiatives at the local level. PO 00000 Frm 00061 Fmt 4703 Sfmt 4703 50391 The MTW Waivers only waive certain provisions of the 1937 Act and its implementing regulations. The five statutory requirements established under the 1996 MTW Statute cannot be waived. Other applicable Federal, state, and local requirements shall continue to apply even in the event of a conflict between such a requirement and a waiver or activity granted by this Notice. Accordingly, HUD and the MTW agencies may not waive or otherwise deviate from compliance with Fair Housing and Civil Rights laws and regulations. Additionally, in implementing activities, MTW agencies remain subject to all other terms, conditions, and obligations under this Notice, and all other Federal requirements applicable to the public housing program, the HCV program, Federal funds, and PHAs. To the extent any MTW activity conflicts with any of the five statutory requirements or other applicable requirements, HUD reserves the right to require the MTW agency to discontinue the activity or to revise the activity to comply with this Notice, and the other applicable Federal requirements. HUD also reserves the right to require an MTW agency to discontinue any activity derived from a waiver should it have significant negative impacts on families or the agency’s operation of its assisted housing programs using Section 8 and 9 funds, as determined by HUD. b. Agency-Specific Waiver Requests Pursuant to the exceptions in Section 9 of this Notice, HUD understands that MTW agencies may wish to request Agency-Specific Waivers to implement activities, waive statutory or regulatory requirements that are not in the Appendix, and/or expand the safe harbor(s) of an activity included in the MTW Waivers. There are two categories of Agency-Specific Waiver Requests: (1) A request to waive a statutory or regulatory requirement, or to implement an activity, not provided for in the Appendix; and (2) a request to expand an activity that is in the Appendix outside of the listed safe harbor (or multiple safe harbors). The MTW agency must obtain explicit written approval from HUD for each AgencySpecific Waiver Request prior to implementation. Agency-Specific Waiver Requests are optional and made at the discretion of the MTW agency. To submit an Agency-Specific Waiver Request(s), an MTW agency will first share the specifics and details of the proposed waiver in the MTW Supplement to the Annual PHA Plan, indicating which of the two categories of Agency-Specific Waiver Requests is E:\FR\FM\05OCN1.SGM 05OCN1 daltland on DSKBBV9HB2PROD with NOTICES 50392 Federal Register / Vol. 83, No. 194 / Friday, October 5, 2018 / Notices being sought. The MTW Supplement form, when finalized, will provide a comprehensive explanation of the elements required to submit an AgencySpecific Waiver Request. The approval of the Annual PHA Plan and MTW Supplement during this stage does not constitute an approval of the Agency-Specific Waiver Request. Rather, the public comment and review period affords the MTW agency’s Resident Advisory Board (RAB), community, and residents the opportunity to provide input on the proposed waiver prior to its submission to HUD. Once the MTW agency obtains approval of its Annual PHA Plan and MTW Supplement containing the Agency-Specific Waiver Request information, the agency will then submit a letter to its local HUD field office requesting final approval of the Agency-Specific Waiver Request(s). This letter is sent and reviewed outside of the Annual PHA Plan and MTW Supplement process. It must include: A good cause justification that relates to one or more of the three MTW statutory objectives; the statute, regulation, and/ or MTW Waiver safe harbor which the MTW agency seeks to waive and its justification for doing so; a copy of the approval letter for the Annual PHA Plan and MTW Supplement containing the proposed waiver; a description of the initiative; the implementation timeline; and any other information requested by HUD. Depending on the nature of the request, HUD may ask for an associated hardship policy, impact analysis, and/or other information necessary to understand the waiver and its possible effects. Agency-Specific Waiver Requests may not conflict with the agency’s cohort-specific evaluation. If the Agency-Specific Waiver is approved by HUD and the changes between the Agency-Specific Waiver Request and the Waiver that HUD ultimately approves do not constitute a ‘‘significant amendment’’ to the Annual PHA Plan, as defined by the agency, then the Agency-Specific Waiver may be implemented once the MTW Agency receives HUD’s explicit written approval. The MTW Agency will need to submit a narrative description of the Agency Specific Waiver in its subsequent MTW Supplement. If the Agency-Specific Waiver is approved by HUD with changes between the Agency-Specific Waiver Request and the Waiver that HUD ultimately approves that constitute a ‘‘significant amendment’’ to the Annual PHA Plan, as defined by the agency, then the MTW agency must re-submit the Agency-Specific Waiver Request VerDate Sep<11>2014 17:11 Oct 04, 2018 Jkt 247001 through the Annual PHA Plan and MTW Supplement public comment process a second time. Once the Annual PHA Plan and MTW Supplement are approved this second time, the MTW agency may implement its AgencySpecific Waiver. To the extent a policy in an AgencySpecific Waiver Request conflicts with any of the five statutory requirements, the cohort-specific evaluation, or other applicable requirements, HUD shall require the MTW agency to discontinue the policy or to revise the policy to comply with this Notice and the other applicable federal requirements. HUD also reserves the right to require an MTW agency to discontinue any policy derived from a waiver should it have significant negative impacts on families or the agency’s operation of its assisted housing programs using Section 8 and 9 funds, as determined by HUD. c. Cohort-Specific Waivers Pursuant to the 2016 MTW Expansion Statute, at the time of designation as an MTW agency, each agency will be selected into an evaluative cohort that seeks to test a specific policy change, as specified in that cohort’s Selection Notice. Cohort-Specific Waivers include statutory and/or regulatory waivers and associated activities that are unique to a specific cohort to allow them to complete their required cohort study. Depending upon the cohort’s study, there is a possibility that HUD restricts certain activities within the MTW Waivers or provides additional waivers that are not included in the Appendix. It is also possible that the specific policy changes to be tested through a given cohort would not need any CohortSpecific Waivers. Any MTW activities that would impact or conflict with the cohort-specific policy change will be identified in the respective Selection Notice so that the MTW agency is aware of this potential restriction on its use of waivers before it enters the MTW demonstration program. Cohort-Specific Waivers and the associated MTW activities may only be used to the extent allowed under the applicable evaluative framework provided by HUD in the applicable Selection Notice. In determining the Cohort-Specific Waivers that will be included in the Selection Notices, HUD will remove and/or add waivers and associated activities based on whether a waiver and its associated activity would impact or conflict with the specific policy(s) to be studied in the MTW agency’s cohort group. The addition or removal of any waivers and associated activities would only apply within the confines of the cohort study. For instance, if the study PO 00000 Frm 00062 Fmt 4703 Sfmt 4703 focuses on rent models as it relates to the voucher program, then an agency’s public housing program would not be affected by the addition or removal of any such waivers and associated activities. If the MTW Waiver(s) and associated activity(s) are not provided to a cohort, or some portion of the agency’s portfolio within the cohort, to allow the cohort to test a specific policy change, the agencies within that cohort study will not be able to conduct that activity(s) until the evaluation of the specific policy change has concluded. 3. Term of Participation The term of each agency’s MTW designation will be 12 years (PHA Fiscal Years) starting from the time of its designation as an MTW agency. All waivers and associated activities provided through the Operations Notice expire at the end of the agency’s term of participation. However, Cohort-Specific Waivers provided to enable a cohortspecific policy change may be extended beyond the agency’s term of participation with HUD’s specific approval if HUD determines that additional time is needed to evaluate the policy change, subject to continued statutory authority for the MTW demonstration. Once an MTW agency has implemented an activity pursuant to the authority of the Operations Notice, the agency may continue to implement that activity throughout the term of its participation in the demonstration, subject to the other terms and conditions of this Notice. The MTW agency must end all activities requiring MTW-specific waivers upon expiration of MTW participation, as HUD cannot guarantee that it will be able to extend any waivers and associated activities beyond that point. For this reason, when entering into contracts with thirdparties that draw upon MTW flexibility, the agency should disclose that such flexibility is only available during the term of the agency’s participation in the MTW demonstration as permitted in this Notice. An exception is third-party contracts that relate to the cohortspecific policy change and associated waiver(s). If HUD determines that additional time beyond the end of the agency’s MTW term is needed to evaluate a cohort-specific policy change, HUD may approve an extension of any cohort-specific waiver(s). 4. MTW Funding Flexibility and Financial Reporting During the term of the demonstration, subject to appropriations, HUD will provide an MTW agency with public housing Operating Fund Program grants, E:\FR\FM\05OCN1.SGM 05OCN1 Federal Register / Vol. 83, No. 194 / Friday, October 5, 2018 / Notices public housing Capital Fund Program (CFP) grants, and/or HCV HAP and Administrative Fee assistance as detailed in this Notice. CFP grants may include Formula grants; Demolition or Disposition Transitional Funding (DDTF), which are included in regular Formula grants; and/or funds from older Replacement Housing Factor (RHF) grants (a program later superseded by DDTF). The funding amount for MTW agencies may be increased by additional allocations of vouchers that the agency is awarded over the term of its participation in the MTW demonstration. MTW Funding provided to an MTW agency, including public housing Operating Fund Program grants, public housing CFP grants, and HCV HAP and Administrative Fee assistance, is subject to any future laws and appropriations. If a future law or appropriations bill conflicts with this Operations Notice, the law or appropriations bill shall be implemented, and no breach of contract claim, or any claim for monetary damages, may result from the conflict or implementation of the conflicting law or regulation. daltland on DSKBBV9HB2PROD with NOTICES a. MTW Funding Flexibility MTW agencies will have the flexibility to apply fungibility among public housing Operating Fund, public housing Capital Fund, and HCV HAP and Administrative Fee assistance. These flexibilities expand the eligible uses of each covered funding stream, but do not negate the need for both the PHA and HUD to be able to account for the funding from its original source to the date of its ultimate eligible use 10 by the PHA, comply with Federal grant and financial management requirements, and use funds effectively and efficiently for their eligible purposes. As the Department continues to implement program-specific financial management policies in its core housing programs, MTW agencies will be subject to the same requirements and procedures as non-MTW agencies. Therefore, the requirements and procedures described in this Notice may change as new financial management policies are implemented over time. HUD will update existing guidance and issue new reporting requirements, as appropriate, to allow HUD to meet its monitoring and oversight responsibilities while ensuring MTW agencies fully utilize and benefit from the flexibilities established by Congress for these funds 10 The date of the ‘‘ultimate eligible use’’ means the date of disbursement by the PHA for an eligible purpose, which would remove the funding from the PHA’s account and the PHA’s control. VerDate Sep<11>2014 17:11 Oct 04, 2018 Jkt 247001 pursuant to the MTW demonstration and the 2016 MTW expansion. HUD will also update existing guidance and issue new reporting requirements, as appropriate, to ensure compliance with 2 CFR part 200, including with respect to Federal financial management. An agency participating in the MTW demonstration program may flexibly use public housing Operating and Capital Funds provided under Sections 9(d) and 9(e) of the 1937 Act and HCV HAP and Administrative Fee program funds provided under Section 8 of the 1937 Act, referred to collectively as MTW Funding. Certain provisions of Sections 8 and 9 of the 1937 Act and 24 CFR 982 are waived as necessary to implement this flexibility. Once the agency receives its MTW designation through the execution of the MTW CACC Amendment, this flexibility in the use of MTW Funding does not require prior HUD approval. The agency may use MTW Funding covered by MTW flexibility for any eligible activity under Sections 9(d)(1), 9(e)(1) and Section 8(o) of the 1937 Act and for the local, non-traditional activities specified in this Notice, including in the Appendix. Any reserves the MTW agency has accumulated prior to signing an MTW CACC Amendment (including public housing Operating and Capital Reserves and HCV HAP and Administrative Fee Reserves) must be used for their originally appropriated purposes and may not be used flexibly for any eligible MTW activity described in the Appendix. All MTW PHA expenditures, including for local, non-traditional activities, must be consistent with the PHA’s charter, approved 5-Year and Annual PHA Plans, and the approved MTW Supplement to the Annual PHA Plan. i. Calculation of Funding (a) Public Housing Operating Grants (1) The calculation of an MTW agency’s Operating Fund subsidy grant eligibility will continue in accordance with operating subsidy formula law, regulations, and appropriations act requirements. As these programmatic and financial requirements are updated, MTW agencies will be affected by and shall comply with these changes. (2) The agency may use these funds for any eligible activity permissible under Section 9(e)(1) of the 1937 Act or, if the agency proposes to use the funding under its MTW flexibility, it may also use these funds for any eligible activity permissible under Section 8(o), Section 9(d)(1), and for the local, non- PO 00000 Frm 00063 Fmt 4703 Sfmt 4703 50393 traditional activities specified in this Notice, including in the Appendix. (3) For Operating Fund grant funding, the MTW agency has accumulated prior to signing an MTW CACC Amendment, the agency may not use such funds for eligible MTW purposes other than the originally appropriated purpose of the funds (i.e., these funds may not be used as flexible MTW Funding). (b) Public Housing Capital Fund Formula and Grants (1) The agency’s public housing Capital Fund formula characteristics and grant amounts, including DDTF and Replacement Housing Factor (RHF), will continue to be calculated in accordance with public housing law, regulations, and appropriations act requirements. (2) MTW agencies must continue to follow the immediate need requirements applicable to all Capital funds and may not accelerate their drawdown of Capital funds for the purpose of funding reserves or for any other purpose. All Capital funds, including funds in BLI 1410 (Administrative Costs) and Budget Line Item (BLI) 1492 (MTW), must be drawn down only when funds are due and payable. (3) The agency may use these funds for any eligible activity permissible under Section 9(d)(1) of the 1937 Act or, if the agency proposes to use the funding under its MTW flexibility, it may also use these funds for any eligible activity permissible under Section 8(o), Section 9(e)(1), and for the local, nontraditional activities specified in this Notice, including in the Appendix. Capital Fund Program (CFP) funds used for activities under section 9(d)(1) are subject to all requirements relevant to non-MTW agency CFP funding, including eligible activities and cost limits. (4) For Capital Funds the MTW agency has accumulated prior to signing an MTW CACC Amendment, the agency may not use such funds for eligible MTW purposes other than the originally appropriated purpose of the funds (i.e., these funds may not be used as flexible MTW Funding). (5) In requisitioning Capital Fund grant funds, the MTW agency will request funds using traditional Capital Fund Budget Line Items (BLIs) for funds to be used for activities under section 9(d) and using the available MTW Budget Line (BLI 1492) items for activities under section 9(e), section 8(o), or local, non-traditional activities. MTW agencies shall not use the Transfer to Operations Budget Line (BLI 1406) since funds for all non-section 9 activities shall be included in the MTW Budget Line (BLI 1492). The agency will E:\FR\FM\05OCN1.SGM 05OCN1 50394 Federal Register / Vol. 83, No. 194 / Friday, October 5, 2018 / Notices daltland on DSKBBV9HB2PROD with NOTICES provide to HUD information on all capital activities funded by the MTW Funding as necessary to ensure compliance with requirements outside the scope of MTW, including environmental review requirements and Energy and Performance Information Center (EPIC) reporting requirements. (6) The agency remains subject to the requirements of Section 9(j) of the 1937 Act with respect to Capital Fund grants. Section 9(d) funds remain subject to the obligation and expenditure deadlines and requirements provided in Section 9(j) despite the fact that they may be in the MTW Single Fund. Capital Funds awarded to MTW agencies must be obligated within 2 years and expended within 4 years of award. Funds not obligated or expended within those timeframes will be subject to recapture. As with all agencies, an MTW agency may requisition CFP funds from HUD only when such funds are due and payable, unless HUD approves another payment schedule. (c) Housing Choice Voucher Funding (1) Funding for the Initial MTW Year. For the calendar year (CY) after the MTW agency joins the MTW demonstration (the ‘‘Initial MTW Year’’), the MTW agency’s HCV HAP renewal funding will be calculated in accordance with the same HAP renewal funding formula used for non-MTW HCV agencies in the applicable FY appropriations act. The HAP renewal formula is customarily based on the previous CY’s HAP expenses reported in the Voucher Management System (VMS), adjusted by any applicable inflation factor and national proration. Example: • If an MTW Agency signs its MTW CACC Amendment in July 2018, CY 2019 will be the Initial Year in the MTW demonstration. The MTW Agency’s CY 2019 HAP renewal funding will be calculated based on the Agency’s CY 2018 HAP expenses, adjusted by inflation and proration (assuming this is the formula in the 2019 Appropriations Act). (2) Funding for Subsequent MTW Years. As is the case for non-MTW PHAs under current appropriations law, the HAP renewal funding eligibility for subsequent MTW years will be calculated based on the MTW agency’s actual expenses for the previous calendar year (known as the rebenchmark year). Unique to MTW agencies, however, the MTW agency’s actual expenses are: (i) The previous CY’s HAP expenses reported in Voucher Management System (VMS,) and (ii) the previous CY’s eligible non-HAP MTW expenses reported in VMS. For both VerDate Sep<11>2014 17:11 Oct 04, 2018 Jkt 247001 HAP and non-HAP MTW expenses, the reported expenses must have been paid from an eligible source of funds as described in section 4(c) below in order to be included in the HAP renewal funding formula. In addition, MTW HAP renewal funding is subject to an MTW Renewal Eligibility Cap derived from the number of units authorized under the agency’s ACC, as described in paragraph (d) on the following page. The lower of the total combined HAP/ non-HAP expenses or the MTW Renewal Eligibility Cap will then be adjusted by an applicable inflation factor and any national proration that applies to the HCV renewal appropriation to determine the MTW agency’s actual CY HAP renewal funding. Example: • In CY 2019, an MTW Agency expended $3,600,000 on HAP and $400,000 on eligible non-HAP MTW expenses. The agency’s HCV HAP renewal funding for CY 2020 will be $4 million (assuming the HAP Renewal Eligibility Cap is greater than $4 million), adjusted by an inflation factor and any applicable national proration. (3) HAP Renewal Sources of Funds. The only HAP and non-HAP MTW expenses that will be included in the MTW HAP renewal formula are those paid for with the same sources of funds that would be included in the non-MTW HAP renewal formula for a non-MTW agency (see PIH Notice 2013–28 and any future successor notices). Accordingly, HAP expenses and non-HAP MTW expenses must be paid from the following sources of funds to be included in the HAP renewal formula calculation: • Housing Choice Voucher (HCV) budget authority, • HUD-held HAP reserves (undisbursed budget authority), • PHA-held HAP reserves (i.e., Restricted Net Position (RNP)), • Any funds from the HAP Set-aside (if available after PHA application and approval), and • Administrative Fee reserves (i.e., Unrestricted Net Position (UNP)). HAP expenses or non-HAP MTW expenses that were covered by any other funding source (for example, public housing Operating Funds and Capital Funds, and current year HCV Administrative Fee funds) will not be included in the MTW PHA’s HCV renewal funding calculation. (4) HAP Renewal Eligibility Cap. The MTW PHA’s renewal eligibility for all MTW Years will be limited by the HAP Renewal Eligibility Cap. The calculation multiplies (1) the MTW PHA’s total number of MTW-eligible ACC PO 00000 Frm 00064 Fmt 4703 Sfmt 4703 authorized units 11 in the re-benchmark year (the CY immediately preceding the CY for which the PHA’s renewal eligibility is being calculated) 12 by (2) the PHA’s pre-MTW monthly per-unit cost (PUC) inflated to the re-benchmark year. • For (1), the number of MTW-eligible ACC authorized units is measured in unit months available (UMAs).13 • For (2), the inflated pre-MTW PUC is projected using, as a base, the monthly PUC for the CY in which the agency signed its MTW CACC Amendment. HUD applies an inflation factor to this base PUC to estimate what the PHA’s HCV PUC would be, had the PHA not joined the MTW program, as of the re-benchmark year. After the calculation of the HAP Renewal Eligibility Cap, it is compared with the MTW PHA’s actual total combined HAP/non-HAP expenses. The lower of these two amounts—(1) the HAP Renewal Eligibility Cap or (2) the MTW PHA’s actual total combined HAP/non-HAP expenses—is then adjusted by the inflation factor and any national proration factor to determine the MTW PHA’s CY renewal funding. Example: • If an MTW Agency signs its MTW CACC Amendment in July 2018, CY 2019 will be the Initial Year in the MTW demonstration. In the Initial CY (CY 2019) the MTW Agency’s renewal formula is the same formula that is used for non-MTW PHAs. In calculating the MTW Agency’s HCV renewal funding for CY 2020, the following information applies: Æ The MTW PHA’s average monthly PUC for CY 2018 was $700. Æ The CY 2019 inflation rate is 2 percent. Æ The number of MTW-eligible ACC authorized units during CY 2019 is 800 11 ‘‘MTW-eligible ACC authorized units’’ means the PHA’s number of ACC authorized units, regardless of whether the units are leased, after excluding the number of authorized units that would not be subject to the MTW renewal formula. In other words, special purpose vouchers that are renewed separately and are not part of the MTW HAP renewal formula are not included in the formula used to calculate the HAP Renewal Eligibility Cap. See Section 8 of this Notice for further information on these special purpose vouchers that are renewed separately outside the MTW renewal formula. 12 As noted above, the re-benchmark year is also the source year for the actual expense data used in the MTW PHA’s HAP renewal formula. 13 Authorized units in the HCV program context are measured in terms of unit months available. For example, if an authorized unit is under CACC as of January 1, the authorized unit equals 12 unit months available for that CY. On the other hand, if the authorized unit was added to the CACC under a new funding increment effective July 1, the authorized unit is equal to 6 unit months available for that CY. E:\FR\FM\05OCN1.SGM 05OCN1 daltland on DSKBBV9HB2PROD with NOTICES Federal Register / Vol. 83, No. 194 / Friday, October 5, 2018 / Notices units. (In this example all units were under ACC as of January 1, 2019, so the number of unit months available (UMAs) is simply 800 units multiplied by 12 months, or 9,600 UMAs.) • The HAP Renewal Eligibility Cap for CY 2020 is calculated by first determining the estimated PUC for CY 2019, which is $714 (the monthly PUC for CY 2018 inflated for CY 2019, or $700 × 1.02). The estimated PUC for CY 2019 is then multiplied by the MTW PHA’s CY 2019 MTW-eligible ACC authorized UMAs 14 ($714 × 9,600 UMAs) to determine the HAP Renewal Eligibility Cap, which is $6,854,400. • The HAP Renewal Eligibility Cap ($6,854,400) is then compared to the MTW Agency’s total combined HAP/ non-HAP expenses for the re-benchmark year that originated from the eligible funding sources described earlier in this Notice. If the total combined HAP/nonHAP expenses do not exceed $6,854,400, the MTW Agency’s CY 2020 renewal funding will be the total combined HAP/non-HAP expenses adjusted by an inflation factor and any national proration. If the total combined HAP/non-HAP expenses exceed $6,854,400, the MTW Agency’s CY 2020 renewal funding will be $6,854,400, adjusted by an inflation factor and any national proration. (5) Financial Management Requirements Apply. The same financial management requirements that apply to non-MTW agencies also apply to MTW agencies. Accordingly, all undisbursed HAP funds, including HAP-originated reserve funds, will be retained as HUDheld reserves per Office of Management and Budget cash management requirements and can be requested by the MTW agency when immediate need exceeds the scheduled HAP monthly disbursements, but only after consideration of available MTW agencyheld Restricted Net Position (RNP). (6) Administrative Fees. The Administrative Fee rates used to calculate fee eligibility for MTW agencies shall be established according to the same methodology used to establish Administrative Fee rates for all agencies, including non-MTW agencies. As is the case for all agencies under current appropriations law, administrative fees will be calculated on the basis of units leased as of the first day of each month; this data will be extracted from Voucher Management System (VMS) at the close of each reporting cycle. Administrative fees for 14 As noted earlier, these are the MTW PHA’s CY 2019 UMAs that are subject to the MTW renewal formula. UMAs attributable to special purpose vouchers such as HUD–VASH and FUP that are renewed separately are not included in this count. VerDate Sep<11>2014 17:11 Oct 04, 2018 Jkt 247001 MTW agencies are also subject to the national proration factor and any other appropriations act requirements. (7) Adjustments for the First-Time Renewal of Certain Vouchers. If the MTW agency receives incremental HCV vouchers and funding (including tenant protection vouchers) other than special purpose vouchers, renewal funding for those vouchers will be included in the MTW HCV renewal funding eligibility calculation for the following year. (See Section 8 of this Notice for further discussion of tenant protection and other special purpose vouchers.) The renewal amount for the following year is based on HAP costs reported for these increments in VMS in the prior year, which will be adjusted by the inflation factor. Should the initial increment(s) be funded for less than 12 months due to lack of appropriations, HUD will adjust for the missing months upon renewal, by selecting the higher of the funded PUC for the initial increment, or the MTW per unit cost (PUC) times the number of units,15 then adjusted by the inflation factor. The aggregate renewal eligibility is always subject to the national proration factor. (8) Applicable Inflation Factor and Proration. The same applicable inflation factor that applies to non-MTW agencies will be applied each CY to determine the MTW agency’s HAP funding renewal eligibility. Likewise, the MTW agency’s HAP funding renewal eligibility is subject to the same national proration as non-MTW agencies’ renewal eligibility. (9) Prior Year Reserves. For HCV HAP and Administrative Fee funding provided in years prior to the designation of the agency as an MTW agency, the agency may not use any accumulated HCV reserves for eligible MTW purposes other than the originally appropriated purpose of the funds (i.e., these funds may not be used as flexible MTW Funding). (10) Rental Assistance Demonstration (RAD). Any vouchers received as part of a RAD Component I conversion shall be added to the ACC for the remainder of the CY in which they are awarded. HUD will issue a new increment of voucher funding in support of those vouchers for the first full CY following a RAD Component I conversion. In subsequent years, voucher funding for RADconverted units will be renewed under 15 The MTW PUC is equal to MTW HAP expenses divided by the number of MTW units leased. (NonHAP MTW expenses are not included in the MTW PUC calculation.) HUD may further adjust the MTW PUC calculation for PHAs administering RAD project-based vouchers to exclude RAD Rehab payments so the MTW PUC only reflects expenses attributable to actual housing assistance payments. PO 00000 Frm 00065 Fmt 4703 Sfmt 4703 50395 the MTW HCV renewal funding calculation, plus inflation factor and the applicable proration factor. Tenant protection vouchers provided for RAD Component II conversions are renewed in accordance with section 4.v, Adjustment for the first-time renewal of certain vouchers, above. Administrative fees for RAD vouchers will be calculated based on the same methodology used to establish administrative fees for nonMTW agencies. Fees for RAD vouchers will be prorated at the same level that applies to all non-MTW agencies. (11) Voucher Programs Not Included in MTW Program. Vouchers and funding provided for the following special purpose vouchers, or any new special purpose vouchers provided in future appropriations acts, whether for new allocations or renewal of existing increments, shall not be included in the HCV MTW renewal calculation: Mainstream, HUD-Veterans Affairs Supportive Housing (HUD–VASH), Non-Elderly Disabled (NED), and Family Unification Program (FUP). These vouchers will be renewed under the regular voucher renewal requirements as provided under the appropriations acts. Special purpose vouchers are discussed in more detail in Section 8 of this Notice. In addition, funding provided for the Section 8 Moderate Rehabilitation Program is not part of the MTW program and may not be used for MTW activities. b. Financial Reporting and Auditing MTW agencies must submit year-end unaudited financial information to the Department no later than 2 months after their fiscal year end using the Financial Data Schedule (FDS) contained in the Real Estate Assessment Center’s (REAC) Financial Assessment Subsystem (FASS–PH), or its successor system. Current financial reporting requirements for MTW agencies are posted on the REAC website at https://www.hud.gov/ sites/documents/DOC_11833.PDF. These requirements may be updated in the future. MTW agencies are also required to electronically submit their audited financial information, if applicable, to the Department no later than 9 months after their fiscal year end. MTW agencies must include public housing project level financial information in the FDS and must follow the Asset Management guidelines established in Public and Indian Housing (PIH) Notice 2007–9 Supplement to Financial Management Handbook Office of Public and Indian Housing (PIH) Revised April 2007, and any subsequent updates to this Handbook or PIH Notice. MTW agencies will conform to the cost E:\FR\FM\05OCN1.SGM 05OCN1 50396 Federal Register / Vol. 83, No. 194 / Friday, October 5, 2018 / Notices daltland on DSKBBV9HB2PROD with NOTICES requirements of 2 CFR part 200 and any HUD implementation thereof. MTW agencies must procure an Independent Public Accountant (IPA) to perform an annual audit pursuant to Federal requirements at 2 CFR part 200 and 24 CFR 990.190, or successor, as well as any audit compliance supplements developed specifically for use with the MTW demonstration. Completed IPA audits must be submitted to HUD in accordance with current HUD regulations. HUD will review IPA audits of MTW agencies to determine appropriate action relative to any findings, prepare recommendations for audit finding resolution, and follow up with MTW agencies to assure finding closure. If there are audit findings related to the MTW program itself, HUD will monitor the resolution of all audit findings. 5. Evaluation As a condition of participating in the MTW demonstration, MTW agencies agree to cooperate fully with HUD and its contractors in the monitoring and evaluation of the MTW demonstration. MTW agencies shall keep records and submit reports and other information as required by HUD. This includes any data collection required for the use of waivers and associated activities, for the uses of MTW funds within and across funding streams, and any evaluation efforts that HUD undertakes for the cohort-specific policy changes. MTW is a demonstration that provides PHAs flexibilities to innovate and try different approaches to housing assistance in order to achieve at least one of the three statutory objectives laid out in the 1996 MTW Statute. At its core, the demonstration is an opportunity for PHAs, participants, HUD, stakeholders, and the general public to learn from different approaches to providing Federal housing assistance to low-income families. This includes learning from approaches that are effective and produce desired outcomes, and from approaches that are less effective than anticipated and where results may have unintended consequences. Because MTW agencies can use different flexibilities calling on multiple activities within the MTW Waivers to serve local populations in various parts of the country, interpreting PHAreported performance data on the effects of an individual MTW activity can be challenging. Consequently, and while adhering to the guiding principles for the expansion—to simplify, learn, and apply—HUD will create and develop an evaluation system that will document and consider the MTW demonstration VerDate Sep<11>2014 17:11 Oct 04, 2018 Jkt 247001 through the lens of the three statutory objectives relating to cost effectiveness, self-sufficiency, and housing choice. HUD envisions three types of evaluation: Program-wide evaluation, cohort-specific evaluation, and ad hoc evaluation. a. Program-Wide Evaluation Program-wide evaluation would seek to assess whether or not, and to what extent, MTW agencies use Federal dollars more efficiently, help residents find employment and become selfsufficient, and/or increase housing choices for low-income families. HUD intends to develop a method for program-wide evaluation that is based, to the extent possible, on information already being collected through existing HUD administrative data systems. HUD may determine and require that additional reporting is necessary to effectively evaluate MTW. b. Cohort-Specific Evaluation The 2016 MTW Expansion Statute requires HUD to direct all the agencies in a cohort to implement one specific policy change and to conduct a rigorous evaluation of the one specific policy change. The MTW Research Advisory Committee has considered input from the public and advised HUD on the policy changes to be tested through the new cohorts of MTW agencies and on the methods of research and evaluation. The cohort-specific policy change and evaluation methods will be described in the applicable Selection Notice so that the MTW agency is aware, in advance of application to the MTW demonstration program, of the policy it will be required to implement and the evaluation requirements. The specific evaluation methods and requirements for participating MTW agencies will vary based on the policy changes to be tested. For example, some cohorts of MTW agencies may be required to participate in randomized control trials, while others may be required to participate in detailed process studies or ethnographic research. HUD’s Office of Policy Development and Research (PD&R) will take the lead on evaluating cohort-specific policy changes, and funds have been appropriated by Congress for this evaluation. In all cases, the purpose of the evaluation will be to measure the outcomes associated with the specific policy change(s) in order to offer policy recommendations for implementing the policy change(s) across all PHAs. HUD will determine the length and timeframe for the evaluation, which will be informed by feedback provided by the MTW Research Advisory PO 00000 Frm 00066 Fmt 4703 Sfmt 4703 Committee. In some cases, the evaluation timeframe may extend beyond the agency’s term of MTW participation. The MTW agency is required to participate in the evaluation for the full timeframe designated by HUD. HUD may extend waivers and associated activities beyond the agency’s term of participation to the extent that those waivers and associated activities are needed to support the evaluation of the specific policy change and HUD determines whether additional time is needed to evaluate the policy change. c. Ad-Hoc Evaluation HUD reserves the right to request, and the MTW agency agrees to provide, any additional information required by law or required for the sound administration or evaluation of the MTW agency. 6. Program Administration and Oversight In general, MTW agencies will be subject to the same planning and reporting protocols as non-MTW agencies, including the PHA Plan (5Year Plan and Annual PHA Plan) and Capital Fund planning. MTW agencies must also report data into HUD data systems, as required. New protocols and instruments will be developed for assessing an MTW agency’s performance and will be incorporated into PHAS and SEMAP, or successor assessment systems, or an alternative assessment system developed by HUD, explained further in Section 6.b. of this Operations Notice. In addition, HUD will employ standard program compliance and monitoring approaches including assessment of relative risk and on-site monitoring conducted by HUD or by entities contracted by HUD. a. Planning and Reporting i. The Annual PHA Plan MTW agencies must adhere to Annual PHA Plan regulations at 24 CFR part 903, any implementing HUD Notices and guidance, as well as any succeeding regulations. The Annual PHA Plan consists of the 5-Year Plan that a PHA must submit to HUD once every five PHA fiscal years and the Annual PHA Plan that the PHA must submit to HUD for each PHA fiscal year. Any HUD assistance that the agency is authorized to use under the MTW demonstration must be used in accordance with the Annual PHA Plan, as applicable. Annual and 5-Year Plans must be submitted in a format prescribed by HUD. Currently, submission format requirements are outlined in Notice PIH 2015–18 (HA), issued October 23, 2015, E:\FR\FM\05OCN1.SGM 05OCN1 Federal Register / Vol. 83, No. 194 / Friday, October 5, 2018 / Notices daltland on DSKBBV9HB2PROD with NOTICES which is effective until amended, superseded, or rescinded. ii. MTW Supplement to the Annual PHA Plan (Under Development) As an MTW agency, all Annual PHA Plan information must be provided in the context of the agency’s participation in the MTW demonstration. This includes taking into account the MTW Waiver(s) and associated activity(s) afforded to the MTW agency. To this end, the MTW agency will submit an MTW Supplement to the Annual PHA Plan, in a format to be developed by HUD. Prior to submitting to HUD, the MTW Supplement must go through a public process along with the Annual PHA Plan. This will allow the agency to inform the community of any programmatic changes and give the public an opportunity to comment. Details about this requirement are elaborated later in this section. New MTW agencies will not be required to submit the Annual MTW Plan or Annual MTW Report (i.e., Form 50900), which are required for existing MTW agencies. The MTW Supplement form has not been finalized at the time of publishing of this Operations Notice. The MTW Supplement will be made available for public review and comment, per Paperwork Reduction Act requirements, prior to finalizing the form. At this time, HUD plans to require MTW agencies to use the MTW Supplement to the Annual PHA Plan to: • Describe how the MTW agency seeks to address the three MTW statutory objectives during the coming fiscal year, in a narrative format; • Indicate the MTW activities that the agency plans to implement in the Annual PHA Plan year that utilize the activities contained in the MTW Waivers (Appendix), and ongoing activities the agency has implemented in the prior year, using a check-box or other simple format; • Indicate the estimated costs/savings per year for planned activities that have a cost implication; • Indicate the reason(s) why any previously approved MTW activities were not implemented in the previous year; • Indicate any changes in the MTW activities and associated waivers, including safe harbors, that have changed from the previous Annual PHA Plan year; • Describe any Agency-Specific Waiver Requests that the MTW agency seeks to implement in PHA fiscal year, if applicable; • Indicate the MTW activities that the agency will undertake in the Annual VerDate Sep<11>2014 17:11 Oct 04, 2018 Jkt 247001 PHA Plan year that require CohortSpecific Waivers (as applicable and identified in each cohort’s Selection Notice), and the Cohort-Specific Waivers to be used, using a check-box or other simple, non-narrative format; • Certify to HUD that all MTW activities being implemented by the agency fall within the safe harbors outlined in the Appendix; • Submit data or information required for the ongoing use of any activities within the MTW Waivers; and • Submit data required for HUD’s verification of the MTW agency’s compliance with the five statutory requirements established under the 1996 MTW Statute. Non-MTW PHAs that are qualified under 24 CFR 903.3(c) and that are not designated as troubled under PHAS and that do not have a failing score under SEMAP are exempt from the requirement to submit the Annual PHA Plan. Per this Operations Notice, while MTW agencies that are qualified under 24 CFR 903.3(c) are not required to submit the Annual PHA Plan, they are required to submit the MTW Supplement to the Annual PHA Plan on an annual basis. During the agency’s initial year of participation in the MTW demonstration, an agency may implement MTW activities once they have been included in an approved MTW Supplement, either during the next regularly scheduled submission of the Annual PHA Plan and MTW Supplement or through an amendment to the Annual PHA Plan, which would include the MTW Supplement. AgencySpecific Waiver Requests and activities may only be implemented after explicit written approval from HUD. MTW agencies must submit to HUD the Annual PHA Plan, including any required attachments, and the MTW Supplement no later than seventy-five (75) days prior to the start of the agency’s fiscal year. Before submission to HUD, the agency must have at least a 45-day public review period of its plan, after publishing a notice informing the public of its availability and conducting reasonable outreach to encourage participation in the plan process, followed by a public hearing. MTW agencies must consider, in consultation with the RABs, all of the comments received at the public hearing. The recommendations received by the public and RABs must be submitted by the agency as a required attachment to the Plan. MTW agencies must also include a narrative describing their analysis of the recommendations and the decisions made on these recommendations. Agencies must also PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 50397 obtain the proper signed certifications and board certification. HUD will notify the MTW agency in writing if HUD objects to any provisions or information in the Annual PHA Plan or the MTW Supplement. When the MTW agency submits its Plan seventyfive (75) days in advance of its fiscal year, HUD will respond to the MTW agency within 75 days. Reviews of the Annual PHA Plan and the MTW Supplement will be conducted by the local field office, in consultation with the MTW Office. iii. Admissions and Continued Occupancy Policy (ACOP) and Administrative Plan The MTW agency must update its ACOP and Administrative Plan to be consistent with the MTW activities and related waivers that it implements. The agency may not implement an MTW activity or waiver until the relevant sections of the ACOP and/or Administrative Plan are updated. MTW agencies must provide HUD with electronic versions of the ACOP and Administrative Plan upon request. If the MTW agency implements an activity using the local, non-traditional uses of funds waiver, the MTW agency must create and update an implementing document specifically for such activity. iv. Capital Planning and Reporting MTW agencies must adhere to CFP regulations at 24 CFR part 905, any implementing HUD Notices and guidance, as well as any successor regulations. As noted previously, MTW agencies are funded in accordance with CFP regulations and formula funds are calculated and distributed in the same manner as non-MTW agencies. MTW agencies have the authority and flexibility to utilize their CFP funds for expanded uses as part of their MTW funding flexibility. HUD will award Capital Fund grants to MTW agencies in keeping with the standard process for all PHAs. The Field Office will distribute funds in Line of Credit Control System (LOCCS) to the MTW agencies in accordance with the standard process. As with all PHAs, an MTW agency may draw down Capital Funds from HUD only when such funds are due and payable, unless HUD approves another payment schedule. To the extent that the MTW agency plans to use CFP funding for other MTWeligible (non-CFP) activities, the CFP funding would be recorded on BLI 1492 (Moving to Work) on Form HUD– 50075.1. CFP funds entered on BLI 1492 would not need to be broken out and itemized in the part II supporting pages of the HUD–50075.1. However, E:\FR\FM\05OCN1.SGM 05OCN1 50398 Federal Register / Vol. 83, No. 194 / Friday, October 5, 2018 / Notices regardless of the BLI utilized, funds may not be drawn down until the PHA has an immediate need for the funds. An MTW agency may not accelerate drawdowns of funds in order to fund reserves or to otherwise increase locally held amounts, as discussed in 4(a)(i)(b)(2) of this Notice. An MTW agency is not required to use all or any portion of its CFP grant for non-CFP activities. To the extent that the MTW agency wishes to dedicate all or a portion of its CFP grant to specific capital improvements, the agency shall record CFP funding on the appropriate BLI(s) on Form HUD–50075.1 (other than BLI 1492) as in the standard program. daltland on DSKBBV9HB2PROD with NOTICES v. Inventory Management System/PIH Information Center Reporting Data from HUD’s Inventory Management System (IMS) and Public and Indian Housing (PIH) Information Center (PIC), or successor systems, is critical to all aspects of program administration, including HUD monitoring and tracking of MTW agency progress in meeting the MTW statutory objectives. IMS/PIC data is used to establish funding eligibility levels for both Operating Subsidy Fund and Capital Fund grants. Further, HUD relies on IMS/PIC data to provide a thorough and comprehensive view of PHA program performance and compliance. MTW agencies are required to submit the following information to HUD via IMS/PIC (or its successor system): • Family data to IMS/PIC using Form HUD–50058 MTW (or successor forms) or Form HUD–50058 and in compliance with HUD’s 50058 MTW or standard 50058 submission requirements for MTW agencies. MTW agencies must report information on all families receiving some form of tenant-based or project-based housing assistance, either directly or indirectly, as well as all public housing families, to be current to at least a 95 percent level. • Current building and unit information in the development module of IMS/PIC (or successor system). • Basic data about the PHA (address, phone number, email address, etc.). HUD will monitor MTW agency reporting to IMS/PIC (or successor system) to ensure compliance and provide technical assistance to MTW agencies as needed. vi. Voucher Management System Reporting MTW agencies are required to report voucher utilization in the Voucher Management System (VMS), or its successor system. There are several areas in which VMS reporting is VerDate Sep<11>2014 17:11 Oct 04, 2018 Jkt 247001 different for MTW agencies. These areas are highlighted in the VMS User’s Manual (http://portal.hud.gov/ hudportal/documents/huddoc?id= instructions.pdf), which details the VMS reporting requirements. HUD will monitor each MTW agency’s VMS reporting to ensure compliance and provide technical assistance to MTW agencies as needed. vii. General Reporting Requirement In addition to the reporting requirements outlined in this Operations Notice, MTW agencies are required to comply with any and all HUD reporting requirements not specifically waived by HUD for participation in the MTW demonstration program, including the requirement (discussed in Section 5) to comply with HUD’s evaluation of the specific-policy changes being implemented by cohort. b. Performance Assessment Assessing the performance of PHAs (both MTW and non-MTW) helps with the delivery of services in the public housing and voucher programs and enhances trust among PHAs, public housing participants, HUD, and the general public. To facilitate this effort, HUD will provide management tools for effectively and fairly assessing the performance of a PHA in essential housing operations and program administration. Currently, HUD uses PHAS and SEMAP to assess risk and identify underperforming PHAs in the traditional public housing and voucher programs. However, since some of the MTW flexibilities make it difficult to accurately assess the performance of MTW agencies under the existing systems, HUD will develop an alternative, MTW-specific assessment system, which may be incorporated into PHAS and SEMAP (or successor assessment system(s)). MTW agencies may not opt out of the MTW-specific successor system(s). Until the successor system is implemented, HUD will monitor MTW agency performance through PHAS sub-scores. i. Public Housing Assessment System MTW agencies are scored in PHAS, however, agencies can elect not to receive the overall score (MTW agencies continue to receive PHAS sub-scores even if they elect not to receive the overall score). If an MTW agency elects to receive its overall PHAS score, the agency must continue to be scored for the duration of the demonstration, or until the agency is assessed under the alternative, MTW-specific assessment PO 00000 Frm 00068 Fmt 4703 Sfmt 4703 system(s), whichever comes first. Once developed, all MTW agencies, including MTW agencies that elect not to receive an overall PHAS score, must be assessed under the MTW-specific assessment system(s). Per the 1996 MTW statute, when providing public housing, the MTW agency must ensure that the housing is safe, decent, sanitary, and in good repair, according to the physical inspection protocols established and approved by HUD. Thus, MTW agencies continue to be subject to HUD physical inspections. To the extent that HUD physical inspections reveal deficiencies, the MTW agency must continue to address these deficiencies in accordance with existing physical inspection requirements. If an MTW agency does not maintain public housing adequately, as evidenced by the physical inspection performed by HUD and is determined to be troubled in this area, HUD will determine appropriate remedial actions. The actions to be taken by HUD and the agency will include actions statutorily required and such other actions as may be determined appropriate by HUD. These actions may include developing and executing a Memorandum of Agreement (MOA) with the MTW agency, suspension or termination of the MTW CACC Amendment in accordance with the provisions therein, or such other actions legally available to the Department. MTW agencies must continue to submit year-end financial information into the Financial Data System (FDS)or successor system, as discussed earlier. ii. Section 8 Management Assessment Program MTW agencies are not scored in SEMAP but they can elect to be scored if they choose to opt in. If an MTW agency elects to receive its overall SEMAP score, the agency must continue to be scored for the duration of the demonstration, or until the agency is assessed under the MTW-specific assessment system, whichever comes first. Once developed, all MTW agencies, including MTW agencies that opt out of SEMAP, must be assessed under the MTW-specific assessment system(s). c. Monitoring and Oversight MTW agencies remain subject to the full range of HUD monitoring and oversight efforts including, but not limited to, annual risk assessments, onsite monitoring reviews, monitoring reviews relating to VMS reporting and rent reasonableness, review of the accuracy of data reported into HUD data systems, and use of HUD data systems E:\FR\FM\05OCN1.SGM 05OCN1 Federal Register / Vol. 83, No. 194 / Friday, October 5, 2018 / Notices daltland on DSKBBV9HB2PROD with NOTICES to assess agency program performance, among other activities. i. MTW Statutory Requirements Throughout participation in the MTW demonstration program, all MTW agencies must continue to meet five statutory requirements established under the 1996 MTW Statute. Implementation, monitoring and enforcement of the five statutory requirements will be discussed in greater detail in the final version of this Operations Notice, and specific enforcement processes will be included in the MTW CACC Amendment (see also, section 11 of this Notice). HUD will monitor and determine MTW agencies’ compliance with these five requirements as follows: (a) MTW agencies must ensure that at least 75 percent of the families assisted are very low-income families, in each fiscal year, as defined in section 3(b)(2) of the 1937 Act. (i) HUD Verification Approach: Initial household certification data recorded in PIC will be used for both the public housing and HCV programs for compliance monitoring purposes. The initial certification is comprised only of new admissions in the agency’s given fiscal year. Initial household certification data for families housed through local, non-traditional activities (in accordance with the Appendix) will be provided in a manner specified by the Department. An agency’s portfolio will then be weighted with respect to the number of households being served by each housing program type (i.e., PH, HCV, Local, Non-Traditional). (b) MTW agencies must establish a reasonable rent policy which shall be designed to encourage employment and self-sufficiency by participating families, consistent with the purpose of this demonstration, such as by excluding some or all of a family’s earned income for purposes of determining rent. (i) HUD Verification Approach: HUD defines rent reform as any change in the regulations on how rent is calculated for a household. Upon designation into the MTW demonstration, agencies are to submit their planned policy to implement a reasonable rent policy in the MTW Supplement. All activities falling under the Tenant Rent Policies category, detailed in the Appendix, meet the definition of a reasonable rent policy. An MTW agency must implement one or multiple reasonable rent policies during the term of its MTW designation (MTW agencies in the rent reform cohort may have prescribed deadlines to implement their reasonable rent policies). VerDate Sep<11>2014 17:11 Oct 04, 2018 Jkt 247001 (c) MTW agencies must continue to assist substantially the same total number of eligible low-income families as would have been served had the amounts not been combined. (i) HUD Verification Approach: HUD continues to consider the best approach to monitor the MTW statutory requirement that MTW agencies serve substantially the same number of families absent the demonstration. The main themes and principles for this effort include a Substantially the Same (STS) methodology that: Ensures substantially the same number of families are housed; allows for local flexibility; is responsive to changing budgetary climates; is feasible for HUD to administer; is easy for MTW agencies to predict compliance; is straight forward to understand; is calculated each year; and has publicly available results. First, the STS methodology would establish a baseline ratio of dollars the agency expends and families housed. Before an agency enters the MTW demonstration, the public housing funding and the HCV HAP funding spent by the agency in the prior CY would be divided by the current number of families housed in each program. This calculation would yield how many families the agency houses per $100,000 of funding in both the public housing and HCV programs. Each year during an agency’s participation in the MTW demonstration, the baseline number of total families housed per $100,000 of funding in both the public housing and HCV programs would be applied to the agency’s actual funding for that calendar year. So, for example, the agency would know that if it is appropriated ‘‘x number of dollars,’’ it would be required to house ‘‘y number of families.’’ Depending on the specific circumstances of the agency, a dip below the baseline year number would be allowed. HUD is exploring methods to ensure that the ratio of families housed per $100,000 in the baseline year continues to be an accurate measure of ‘‘substantially the same’’ service levels in future years of the MTW designation. There would also be opportunities for PHAs to request adjustments of the baseline ratio to account for changes in costs due to special circumstances. The following is an example of the STS baseline ratio calculation: Baseline Year (Calendar Year Before Agency Enters MTW) • Agency expends $800,000 in HCV HAP funds and houses 100 HCV families. Agency then houses 12.5 HCV families per $100,000 of HCV funds. PO 00000 Frm 00069 Fmt 4703 Sfmt 4703 50399 • Agency expends $500,000 in public housing funds and houses 75 public housing families. Agency then houses 15 public housing families per $100,000 public housing funds. First Year in MTW Demonstration • MTW agency receives $900,000 in HCV HAP funds and $300,000 in public housing funds. • MTW agency must house 112.5 families for the HCV share and 45 families for the public housing share. Therefore, in this example, the MTW agency is required to house 157 total families flexibly with its MTW funds (this may be in the public housing program, the HCV program, a local, nontraditional rental subsidy program, or a local, non-traditional development program 16). (d) MTW agencies must maintain a comparable mix of families (by family size) as would have been provided had the amounts not been used under the demonstration. (i) HUD Verification Approach: In order to establish a comparable mix baseline, the Department will pull data, by family size, for occupied public housing units and leased vouchers at the time of entry into the demonstration. The Department will rely upon agencyreported data into HUD systems (i.e., PIC, VMS). This information will be used to establish baseline percentages, by family size, to which the agency is measured by for the remainder of participation. Following entry into the demonstration, agencies will provide comparable mix data and, if applicable, associated justifications in the MTW Supplement. The Department deems an acceptable level of variation to be no more than 5 percent from the baseline. Justifications or explanations for fluctuations greater than 5 percent are required and subject to the Department’s review. (e) MTW agencies must ensure that housing assisted under the demonstration meets housing quality standards established or approved by the Secretary. 16 MTW agencies may use their MTW Funding to develop affordable housing units that are outside of the traditional public housing and HCV programs. Such local, non-traditional development allows for the creation of important affordable housing resources, which must be balanced with the existing and immediate needs of families waiting for housing assistance. It is therefore necessary to relate the amount of the MTW agency’s total available MTW Funding investment to the number of affordable units developed. To that end, HUD will divide the MTW agency’s total available MTW Funding in the local, non-traditional development by the HUD-published Total Development Cost (TDC). The resulting number of units would then count as families housed for the length of time the units remained affordable. E:\FR\FM\05OCN1.SGM 05OCN1 50400 Federal Register / Vol. 83, No. 194 / Friday, October 5, 2018 / Notices (i) HUD Verification Approach: In order to demonstrate that the MTW agency meets housing quality standards, HUD will verify compliance for each housing program type as follows: • HCV—Program regulations at 24 CFR part 982 set forth basic housing quality standards (HQS) for housing assisted under the HCV program. These housing quality standards, or its successor regulations, are the standards used to determine if the agency is fulfilling its responsibilities to ensure owners are maintaining the units in accordance with HQS in the evaluation of an agency. Agencies with an HCV program must certify in the MTW Supplement that they have fulfilled their responsibilities to comply with and ensure enforcement of HQS under this requirement. • Public Housing—HUD will verify this requirement through its review of PHAS Physical Assessment Subsystem (PASS) scores, or successor assessment system. Scores falling below 24 out of 40 will be identified as non-compliant with the statutory requirement. • Local, Non-Traditional—In the MTW Supplement, MTW Agencies must certify that local, non-traditional units meet housing quality standards as required in PIH Notice 2011–45, or successor notice. ii. Income Integrity and Enterprise Income Verification System (EIV) Reviews MTW agencies are required to comply with the final rule regarding EIV issued December 29, 2009, and utilize EIV for all income verifications. EIV has been modified for MTW agencies so that family information submitted in PIC will not expire for 40 months, in order to accommodate agencies choosing to extend recertification periods for up to three years. MTW agencies are subject to HUD review to ensure compliance with EIV requirements as well as monitor the accuracy and integrity of the MTW agencies’ income and rent determination policies, procedures, and outcomes. daltland on DSKBBV9HB2PROD with NOTICES iii. MTW Site Visit HUD will periodically conduct site visits to provide guidance, discuss the MTW agency’s MTW activities, and offer any needed technical assistance regarding its program. The purpose of a site visit will be to confirm reported agency MTW activities, to review the status and effectiveness of the agency’s MTW strategies, provide technical assistance, and to identify and resolve outstanding MTW related issues. VerDate Sep<11>2014 17:11 Oct 04, 2018 Jkt 247001 The MTW agency shall give HUD access, at reasonable times and places, to all requested sources of information, including access to files, access to units, and an opportunity to interview agency staff and assisted participants. Where travel funding or staff resources are not available to facilitate in-person site visits, HUD may exercise the option to conduct remote site visits via telephone, videoconference, or webinar. To the extent possible, HUD will coordinate the MTW site visit with other site visits to be conducted by HUD. iv. Housing Choice Voucher Utilization HUD will monitor HCV utilization at MTW agencies and will ensure that HCV funds are utilized in accordance with Section 4(a)(i)(c) and Section 6(c)(i)(c) of this Notice. Where leasing levels are inconsistent with the requirements of this Notice, HUD may take appropriate actions to work with the MTW agency to increase leasing and utilization. v. Public Housing Occupancy HUD will monitor public housing occupancy rates for MTW agencies. In instances where the MTW agency’s public housing occupancy rate falls below 96 percent, HUD may require, at its discretion, that the MTW agency enter into an Occupancy Action Plan to address the occupancy issues. The Occupancy Action Plan will include the cause of the occupancy issue, the intended solution, and reasonable timeframes to address the cause of the occupancy issue. vi. Additional Monitoring and Oversight HUD may, based on the MTW agency’s risks and at HUD’s discretion, conduct management, programmatic, financial, or other reviews of the MTW agency. The MTW agency shall respond to any findings with appropriate corrective action(s). In addition, HUD will make use of all HUD data systems and available information to conduct ongoing remote monitoring and oversight actions for MTW agencies, consistent with the results of the PIH risk assessment. 7. Rental Assistance Demonstration Program MTW agencies converting public housing program units to Section 8 assistance under the Rental Assistance Demonstration (RAD) program are able to retain MTW regulatory and statutory flexibilities in the management of those units, subject to RAD requirements, if the conversion is to Project Based PO 00000 Frm 00070 Fmt 4703 Sfmt 4703 Voucher (PBV) assistance. MTW agencies converting projects under RAD to PBV may continue to undertake flexibilities except to the extent limited by RAD, as described in the RAD Notice, PIH 2012–32, REV–3, or its successor Notice.17 8. Applying MTW Flexibilities to Special Purpose Vouchers Special Purpose Vouchers (SPVs) are specifically provided for by Congress in line item appropriations, which distinguish them from regular vouchers. Except for enhanced vouchers and tenant-protection vouchers (described below), SPVs are not part of the MTW demonstration and are not part of the MTW agency’s total available flexible MTW Funding. The funding is renewed outside of the MTW HAP renewal formula and the funding (both the initial increment and renewal funding) for the SPVs may only be used for eligible SPV purposes. There are no additional MTW flexibilities around using MTW funds to cover SPV shortfalls. MTW PHAs may use non-HAP sources to cover shortfalls, following the procedures outlined in Notice PIH 2013–28. PHAs already have the ability to use HAP reserve funds to address SPV instances of shortfalls, where the SPVs are under the same appropriations allocation for renewal as their Section 8 vouchers.18 a. HUD-Veterans Affairs Supportive Housing HUD-Veterans Affairs Supportive Housing (HUD–VASH) vouchers have separate operating requirements and must be administered in accordance with the requirements listed at www.hud.gov/program_offices/public_ indian_housing/programs/hcv/vash. The operating requirements waive and alter many of the standard HCV statutes and regulations at 24 CFR part 982. Unless stated in the HUD–VASH operating requirements, however, the regulatory requirements at 24 CFR part 982 and all other HUD directives for the HCV program are applicable to HUD– VASH vouchers. Agencies may submit a request to HUD to operate HUD–VASH vouchers in accordance with MTW administrative flexibilities. b. Family Unification Program The Family Unification Program (FUP) NOFA language allows vouchers to be administered in accordance with MTW operations, unless MTW provisions are inconsistent with the 17 Notices and laws related to RAD can be found at http://portal.hud.gov/hudportal/HUD?src=/RAD/ library/notices. 18 https://portal.hud.gov/hudportal/documents/ huddoc?id=DOC_10495.pdf. E:\FR\FM\05OCN1.SGM 05OCN1 Federal Register / Vol. 83, No. 194 / Friday, October 5, 2018 / Notices appropriations act or requirements of the FUP NOFA. In the event of a conflict between the Operations Notice and the appropriations act or FUP NOFA language, the act and NOFA govern. daltland on DSKBBV9HB2PROD with NOTICES c. Non-Elderly Persons With Disabilities Vouchers The Non-Elderly Persons with Disabilities (NED) NOFA language allows vouchers to be administered in accordance with MTW operations unless MTW provisions are inconsistent with the appropriations act or requirements of the NED NOFA. In the event of a conflict between the Operations Notice and the appropriations act or FUP NOFA language, the act and NOFA govern. d. Enhanced Vouchers and Tenant Protection Vouchers Enhanced and tenant protection voucher funds become fungible once the initial funding increment is renewed. The agency must continue to provide rental assistance to enhanced voucher families and tenant protection voucher families after the initial funding increment is renewed. The statutory enhanced voucher requirements under Section 8(t) of the 1937 Act (e.g., the HAP calculation) apply to an enhanced voucher family until the family either moves from the project or leaves the HCV tenant-based program for any reason. MTW agencies must follow the procedures described in Notice PIH 2013–27, or its successor Notice, for a recipient of an enhanced voucher to voluntarily agree to relinquish their tenant-based assistance in exchange for PBV assistance. When an enhanced voucher family moves from the project, either after initially receiving the voucher or anytime thereafter, the Section 8(t) enhanced voucher requirements no longer apply. The voucher is then administered in accordance with the regular HCV program requirements, as modified by the agency’s individual MTW waivers and MTW policies for its tenant-based HCV program. Regular tenant protection vouchers (i.e., tenant protection vouchers that are not enhanced vouchers) are always administered in accordance with the normally applicable HCV program requirements, as modified by the agency’s individual MTW waivers and MTW policies for its tenant-based HCV program, regardless of whether the family stays or moves from the project. 9. Applicability of Other Federal, State, and Local Requirements Notwithstanding the MTW Waivers and associated activities provided in VerDate Sep<11>2014 17:11 Oct 04, 2018 Jkt 247001 this Operations Notice, the following provisions of the 1937 Act continue to apply to MTW agencies and the assistance received pursuant to the 1937 Act: i. The terms ‘‘low-income families’’ and ‘‘very low-income families’’ shall continue to be defined by reference to Section 3(b)(2) of the 1937 Act (42 U.S.C. 1437a(b)(2)); ii. Section 12 of the 1937 Act (42 U.S.C. 1437j), as amended, shall apply to housing assisted under the demonstration, other than housing assisted solely due to occupancy by families receiving tenant-based assistance; iii. Section 18 of the 1937 Act (42 U.S.C. 1437p, as amended by Section 1002(d) of Pub. L. 104–19, Section 201(b)(1) of Pub. L. 104–134, and Section 201(b) of Pub. L. 104–202), governing demolition and disposition, shall continue to apply to public housing notwithstanding any use of the housing under MTW; and iv. Section 8(r)(1) of the 1937 Act on HCV portability shall continue to apply unless provided as a cohort-specific waiver and associated activity(s) in an evaluative cohort as necessary to implement comprehensive rent reform and occupancy policies. Such a cohortspecific waiver and associated activity(s) would contain, at a minimum, exceptions for requests to port due to employment, education, health and safety, and reasonable accommodation. Notwithstanding any requirement contained in this Notice or any MTW Waiver and associated activity granted herein, other Federal, state and local requirements applicable to public housing or HCV assistance will continue to apply. The MTW CACC Amendment will place in HUD the authority to determine if any future law or future regulation conflicts with any MTWrelated agreement or Notice. If a future law conflicts, the law shall be implemented, and no breach of contract claim, or any claim for monetary damages, may result from the conflict or implementation of the conflicting law or regulation. If any non-1937 Act requirement applicable to PHAs, public housing, or HCV assistance contains a provision that conflicts or is inconsistent with any MTW Waiver and associated activity granted by HUD, the agency remains subject to the terms of that non-1937 Act requirement. Such requirements include, but are not limited to: • Requirements for Federal Funds: Notwithstanding the flexibilities described in this Notice, the public housing and voucher funding provided PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 50401 to MTW agencies remain Federal funds and are subject to any and all other Federal requirements outside of the 1937 Act (e.g., including, but not limited to, competitive HUD NOFAs under which the MTW agency has received an award, state and local laws, Federal statutes other than the 1937 Act (including appropriations acts), and OMB Circulars and requirements), as modified from time to time. The MTW agency’s expenditures must comply with 2 CFR part 200 and other applicable Federal requirements, which provide basic guidelines for the use of Federal funds, including the requirements of this Notice. • National Environmental Policy Act (NEPA): MTW agencies must comply with NEPA, 24 CFR part 50 or part 58, as applicable, and other related Federal laws and authorities identified in 24 CFR. Part 50 or part 58, as applicable. Information and guidance on the environmental review process and requirements is provided in PIH Notice 2016–22, or successor notice. • Fair Housing and Equal Opportunity: As with the administration of all HUD programs and all HUDassisted activities, fair housing, and civil rights issues apply to the administration of MTW demonstration programs. This includes actions and policies that may have a discriminatory effect on the basis of race, color, sex, national origin, religion, disability, or familial status (see 24 CFR part 1 and part 100 subpart G) or that may impede, obstruct, prevent, or undermine efforts to affirmatively further fair housing. Annual PHA Plans must include a civil rights certification required by Section 5A of the 1937 Act and implemented by regulation at 24 CFR 903.7(o) and 903.15, as well as a statement of the PHA’s strategies and actions to achieve fair housing goals outlined in an approved Assessment of Fair Housing (AFH) consistent with 24 CFR 5.154. If the PHA does not have a HUD-accepted AFH, it must still provide a civil rights certification and statement of the PHA’s fair housing strategies, which would be informed by the corresponding jurisdiction’s AFH and the PHA’s assessment of its own operations. All PHAs, including MTW agencies, are obligated to comply with nondiscrimination and equal opportunity laws and implementing regulation, including those in 24 CFR 5.105. Specific laws and regulations must be viewed in their entirety for full compliance, as this Operations Notice does not incorporate a complete discussion of all legal authorities. For example, PHAs, including MTW agencies, are required to comply with E:\FR\FM\05OCN1.SGM 05OCN1 daltland on DSKBBV9HB2PROD with NOTICES 50402 Federal Register / Vol. 83, No. 194 / Friday, October 5, 2018 / Notices the Fair Housing Act, Title VI of the Civil Rights Act of 1964, Section 504 of the Rehabilitation Act of 1973, Title II of the Americans with Disabilities Act of 1990, Architectural Barriers Act of 1968, Executive Order 11063: Equal Opportunity in Housing, Executive Order 13166: Improving Access to Services for Persons with Limited English Proficiency, HUD’s Equal Access Rule (24 CFR 5.105(a)(2), Age Discrimination Act of 1975, and Title IX of the Education Amendments Act of 1972, as well as HUD and governmentwide regulations implementing these authorities. PHAs should review PIH Notice 2011–31 for more details. • Court Orders and Voluntary Compliance Agreements: MTW agencies must comply with the terms of any applicable court orders or Voluntary Compliance Agreements that are in existence or may come into existence during the term of the MTW CACC Amendment. The PHA must cooperate fully with any investigation by the HUD Office of Inspector General or any other investigative and law enforcement agencies of the U.S. Government. admitted pursuant to the 2016 MTW Expansion Statute, including all of the provisions of this Operations Notice and the accompanying MTW CACC Amendment. Should an existing MTW agency elect to administer its MTW program pursuant to the framework described in this Operations Notice, it will not be required to implement the cohortspecific policy change associated with any of the MTW cohorts and it will not be required to participate in the evaluation of that specific policy change. All other requirements in this Operations Notice will apply. 10. MTW Agencies Admitted Prior to 2016 MTW Expansion Statute The 39 MTW agencies that entered the MTW demonstration prior to the 2016 MTW Expansion Statute adhere to an administrative structure outlined in the Standard MTW Agreement, a contract between each current agency and HUD. The 2016 MTW Expansion Statute extended the term of the Standard MTW Agreement for these existing MTW agencies through each agency’s 2028 fiscal year. Some agencies that entered the MTW demonstration prior to the 2016 MTW Expansion Statute may wish to opt out of their Standard MTW Agreement and administer their MTW program pursuant to the MTW Expansion and the requirements in this MTW Operations Notice. HUD will support an existing MTW agency’s request to join the MTW Expansion provided that the agency: • Makes the change at the end of its fiscal year, so that it does not have part of a fiscal year under the Standard Agreement and part under the Operations Notice; • follows the same public comment and Board resolution process as would be required for amending the Standard MTW Agreement; • executes its MTW CACC Amendment to authorize participation in the MTW demonstration consistent with the Operations Notice; and • agrees to all the terms and conditions that apply to MTW agencies A Finding of No Significant Impact (FONSI) with respect to the environment was made for a previous version of this Notice in accordance with HUD regulations in 24 CFR part 50 that implement section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The FONSI is applicable to the current version of the Notice because there were no significant changes to the provisions of the Notice. The FONSI will be available for public inspection on www.regulations.gov. VerDate Sep<11>2014 17:11 Oct 04, 2018 Jkt 247001 11. Sanctions, Terminations, and Default If the MTW agency violates any of the requirements outlined in this Notice, HUD is authorized to take any corrective or remedial action permitted by law. Sanctions, terminations, and default are covered in the agency’s MTW CACC Amendment. III. Environmental Impact 1. Purpose and Applicability Dated: August 24 2018. Robert E. Mulderig, Acting Deputy Assistant Secretary for Public Housing Investments. [FR Doc. 2018–21723 Filed 10–4–18; 8:45 am] BILLING CODE 4210–67–P DEPARTMENT OF THE INTERIOR Bureau of Land Management [LLOR932000.L16100000. DP0000.LXSSH0930000.18X.HAG 18–0143] Notice of Availability of the Draft Resource Management Plan/ Environmental Impact Statement for the San Juan Islands National Monument, Washington Bureau of Land Management, Interior. ACTION: Notice of availability. AGENCY: PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 In accordance with the National Environmental Policy Act of 1969, as amended, and the Federal Land Policy and Management Act of 1976 (FLPMA), as amended, the Bureau of Land Management (BLM) has prepared a Draft Resource Management Plan (RMP) and Draft Environmental Impact Statement (EIS) for the San Juan Islands National Monument, and, by this notice, is announcing the opening of the comment period. DATES: To ensure that comments will be considered, the BLM must receive written comments on the Draft RMP and Draft EIS within 90 days following the date the Environmental Protection Agency publishes its Notice of Availability of the Draft RMP and Draft EIS in the Federal Register. The BLM will announce future meetings or hearings and any other public participation activities at least 15 days in advance through public notices, media releases, and/or mailings. ADDRESSES: You may submit comments related to the San Juan Islands National Monument Draft RMP and Draft EIS by any of the following methods: • Website: https://go.usa.gov/xRphc. • Email: blm_or_sanjuanislandsnm@ blm.gov. • Fax: 509–536–1275. • Mail: San Juan Islands National Monument Comments, Lopez Island BLM Office, PO Box 3, Lopez, WA 98261. Copies of the San Juan Islands National Monument Draft RMP and Draft EIS are available at the BLM Lopez Island Office (37 Washburn Place, Lopez Island, WA 98261), the BLM Spokane District Office (1103 N Fancher Rd, Spokane Valley, WA 99212), and the BLM Oregon/Washington State Office (1220 SW 3rd Avenue, Portland, OR 97204). The document is also available on the following website: https:// go.usa.gov/xRphc. FOR FURTHER INFORMATION CONTACT: Lauren Pidot, Planner, 503–808–6297; Lopez Island BLM Office, PO Box 3, Lopez, WA 98261; lpidot@blm.gov. Persons who use a telecommunications device for the deaf (TDD) may call the Federal Relay Service (FRS) at 1–800– 877–8339 to contact the above individual during normal business hours. FRS is available 24 hours a day, 7 days a week, to leave a message or a question with the above individual. You will receive a reply during normal business hours. SUPPLEMENTARY INFORMATION: The BLM has prepared the San Juan Islands National Monument Draft RMP/EIS to evaluate potential management strategies for the San Juan Islands SUMMARY: E:\FR\FM\05OCN1.SGM 05OCN1

Agencies

[Federal Register Volume 83, Number 194 (Friday, October 5, 2018)]
[Notices]
[Pages 50387-50402]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-21723]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5994-N-03]


Operations Notice for the Expansion of the Moving to Work 
Demonstration Program

AGENCY: Office of Public and Indian Housing, HUD.

ACTION: Notice.

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SUMMARY: The Public Housing/Section 8 Moving to Work (MTW) 
demonstration program was first established under Section 204 of the 
Omnibus Consolidated Rescissions and Appropriations Act of 1996 to 
provide statutory and regulatory flexibility to participating public 
housing agencies (PHAs) under three statutory objectives. Those three 
statutory objectives are: To reduce cost and achieve greater cost 
effectiveness in Federal expenditures; to give incentives to families 
with children whose heads of household are either working, seeking 
work, or are participating in job training, educational or other 
programs that assist in obtaining employment and becoming economically 
self-sufficient; and to increase housing choices for low-income 
families. This Operations Notice for the Expansion of the MTW 
Demonstration Program (Operations Notice) establishes requirements for 
the implementation and continued operation of the MTW demonstration 
program pursuant to the 2016 MTW Expansion Statute.

DATES: Comment Due Date: November 19, 2018.

Submission of Comments

    Electronic Submission of Comments. HUD strongly encourages 
interested persons to submit comments electronically. Electronic 
submission of comments allows the commenter maximum time to prepare and 
submit a comment, ensures timely receipt by HUD, and enables HUD to 
make them immediately available to the public. Interested persons may 
submit comments electronically through the Federal eRulemaking Portal 
at www.regulations.gov. Comments submitted electronically through the 
www.regulations.gov website can be viewed by other commenters and 
interested members of the public. Commenters should follow the 
instructions provided on that site to submit comments electronically.
    Submission of Comments by Mail. Alternatively, interested persons 
may submit comments regarding this Notice to the Regulations Division, 
Office of General Counsel, Department of

[[Page 50388]]

Housing and Urban Development, 451 7th Street SW, Room 10276, 
Washington, DC 20410-0500. Communications must refer to the above 
docket number and title.
    Note: To receive consideration as public comments, comments must be 
submitted through one of the two methods specified above. Again, all 
submissions must refer to the docket number and title of the Notice.
    No Facsimile Comments. Facsimile (fax) comments are not acceptable.
    Public Inspection of Public Comments. All properly submitted 
comments and communications submitted to HUD will be available for 
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the 
above address. Due to security measures at the HUD Headquarters 
building, an appointment to review the public comments must be 
scheduled in advance by calling the Regulations Division at 202-708-
3055 (this is not a toll-free number). Individuals with speech or 
hearing impairments may access this number via TTY by calling the 
Federal Relay Service at 1-800-877-8339 (this is a toll-free number). 
Copies of all comments submitted are available for inspection and 
downloading at www.regulations.gov.

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

SUPPLEMENTARY INFORMATION:

I. Background

    Section 239 of the Fiscal Year 2016 Appropriations Act, Public Law 
114-113 (2016 MTW Expansion Statute), signed by the President in 
December 2015, authorizes HUD to expand the MTW demonstration program 
from the current size of 39 agencies to an additional 100 agencies over 
a period of 7 years. This Notice was originally published on January 
23, 2017, in the Federal Register, entitled ``Operations Notice for the 
Expansion of the Moving to Work Demonstration Program Solicitation of 
Comment.'' On May 4, 2017, the Notice was republished with three 
technical revisions and an extension of the comment period. HUD took 
all comments received into consideration.
    Changes to this Notice have been made to incorporate feedback from 
the two previous publications and to reflect policy decisions. The 
primary changes are as follows:
     The term of participation has been set at 12 years from 
the year of designation in response to public comments for the term to 
be at least 10 years from the year of designation.
     In response to public comments, the Department removed the 
General Waivers and Conditional Waivers categories and replaced them 
with a singular MTW Waivers category, which MTW agencies may implement 
without further approval from HUD.
    [cir] In restructuring the MTW Waivers, the Notice now includes 
safe harbors, which are defined as the additional requirements, beyond 
those specified in the activity description, that the agency must 
follow in implementing activities without further HUD approval.
    [cir] MTW Waivers now include specific guidance on impact analyses, 
hardship policies, and applicability of waivers to elderly/disabled 
families.
    [cir] An additional MTW Waiver was added: ``Increase Elderly Age,'' 
which allows agencies to amend the definition of an elderly person to 
be an individual who is at least sixty-five.
    [cir] The Homeownership Waiver was removed. Upon reviewing this 
waiver, the Department determined that the activities provided to 
agencies under the waiver were already available under the Section 32 
Homeownership Program.
     The 90 percent voucher utilization requirement was 
removed. The MTW Housing Assistance Payment (HAP) Renewal Formula has 
been revised to use as a base, all prior-year MTW-eligible Housing 
Choice Voucher (HCV) funding expenses paid from HAP, including HAP 
expenses plus non-HAP expenses.
     For a prospective agency to be eligible for selection to 
the MTW demonstration, it must be a high performer in either the Public 
Housing Assessment System (PHAS) or the Section Eight Management 
Assessment Program (SEMAP).
     Regionalization was removed from the MTW Operations Notice 
and will be implemented through a separate forthcoming notice.
     Agencies will formalize their MTW status with an amendment 
to their Annual Contributions Contract.
     The monitoring of the requirement that an MTW agency 
designated pursuant to the 2016 MTW Expansion Statute continues to 
assist substantially the same number of families has been simplified. 
Compliance will be determined using a baseline ratio of total public 
housing and HCV HAP funding to families served.

MTW Demonstration Program

    The MTW demonstration program was first established under Section 
204 of Title II of section 101(e) of the Omnibus Consolidated 
Rescissions and Appropriations Act of 1996, Public Law 104-134, 110 
Stat. 1321-281; 42 U.S.C. 1437f note (1996 MTW Statute) \1\ to provide 
statutory and regulatory flexibility \2\ to participating PHAs under 
three statutory objectives. Those three statutory objectives are to:
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    \1\ PHAs currently operating an MTW demonstration program 
include PHAs with an active MTW agreement as of December 15, 2015. 
PHAs currently operating an MTW program do not include PHAs that 
previously participated in the MTW demonstration and later left the 
demonstration.
    \2\ The MTW demonstration program may only provide certain 
flexibilities under the 1937 Act. For more information on the 
history of the MTW demonstration program, please go to: www.hud.gov/mtw.
---------------------------------------------------------------------------

     Reduce cost and achieve greater cost effectiveness in 
Federal expenditures;
     give incentives to families with children where the head 
of household is working, seeking work, or is preparing for work by 
participating in job training, educational programs, or programs that 
assist people to obtain employment and become economically self-
sufficient; and
     increase housing choices for eligible low-income families.
    To achieve these objectives, PHAs selected for participation in the 
MTW demonstration are given exemptions from many existing public 
housing and HCV rules and offered more flexibility with how they use 
their Federal funds. MTW agencies use this opportunity presented by the 
MTW demonstration to better address local housing needs. HUD learns 
from the experience of MTW agencies to develop new housing policy 
recommendations that can positively impact assisted housing delivery 
for PHAs nationwide.
    In addition to statutory and regulatory relief,\3\ MTW agencies 
have the flexibility to apply fungibility among three core funding 
programs' funding streams--public housing Operating Funds, public 
housing Capital Funds, and HCV assistance (to include both HAP and 
Administrative Fees)--hereinafter referred to as ``MTW Funding.'' \4\ 
These flexibilities do not

[[Page 50389]]

negate the need for both the PHA and HUD to be able to account for the 
funding from its original source to the date of its ultimate eligible 
use \5\ by the PHA, to comply with Federal grant and financial 
management requirements, and to use funds effectively and efficiently 
for their eligible purposes. As the Department continues to implement 
program-specific financial management policies in its core housing 
programs, MTW agencies will be subject to the same requirements and 
procedures as non-MTW agencies. Therefore, the requirements and 
procedures described in this Notice may change as new financial 
management policies are implemented over time.
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    \3\ For more information about the MTW demonstration program and 
the specific activities of existing MTW agencies, please refer to 
the MTW website at www.hud.gov/mtw.
    \4\ Funds awarded under Sections 8(o), 9(d), and 9(e) of the 
1937 Act are eligible for expanded uses pursuant to MTW fungibility, 
with the exception of funds provided for specific non-MTW HCV sub-
programs. Other funds a PHA may receive (i.e., grant funds under 
another obligating document) are likewise not covered by MTW 
flexibilities and must be tracked and reported under the applicable 
rules and requirements.
    \5\ The date of the ``ultimate eligible use'' means the date of 
disbursement by the PHA for an eligible purpose, which would remove 
the funding from the PHA's account and the PHA's control.
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    Throughout participation in the MTW demonstration program, MTW 
agencies must continue to meet five statutory requirements established 
under the 1996 MTW Statute. The five statutory requirements are:
     At least 75 percent of the families assisted by 
participating demonstration public housing authorities shall be very 
low-income families, as defined in section 3(b)(2) of the United States 
Housing Act of 1937;
     establishing a reasonable rent policy, which shall be 
designed to encourage employment and self-sufficiency by participating 
families, consistent with the purpose of this demonstration, such as by 
excluding some or all of a family's earned income for purposes of 
determining rent;
     continuing to assist substantially the same total number 
of eligible low-income families as would have been served had the 
amounts not been combined;
     maintaining a comparable mix of families (by family size) 
as would have been provided had the amounts not been used under the 
demonstration; and
     assuring that housing assisted under the demonstration 
program meets housing quality standards established or approved by the 
Secretary.
    Currently, there are 39 agencies \6\ participating in the MTW 
demonstration program. The administrative structure for these 39 
agencies is outlined in the Standard MTW Agreement, a contract between 
each existing MTW agency and HUD. The 2016 MTW Expansion Statute 
extended the term of the Standard MTW Agreement through each of the 
existing MTW agencies' 2028 fiscal year.
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    \6\ The 39 agencies are: Alaska Housing Finance Corporation; 
Atlanta Housing Authority; Housing Authority of the City of 
Baltimore; Boulder Housing Partners; Cambridge Housing Authority; 
Housing Authority of Champaign County; Charlotte Housing Authority; 
Chicago Housing Authority; Housing Authority of Columbus, Georgia; 
District of Columbia Housing Authority; Delaware State Housing 
Authority; Fairfax County Redevelopment and Housing Authority; 
Holyoke Housing Authority; Keene Housing; King County Housing 
Authority; Lawrence-Douglas County Housing Authority; Lexington-
Fayette Urban County Housing Authority; Lincoln Housing Authority; 
Louisville Metropolitan Housing Authority; Massachusetts Department 
of Housing and Community Development; Minneapolis Public Housing 
Authority; Housing Authority of the City of New Haven; Oakland 
Housing Authority; Orlando Housing Authority; Philadelphia Housing 
Authority; Housing Authority of the City of Pittsburgh; Portage 
Metropolitan Housing Authority; Home Forward (Portland, OR); Housing 
Authority of the City of Reno; San Antonio Housing Authority; 
Housing Authority of the County of San Bernardino; San Diego Housing 
Commission; Housing Authority of the County of San Mateo; Housing 
Authority of the County of Santa Clara/City of San Jose; Seattle 
Housing Authority; Tacoma Housing Authority; Housing Authority of 
Tulare County; and Vancouver Housing Authority.
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2016 Expansion of the MTW Demonstration Program

    As the 2016 MTW Expansion Statute directs, HUD is authorized to 
expand the MTW demonstration program from the current level of 39 
agencies to an additional 100 agencies over a period of 7 years, ending 
in 2023. In expanding the MTW demonstration, HUD intends to build on 
the successes and lessons learned from the demonstration thus far. The 
vision for the MTW expansion is to learn from MTW interventions to 
improve the delivery of Federally assisted housing and promote self-
sufficiency for low-income families across the Nation. Through the 
expansion, HUD will extend flexibility to a broader range of PHAs both 
in terms of size and geographic diversity and will balance the 
flexibility inherent in MTW with the need for measurement, evaluation, 
and prudent oversight.
    HUD will select the additional 100 PHAs in cohorts, with 
applications for each cohort to be sought via PIH Notice. For each 
cohort of agencies selected, the 2016 MTW Expansion Statute requires 
HUD to direct all the agencies within the cohort to implement one 
specific policy change, which HUD will evaluate rigorously. MTW 
agencies may implement policy changes in addition to the policy change 
directed by HUD as long as those policy changes do not conflict or 
interfere with the cohort study. As required by the 2016 MTW Expansion 
Statute, the HUD-appointed MTW Research Advisory Committee, described 
further below, advised HUD on the policy changes to be tested through 
the new cohorts of MTW agencies and the methods of research and 
evaluation.
    The 2016 MTW Expansion Statute also includes a provision allowing 
the Secretary to designate an MTW agency as a regional MTW agency--at 
the request of said agency--should the Secretary determine that unified 
administration of assistance ``under sections 8 and 9 of the United 
States Housing Act of 1937 (42 U.S.C. 1437f and g)'' by that agency 
across multiple jurisdictions will lead to (a) efficiencies and to (b) 
greater housing choice for low-income persons in the region. HUD will 
issue separate guidance regarding how an MTW agency may be designated 
as a regional MTW agency.
Eligibility and Selection for the Expansion of the MTW Demonstration
    The 2016 MTW Expansion Statute provides that the 100 MTW agencies 
selected must be high performers in either HUD's Public Housing 
Assessment System (PHAS) or its Section Eight Management Assessment 
Program (SEMAP) at the time of application to the demonstration, and 
represent geographic diversity across the country. Further, the 2016 
MTW Expansion Statute states that of these 100 PHAs:
     No less than 50 PHAs shall administer 1,000 or fewer 
aggregate housing voucher and public housing units;
     no less than 47 PHAs shall administer 1,001-6,000 
aggregate housing voucher and public housing units;
     no more than 3 PHAs shall administer 6,001-27,000 
aggregate housing voucher and public housing units;
     no PHA shall be granted MTW designation if it administers 
more than 27,000 aggregate housing voucher and public housing units; 
and
     five of the PHAs selected shall be agencies with a Rental 
Assistance Demonstration (RAD) portfolio award.
    HUD will issue separate PIH Notices, by cohort, soliciting 
applications from eligible PHAs for participation in the MTW 
demonstration. These Notices, when issued, will outline the specific 
application submission requirements, evaluation criteria, and process 
HUD will use when selecting PHAs for MTW designation.
    The PHA sizes eligible for participation in the MTW demonstration 
are statutory and were defined by Congress; therefore, HUD is unable to 
waive or modify those size restrictions.

[[Page 50390]]

MTW Research Advisory Committee

    The 2016 MTW Expansion Statute required HUD to form and consult 
with a Federal MTW Research Advisory Committee (the Committee), 
established in May 2016. The Committee is governed by the Federal 
Advisory Committee Act (5 U.S.C. Appendix 2), which sets forth 
standards for the formation and use of advisory committees. The purpose 
of the Committee is to provide independent advice with respect to the 
policies to be studied through the MTW expansion and the related 
methods of research and evaluation. The Committee is charged with 
advising HUD on the following:
     Policy proposals and evaluation methods for the MTW 
demonstration to inform the one specific policy change required for 
each cohort of agencies;
     rigorous research methodologies to measure the impact of 
policy changes studied;
     policy changes adopted by MTW agencies that have proven 
successful and can be applied more broadly to all PHAs; and
     statutory and/or regulatory changes (specific waivers and 
associated activities, and program and policy flexibility) necessary to 
implement policy changes for all PHAs.
    The Committee has no role in reviewing or selecting the 100 PHAs to 
participate in the expansion of the MTW demonstration.
    The Committee members were appointed to a two-year term in June 
2016 by the HUD Secretary and chosen to ensure balance, diversity, and 
a broad representation of ideas.\7\ In May 2018, HUD extended the 
Committee and the members' appointments for another two-year term. As 
required by the 2016 MTW Expansion Statute, the Committee includes 
program and research experts from HUD; a representation of MTW 
agencies, including current and former residents; and independent 
subject matter experts in housing policy research.
---------------------------------------------------------------------------

    \7\ For more information on the establishment, purpose, members, 
and meeting content of the MTW Research Advisory Committee, please 
go to: https://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_housing/programs/ph/mtw/expansion/rac.
---------------------------------------------------------------------------

    Based on the advice of the Committee, HUD will study, by cohort of 
MTW agencies, the following four policies (which are in no particular 
order except for the first two cohorts):
     Impact of MTW Flexibility on Small and Medium PHAs: In 
this first cohort, HUD will evaluate the overall effects of MTW 
flexibility on a PHA and the residents it serves. The Committee 
recommended that PHAs with under 1,000 aggregate public housing and 
voucher units be included in this cohort. To date, only one of the 
existing MTW agencies has less than 1,000 aggregate units, while the 
majority of PHAs nationwide fit into this size category.
     Rent Reform: In this second cohort, HUD will evaluate 
different rent reform models. Rent reform models may be income based 
and may include tiered rents and/or stepped-up rents.
     Work Requirements: In this cohort, HUD will evaluate work 
requirements for residents/participants who are non-elderly, non-
disabled, and at least 18 years old.
     Landlord Incentives: In this cohort, HUD will evaluate how 
to improve landlord participation in the HCV program through incentives 
such as participation payments, vacancy payments, alternate inspection 
schedules and other methods.

Operations Notice for the Expansion of the MTW Demonstration

    Through the MTW expansion, HUD seeks to design and test new 
approaches to providing and administering housing assistance and then 
to apply the lessons-learned nationwide, all within a framework of 
simplifying program administration. This is laid out in HUD's guiding 
principles for the expansion, which are: (1) Simplify; (2) learn; and 
(3) apply. The Operations Notice is an embodiment of this vision. The 
Operations Notice describes a framework for the MTW demonstration that 
streamlines and simplifies HUD's implementation of MTW status and the 
associated flexibilities of participating MTW agencies while providing 
for the rigorous evaluation of specific policy changes. This framework 
would apply to all PHAs designated as an MTW agency pursuant to the 
2016 MTW Expansion Statute and to any previously-designated MTW 
agencies that agree to operate under the framework of the Operations 
Notice. These PHAs are referred to in the Operations Notice as ``MTW 
agencies.'' Participation in the MTW Expansion will be formalized by an 
amendment to the PHA's Consolidated Annual Contributions Contract, 
which is called the MTW CACC Amendment.\8\
---------------------------------------------------------------------------

    \8\ The MTW Consolidated ACC Amendment amends the ACCs and the 
CACCs for the Public Housing and Section 8 Voucher programs.
---------------------------------------------------------------------------

    The Operations Notice is organized into 11 sections as follows:

1. Purpose and Applicability
2. Waivers
    a. MTW Waivers
    b. Agency-Specific Waiver Requests
    c. Cohort-Specific Waivers
3. Term of Participation
4. MTW Funding Flexibilities and Financial Reporting
    a. MTW Funding Flexibility
    b. Calculation of Funding
    c. Financial Reporting and Auditing
5. Evaluation
    a. Program-Wide Evaluation
    b. Cohort-Specific Evaluation
    c. Ad-Hoc Evaluation
6. Program Administration and Oversight
    a. Planning and Reporting
    b. Performance Assessment
    c. Monitoring and Oversight
7. Rental Assistance Demonstration Program
8. Applying MTW Flexibilities to Special Purpose Vouchers
    a. HUD-Veterans Affairs Supportive Housing
    b. Family Unification Program
    c. Non-Elderly Persons With Disabilities Vouchers
    d. Enhanced Vouchers and Tenant Protection Vouchers
9. Applicability of Other Federal, State, and Local Requirements
10. MTW Agencies Admitted Prior to 2016 MTW Expansion Statute
11. Sanctions, Terminations, and Default

II. Operations Notice

1. Purpose and Applicability

    The Operations Notice establishes requirements for the 
implementation and continued operation of the expansion of the MTW 
demonstration program pursuant to the 2016 MTW Expansion Statute. The 
Operations Notice also applies to all PHAs designated as MTW pursuant 
to the 2016 MTW Expansion Statute and to any previously-designated MTW 
agency that elects to operate under the terms of this Notice.
    Through the MTW CACC Amendment, an MTW agency agrees to abide by 
the program structure, flexibilities, and terms and conditions detailed 
in the Operations Notice for the term of the agency's participation in 
MTW demonstration. Any significant updates to the Operations Notice by 
HUD will be preceded by a public comment period. HUD may supplement the 
Operations Notice with PIH Notices providing more detailed guidance, 
including with respect to implementing future appropriations act 
provisions and revisions to financial policies and procedures. 
Additionally, HUD will develop informational materials to address 
various program elements, which HUD will post on the MTW website.

[[Page 50391]]

    Unless otherwise provided in the Operations Notice, an agency's MTW 
program applies to all of the agency's public housing units (including 
agency-owned properties and units comprising a part of mixed-income, 
mixed finance communities, tenant-based HCV assistance, project-based 
HCV assistance under Section 8(o), and Homeownership units developed 
using Section 8(y) HCV assistance. This Operations Notice does not 
apply to HCV assistance that is required: (i) To make payments to other 
PHAs under HCV portability billing procedures; (ii) To meet particular 
purposes for which HUD has expressly committed the assistance to the 
agency; \9\ or (iii) to meet existing contractual obligations of the 
agency to a third party (such as Housing Assistance Payment (HAP) 
contracts with owners under the agency's HCV program), unless a third 
party agrees to Project-Based Voucher (PBV) activities implemented 
under the MTW program with the agency.
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    \9\ Mainstream Vouchers, Moderate Rehabilitation Renewals, HUD-
Veterans Affairs Supportive Housing (HUD-VASH) Vouchers, Non-Elderly 
Disabled (NED) Vouchers, and Family Unification Program (FUP) 
Vouchers are not part of the MTW demonstration program.
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    PHAs are reminded that the MTW demonstration program does not 
permit waivers related to statutes outside of the 1937 Act or 
regulations promulgated under authority outside of the 1937 Act, 
including any waivers to fair housing, nondiscrimination, labor 
standards, or environmental requirements. Other subject matter 
prohibited from waivers or restricted with respect to waivers is 
discussed elsewhere in this Notice.

2. Waivers

    Pursuant to the 1996 MTW Statute and 2016 MTW Expansion Statute, 
the Appendix of this Notice provides waivers of certain provisions of 
the 1937 Act as well as the implementing requirements and regulations. 
These waivers and associated activities afford MTW agencies the 
opportunity to use their MTW authority to pursue locally-driven 
policies, procedures, and programs in order to further the goals of the 
demonstration. In implementing MTW activities, agencies will ensure 
assisted families are made aware of the impacts the activity(s) may 
have to their tenancy. The following are the three categories of 
waivers that MTW agencies may pursue: (a) MTW Waivers; (b) Agency-
Specific Waiver Requests; and (c) Cohort-Specific Waivers. MTW agencies 
may conduct any permissible activity in the MTW Waivers category within 
the provided safe harbors, as detailed in the Appendix, without 
additional approval from HUD. Agencies may make an Agency-Specific 
Waiver Request to implement additional activities not contained in the 
MTW Waivers, request to waive a statutory or regulatory requirement not 
waived in the MTW Waivers, and/or request to expand the safe harbors of 
an MTW Waivers activity. Agencies may also be provided with Cohort-
Specific Waivers if they are necessary to allow for the implementation 
of the required cohort study.
a. MTW Waivers
    The Appendix contains the available waivers and associated 
activities that MTW agencies may implement after they have been 
included in the MTW Supplement (described in Section 6 of this Notice) 
of an approved PHA Plan. The Appendix includes the waiver name, waiver 
description, statutes and regulations waived, permissible activities, 
and safe harbors. The waiver description defines the authorization 
provided to the MTW agency, subject to the terms of this Notice. The 
list of statutes and regulations waived details the citations of the 
1937 Act requirements that may be waived by an MTW agency in order to 
implement an activity. The list of waivers and list of activities are 
organized by program type. The safe harbors section contains the 
additional requirements (beyond those specified in the activity 
description) that the agency must satisfy in implementing activities 
without further HUD approval. If an MTW agency wishes to implement 
additional activities not contained in the MTW Waivers, request to 
waive a statutory or regulatory requirement, and/or request the ability 
to go beyond an MTW activity's safe harbor(s), the MTW agency must 
submit an Agency-Specific Waiver Request for approval from HUD as 
explained further in Section 2.b of this Notice.
    MTW agencies may implement any activity contained in the Appendix 
as long as it is included in the MTW Supplement of an approved PHA Plan 
and implemented within the associated safe harbor(s). The MTW agency 
will update the MTW Supplement annually, as described in Section 6 of 
this Notice, to reflect the new activities it plans to implement in the 
coming fiscal year and ongoing activities it has implemented in the 
prior year, which includes estimated costs/savings for planned 
activities that have a cost implication. While MTW activities are 
listed by specific waiver name, MTW agencies may use the MTW Supplement 
to combine activities together to create more comprehensive initiatives 
at the local level.
    The MTW Waivers only waive certain provisions of the 1937 Act and 
its implementing regulations. The five statutory requirements 
established under the 1996 MTW Statute cannot be waived. Other 
applicable Federal, state, and local requirements shall continue to 
apply even in the event of a conflict between such a requirement and a 
waiver or activity granted by this Notice. Accordingly, HUD and the MTW 
agencies may not waive or otherwise deviate from compliance with Fair 
Housing and Civil Rights laws and regulations. Additionally, in 
implementing activities, MTW agencies remain subject to all other 
terms, conditions, and obligations under this Notice, and all other 
Federal requirements applicable to the public housing program, the HCV 
program, Federal funds, and PHAs. To the extent any MTW activity 
conflicts with any of the five statutory requirements or other 
applicable requirements, HUD reserves the right to require the MTW 
agency to discontinue the activity or to revise the activity to comply 
with this Notice, and the other applicable Federal requirements. HUD 
also reserves the right to require an MTW agency to discontinue any 
activity derived from a waiver should it have significant negative 
impacts on families or the agency's operation of its assisted housing 
programs using Section 8 and 9 funds, as determined by HUD.
b. Agency-Specific Waiver Requests
    Pursuant to the exceptions in Section 9 of this Notice, HUD 
understands that MTW agencies may wish to request Agency-Specific 
Waivers to implement activities, waive statutory or regulatory 
requirements that are not in the Appendix, and/or expand the safe 
harbor(s) of an activity included in the MTW Waivers. There are two 
categories of Agency-Specific Waiver Requests: (1) A request to waive a 
statutory or regulatory requirement, or to implement an activity, not 
provided for in the Appendix; and (2) a request to expand an activity 
that is in the Appendix outside of the listed safe harbor (or multiple 
safe harbors). The MTW agency must obtain explicit written approval 
from HUD for each Agency-Specific Waiver Request prior to 
implementation. Agency-Specific Waiver Requests are optional and made 
at the discretion of the MTW agency.
    To submit an Agency-Specific Waiver Request(s), an MTW agency will 
first share the specifics and details of the proposed waiver in the MTW 
Supplement to the Annual PHA Plan, indicating which of the two 
categories of Agency-Specific Waiver Requests is

[[Page 50392]]

being sought. The MTW Supplement form, when finalized, will provide a 
comprehensive explanation of the elements required to submit an Agency-
Specific Waiver Request.
    The approval of the Annual PHA Plan and MTW Supplement during this 
stage does not constitute an approval of the Agency-Specific Waiver 
Request. Rather, the public comment and review period affords the MTW 
agency's Resident Advisory Board (RAB), community, and residents the 
opportunity to provide input on the proposed waiver prior to its 
submission to HUD.
    Once the MTW agency obtains approval of its Annual PHA Plan and MTW 
Supplement containing the Agency-Specific Waiver Request information, 
the agency will then submit a letter to its local HUD field office 
requesting final approval of the Agency-Specific Waiver Request(s). 
This letter is sent and reviewed outside of the Annual PHA Plan and MTW 
Supplement process. It must include: A good cause justification that 
relates to one or more of the three MTW statutory objectives; the 
statute, regulation, and/or MTW Waiver safe harbor which the MTW agency 
seeks to waive and its justification for doing so; a copy of the 
approval letter for the Annual PHA Plan and MTW Supplement containing 
the proposed waiver; a description of the initiative; the 
implementation timeline; and any other information requested by HUD. 
Depending on the nature of the request, HUD may ask for an associated 
hardship policy, impact analysis, and/or other information necessary to 
understand the waiver and its possible effects. Agency-Specific Waiver 
Requests may not conflict with the agency's cohort-specific evaluation.
    If the Agency-Specific Waiver is approved by HUD and the changes 
between the Agency-Specific Waiver Request and the Waiver that HUD 
ultimately approves do not constitute a ``significant amendment'' to 
the Annual PHA Plan, as defined by the agency, then the Agency-Specific 
Waiver may be implemented once the MTW Agency receives HUD's explicit 
written approval. The MTW Agency will need to submit a narrative 
description of the Agency Specific Waiver in its subsequent MTW 
Supplement.
    If the Agency-Specific Waiver is approved by HUD with changes 
between the Agency-Specific Waiver Request and the Waiver that HUD 
ultimately approves that constitute a ``significant amendment'' to the 
Annual PHA Plan, as defined by the agency, then the MTW agency must re-
submit the Agency-Specific Waiver Request through the Annual PHA Plan 
and MTW Supplement public comment process a second time. Once the 
Annual PHA Plan and MTW Supplement are approved this second time, the 
MTW agency may implement its Agency-Specific Waiver.
    To the extent a policy in an Agency-Specific Waiver Request 
conflicts with any of the five statutory requirements, the cohort-
specific evaluation, or other applicable requirements, HUD shall 
require the MTW agency to discontinue the policy or to revise the 
policy to comply with this Notice and the other applicable federal 
requirements. HUD also reserves the right to require an MTW agency to 
discontinue any policy derived from a waiver should it have significant 
negative impacts on families or the agency's operation of its assisted 
housing programs using Section 8 and 9 funds, as determined by HUD.
c. Cohort-Specific Waivers
    Pursuant to the 2016 MTW Expansion Statute, at the time of 
designation as an MTW agency, each agency will be selected into an 
evaluative cohort that seeks to test a specific policy change, as 
specified in that cohort's Selection Notice. Cohort-Specific Waivers 
include statutory and/or regulatory waivers and associated activities 
that are unique to a specific cohort to allow them to complete their 
required cohort study. Depending upon the cohort's study, there is a 
possibility that HUD restricts certain activities within the MTW 
Waivers or provides additional waivers that are not included in the 
Appendix. It is also possible that the specific policy changes to be 
tested through a given cohort would not need any Cohort-Specific 
Waivers. Any MTW activities that would impact or conflict with the 
cohort-specific policy change will be identified in the respective 
Selection Notice so that the MTW agency is aware of this potential 
restriction on its use of waivers before it enters the MTW 
demonstration program. Cohort-Specific Waivers and the associated MTW 
activities may only be used to the extent allowed under the applicable 
evaluative framework provided by HUD in the applicable Selection 
Notice.
    In determining the Cohort-Specific Waivers that will be included in 
the Selection Notices, HUD will remove and/or add waivers and 
associated activities based on whether a waiver and its associated 
activity would impact or conflict with the specific policy(s) to be 
studied in the MTW agency's cohort group. The addition or removal of 
any waivers and associated activities would only apply within the 
confines of the cohort study. For instance, if the study focuses on 
rent models as it relates to the voucher program, then an agency's 
public housing program would not be affected by the addition or removal 
of any such waivers and associated activities. If the MTW Waiver(s) and 
associated activity(s) are not provided to a cohort, or some portion of 
the agency's portfolio within the cohort, to allow the cohort to test a 
specific policy change, the agencies within that cohort study will not 
be able to conduct that activity(s) until the evaluation of the 
specific policy change has concluded.

3. Term of Participation

    The term of each agency's MTW designation will be 12 years (PHA 
Fiscal Years) starting from the time of its designation as an MTW 
agency. All waivers and associated activities provided through the 
Operations Notice expire at the end of the agency's term of 
participation. However, Cohort-Specific Waivers provided to enable a 
cohort-specific policy change may be extended beyond the agency's term 
of participation with HUD's specific approval if HUD determines that 
additional time is needed to evaluate the policy change, subject to 
continued statutory authority for the MTW demonstration.
    Once an MTW agency has implemented an activity pursuant to the 
authority of the Operations Notice, the agency may continue to 
implement that activity throughout the term of its participation in the 
demonstration, subject to the other terms and conditions of this 
Notice. The MTW agency must end all activities requiring MTW-specific 
waivers upon expiration of MTW participation, as HUD cannot guarantee 
that it will be able to extend any waivers and associated activities 
beyond that point. For this reason, when entering into contracts with 
third-parties that draw upon MTW flexibility, the agency should 
disclose that such flexibility is only available during the term of the 
agency's participation in the MTW demonstration as permitted in this 
Notice. An exception is third-party contracts that relate to the 
cohort-specific policy change and associated waiver(s). If HUD 
determines that additional time beyond the end of the agency's MTW term 
is needed to evaluate a cohort-specific policy change, HUD may approve 
an extension of any cohort-specific waiver(s).

4. MTW Funding Flexibility and Financial Reporting

    During the term of the demonstration, subject to appropriations, 
HUD will provide an MTW agency with public housing Operating Fund 
Program grants,

[[Page 50393]]

public housing Capital Fund Program (CFP) grants, and/or HCV HAP and 
Administrative Fee assistance as detailed in this Notice. CFP grants 
may include Formula grants; Demolition or Disposition Transitional 
Funding (DDTF), which are included in regular Formula grants; and/or 
funds from older Replacement Housing Factor (RHF) grants (a program 
later superseded by DDTF). The funding amount for MTW agencies may be 
increased by additional allocations of vouchers that the agency is 
awarded over the term of its participation in the MTW demonstration. 
MTW Funding provided to an MTW agency, including public housing 
Operating Fund Program grants, public housing CFP grants, and HCV HAP 
and Administrative Fee assistance, is subject to any future laws and 
appropriations. If a future law or appropriations bill conflicts with 
this Operations Notice, the law or appropriations bill shall be 
implemented, and no breach of contract claim, or any claim for monetary 
damages, may result from the conflict or implementation of the 
conflicting law or regulation.
a. MTW Funding Flexibility
    MTW agencies will have the flexibility to apply fungibility among 
public housing Operating Fund, public housing Capital Fund, and HCV HAP 
and Administrative Fee assistance. These flexibilities expand the 
eligible uses of each covered funding stream, but do not negate the 
need for both the PHA and HUD to be able to account for the funding 
from its original source to the date of its ultimate eligible use \10\ 
by the PHA, comply with Federal grant and financial management 
requirements, and use funds effectively and efficiently for their 
eligible purposes. As the Department continues to implement program-
specific financial management policies in its core housing programs, 
MTW agencies will be subject to the same requirements and procedures as 
non-MTW agencies. Therefore, the requirements and procedures described 
in this Notice may change as new financial management policies are 
implemented over time. HUD will update existing guidance and issue new 
reporting requirements, as appropriate, to allow HUD to meet its 
monitoring and oversight responsibilities while ensuring MTW agencies 
fully utilize and benefit from the flexibilities established by 
Congress for these funds pursuant to the MTW demonstration and the 2016 
MTW expansion. HUD will also update existing guidance and issue new 
reporting requirements, as appropriate, to ensure compliance with 2 CFR 
part 200, including with respect to Federal financial management.
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    \10\ The date of the ``ultimate eligible use'' means the date of 
disbursement by the PHA for an eligible purpose, which would remove 
the funding from the PHA's account and the PHA's control.
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    An agency participating in the MTW demonstration program may 
flexibly use public housing Operating and Capital Funds provided under 
Sections 9(d) and 9(e) of the 1937 Act and HCV HAP and Administrative 
Fee program funds provided under Section 8 of the 1937 Act, referred to 
collectively as MTW Funding. Certain provisions of Sections 8 and 9 of 
the 1937 Act and 24 CFR 982 are waived as necessary to implement this 
flexibility. Once the agency receives its MTW designation through the 
execution of the MTW CACC Amendment, this flexibility in the use of MTW 
Funding does not require prior HUD approval.
    The agency may use MTW Funding covered by MTW flexibility for any 
eligible activity under Sections 9(d)(1), 9(e)(1) and Section 8(o) of 
the 1937 Act and for the local, non-traditional activities specified in 
this Notice, including in the Appendix. Any reserves the MTW agency has 
accumulated prior to signing an MTW CACC Amendment (including public 
housing Operating and Capital Reserves and HCV HAP and Administrative 
Fee Reserves) must be used for their originally appropriated purposes 
and may not be used flexibly for any eligible MTW activity described in 
the Appendix. All MTW PHA expenditures, including for local, non-
traditional activities, must be consistent with the PHA's charter, 
approved 5-Year and Annual PHA Plans, and the approved MTW Supplement 
to the Annual PHA Plan.
i. Calculation of Funding
(a) Public Housing Operating Grants
    (1) The calculation of an MTW agency's Operating Fund subsidy grant 
eligibility will continue in accordance with operating subsidy formula 
law, regulations, and appropriations act requirements. As these 
programmatic and financial requirements are updated, MTW agencies will 
be affected by and shall comply with these changes.
    (2) The agency may use these funds for any eligible activity 
permissible under Section 9(e)(1) of the 1937 Act or, if the agency 
proposes to use the funding under its MTW flexibility, it may also use 
these funds for any eligible activity permissible under Section 8(o), 
Section 9(d)(1), and for the local, non-traditional activities 
specified in this Notice, including in the Appendix.
    (3) For Operating Fund grant funding, the MTW agency has 
accumulated prior to signing an MTW CACC Amendment, the agency may not 
use such funds for eligible MTW purposes other than the originally 
appropriated purpose of the funds (i.e., these funds may not be used as 
flexible MTW Funding).
(b) Public Housing Capital Fund Formula and Grants
    (1) The agency's public housing Capital Fund formula 
characteristics and grant amounts, including DDTF and Replacement 
Housing Factor (RHF), will continue to be calculated in accordance with 
public housing law, regulations, and appropriations act requirements.
    (2) MTW agencies must continue to follow the immediate need 
requirements applicable to all Capital funds and may not accelerate 
their drawdown of Capital funds for the purpose of funding reserves or 
for any other purpose. All Capital funds, including funds in BLI 1410 
(Administrative Costs) and Budget Line Item (BLI) 1492 (MTW), must be 
drawn down only when funds are due and payable.
    (3) The agency may use these funds for any eligible activity 
permissible under Section 9(d)(1) of the 1937 Act or, if the agency 
proposes to use the funding under its MTW flexibility, it may also use 
these funds for any eligible activity permissible under Section 8(o), 
Section 9(e)(1), and for the local, non-traditional activities 
specified in this Notice, including in the Appendix. Capital Fund 
Program (CFP) funds used for activities under section 9(d)(1) are 
subject to all requirements relevant to non-MTW agency CFP funding, 
including eligible activities and cost limits.
    (4) For Capital Funds the MTW agency has accumulated prior to 
signing an MTW CACC Amendment, the agency may not use such funds for 
eligible MTW purposes other than the originally appropriated purpose of 
the funds (i.e., these funds may not be used as flexible MTW Funding).
    (5) In requisitioning Capital Fund grant funds, the MTW agency will 
request funds using traditional Capital Fund Budget Line Items (BLIs) 
for funds to be used for activities under section 9(d) and using the 
available MTW Budget Line (BLI 1492) items for activities under section 
9(e), section 8(o), or local, non-traditional activities. MTW agencies 
shall not use the Transfer to Operations Budget Line (BLI 1406) since 
funds for all non-section 9 activities shall be included in the MTW 
Budget Line (BLI 1492). The agency will

[[Page 50394]]

provide to HUD information on all capital activities funded by the MTW 
Funding as necessary to ensure compliance with requirements outside the 
scope of MTW, including environmental review requirements and Energy 
and Performance Information Center (EPIC) reporting requirements.
    (6) The agency remains subject to the requirements of Section 9(j) 
of the 1937 Act with respect to Capital Fund grants. Section 9(d) funds 
remain subject to the obligation and expenditure deadlines and 
requirements provided in Section 9(j) despite the fact that they may be 
in the MTW Single Fund. Capital Funds awarded to MTW agencies must be 
obligated within 2 years and expended within 4 years of award. Funds 
not obligated or expended within those timeframes will be subject to 
recapture. As with all agencies, an MTW agency may requisition CFP 
funds from HUD only when such funds are due and payable, unless HUD 
approves another payment schedule.
(c) Housing Choice Voucher Funding
    (1) Funding for the Initial MTW Year. For the calendar year (CY) 
after the MTW agency joins the MTW demonstration (the ``Initial MTW 
Year''), the MTW agency's HCV HAP renewal funding will be calculated in 
accordance with the same HAP renewal funding formula used for non-MTW 
HCV agencies in the applicable FY appropriations act. The HAP renewal 
formula is customarily based on the previous CY's HAP expenses reported 
in the Voucher Management System (VMS), adjusted by any applicable 
inflation factor and national proration.
    Example:
     If an MTW Agency signs its MTW CACC Amendment in July 
2018, CY 2019 will be the Initial Year in the MTW demonstration. The 
MTW Agency's CY 2019 HAP renewal funding will be calculated based on 
the Agency's CY 2018 HAP expenses, adjusted by inflation and proration 
(assuming this is the formula in the 2019 Appropriations Act).
    (2) Funding for Subsequent MTW Years. As is the case for non-MTW 
PHAs under current appropriations law, the HAP renewal funding 
eligibility for subsequent MTW years will be calculated based on the 
MTW agency's actual expenses for the previous calendar year (known as 
the re-benchmark year). Unique to MTW agencies, however, the MTW 
agency's actual expenses are: (i) The previous CY's HAP expenses 
reported in Voucher Management System (VMS,) and (ii) the previous CY's 
eligible non-HAP MTW expenses reported in VMS. For both HAP and non-HAP 
MTW expenses, the reported expenses must have been paid from an 
eligible source of funds as described in section 4(c) below in order to 
be included in the HAP renewal funding formula. In addition, MTW HAP 
renewal funding is subject to an MTW Renewal Eligibility Cap derived 
from the number of units authorized under the agency's ACC, as 
described in paragraph (d) on the following page. The lower of the 
total combined HAP/non-HAP expenses or the MTW Renewal Eligibility Cap 
will then be adjusted by an applicable inflation factor and any 
national proration that applies to the HCV renewal appropriation to 
determine the MTW agency's actual CY HAP renewal funding.
    Example:
     In CY 2019, an MTW Agency expended $3,600,000 on HAP and 
$400,000 on eligible non-HAP MTW expenses. The agency's HCV HAP renewal 
funding for CY 2020 will be $4 million (assuming the HAP Renewal 
Eligibility Cap is greater than $4 million), adjusted by an inflation 
factor and any applicable national proration.
    (3) HAP Renewal Sources of Funds. The only HAP and non-HAP MTW 
expenses that will be included in the MTW HAP renewal formula are those 
paid for with the same sources of funds that would be included in the 
non-MTW HAP renewal formula for a non-MTW agency (see PIH Notice 2013-
28 and any future successor notices). Accordingly, HAP expenses and 
non-HAP MTW expenses must be paid from the following sources of funds 
to be included in the HAP renewal formula calculation:
     Housing Choice Voucher (HCV) budget authority,
     HUD-held HAP reserves (undisbursed budget authority),
     PHA-held HAP reserves (i.e., Restricted Net Position 
(RNP)),
     Any funds from the HAP Set-aside (if available after PHA 
application and approval), and
     Administrative Fee reserves (i.e., Unrestricted Net 
Position (UNP)). HAP expenses or non-HAP MTW expenses that were covered 
by any other funding source (for example, public housing Operating 
Funds and Capital Funds, and current year HCV Administrative Fee funds) 
will not be included in the MTW PHA's HCV renewal funding calculation.
    (4) HAP Renewal Eligibility Cap. The MTW PHA's renewal eligibility 
for all MTW Years will be limited by the HAP Renewal Eligibility Cap. 
The calculation multiplies (1) the MTW PHA's total number of MTW-
eligible ACC authorized units \11\ in the re-benchmark year (the CY 
immediately preceding the CY for which the PHA's renewal eligibility is 
being calculated) \12\ by (2) the PHA's pre-MTW monthly per-unit cost 
(PUC) inflated to the re-benchmark year.
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    \11\ ``MTW-eligible ACC authorized units'' means the PHA's 
number of ACC authorized units, regardless of whether the units are 
leased, after excluding the number of authorized units that would 
not be subject to the MTW renewal formula. In other words, special 
purpose vouchers that are renewed separately and are not part of the 
MTW HAP renewal formula are not included in the formula used to 
calculate the HAP Renewal Eligibility Cap. See Section 8 of this 
Notice for further information on these special purpose vouchers 
that are renewed separately outside the MTW renewal formula.
    \12\ As noted above, the re-benchmark year is also the source 
year for the actual expense data used in the MTW PHA's HAP renewal 
formula.
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     For (1), the number of MTW-eligible ACC authorized units 
is measured in unit months available (UMAs).\13\
---------------------------------------------------------------------------

    \13\ Authorized units in the HCV program context are measured in 
terms of unit months available. For example, if an authorized unit 
is under CACC as of January 1, the authorized unit equals 12 unit 
months available for that CY. On the other hand, if the authorized 
unit was added to the CACC under a new funding increment effective 
July 1, the authorized unit is equal to 6 unit months available for 
that CY.
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     For (2), the inflated pre-MTW PUC is projected using, as a 
base, the monthly PUC for the CY in which the agency signed its MTW 
CACC Amendment. HUD applies an inflation factor to this base PUC to 
estimate what the PHA's HCV PUC would be, had the PHA not joined the 
MTW program, as of the re-benchmark year.
    After the calculation of the HAP Renewal Eligibility Cap, it is 
compared with the MTW PHA's actual total combined HAP/non-HAP expenses. 
The lower of these two amounts--(1) the HAP Renewal Eligibility Cap or 
(2) the MTW PHA's actual total combined HAP/non-HAP expenses--is then 
adjusted by the inflation factor and any national proration factor to 
determine the MTW PHA's CY renewal funding.
    Example:
     If an MTW Agency signs its MTW CACC Amendment in July 
2018, CY 2019 will be the Initial Year in the MTW demonstration. In the 
Initial CY (CY 2019) the MTW Agency's renewal formula is the same 
formula that is used for non-MTW PHAs. In calculating the MTW Agency's 
HCV renewal funding for CY 2020, the following information applies:
    [cir] The MTW PHA's average monthly PUC for CY 2018 was $700.
    [cir] The CY 2019 inflation rate is 2 percent.
    [cir] The number of MTW-eligible ACC authorized units during CY 
2019 is 800

[[Page 50395]]

units. (In this example all units were under ACC as of January 1, 2019, 
so the number of unit months available (UMAs) is simply 800 units 
multiplied by 12 months, or 9,600 UMAs.)
     The HAP Renewal Eligibility Cap for CY 2020 is calculated 
by first determining the estimated PUC for CY 2019, which is $714 (the 
monthly PUC for CY 2018 inflated for CY 2019, or $700 x 1.02). The 
estimated PUC for CY 2019 is then multiplied by the MTW PHA's CY 2019 
MTW-eligible ACC authorized UMAs \14\ ($714 x 9,600 UMAs) to determine 
the HAP Renewal Eligibility Cap, which is $6,854,400.
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    \14\ As noted earlier, these are the MTW PHA's CY 2019 UMAs that 
are subject to the MTW renewal formula. UMAs attributable to special 
purpose vouchers such as HUD-VASH and FUP that are renewed 
separately are not included in this count.
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     The HAP Renewal Eligibility Cap ($6,854,400) is then 
compared to the MTW Agency's total combined HAP/non-HAP expenses for 
the re-benchmark year that originated from the eligible funding sources 
described earlier in this Notice. If the total combined HAP/non-HAP 
expenses do not exceed $6,854,400, the MTW Agency's CY 2020 renewal 
funding will be the total combined HAP/non-HAP expenses adjusted by an 
inflation factor and any national proration. If the total combined HAP/
non-HAP expenses exceed $6,854,400, the MTW Agency's CY 2020 renewal 
funding will be $6,854,400, adjusted by an inflation factor and any 
national proration.
    (5) Financial Management Requirements Apply. The same financial 
management requirements that apply to non-MTW agencies also apply to 
MTW agencies. Accordingly, all undisbursed HAP funds, including HAP-
originated reserve funds, will be retained as HUD-held reserves per 
Office of Management and Budget cash management requirements and can be 
requested by the MTW agency when immediate need exceeds the scheduled 
HAP monthly disbursements, but only after consideration of available 
MTW agency-held Restricted Net Position (RNP).
    (6) Administrative Fees. The Administrative Fee rates used to 
calculate fee eligibility for MTW agencies shall be established 
according to the same methodology used to establish Administrative Fee 
rates for all agencies, including non-MTW agencies. As is the case for 
all agencies under current appropriations law, administrative fees will 
be calculated on the basis of units leased as of the first day of each 
month; this data will be extracted from Voucher Management System (VMS) 
at the close of each reporting cycle. Administrative fees for MTW 
agencies are also subject to the national proration factor and any 
other appropriations act requirements.
    (7) Adjustments for the First-Time Renewal of Certain Vouchers. If 
the MTW agency receives incremental HCV vouchers and funding (including 
tenant protection vouchers) other than special purpose vouchers, 
renewal funding for those vouchers will be included in the MTW HCV 
renewal funding eligibility calculation for the following year. (See 
Section 8 of this Notice for further discussion of tenant protection 
and other special purpose vouchers.) The renewal amount for the 
following year is based on HAP costs reported for these increments in 
VMS in the prior year, which will be adjusted by the inflation factor. 
Should the initial increment(s) be funded for less than 12 months due 
to lack of appropriations, HUD will adjust for the missing months upon 
renewal, by selecting the higher of the funded PUC for the initial 
increment, or the MTW per unit cost (PUC) times the number of 
units,\15\ then adjusted by the inflation factor. The aggregate renewal 
eligibility is always subject to the national proration factor.
---------------------------------------------------------------------------

    \15\ The MTW PUC is equal to MTW HAP expenses divided by the 
number of MTW units leased. (Non-HAP MTW expenses are not included 
in the MTW PUC calculation.) HUD may further adjust the MTW PUC 
calculation for PHAs administering RAD project-based vouchers to 
exclude RAD Rehab payments so the MTW PUC only reflects expenses 
attributable to actual housing assistance payments.
---------------------------------------------------------------------------

    (8) Applicable Inflation Factor and Proration. The same applicable 
inflation factor that applies to non-MTW agencies will be applied each 
CY to determine the MTW agency's HAP funding renewal eligibility. 
Likewise, the MTW agency's HAP funding renewal eligibility is subject 
to the same national proration as non-MTW agencies' renewal 
eligibility.
    (9) Prior Year Reserves. For HCV HAP and Administrative Fee funding 
provided in years prior to the designation of the agency as an MTW 
agency, the agency may not use any accumulated HCV reserves for 
eligible MTW purposes other than the originally appropriated purpose of 
the funds (i.e., these funds may not be used as flexible MTW Funding).
    (10) Rental Assistance Demonstration (RAD). Any vouchers received 
as part of a RAD Component I conversion shall be added to the ACC for 
the remainder of the CY in which they are awarded. HUD will issue a new 
increment of voucher funding in support of those vouchers for the first 
full CY following a RAD Component I conversion. In subsequent years, 
voucher funding for RAD-converted units will be renewed under the MTW 
HCV renewal funding calculation, plus inflation factor and the 
applicable proration factor. Tenant protection vouchers provided for 
RAD Component II conversions are renewed in accordance with section 
4.v, Adjustment for the first-time renewal of certain vouchers, above. 
Administrative fees for RAD vouchers will be calculated based on the 
same methodology used to establish administrative fees for non-MTW 
agencies. Fees for RAD vouchers will be prorated at the same level that 
applies to all non-MTW agencies.
    (11) Voucher Programs Not Included in MTW Program. Vouchers and 
funding provided for the following special purpose vouchers, or any new 
special purpose vouchers provided in future appropriations acts, 
whether for new allocations or renewal of existing increments, shall 
not be included in the HCV MTW renewal calculation: Mainstream, HUD-
Veterans Affairs Supportive Housing (HUD-VASH), Non-Elderly Disabled 
(NED), and Family Unification Program (FUP). These vouchers will be 
renewed under the regular voucher renewal requirements as provided 
under the appropriations acts. Special purpose vouchers are discussed 
in more detail in Section 8 of this Notice. In addition, funding 
provided for the Section 8 Moderate Rehabilitation Program is not part 
of the MTW program and may not be used for MTW activities.
b. Financial Reporting and Auditing
    MTW agencies must submit year-end unaudited financial information 
to the Department no later than 2 months after their fiscal year end 
using the Financial Data Schedule (FDS) contained in the Real Estate 
Assessment Center's (REAC) Financial Assessment Subsystem (FASS-PH), or 
its successor system. Current financial reporting requirements for MTW 
agencies are posted on the REAC website at https://www.hud.gov/sites/documents/DOC_11833.PDF. These requirements may be updated in the 
future.
    MTW agencies are also required to electronically submit their 
audited financial information, if applicable, to the Department no 
later than 9 months after their fiscal year end. MTW agencies must 
include public housing project level financial information in the FDS 
and must follow the Asset Management guidelines established in Public 
and Indian Housing (PIH) Notice 2007-9 Supplement to Financial 
Management Handbook Office of Public and Indian Housing (PIH) Revised 
April 2007, and any subsequent updates to this Handbook or PIH Notice. 
MTW agencies will conform to the cost

[[Page 50396]]

requirements of 2 CFR part 200 and any HUD implementation thereof.
    MTW agencies must procure an Independent Public Accountant (IPA) to 
perform an annual audit pursuant to Federal requirements at 2 CFR part 
200 and 24 CFR 990.190, or successor, as well as any audit compliance 
supplements developed specifically for use with the MTW demonstration.
    Completed IPA audits must be submitted to HUD in accordance with 
current HUD regulations. HUD will review IPA audits of MTW agencies to 
determine appropriate action relative to any findings, prepare 
recommendations for audit finding resolution, and follow up with MTW 
agencies to assure finding closure. If there are audit findings related 
to the MTW program itself, HUD will monitor the resolution of all audit 
findings.

5. Evaluation

    As a condition of participating in the MTW demonstration, MTW 
agencies agree to cooperate fully with HUD and its contractors in the 
monitoring and evaluation of the MTW demonstration. MTW agencies shall 
keep records and submit reports and other information as required by 
HUD. This includes any data collection required for the use of waivers 
and associated activities, for the uses of MTW funds within and across 
funding streams, and any evaluation efforts that HUD undertakes for the 
cohort-specific policy changes.
    MTW is a demonstration that provides PHAs flexibilities to innovate 
and try different approaches to housing assistance in order to achieve 
at least one of the three statutory objectives laid out in the 1996 MTW 
Statute. At its core, the demonstration is an opportunity for PHAs, 
participants, HUD, stakeholders, and the general public to learn from 
different approaches to providing Federal housing assistance to low-
income families. This includes learning from approaches that are 
effective and produce desired outcomes, and from approaches that are 
less effective than anticipated and where results may have unintended 
consequences.
    Because MTW agencies can use different flexibilities calling on 
multiple activities within the MTW Waivers to serve local populations 
in various parts of the country, interpreting PHA-reported performance 
data on the effects of an individual MTW activity can be challenging. 
Consequently, and while adhering to the guiding principles for the 
expansion--to simplify, learn, and apply--HUD will create and develop 
an evaluation system that will document and consider the MTW 
demonstration through the lens of the three statutory objectives 
relating to cost effectiveness, self-sufficiency, and housing choice.
    HUD envisions three types of evaluation: Program-wide evaluation, 
cohort-specific evaluation, and ad hoc evaluation.
a. Program-Wide Evaluation
    Program-wide evaluation would seek to assess whether or not, and to 
what extent, MTW agencies use Federal dollars more efficiently, help 
residents find employment and become self-sufficient, and/or increase 
housing choices for low-income families. HUD intends to develop a 
method for program-wide evaluation that is based, to the extent 
possible, on information already being collected through existing HUD 
administrative data systems. HUD may determine and require that 
additional reporting is necessary to effectively evaluate MTW.
b. Cohort-Specific Evaluation
    The 2016 MTW Expansion Statute requires HUD to direct all the 
agencies in a cohort to implement one specific policy change and to 
conduct a rigorous evaluation of the one specific policy change. The 
MTW Research Advisory Committee has considered input from the public 
and advised HUD on the policy changes to be tested through the new 
cohorts of MTW agencies and on the methods of research and evaluation.
    The cohort-specific policy change and evaluation methods will be 
described in the applicable Selection Notice so that the MTW agency is 
aware, in advance of application to the MTW demonstration program, of 
the policy it will be required to implement and the evaluation 
requirements. The specific evaluation methods and requirements for 
participating MTW agencies will vary based on the policy changes to be 
tested. For example, some cohorts of MTW agencies may be required to 
participate in randomized control trials, while others may be required 
to participate in detailed process studies or ethnographic research. 
HUD's Office of Policy Development and Research (PD&R) will take the 
lead on evaluating cohort-specific policy changes, and funds have been 
appropriated by Congress for this evaluation. In all cases, the purpose 
of the evaluation will be to measure the outcomes associated with the 
specific policy change(s) in order to offer policy recommendations for 
implementing the policy change(s) across all PHAs.
    HUD will determine the length and timeframe for the evaluation, 
which will be informed by feedback provided by the MTW Research 
Advisory Committee. In some cases, the evaluation timeframe may extend 
beyond the agency's term of MTW participation. The MTW agency is 
required to participate in the evaluation for the full timeframe 
designated by HUD. HUD may extend waivers and associated activities 
beyond the agency's term of participation to the extent that those 
waivers and associated activities are needed to support the evaluation 
of the specific policy change and HUD determines whether additional 
time is needed to evaluate the policy change.
c. Ad-Hoc Evaluation
    HUD reserves the right to request, and the MTW agency agrees to 
provide, any additional information required by law or required for the 
sound administration or evaluation of the MTW agency.

6. Program Administration and Oversight

    In general, MTW agencies will be subject to the same planning and 
reporting protocols as non-MTW agencies, including the PHA Plan (5-Year 
Plan and Annual PHA Plan) and Capital Fund planning. MTW agencies must 
also report data into HUD data systems, as required.
    New protocols and instruments will be developed for assessing an 
MTW agency's performance and will be incorporated into PHAS and SEMAP, 
or successor assessment systems, or an alternative assessment system 
developed by HUD, explained further in Section 6.b. of this Operations 
Notice. In addition, HUD will employ standard program compliance and 
monitoring approaches including assessment of relative risk and on-site 
monitoring conducted by HUD or by entities contracted by HUD.
a. Planning and Reporting
i. The Annual PHA Plan
    MTW agencies must adhere to Annual PHA Plan regulations at 24 CFR 
part 903, any implementing HUD Notices and guidance, as well as any 
succeeding regulations. The Annual PHA Plan consists of the 5-Year Plan 
that a PHA must submit to HUD once every five PHA fiscal years and the 
Annual PHA Plan that the PHA must submit to HUD for each PHA fiscal 
year. Any HUD assistance that the agency is authorized to use under the 
MTW demonstration must be used in accordance with the Annual PHA Plan, 
as applicable.
    Annual and 5-Year Plans must be submitted in a format prescribed by 
HUD. Currently, submission format requirements are outlined in Notice 
PIH 2015-18 (HA), issued October 23, 2015,

[[Page 50397]]

which is effective until amended, superseded, or rescinded.
ii. MTW Supplement to the Annual PHA Plan (Under Development)
    As an MTW agency, all Annual PHA Plan information must be provided 
in the context of the agency's participation in the MTW demonstration. 
This includes taking into account the MTW Waiver(s) and associated 
activity(s) afforded to the MTW agency. To this end, the MTW agency 
will submit an MTW Supplement to the Annual PHA Plan, in a format to be 
developed by HUD. Prior to submitting to HUD, the MTW Supplement must 
go through a public process along with the Annual PHA Plan. This will 
allow the agency to inform the community of any programmatic changes 
and give the public an opportunity to comment. Details about this 
requirement are elaborated later in this section. New MTW agencies will 
not be required to submit the Annual MTW Plan or Annual MTW Report 
(i.e., Form 50900), which are required for existing MTW agencies.
    The MTW Supplement form has not been finalized at the time of 
publishing of this Operations Notice. The MTW Supplement will be made 
available for public review and comment, per Paperwork Reduction Act 
requirements, prior to finalizing the form. At this time, HUD plans to 
require MTW agencies to use the MTW Supplement to the Annual PHA Plan 
to:
     Describe how the MTW agency seeks to address the three MTW 
statutory objectives during the coming fiscal year, in a narrative 
format;
     Indicate the MTW activities that the agency plans to 
implement in the Annual PHA Plan year that utilize the activities 
contained in the MTW Waivers (Appendix), and ongoing activities the 
agency has implemented in the prior year, using a check-box or other 
simple format;
     Indicate the estimated costs/savings per year for planned 
activities that have a cost implication;
     Indicate the reason(s) why any previously approved MTW 
activities were not implemented in the previous year;
     Indicate any changes in the MTW activities and associated 
waivers, including safe harbors, that have changed from the previous 
Annual PHA Plan year;
     Describe any Agency-Specific Waiver Requests that the MTW 
agency seeks to implement in PHA fiscal year, if applicable;
     Indicate the MTW activities that the agency will undertake 
in the Annual PHA Plan year that require Cohort-Specific Waivers (as 
applicable and identified in each cohort's Selection Notice), and the 
Cohort-Specific Waivers to be used, using a check-box or other simple, 
non-narrative format;
     Certify to HUD that all MTW activities being implemented 
by the agency fall within the safe harbors outlined in the Appendix;
     Submit data or information required for the ongoing use of 
any activities within the MTW Waivers; and
     Submit data required for HUD's verification of the MTW 
agency's compliance with the five statutory requirements established 
under the 1996 MTW Statute.
    Non-MTW PHAs that are qualified under 24 CFR 903.3(c) and that are 
not designated as troubled under PHAS and that do not have a failing 
score under SEMAP are exempt from the requirement to submit the Annual 
PHA Plan. Per this Operations Notice, while MTW agencies that are 
qualified under 24 CFR 903.3(c) are not required to submit the Annual 
PHA Plan, they are required to submit the MTW Supplement to the Annual 
PHA Plan on an annual basis.
    During the agency's initial year of participation in the MTW 
demonstration, an agency may implement MTW activities once they have 
been included in an approved MTW Supplement, either during the next 
regularly scheduled submission of the Annual PHA Plan and MTW 
Supplement or through an amendment to the Annual PHA Plan, which would 
include the MTW Supplement. Agency-Specific Waiver Requests and 
activities may only be implemented after explicit written approval from 
HUD.
    MTW agencies must submit to HUD the Annual PHA Plan, including any 
required attachments, and the MTW Supplement no later than seventy-five 
(75) days prior to the start of the agency's fiscal year. Before 
submission to HUD, the agency must have at least a 45-day public review 
period of its plan, after publishing a notice informing the public of 
its availability and conducting reasonable outreach to encourage 
participation in the plan process, followed by a public hearing. MTW 
agencies must consider, in consultation with the RABs, all of the 
comments received at the public hearing. The recommendations received 
by the public and RABs must be submitted by the agency as a required 
attachment to the Plan. MTW agencies must also include a narrative 
describing their analysis of the recommendations and the decisions made 
on these recommendations. Agencies must also obtain the proper signed 
certifications and board certification.
    HUD will notify the MTW agency in writing if HUD objects to any 
provisions or information in the Annual PHA Plan or the MTW Supplement. 
When the MTW agency submits its Plan seventy-five (75) days in advance 
of its fiscal year, HUD will respond to the MTW agency within 75 days.
    Reviews of the Annual PHA Plan and the MTW Supplement will be 
conducted by the local field office, in consultation with the MTW 
Office.
iii. Admissions and Continued Occupancy Policy (ACOP) and 
Administrative Plan
    The MTW agency must update its ACOP and Administrative Plan to be 
consistent with the MTW activities and related waivers that it 
implements. The agency may not implement an MTW activity or waiver 
until the relevant sections of the ACOP and/or Administrative Plan are 
updated. MTW agencies must provide HUD with electronic versions of the 
ACOP and Administrative Plan upon request. If the MTW agency implements 
an activity using the local, non-traditional uses of funds waiver, the 
MTW agency must create and update an implementing document specifically 
for such activity.
iv. Capital Planning and Reporting
    MTW agencies must adhere to CFP regulations at 24 CFR part 905, any 
implementing HUD Notices and guidance, as well as any successor 
regulations. As noted previously, MTW agencies are funded in accordance 
with CFP regulations and formula funds are calculated and distributed 
in the same manner as non-MTW agencies.
    MTW agencies have the authority and flexibility to utilize their 
CFP funds for expanded uses as part of their MTW funding flexibility. 
HUD will award Capital Fund grants to MTW agencies in keeping with the 
standard process for all PHAs. The Field Office will distribute funds 
in Line of Credit Control System (LOCCS) to the MTW agencies in 
accordance with the standard process. As with all PHAs, an MTW agency 
may draw down Capital Funds from HUD only when such funds are due and 
payable, unless HUD approves another payment schedule. To the extent 
that the MTW agency plans to use CFP funding for other MTW-eligible 
(non-CFP) activities, the CFP funding would be recorded on BLI 1492 
(Moving to Work) on Form HUD-50075.1. CFP funds entered on BLI 1492 
would not need to be broken out and itemized in the part II supporting 
pages of the HUD-50075.1. However,

[[Page 50398]]

regardless of the BLI utilized, funds may not be drawn down until the 
PHA has an immediate need for the funds. An MTW agency may not 
accelerate drawdowns of funds in order to fund reserves or to otherwise 
increase locally held amounts, as discussed in 4(a)(i)(b)(2) of this 
Notice.
    An MTW agency is not required to use all or any portion of its CFP 
grant for non-CFP activities. To the extent that the MTW agency wishes 
to dedicate all or a portion of its CFP grant to specific capital 
improvements, the agency shall record CFP funding on the appropriate 
BLI(s) on Form HUD-50075.1 (other than BLI 1492) as in the standard 
program.
v. Inventory Management System/PIH Information Center Reporting
    Data from HUD's Inventory Management System (IMS) and Public and 
Indian Housing (PIH) Information Center (PIC), or successor systems, is 
critical to all aspects of program administration, including HUD 
monitoring and tracking of MTW agency progress in meeting the MTW 
statutory objectives. IMS/PIC data is used to establish funding 
eligibility levels for both Operating Subsidy Fund and Capital Fund 
grants. Further, HUD relies on IMS/PIC data to provide a thorough and 
comprehensive view of PHA program performance and compliance.
    MTW agencies are required to submit the following information to 
HUD via IMS/PIC (or its successor system):
     Family data to IMS/PIC using Form HUD-50058 MTW (or 
successor forms) or Form HUD-50058 and in compliance with HUD's 50058 
MTW or standard 50058 submission requirements for MTW agencies. MTW 
agencies must report information on all families receiving some form of 
tenant-based or project-based housing assistance, either directly or 
indirectly, as well as all public housing families, to be current to at 
least a 95 percent level.
     Current building and unit information in the development 
module of IMS/PIC (or successor system).
     Basic data about the PHA (address, phone number, email 
address, etc.).
    HUD will monitor MTW agency reporting to IMS/PIC (or successor 
system) to ensure compliance and provide technical assistance to MTW 
agencies as needed.
vi. Voucher Management System Reporting
    MTW agencies are required to report voucher utilization in the 
Voucher Management System (VMS), or its successor system. There are 
several areas in which VMS reporting is different for MTW agencies. 
These areas are highlighted in the VMS User's Manual (http://portal.hud.gov/hudportal/documents/huddoc?id=instructions.pdf), which 
details the VMS reporting requirements.
    HUD will monitor each MTW agency's VMS reporting to ensure 
compliance and provide technical assistance to MTW agencies as needed.
vii. General Reporting Requirement
    In addition to the reporting requirements outlined in this 
Operations Notice, MTW agencies are required to comply with any and all 
HUD reporting requirements not specifically waived by HUD for 
participation in the MTW demonstration program, including the 
requirement (discussed in Section 5) to comply with HUD's evaluation of 
the specific-policy changes being implemented by cohort.
b. Performance Assessment
    Assessing the performance of PHAs (both MTW and non-MTW) helps with 
the delivery of services in the public housing and voucher programs and 
enhances trust among PHAs, public housing participants, HUD, and the 
general public. To facilitate this effort, HUD will provide management 
tools for effectively and fairly assessing the performance of a PHA in 
essential housing operations and program administration.
    Currently, HUD uses PHAS and SEMAP to assess risk and identify 
underperforming PHAs in the traditional public housing and voucher 
programs. However, since some of the MTW flexibilities make it 
difficult to accurately assess the performance of MTW agencies under 
the existing systems, HUD will develop an alternative, MTW-specific 
assessment system, which may be incorporated into PHAS and SEMAP (or 
successor assessment system(s)). MTW agencies may not opt out of the 
MTW-specific successor system(s). Until the successor system is 
implemented, HUD will monitor MTW agency performance through PHAS sub-
scores.
i. Public Housing Assessment System
    MTW agencies are scored in PHAS, however, agencies can elect not to 
receive the overall score (MTW agencies continue to receive PHAS sub-
scores even if they elect not to receive the overall score). If an MTW 
agency elects to receive its overall PHAS score, the agency must 
continue to be scored for the duration of the demonstration, or until 
the agency is assessed under the alternative, MTW-specific assessment 
system(s), whichever comes first. Once developed, all MTW agencies, 
including MTW agencies that elect not to receive an overall PHAS score, 
must be assessed under the MTW-specific assessment system(s).
    Per the 1996 MTW statute, when providing public housing, the MTW 
agency must ensure that the housing is safe, decent, sanitary, and in 
good repair, according to the physical inspection protocols established 
and approved by HUD. Thus, MTW agencies continue to be subject to HUD 
physical inspections. To the extent that HUD physical inspections 
reveal deficiencies, the MTW agency must continue to address these 
deficiencies in accordance with existing physical inspection 
requirements. If an MTW agency does not maintain public housing 
adequately, as evidenced by the physical inspection performed by HUD 
and is determined to be troubled in this area, HUD will determine 
appropriate remedial actions. The actions to be taken by HUD and the 
agency will include actions statutorily required and such other actions 
as may be determined appropriate by HUD. These actions may include 
developing and executing a Memorandum of Agreement (MOA) with the MTW 
agency, suspension or termination of the MTW CACC Amendment in 
accordance with the provisions therein, or such other actions legally 
available to the Department.
    MTW agencies must continue to submit year-end financial information 
into the Financial Data System (FDS)or successor system, as discussed 
earlier.
ii. Section 8 Management Assessment Program
    MTW agencies are not scored in SEMAP but they can elect to be 
scored if they choose to opt in. If an MTW agency elects to receive its 
overall SEMAP score, the agency must continue to be scored for the 
duration of the demonstration, or until the agency is assessed under 
the MTW-specific assessment system, whichever comes first. Once 
developed, all MTW agencies, including MTW agencies that opt out of 
SEMAP, must be assessed under the MTW-specific assessment system(s).
c. Monitoring and Oversight
    MTW agencies remain subject to the full range of HUD monitoring and 
oversight efforts including, but not limited to, annual risk 
assessments, on-site monitoring reviews, monitoring reviews relating to 
VMS reporting and rent reasonableness, review of the accuracy of data 
reported into HUD data systems, and use of HUD data systems

[[Page 50399]]

to assess agency program performance, among other activities.
i. MTW Statutory Requirements
    Throughout participation in the MTW demonstration program, all MTW 
agencies must continue to meet five statutory requirements established 
under the 1996 MTW Statute. Implementation, monitoring and enforcement 
of the five statutory requirements will be discussed in greater detail 
in the final version of this Operations Notice, and specific 
enforcement processes will be included in the MTW CACC Amendment (see 
also, section 11 of this Notice). HUD will monitor and determine MTW 
agencies' compliance with these five requirements as follows:
    (a) MTW agencies must ensure that at least 75 percent of the 
families assisted are very low-income families, in each fiscal year, as 
defined in section 3(b)(2) of the 1937 Act.
    (i) HUD Verification Approach: Initial household certification data 
recorded in PIC will be used for both the public housing and HCV 
programs for compliance monitoring purposes. The initial certification 
is comprised only of new admissions in the agency's given fiscal year. 
Initial household certification data for families housed through local, 
non-traditional activities (in accordance with the Appendix) will be 
provided in a manner specified by the Department. An agency's portfolio 
will then be weighted with respect to the number of households being 
served by each housing program type (i.e., PH, HCV, Local, Non-
Traditional).
    (b) MTW agencies must establish a reasonable rent policy which 
shall be designed to encourage employment and self-sufficiency by 
participating families, consistent with the purpose of this 
demonstration, such as by excluding some or all of a family's earned 
income for purposes of determining rent.
    (i) HUD Verification Approach: HUD defines rent reform as any 
change in the regulations on how rent is calculated for a household. 
Upon designation into the MTW demonstration, agencies are to submit 
their planned policy to implement a reasonable rent policy in the MTW 
Supplement. All activities falling under the Tenant Rent Policies 
category, detailed in the Appendix, meet the definition of a reasonable 
rent policy. An MTW agency must implement one or multiple reasonable 
rent policies during the term of its MTW designation (MTW agencies in 
the rent reform cohort may have prescribed deadlines to implement their 
reasonable rent policies).
    (c) MTW agencies must continue to assist substantially the same 
total number of eligible low-income families as would have been served 
had the amounts not been combined.
    (i) HUD Verification Approach: HUD continues to consider the best 
approach to monitor the MTW statutory requirement that MTW agencies 
serve substantially the same number of families absent the 
demonstration. The main themes and principles for this effort include a 
Substantially the Same (STS) methodology that: Ensures substantially 
the same number of families are housed; allows for local flexibility; 
is responsive to changing budgetary climates; is feasible for HUD to 
administer; is easy for MTW agencies to predict compliance; is straight 
forward to understand; is calculated each year; and has publicly 
available results. First, the STS methodology would establish a 
baseline ratio of dollars the agency expends and families housed. 
Before an agency enters the MTW demonstration, the public housing 
funding and the HCV HAP funding spent by the agency in the prior CY 
would be divided by the current number of families housed in each 
program. This calculation would yield how many families the agency 
houses per $100,000 of funding in both the public housing and HCV 
programs. Each year during an agency's participation in the MTW 
demonstration, the baseline number of total families housed per 
$100,000 of funding in both the public housing and HCV programs would 
be applied to the agency's actual funding for that calendar year. So, 
for example, the agency would know that if it is appropriated ``x 
number of dollars,'' it would be required to house ``y number of 
families.'' Depending on the specific circumstances of the agency, a 
dip below the baseline year number would be allowed. HUD is exploring 
methods to ensure that the ratio of families housed per $100,000 in the 
baseline year continues to be an accurate measure of ``substantially 
the same'' service levels in future years of the MTW designation. There 
would also be opportunities for PHAs to request adjustments of the 
baseline ratio to account for changes in costs due to special 
circumstances.
    The following is an example of the STS baseline ratio calculation:

Baseline Year (Calendar Year Before Agency Enters MTW)

     Agency expends $800,000 in HCV HAP funds and houses 100 
HCV families. Agency then houses 12.5 HCV families per $100,000 of HCV 
funds.
     Agency expends $500,000 in public housing funds and houses 
75 public housing families. Agency then houses 15 public housing 
families per $100,000 public housing funds.

First Year in MTW Demonstration

     MTW agency receives $900,000 in HCV HAP funds and $300,000 
in public housing funds.
     MTW agency must house 112.5 families for the HCV share and 
45 families for the public housing share. Therefore, in this example, 
the MTW agency is required to house 157 total families flexibly with 
its MTW funds (this may be in the public housing program, the HCV 
program, a local, non-traditional rental subsidy program, or a local, 
non-traditional development program \16\).
---------------------------------------------------------------------------

    \16\ MTW agencies may use their MTW Funding to develop 
affordable housing units that are outside of the traditional public 
housing and HCV programs. Such local, non-traditional development 
allows for the creation of important affordable housing resources, 
which must be balanced with the existing and immediate needs of 
families waiting for housing assistance. It is therefore necessary 
to relate the amount of the MTW agency's total available MTW Funding 
investment to the number of affordable units developed. To that end, 
HUD will divide the MTW agency's total available MTW Funding in the 
local, non-traditional development by the HUD-published Total 
Development Cost (TDC). The resulting number of units would then 
count as families housed for the length of time the units remained 
affordable.
---------------------------------------------------------------------------

    (d) MTW agencies must maintain a comparable mix of families (by 
family size) as would have been provided had the amounts not been used 
under the demonstration.
    (i) HUD Verification Approach: In order to establish a comparable 
mix baseline, the Department will pull data, by family size, for 
occupied public housing units and leased vouchers at the time of entry 
into the demonstration. The Department will rely upon agency-reported 
data into HUD systems (i.e., PIC, VMS). This information will be used 
to establish baseline percentages, by family size, to which the agency 
is measured by for the remainder of participation. Following entry into 
the demonstration, agencies will provide comparable mix data and, if 
applicable, associated justifications in the MTW Supplement. The 
Department deems an acceptable level of variation to be no more than 5 
percent from the baseline. Justifications or explanations for 
fluctuations greater than 5 percent are required and subject to the 
Department's review.
    (e) MTW agencies must ensure that housing assisted under the 
demonstration meets housing quality standards established or approved 
by the Secretary.

[[Page 50400]]

    (i) HUD Verification Approach: In order to demonstrate that the MTW 
agency meets housing quality standards, HUD will verify compliance for 
each housing program type as follows:
     HCV--Program regulations at 24 CFR part 982 set forth 
basic housing quality standards (HQS) for housing assisted under the 
HCV program. These housing quality standards, or its successor 
regulations, are the standards used to determine if the agency is 
fulfilling its responsibilities to ensure owners are maintaining the 
units in accordance with HQS in the evaluation of an agency. Agencies 
with an HCV program must certify in the MTW Supplement that they have 
fulfilled their responsibilities to comply with and ensure enforcement 
of HQS under this requirement.
     Public Housing--HUD will verify this requirement through 
its review of PHAS Physical Assessment Subsystem (PASS) scores, or 
successor assessment system. Scores falling below 24 out of 40 will be 
identified as non-compliant with the statutory requirement.
     Local, Non-Traditional--In the MTW Supplement, MTW 
Agencies must certify that local, non-traditional units meet housing 
quality standards as required in PIH Notice 2011-45, or successor 
notice.
ii. Income Integrity and Enterprise Income Verification System (EIV) 
Reviews
    MTW agencies are required to comply with the final rule regarding 
EIV issued December 29, 2009, and utilize EIV for all income 
verifications. EIV has been modified for MTW agencies so that family 
information submitted in PIC will not expire for 40 months, in order to 
accommodate agencies choosing to extend recertification periods for up 
to three years.
    MTW agencies are subject to HUD review to ensure compliance with 
EIV requirements as well as monitor the accuracy and integrity of the 
MTW agencies' income and rent determination policies, procedures, and 
outcomes.
iii. MTW Site Visit
    HUD will periodically conduct site visits to provide guidance, 
discuss the MTW agency's MTW activities, and offer any needed technical 
assistance regarding its program. The purpose of a site visit will be 
to confirm reported agency MTW activities, to review the status and 
effectiveness of the agency's MTW strategies, provide technical 
assistance, and to identify and resolve outstanding MTW related issues.
    The MTW agency shall give HUD access, at reasonable times and 
places, to all requested sources of information, including access to 
files, access to units, and an opportunity to interview agency staff 
and assisted participants.
    Where travel funding or staff resources are not available to 
facilitate in-person site visits, HUD may exercise the option to 
conduct remote site visits via telephone, videoconference, or webinar.
    To the extent possible, HUD will coordinate the MTW site visit with 
other site visits to be conducted by HUD.
iv. Housing Choice Voucher Utilization
    HUD will monitor HCV utilization at MTW agencies and will ensure 
that HCV funds are utilized in accordance with Section 4(a)(i)(c) and 
Section 6(c)(i)(c) of this Notice. Where leasing levels are 
inconsistent with the requirements of this Notice, HUD may take 
appropriate actions to work with the MTW agency to increase leasing and 
utilization.
v. Public Housing Occupancy
    HUD will monitor public housing occupancy rates for MTW agencies. 
In instances where the MTW agency's public housing occupancy rate falls 
below 96 percent, HUD may require, at its discretion, that the MTW 
agency enter into an Occupancy Action Plan to address the occupancy 
issues. The Occupancy Action Plan will include the cause of the 
occupancy issue, the intended solution, and reasonable timeframes to 
address the cause of the occupancy issue.
vi. Additional Monitoring and Oversight
    HUD may, based on the MTW agency's risks and at HUD's discretion, 
conduct management, programmatic, financial, or other reviews of the 
MTW agency. The MTW agency shall respond to any findings with 
appropriate corrective action(s).
    In addition, HUD will make use of all HUD data systems and 
available information to conduct ongoing remote monitoring and 
oversight actions for MTW agencies, consistent with the results of the 
PIH risk assessment.

7. Rental Assistance Demonstration Program

    MTW agencies converting public housing program units to Section 8 
assistance under the Rental Assistance Demonstration (RAD) program are 
able to retain MTW regulatory and statutory flexibilities in the 
management of those units, subject to RAD requirements, if the 
conversion is to Project Based Voucher (PBV) assistance. MTW agencies 
converting projects under RAD to PBV may continue to undertake 
flexibilities except to the extent limited by RAD, as described in the 
RAD Notice, PIH 2012-32, REV-3, or its successor Notice.\17\
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    \17\ Notices and laws related to RAD can be found at http://portal.hud.gov/hudportal/HUD?src=/RAD/library/notices.
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8. Applying MTW Flexibilities to Special Purpose Vouchers

    Special Purpose Vouchers (SPVs) are specifically provided for by 
Congress in line item appropriations, which distinguish them from 
regular vouchers. Except for enhanced vouchers and tenant-protection 
vouchers (described below), SPVs are not part of the MTW demonstration 
and are not part of the MTW agency's total available flexible MTW 
Funding. The funding is renewed outside of the MTW HAP renewal formula 
and the funding (both the initial increment and renewal funding) for 
the SPVs may only be used for eligible SPV purposes. There are no 
additional MTW flexibilities around using MTW funds to cover SPV 
shortfalls. MTW PHAs may use non-HAP sources to cover shortfalls, 
following the procedures outlined in Notice PIH 2013-28. PHAs already 
have the ability to use HAP reserve funds to address SPV instances of 
shortfalls, where the SPVs are under the same appropriations allocation 
for renewal as their Section 8 vouchers.\18\
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    \18\ https://portal.hud.gov/hudportal/documents/huddoc?id=DOC_10495.pdf.
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a. HUD-Veterans Affairs Supportive Housing
    HUD-Veterans Affairs Supportive Housing (HUD-VASH) vouchers have 
separate operating requirements and must be administered in accordance 
with the requirements listed at www.hud.gov/program_offices/public_indian_housing/programs/hcv/vash. The operating requirements 
waive and alter many of the standard HCV statutes and regulations at 24 
CFR part 982. Unless stated in the HUD-VASH operating requirements, 
however, the regulatory requirements at 24 CFR part 982 and all other 
HUD directives for the HCV program are applicable to HUD-VASH vouchers. 
Agencies may submit a request to HUD to operate HUD-VASH vouchers in 
accordance with MTW administrative flexibilities.
b. Family Unification Program
    The Family Unification Program (FUP) NOFA language allows vouchers 
to be administered in accordance with MTW operations, unless MTW 
provisions are inconsistent with the

[[Page 50401]]

appropriations act or requirements of the FUP NOFA. In the event of a 
conflict between the Operations Notice and the appropriations act or 
FUP NOFA language, the act and NOFA govern.
c. Non-Elderly Persons With Disabilities Vouchers
    The Non-Elderly Persons with Disabilities (NED) NOFA language 
allows vouchers to be administered in accordance with MTW operations 
unless MTW provisions are inconsistent with the appropriations act or 
requirements of the NED NOFA. In the event of a conflict between the 
Operations Notice and the appropriations act or FUP NOFA language, the 
act and NOFA govern.
d. Enhanced Vouchers and Tenant Protection Vouchers
    Enhanced and tenant protection voucher funds become fungible once 
the initial funding increment is renewed. The agency must continue to 
provide rental assistance to enhanced voucher families and tenant 
protection voucher families after the initial funding increment is 
renewed.
    The statutory enhanced voucher requirements under Section 8(t) of 
the 1937 Act (e.g., the HAP calculation) apply to an enhanced voucher 
family until the family either moves from the project or leaves the HCV 
tenant-based program for any reason. MTW agencies must follow the 
procedures described in Notice PIH 2013-27, or its successor Notice, 
for a recipient of an enhanced voucher to voluntarily agree to 
relinquish their tenant-based assistance in exchange for PBV 
assistance. When an enhanced voucher family moves from the project, 
either after initially receiving the voucher or anytime thereafter, the 
Section 8(t) enhanced voucher requirements no longer apply. The voucher 
is then administered in accordance with the regular HCV program 
requirements, as modified by the agency's individual MTW waivers and 
MTW policies for its tenant-based HCV program.
    Regular tenant protection vouchers (i.e., tenant protection 
vouchers that are not enhanced vouchers) are always administered in 
accordance with the normally applicable HCV program requirements, as 
modified by the agency's individual MTW waivers and MTW policies for 
its tenant-based HCV program, regardless of whether the family stays or 
moves from the project.

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

    Notwithstanding the MTW Waivers and associated activities provided 
in this Operations Notice, the following provisions of the 1937 Act 
continue to apply to MTW agencies and the assistance received pursuant 
to the 1937 Act:
    i. The terms ``low-income families'' and ``very low-income 
families'' shall continue to be defined by reference to Section 3(b)(2) 
of the 1937 Act (42 U.S.C. 1437a(b)(2));
    ii. Section 12 of the 1937 Act (42 U.S.C. 1437j), as amended, shall 
apply to housing assisted under the demonstration, other than housing 
assisted solely due to occupancy by families receiving tenant-based 
assistance;
    iii. Section 18 of the 1937 Act (42 U.S.C. 1437p, as amended by 
Section 1002(d) of Pub. L. 104-19, Section 201(b)(1) of Pub. L. 104-
134, and Section 201(b) of Pub. L. 104-202), governing demolition and 
disposition, shall continue to apply to public housing notwithstanding 
any use of the housing under MTW; and
    iv. Section 8(r)(1) of the 1937 Act on HCV portability shall 
continue to apply unless provided as a cohort-specific waiver and 
associated activity(s) in an evaluative cohort as necessary to 
implement comprehensive rent reform and occupancy policies. Such a 
cohort-specific waiver and associated activity(s) would contain, at a 
minimum, exceptions for requests to port due to employment, education, 
health and safety, and reasonable accommodation.
    Notwithstanding any requirement contained in this Notice or any MTW 
Waiver and associated activity granted herein, other Federal, state and 
local requirements applicable to public housing or HCV assistance will 
continue to apply. The MTW CACC Amendment will place in HUD the 
authority to determine if any future law or future regulation conflicts 
with any MTW-related agreement or Notice. If a future law conflicts, 
the law shall be implemented, and no breach of contract claim, or any 
claim for monetary damages, may result from the conflict or 
implementation of the conflicting law or regulation.
    If any non-1937 Act requirement applicable to PHAs, public housing, 
or HCV assistance contains a provision that conflicts or is 
inconsistent with any MTW Waiver and associated activity granted by 
HUD, the agency remains subject to the terms of that non-1937 Act 
requirement. Such requirements include, but are not limited to:
     Requirements for Federal Funds: Notwithstanding the 
flexibilities described in this Notice, the public housing and voucher 
funding provided to MTW agencies remain Federal funds and are subject 
to any and all other Federal requirements outside of the 1937 Act 
(e.g., including, but not limited to, competitive HUD NOFAs under which 
the MTW agency has received an award, state and local laws, Federal 
statutes other than the 1937 Act (including appropriations acts), and 
OMB Circulars and requirements), as modified from time to time. The MTW 
agency's expenditures must comply with 2 CFR part 200 and other 
applicable Federal requirements, which provide basic guidelines for the 
use of Federal funds, including the requirements of this Notice.
     National Environmental Policy Act (NEPA): MTW agencies 
must comply with NEPA, 24 CFR part 50 or part 58, as applicable, and 
other related Federal laws and authorities identified in 24 CFR. Part 
50 or part 58, as applicable. Information and guidance on the 
environmental review process and requirements is provided in PIH Notice 
2016-22, or successor notice.
     Fair Housing and Equal Opportunity: As with the 
administration of all HUD programs and all HUD-assisted activities, 
fair housing, and civil rights issues apply to the administration of 
MTW demonstration programs. This includes actions and policies that may 
have a discriminatory effect on the basis of race, color, sex, national 
origin, religion, disability, or familial status (see 24 CFR part 1 and 
part 100 subpart G) or that may impede, obstruct, prevent, or undermine 
efforts to affirmatively further fair housing. Annual PHA Plans must 
include a civil rights certification required by Section 5A of the 1937 
Act and implemented by regulation at 24 CFR 903.7(o) and 903.15, as 
well as a statement of the PHA's strategies and actions to achieve fair 
housing goals outlined in an approved Assessment of Fair Housing (AFH) 
consistent with 24 CFR 5.154. If the PHA does not have a HUD-accepted 
AFH, it must still provide a civil rights certification and statement 
of the PHA's fair housing strategies, which would be informed by the 
corresponding jurisdiction's AFH and the PHA's assessment of its own 
operations.
    All PHAs, including MTW agencies, are obligated to comply with non-
discrimination and equal opportunity laws and implementing regulation, 
including those in 24 CFR 5.105. Specific laws and regulations must be 
viewed in their entirety for full compliance, as this Operations Notice 
does not incorporate a complete discussion of all legal authorities. 
For example, PHAs, including MTW agencies, are required to comply with

[[Page 50402]]

the Fair Housing Act, Title VI of the Civil Rights Act of 1964, Section 
504 of the Rehabilitation Act of 1973, Title II of the Americans with 
Disabilities Act of 1990, Architectural Barriers Act of 1968, Executive 
Order 11063: Equal Opportunity in Housing, Executive Order 13166: 
Improving Access to Services for Persons with Limited English 
Proficiency, HUD's Equal Access Rule (24 CFR 5.105(a)(2), Age 
Discrimination Act of 1975, and Title IX of the Education Amendments 
Act of 1972, as well as HUD and government-wide regulations 
implementing these authorities. PHAs should review PIH Notice 2011-31 
for more details.
     Court Orders and Voluntary Compliance Agreements: MTW 
agencies must comply with the terms of any applicable court orders or 
Voluntary Compliance Agreements that are in existence or may come into 
existence during the term of the MTW CACC Amendment. The PHA must 
cooperate fully with any investigation by the HUD Office of Inspector 
General or any other investigative and law enforcement agencies of the 
U.S. Government.

10. MTW Agencies Admitted Prior to 2016 MTW Expansion Statute

    The 39 MTW agencies that entered the MTW demonstration prior to the 
2016 MTW Expansion Statute adhere to an administrative structure 
outlined in the Standard MTW Agreement, a contract between each current 
agency and HUD. The 2016 MTW Expansion Statute extended the term of the 
Standard MTW Agreement for these existing MTW agencies through each 
agency's 2028 fiscal year.
    Some agencies that entered the MTW demonstration prior to the 2016 
MTW Expansion Statute may wish to opt out of their Standard MTW 
Agreement and administer their MTW program pursuant to the MTW 
Expansion and the requirements in this MTW Operations Notice. HUD will 
support an existing MTW agency's request to join the MTW Expansion 
provided that the agency:
     Makes the change at the end of its fiscal year, so that it 
does not have part of a fiscal year under the Standard Agreement and 
part under the Operations Notice;
     follows the same public comment and Board resolution 
process as would be required for amending the Standard MTW Agreement;
     executes its MTW CACC Amendment to authorize participation 
in the MTW demonstration consistent with the Operations Notice; and
     agrees to all the terms and conditions that apply to MTW 
agencies admitted pursuant to the 2016 MTW Expansion Statute, including 
all of the provisions of this Operations Notice and the accompanying 
MTW CACC Amendment.
    Should an existing MTW agency elect to administer its MTW program 
pursuant to the framework described in this Operations Notice, it will 
not be required to implement the cohort-specific policy change 
associated with any of the MTW cohorts and it will not be required to 
participate in the evaluation of that specific policy change. All other 
requirements in this Operations Notice will apply.

11. Sanctions, Terminations, and Default

    If the MTW agency violates any of the requirements outlined in this 
Notice, HUD is authorized to take any corrective or remedial action 
permitted by law. Sanctions, terminations, and default are covered in 
the agency's MTW CACC Amendment.

III. Environmental Impact

1. Purpose and Applicability

    A Finding of No Significant Impact (FONSI) with respect to the 
environment was made for a previous version of this Notice in 
accordance with HUD regulations in 24 CFR part 50 that implement 
section 102(2)(C) of the National Environmental Policy Act of 1969 (42 
U.S.C. 4332(2)(C)). The FONSI is applicable to the current version of 
the Notice because there were no significant changes to the provisions 
of the Notice. The FONSI will be available for public inspection on 
www.regulations.gov.

    Dated: August 24 2018.
Robert E. Mulderig,
Acting Deputy Assistant Secretary for Public Housing Investments.
[FR Doc. 2018-21723 Filed 10-4-18; 8:45 am]
 BILLING CODE 4210-67-P