HUD Publishes New Requirements to Apply for HCV Shortfall and other Set-Aside Funding

By: Tushar Gurjal, Senior Policy Manager

On June 24, HUD published a notice titled “HCV 2024 HAP Funding – Revised HAP Set-Aside Shortfall Funding Requirements” [PIH 20204-21 (HA)]. The notice revises the set-aside funding requirements for Housing Assistance Payments (HAP) for the Housing Choice Voucher (HCV) program in 2024. It supersedes the HAP set-aside requirements set forth in the HCV Implementation notice published earlier this year in PIH Notice 2024-16. The 2024 appropriations act provides for $200 million for set-aside funding.

Due to HUD’s concerns about the additional need for 2024 shortfall funding, the Department will delay the awarding of funding under other set-aside categories until later in the year. The notice also revises the exceptions under which a shortfall PHA may continue to issue vouchers and establishes other eligibility conditions for shortfall funding. Depending on the amount remaining after shortfall requests, HUD may prorate funds for other funding awards or decline to make other funding awards. In calculating shortfall awards, HUD will use the Two-Year Forecasting Tool (TYT), the most recent validated voucher leasing and expense data from the Voucher Management System (VMS), and any updated information that the PHA provides.

The Department is updating the PHA requirements for shortfall funding. Upon receiving notification that HUD’s shortfall prevention team has identified a projected shortfall, the PHA must take the following actions:

  • Suspend the issuance of vouchers;
  • Cease absorbing vouchers;
  • Implement other cost-saving measures; and
  • Apply for shortfall funding.

The suspension of the issuance of vouchers is subject to certain exclusions. The Department may create new exclusions on a case-by-case basis.

To apply for shortfall funding, PHAs should still follow section 11.A of Notice PIH 2024-16 (though Appendix E of that notice has been superseded). All PHAs applying for shortfall funding must work with the shortfall prevention team. To calculate potential shortfalls, the shortfall prevention team considers HCV reserves (as of 12/31/2023); renewal funding; set-asides and other funding increments received by the PHA; projected unit months leased; total HAP expenses; voucher issued or projected to be issued; other changes to units leased; 2024 year-end total HAP reserve balance; unrestricted net balance and other potential funding sources that are available to the PHA.

The full notice can be read here.

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