Proposed HUD notice would tie voucher funding to local land use; NACo voices concerns

Key Takeaways

On July 6, the U.S. Department of Housing and Urban Development (HUD) published a notice outlining the renewal funding inflation factors (RFIF) for Housing Choice Voucher (HCV) funding for fiscal year (FY) 2026. In addition to the FY 2026 methodology, the notice also signaled HUD’s intent to consider local land use, permitting and development approval processes in the FY 2027 funding cycle.

HUD uses the RFIF methodology to calculate how rental costs in a given market have changed, allowing them to determine how much additional funding Public Housing Authorities (PHA’s) need to maintain continuity of the prior year’s rental assistance contracts. This objective, need-based formula ensures funding levels reflect on-the-ground cost realities in local rental markets. 

It is important to note that only a small number of PHA’s are integrated as county departments—most operate as an autonomous housing partner. However, in virtually every instance, counties work closely with their local PHA on housing and homeless response initiatives, as well as providing workforce development pipelines and wraparound supportive services for PHA tenants and properties. Any impact to PHA capacity would likely have downstream impacts on county service delivery. 

NACo submitted comments, alongside the National League of Cities (NLC), outlining concerns with the proposed deviation from the current, need-based formula. Read our comments here.

Why this Matters for Counties

While the notice primarily addresses FY 2026 RFIF methodology, NACo’s concerns stem from a proposed change to the FY 2027 RFIF methodology. The proposal would incorporate local land use, permitting and development approval procedures as an HCV inflation factor in high-cost communities. 

It is unclear exactly how, and to what extent, HUD would incorporate these factors. Local rental markets are influenced by a wide range of factors and any attempt to isolate a local policy’s impacts will likely raise questions of precision and objectivity. This would be especially complex for PHA’s that serve multiple jurisdictions, each with their own unique housing strategy and zoning framework.

The likely outcome, however, is that PHA’s receive a smaller inflation adjustment in jurisdictions with land use or development procedures that HUD deems to be a “constraint” to housing supply growth. There is no express requirement that a PHA’s renewal allocation still meet a minimum threshold to maintain continuity of essential housing assistance. 

Because this change applies specifically to high-cost communities, it may penalize the areas that need housing support the most. Even a modest shortfall of available vouchers may result in longer waitlists for housing assistance, lower payment standards or alienation of participating landlords. 

Additionally, NACo points out that PHA’s – even those integrated as a county department – have no influence over local land use, permitting or development approval decisions. While many counties are already voluntarily pursuing more permissive housing reforms, this disconnect makes it unlikely that HUD’s proposed change would meaningfully influence local land use decisionmakers. However, this policy would still impact the households that rely on PHA’s for critical housing support. 

NACo’s Recommendation

NACo, alongside NLC, urges HUD to maintain the current methodology for calculating renewal funding, rather than adjusting renewal funding based on unrelated local regulatory conditions. At the same time, both organizations support HUD’s broader housing supply goals and encourage the Department to pursue that objective through increased technical assistance and data sharing, greater PHA development capacity and swift implementation of the housing supply provisions of the 21st st Century ROAD to Housing Act.