Summary, 1998 Housing Reform Act
Revised, November 2, 1998
NOTE: The full text of the 1998 Housing Act is available
online. Pub.L. 105-276
(PDF)
Here is a glance at some of the provisions within The Quality
Housing and Work Responsibility Act of 1998 (Public Law 105-276).
This is a broad and far-reaching Act; this paper is meant
to be an overview of some of its important issues. Generally,
the effective date of this Act is October 1, 1999. However,
many provisions are effective immediately.
Topics
Income Targeting and Deconcentration
Minimum Rents
Family Choice
of Rental Payment
Community
Service and Family Self-Sufficiency Requirements
Earned Income Disregard
Residents
on Housing Authority Boards
Public Housing Agency
Plans
Family Self Sufficiency
Program
Federal
Preferences and Take One, Take All
Resident Management
Demolition
and Disposition of Public Housing
Voluntary
Conversion of Public Housing into Vouchers
Mandatory
Conversion of Public Housing into Vouchers
Homeownership
for Public Housing Residents
Merger
of Certificate and Voucher Programs
Portability
Homeownership
Option for Voucher Holders
Home Rule Flexible Grant
Demonstration
Income
Eligibility for HOME and CDBG Programs
FHA Property Disposition
Reform
Income
Targeting and Deconcentration
[Targeting and deconcentration language is effective immediately.
HUD is expected to issue a clarifying notice in
November 1998.]
Public Housing
Of the public housing units made available in any fiscal
year, not less than 40% must be occupied by families whose
incomes are less than 30% of the area median income (AMI).
The legislation also allows for fungibility. Fungibility means
that for each voucher holder exceeding the section 8 voucher
program’s income targeting requirement for families below
30% of area median income (AMI), the number of public housing
units occupied by families earning less than 30% AMI can be
reduced by that number. This allows for higher income
families to enter into public housing. The fungibility
provision is limited to 10% of the number of the housing authority’s
tenant-based voucher holders and must support deconcentration
(fungibility can only be used when families moving into public
housing under fungibility have incomes above 30% of the AMI
move into census tracts that have a poverty rate of 30% or
more - effectively encouraging higher income families to move
into lower income neighborhoods as a condition of using fungibility).
There is a “fungibility floor” where the very least number
of public housing units occupied by families with incomes
less than 30% of the AMI are 30% of the public housing units.
Public housing agencies are prohibited from concentrating
very low income families in certain public housing projects
or in certain buildings of certain projects. As part
of its annual plan, the housing agency must provide for deconcentration
of poverty and income-mixing by bringing higher income
tenants into lower income projects and vice versa. Housing
agencies are permitted to “skip” over a family on a waiting
list in order to get to the next family in fulfilling this
income mixing.
Tenant-Based Section 8 105-276
Of the tenant-based section 8 vouchers made available in
any fiscal year, not less than 75% of the vouchers must be
used by families whose incomes are less than 30% of the AMI.
Project-Based Section 8
Eligibility: Pre-1981 projects: at least 75%
of units which become available must be for families earning
less than 50% of AMI. Post-1981 projects: at least 85%
of units which become available must be for families earning
less than 50% of AMI.
Targeting: Of the project-based section
8 units made available in any fiscal year, not less than 40%
of the units must be used by families whose incomes are less
than 30% of the AMI. Project owners cannot skip over
lower income applicants in order to select higher income
families. However, project owners can establish preferences
for families with an employed member.
Minimum Rents
[Effective Immediately]
Housing authorities may impose minimum rents of $0 to $50
a month for public housing and section 8 assisted residents.
The legislation has mandatory exemptions, which are effective
immediately, from payment of the minimum rent for the following
financial hardship circumstances: the family has lost eligibility
for, or is awaiting an eligibility determination for, a federal,
state or local assistance program; the family would be evicted
as a result of the imposition of the minimum rent requirements;
the income of the family has decreased because of changed
circumstances (including loss of employment); a death in the
family has occurred; other situations as determined by the
housing authority or, for some section 8 residents, by the
HUD Secretary.
Family
Choice of Rental Payment
Families living in public housing may pay either a flat rent
or an income-based rent. Families may elect annually
whether their rent will be a flat rent or an income-based
rent. Families who chose a flat rent and cannot pay
it because of financial hardship as determined by the housing
agency can switch to an income-based rent. In these
situations, the housing authority must immediately provide
for the family to switch to an income-based rent. Housing
authorities may establish a rent structure that requires a
portion of the rent to go into an escrow or savings account,
impose ceiling rents or adopt income exclusions.
Community
Service and Family Self-Sufficiency Requirements
[Effective October 1, 1999]
Each adult resident of a public housing project must contribute
eight hours of community service a month (not including political
activities) within the community that they live or participate
in an economic self-sufficiency program for eight hours per
month. Exemptions exist for any individual who is 62
years of age or older; is blind or disabled and is unable
to comply or is a primary caretaker of such individual; also
exempt is any adult in a family that receives TANF or other
state welfare assistance, including a state welfare-to-work
program, who has not been found to be in noncompliance with
that program. Also exempt is any adult who meets a state
welfare program’s criteria for exemption from work requirements.
Residents not fitting any of the exemptions and found to be
in noncompliance with the community work requirement will
not have their leases renewed. This established a 12
month lease for public housing residents which must be automatically
renewed for all purposes except for noncompliance with the
community work and self-sufficiency requirements. Nothing
in this section authorizes a housing authority to establish
any time limits on public housing residency.
If state or local public assistance benefits are decreased
because of failure to comply with state self-sufficiency or
work activity requirements in those programs, the family’s
rent may not be decreased as a result of any decrease in the
income of the family. This applies to families living
in public housing and families receiving tenant-based section
8 assistance and who receive welfare or public assistance
from a state or local program. Reaching a time limit
does not equal a failure to comply with the public assistance
program.
Earned
Income Disregard
For purposes of rent calculation for public housing residents,
increased income from new or greater employment is disregarded
for 12 months after the income increases. (Housing authorities
may choose to operate the earned income disregard for longer
than 12 months). A rent increase will then be phased in over
a two-year period after the initial 12 month disregard.
During the first year of the phase-in, no more than 50 percent
of the increase can be applied to the rent calculation; by
the second year after the initial 12 month income disregard,
the resident will be paying their full rent. Section
8 residents could potentially take advantage of the earned
income disregard if adequate appropriations are allocated
in future year HUD budgets.
Expansion of who is eligible for the income disregard: someone
whose income increases who was previously employed for one
or more years; someone whose earned income increases during
a family self-sufficiency or other job training program; someone
who, during the previous 6 months, was assisted under any
state temporary assistance to needy families program.
Instead of disregarding earned income, and at the family’s
request, a housing authority may establish an individual savings
account for that family.
Residents
on Housing Authority Boards
The legislation requires each public housing organization
to have on its board of directors or governing body at least
one member who is assisted by the public housing agency.
This person may be appointed rather than be elected by other
residents. For those housing authorities with less than
300 units where, after notice, no resident expresses a desire
to be on the board, no such participation is required.
States which require board members to be salaried or to serve
on a full-time basis are exempted.
Public
Housing Agency Plans
Each housing authority must submit, to HUD, both a five year
plan and a one year plan. The five year plan will include
the authority’s mission for serving the needs of low income
and very low income families in its jurisdiction and a statement
of goals and objectives on its plan to meet its mission.
The annual plan will include 18 pieces. The annual plan must
be developed in consultation with the Resident Advisory Board
and be consistent with the applicable comprehensive housing
affordability strategy or consolidated plan. The Resident
Advisory Board will be established by the housing agency and
will be made up of people “who adequately reflect and represent
the residents assisted by the public housing agency”.
The housing agency must consider the recommendations of the
Resident Advisory Board in preparing the agency’s “final”
plan. The housing authority must also include the Resident
Board’s recommendations and a description of how the recommendations
were addressed by the housing authority when submitting its
plan to HUD. Notice of plan development and a public
hearing are required before a plan can be submitted to HUD.
The annual plan will include: 1) statement of housing needs
and the means by which the housing authority will address
those needs; 2) statement of the financial resources of the
HA and how the planned uses of those resources; 3) explanation
of eligibility selection and admission policies; 4) rent determination
policies; 5) statement regarding operation and management;
6) statement of the HA’s grievance procedures; 7) capital
improvement needs; 8) demolition and disposition statement
regarding the public housing stock; 9) designation of housing
for elderly and disabled families; 10) statement regarding
conversion of any public housing stock; 11) description of
any homeownership programs; 12)description of the community
service and self-sufficiency policies, programs and compliance;
13) a plan regarding safety and crime prevention; 14) requirements
relating to pet ownership in public housing; 15) certification
that housing authority is complying with civil rights laws;
16) results of the most recent fiscal year audit; 17) statement
on asset management; and 18) any other information as may
be required.
Family
Self Sufficiency Program
Housing authorities currently operating Family Self Sufficiency
programs must continue but the number of families a housing
authority is obligated to enroll in a Family Self Sufficiency
program will be reduced by one for each family that successfully
completes the program after the bill is signed (it was signed
on October 21). Housing authorities can operate a Family
Self Sufficiency program if they so choose but are no longer
required to do so for each newly administered housing unit.
However, Family Self Sufficiency will continue to exist and
housing authorities can participate if they choose.
Federal
Preferences and Take One, Take All [Effective Immediately]
Federal preferences are repealed. Each local housing
authority may establish its own local preferences based on
local needs and priorities. Take one, take all provisions
for tenant-based section 8 are also repealed. These
provisions make permanent what have been annual repeals, through
appropriations bills, since 1996.
Resident
Management
The legislation provides for resident management corporations
to operate a public housing project. Operating and Capital
Funds will flow directly from HUD to the resident management
corporation managing the project. Residents can also apply
to have a non-resident management corporation manage their
public housing under certain circumstances.
Demolition
and Disposition of Public Housing
Housing authorities can apply for authorization to demolish
or dispose of a public housing project or a portion of the
project. The HUD Secretary must approve the application
unless any certification made by the housing authority is
inconsistent with data available or data requested by the
Secretary; and, unless the application was not made in consultation
with residents who will be affected, each resident advisory
board and resident council, if any, of the project and appropriate
government officials. Only in “appropriate circumstances”
to be determined by the HUD Secretary will the housing authority
initially offer the property for sale to any eligible resident
group or nonprofit organization acting on behalf of residents.
No longer will the housing authority have to offer to sell
tenants projects that they plan to demolish.
The legislation provides for various scenarios under which
demolition or sale of the public housing is acceptable - the
housing is “obsolete as to physical condition, location, or
other factors; no modifications are cost effective to return
the project to useful life; the retention of the property
is not in the best interests of the residents or the public
housing agency; etc. The demolition has to be in the
housing authority’s plan.
The housing agency must notify each family residing in a
project to be demolished or sold 90 days prior to the displacement
date. Each family displaced will be offered comparable
housing that is located in an area that is generally not less
desirable than the location of the displaced person’s housing,
their relocation costs will be paid and the housing authority
will provide any necessary counseling for resident who are
displaced. The legislation also states that the housing
authority will not begin demolition or finalize a sale until
all residents residing in the building are relocated.
The replacement housing may include tenant-based assistance,
project-based assistance or another unit operated or assisted
by the housing authority. Tenants may no longer be protected
against increased rents if they are given vouchers, which
often require tenants to pay more than public housing rents.
Voluntary
Conversion of Public Housing into Vouchers
Here, housing authorities may convert public housing stock
into tenant-based assistance (vouchers). The housing
authority completes a conversion assessment and determines,
among other things, whether or not the cost of providing tenant-based
assistance is less expensive than continuing public housing
assistance for the remaining use of the project. Each
housing authority must complete such an assessment.
If the HUD Secretary does not disapprove of the conversion
plan, the housing authority may proceed with conversion if
there has been significant participation by the residents
of the project. Residents must be notified of conversion
90 days prior to their displacement date, receive comparable
housing, and other displacement provisions provided for under
demolition / disposition.
Mandatory
Conversion of Public Housing into Vouchers
Each housing authority must identify all public housing projects
within its authority which are distressed and the housing
authority cannot assure long-term viability as public housing
through reasonable means and is more expensive to operate
than it would be to provide vouchers to residents in occupancy.
Such identification must be done in consultation with residents
and the appropriate local governments. Those units will
be identified as part of the five year plan and will be reviewed
by the HUD Secretary for approval. When approved, the
Secretary shall make funds available to provide for tenant-based
assistance (vouchers) for the occupants. Residents must
be notified of conversion 90 days prior to their displacement
date, receive comparable housing, and other displacement provisions
provided for under demolition / disposition. Projects
identified or assessed for conversion under prior vouchering
out law will not be subject to the new law, which is more
strict on vouchering out.
Homeownership
for Public Housing Residents
Public housing authorities may transfer a unit of public
housing to a homeownership program if certain requirements
are met and it is approved by the HUD Secretary. Only
low income families are eligible to purchase these units.
Current residents of that unit will have right of first refusal.
If they chose not to purchase the unit, they will be displaced
following guidelines similar to those under voluntary and
mandatory conversion to tenant-based assistance and demolition
/ disposition.
Merger
of Certificate and Voucher Programs
[It is unlikely that these provisions will go into effect
until October 1, 1999. HUD is expected to issue rules
for the new merged program which will apply to new residents
after October 1, 1999 and may apply to existing residents.]
The certificate and voucher programs are merged into a single
voucher program with a payment standard of 90% to 110% of
the fair market rent. A 5% “adjustment pool” is established
for use at the HUD Secretary’s discretion to make adjusted
payments outside of the payment standard to housing authorities.
Upon initial occupancy, a family receiving tenant-based assistance
is prohibited from paying a rent which exceeds 40% of their
monthly adjusted income.
Tenant-based leases must be for at least one year terms,
except that the housing authority may approve shorter terms.
The terms of the lease must be consistent with state and local
law and apply generally to tenants in the property who are
not assisted by tenant-based vouchers.
Portability
Any family receiving tenant-based assistance can move into
a different public housing authority’s jurisdiction and keep
their tenant-based assistance under portability procedures
. However, a housing authority may require a family
initially receiving a voucher to live within its jurisdictions
for the first 12 months. Previously, housing authorities
had to require a family to live it its jurisdiction for the
initial 12 months.
Homeownership
Option for Voucher Holders
Housing authorities providing tenant-based assistance may
provide assistance for an eligible family that purchases a
dwelling unit that will be owned by one or more members of
the family.
Home
Rule Flexible Grant Demonstration [Effective Immediately]
Authorizes local governments and municipalities, in coordination
with the housing authorities in their areas, to receive and
combine and to enter into performance-based contracts for
providing the following covered housing assistance.
Covered housing assistance includes an amount (per fiscal
year) equal to public housing operating and capital
funds as well as funds from the section 8 tenant-based program.
Only local governments and municipalities approved by the
HUD Secretary may participate in this demonstration program.
Goals include encouraging self-sufficiency of residents,
reducing federal housing costs, increasing the stock of affordable
housing and housing choices for low income families, increasing
homeownership, reducing homelessness and improving program
management. Local jurisdictions may participate, if
approved, in the demonstration for one to five years.
A total of up to 100 jurisdictions may be approved by the
HUD Secretary for participation in this demonstration.
Jurisdictions whose housing authorities are high performing
authorities may not participate in this program (except, if
it chooses to, the City of Indianapolis may participate).
Not more than 55 of the 100 total jurisdictions can encompass
troubled housing authorities; up to 45 of the jurisdictions
may encompass non-troubled housing authorities
Under Home Rule, the Secretary may not waive the following
program requirements: low income persons’ eligibility for
housing assistance; targeting; rental payments; and demolition
and disposition.
Income
Eligibility for HOME and CDBG Programs
The HUD Secretary must, for not less than 10 jurisdictions
that are metropolitan cities or urban counties, grant exceptions
(not later than 90 days after enactment of this legislation)
allowing those cities to retain their 80% of area median income
as the eligibility criteria for HOME and CDBG rather than
switching their eligibility for those programs to 100% of
the U.S. median income. This allows for at least 10
cities to keep, for eligibility purposes for the HOME and
CDBG programs, 80% of their area median income instead of
a lower, national median income figure.
FHA
Property Disposition Reform
Gives HUD the authority to acquire single family homes that
are in default. Establishes a framework to ensure that
FHA single family assets offered for sale after foreclosure
in certain areas support homeownership and are repaired.
Establishes Revitalization Areas in areas with a higher proportion
of low income households, or a higher number of troubled assets,
or a low rate of homeownership. Within these Areas,
any assets offered for sales must be at least minimally repaired
so the purchasers are not saddled with high repair costs.
Also, any assets sold in these areas must be sold to owner
occupants in a proportion that at least matches if not exceeds
the proportion of owner occupants in the metropolitan area.
Home > MHA > Reading Room > Housing Reform Act 
![[logo: MHA]](/muncieha/IMAGES/houselogo.gif)