Housing Opportunity Through Modernization Act: Implementation of Sections 102, 103, and 104; Extension of Compliance Date and Safe Harbor Implementation, 106998-106999 [2024-31401]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 89, Number 250 (Tuesday, December 31, 2024)]
[Rules and Regulations]
[Pages 106998-106999]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-31401]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 5, 92, 93, 570, 574, 576, and 578

[Docket No. FR-6057-N-06]


Housing Opportunity Through Modernization Act: Implementation of 
Sections 102, 103, and 104; Extension of Compliance Date and Safe 
Harbor Implementation

AGENCY: Office of the Assistant Secretary for Community Planning and 
Development, U.S. Department of Housing and Urban Development (HUD).

ACTION: Final rule; extension of compliance date.

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SUMMARY: This document extends the compliance date for HUD's final rule 
entitled ``Housing Opportunity Through Modernization Act of 2016: 
Implementation of Sections 102, 103, and 104'' (HOTMA final rule) for 
Community Planning and Development (CPD) programs. Specifically, HUD is 
extending the compliance date for the HOME Investment Partnerships 
program (HOME), HOME-American Rescue Plan program, Housing Trust Fund 
(HTF), Housing Opportunities for Persons With AIDS (HOPWA), Community 
Development Block Grant program (CDBG), Emergency Solution Grants 
(ESG), Continuum of Care (CoC) programs, and CPD programs funded 
through competitive processes (Competitive Programs). HUD is extending 
the compliance deadline for all grantees and allowing grantees that are 
ready to comply to set an earlier compliance date between January 1, 
2024, and January 1, 2026. In addition, HUD is permitting the 
implementation of certain income safe harbors established in the HOTMA 
final rule prior to the extended HOTMA compliance date. HUD is taking 
this action due to delays in updating the HUD systems to comply with 
HOTMA and to allow additional time for jurisdictions, participants, and 
grantees to incorporate HUD's income and asset requirements into their 
own programs and flexibility to transition implementing HOTMA 
requirements under their own timelines.

DATES: The compliance date for the final rule published February 14, 
2023, at 88 FR 9600, is extended. CPD participating jurisdictions, 
participants, and grantees (CPD grantees) subject to 24 CFR parts 5, 
92, 93, 570, 574, 576, and 578, or who apply the income requirements in 
24 CFR part 5 pursuant to Notices of Funding Opportunity (NOFOs), are 
not required to comply with the changes established by the HOTMA final 
rule until January 1, 2026.

FOR FURTHER INFORMATION CONTACT: For HOME and the HTF, Milagro Fisher, 
Senior Affordable Housing Specialist, Office of Affordable Housing 
Programs, at telephone (202) 708-2684, Room 7160; for HOPWA, Lisa 
Steinhauer, Senior Program Specialist, Office of HIV/AIDS Housing, at 
telephone (215) 861-7651, Room 7248; for CDBG, B. Cory Schwartz, Deputy 
Director, State & Small Cities Division, at telephone (202) 402-4105, 
Room 7282. The mailing address for each office contact is Department of 
Housing and Urban Development, 451 Seventh Street SW, Washington, DC 
20410-7000. HUD welcomes and is prepared to receive calls from 
individuals who are deaf or hard of hearing, as well as individuals 
with speech or communication disabilities. To learn more about how to 
make an accessible telephone call, please visit: https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.

SUPPLEMENTARY INFORMATION:

I. Background

    On February 14, 2023, HUD published the HOTMA final rule (88 FR 
9600). The HOTMA final rule established a January 1, 2024, effective 
date for the revisions it made to HUD's income regulations at 24 CFR 
parts 5, 92, 93, 570, and 574. These revisions also affected CPD 
programs subject to 24 CFR parts 576 and 578, as well as Competitive 
Programs using NOFOs that reference the regulations at 24 CFR part 5. 
On September 29, 2023, HUD's Office of Public and Indian Housing (PIH) 
and Office of Housing (Housing) issued joint notification PIH 2023-27/H 
2023-10, which enabled Public Housing Agencies (PHAs) and multifamily 
owners to establish their own compliance dates for sections 102 and 104 
of HOTMA as early as January 1, 2024, and no later than January 1, 
2025. Similarly, on December 8, 2023, HUD published the Housing 
Opportunity Through Modernization Act: Implementation of Sections 102, 
103, and 104; Extension of Compliance Date (88 FR 85648) to extend the 
compliance date of the HOTMA final rule to January 1, 2025, for all CPD 
programs that use HUD's 24 CFR part 5 income regulations.

II. Further Extensions of the HOTMA Final Rule Compliance Date

    On September 18, 2024, PIH announced that PHAs were not to 
implement and comply with the section 102 and 104 income and assets 
provisions in the HOTMA final rule by January 1, 2025. This extension 
was due to delays in updating the HUD systems to comply with the rule. 
Then, on September 20, 2024, Housing issued notification H 2024-09 to 
announce that multifamily owners were not to implement and comply with 
the HOTMA final rule until July 1, 2025. This was also due to delays in 
updating the HUD systems to comply with the rule. Now, HUD has 
determined that CPD grantees receiving assistance through CPD programs, 
which often overlap with PIH and multifamily programs, must be provided 
with certain flexibilities. HUD is communicating these flexibilities 
through this document.
    HUD's determination that these flexibilities are necessary was made 
in light of the fact that CPD grantees may not be able to comply with 
the requirements of the HOTMA final rule until after HUD has provided 
the guidance and performed the software updates necessary for CPD 
grantees to implement the HOTMA final rule. Even after the necessary 
guidance is provided and updates to HUD systems are made, CPD grantees 
will still need additional time to incorporate this guidance into their 
program policies and procedures and to update their own systems and 
software. Therefore, in recognition of these operational issues and 
challenges, HUD is allowing CPD grantees to set their own compliance 
dates for the applicable HOTMA final rule provisions. These compliance 
dates may be as early as January 1, 2024, and no later than January 1, 
2026. Until these new compliance dates, CPD grantees must continue to 
adhere, as applicable, to the requirements found in both their program 
regulations and the regulations at 24 CFR 5.603, 24 CFR 5.609, 24 CFR 
5.611, and 24 CFR 5.617 as they existed prior to January 1, 2024. 
Furthermore,

[[Page 106999]]

CPD grantees must continue to rely on the instructions provided in the 
document published December 8, 2023 at 88 FR 85648 for implementing the 
HOTMA final rule.

III. Implementation of the HOTMA Safe Harbor for ESG, COC Programs, and 
HOPWA

    The HOTMA final rule established an income safe harbor provision at 
24 CFR 5.609(c)(3). This provision permits PHAs and multifamily owners 
to determine the annual income of a family prior to the application of 
any deductions applied in accordance with 24 CFR 5.611 based on income 
determinations made under the rules of other Federal programs or means-
tested forms of Federal public assistance. On September 13, 2024, PIH 
published updated HOTMA Implementation FAQs \1\ describing that PHAs 
may implement the safe harbor provision at 24 CFR 5.609(c)(3).
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    \1\ https://www.hud.gov/sites/dfiles/PIH/documents/PIH%20HOTMA%20Implementation%20FAQ%209.13.2024.pdf updated September 
13, 2024.
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    Now, HUD is allowing certain CPD grantees that have program 
regulations that cross reference 24 CFR 5.609(c)(3) to use this safe 
harbor provision prior to implementing the HOTMA final rule. Grantees 
of the following CPD programs may use this safe harbor provision: HOPWA 
(see 24 CFR 574.310(e)), ESG (see 24 CFR 576.401(c)), and the CoC 
programs (see 24 CFR 578.77(b) and (c)). Before using this safe harbor 
provision, grantees of these CPD programs must update their program 
guidelines and establish policies and procedures that describe income 
verifications when using this safe harbor provision. HUD is providing 
these grantees, and specifically HOPWA grantees, the ability to use 
this income safe harbor provision so that its CPD program guidance more 
closely aligns with its Section 8 program guidance, as HUD's HOPWA 
regulations closely track Housing Choice Voucher program regulations.

IV. Implementation of the HOTMA Safe Harbor for HOME and HTF

    The HOTMA final rule also established separate safe harbor 
provisions at 24 CFR 92.203(a)(1) and (2) and at 24 CFR 92.252(h) for 
HOME and other safe harbor provisions at 24 CFR 93.151(a)(1) through 
(3), and 24 CFR 93.302(e) for HTF. Under 24 CFR 92.203(a)(1) and 24 CFR 
93.151(a)(3), a participating jurisdiction or HTF grantee must accept a 
PHA's, owner's, or rental subsidy provider's income determinations, in 
accordance with 24 CFR 5.609, if a family is applying for or living in 
a HOME-assisted or HTF-assisted rental unit and the unit is being 
assisted by Federal project-based rental subsidy. Similarly, a 
participating jurisdiction or HTF grantee must accept a State project-
based rental subsidy provider's income determination under the rules of 
that State program. In the same way, under 24 CFR 93.151(a)(1), for 
HTF-assisted units that are assisted under the public housing program, 
an HTF grantee must accept a PHA's determination of a family's annual 
income and adjusted income under 24 CFR 5.609 and 24 CFR 5.611. 
Moreover, under 24 CFR 92.203(a)(2) and 24 CFR 93.151(a)(2), a 
participating jurisdiction or HTF grantee may accept a Federal tenant-
based rental assistance provider's income determinations if a family is 
applying for or living in a HOME-assisted or HTF-assisted rental unit 
and the family is being assisted by a Federal tenant-based rental 
assistance program.
    Now, HUD is allowing participating jurisdictions and HTF grantees 
to use the safe harbor provisions in 24 CFR 92.203(a) and 24 CFR 
92.252(h), or 24 CFR 93.151(a) and 24 CFR 93.302(e), prior to the new 
HOTMA final rule compliance date and upon publication of this document, 
even if they have not implemented the remaining provisions of the HOTMA 
final rule. Before using the safe harbor provisions, participating 
jurisdictions and HTF grantees must update their program guidelines and 
establish policies and procedures that describe income verification 
when using the safe harbor provisions. HUD is providing participating 
jurisdictions and HTF grantees the ability to use these safe harbor 
provisions so that its HOME and HTF guidance more closely aligns with 
its other HOTMA final rule implementation guidance and to reduce the 
administrative burden on CPD grantees associated with having to meet 
two different sets of income requirements for the same unit.

V. Conclusion

    Accordingly, HUD extends the January 1, 2025, compliance date for 
implementing the changes made by the HOTMA final rule to 24 CFR parts 
5, 92, 93, 570, and 574 for the CPD programs described in this document 
until January 1, 2026. Until January 1, 2026, the grantees of these 
programs subject to these parts may instead choose to comply with these 
parts as they existed prior to January 1, 2024, and may also implement 
the income safe harbor provisions described in this document.

Marion McFadden,
Principal Deputy Assistant Secretary for Community Planning and 
Development, Office of Community Planning and Development.
[FR Doc. 2024-31401 Filed 12-30-24; 8:45 am]
BILLING CODE 4210-67-P