HUD Announces New Category of Funding To Address Housing Choice Voucher Funding Shortfalls Resulting from Sequestration

by Ballard Spahr LLP

On May 23, 2013, the U.S. Department of Housing and Urban Development (HUD) issued Notice PIH 2013-12, "Implementation of the Federal Fiscal Year 2013 Funding Provisions for the Housing Choice Voucher Program," (the Notice). The Notice implements Housing Choice Voucher (HCV) program funding that is provided through the Consolidated and Further Continuing Appropriations Act, 2013, enacted on March 26, 2013 (the 2013 Act). Of particular importance, the Notice provides a new category of funding to address HCV funding shortfalls resulting from sequestration.

As in prior years, HUD may adjust funding allocations to housing authorities that meet certain criteria. The 2013 Act provides a set-aside of up to $103 million for specific categories as follows:

Category 1: Prevention of Termination of HCV Families Due to Insufficient Funding
Category 2a: Unforeseen Circumstances
Category 2b: Portability Cost Increases
Category 3: Project-Based Vouchers
Category 4: HUD-VASH

Category 1 is a new category and is intended to address the impact of sequestration. The 2013 Act provides that set-aside funding may be made available to housing authorities that, as determined by the Secretary, would be required to terminate families from the HCV program as a result of insufficient funds. In light of reduction of HCV funds due to sequestration, housing authorities may find the set-aside a helpful resource to address funding shortfalls. With the exception of Category 1, the categories listed above may not be funded, depending on the number of eligible applications and funding limitations.

In order to be considered for Category 1 funding, a housing authority must meet the eligibility requirements described in the Notice. Generally, those requirements are as follows:

  • The housing authority is working with the HUD Shortfall Prevention Team (SPT) and SPT confirmed a shortfall.
  • The housing authority has ceased issuing new vouchers to applicants.
  • The housing authority rescinded prior to or immediately following receipt of HUD's April 26, 2013, letter (which pertained to HCV funding shortfalls) any vouchers remaining on the street that were issued to applicant families on or after April 1, 2013, and has stopped leasing those rescinded vouchers.
  • The housing authority has ceased or immediately ceases to absorb portable vouchers.
  • Regarding Project-Based Voucher (PBV) Housing Assistance Payment (HAP) contracts, vouchers are not issued to a family that wants to voluntarily move. If a unit becomes vacant, however, the PBV unit will be filled with a family from the waiting list.

Eligibly requirements for the remaining categories can be found in the Notice.

The submission deadline for requesting set-aside funding is June 24, 2013. Housing authorities applying for Category 1 funds may submit applications after June 24, 2013, but applications received after that date will be reviewed by HUD on a first-come, first-served basis. Applications for categories other than Category 1 will not be reviewed until after HUD has made funding eligibility determinations for all Category 1 applications submitted by the June 24 deadline.

If you wish to discuss this notice, please contact Sharon Wilson Géno at 202.661.2218 or, Amy M. Glassman at 202.661.7680 or, or Nydia M. Pouyes at 202.661.2216 or

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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