Neighborhood Networks: Chapter 3 of Handbook 4350.3

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Under the provisions of the regulations cited in this chapter, owners and management agents may request to use project funds and/or the release of funds from the Residual Receipts account to underwrite all or a portion of the cost of developing, maintaining, and managing a job-training program for project residents, if funds are available. These job-training programs may partner with community organizations, local colleges and universities, and/or local businesses, to develop and implement various job-training programs designed for project residents.

Income received, such as stipends, wages, transportation payments, and childcare vouchers, pursuant to a job-training program, are excluded from annual income for the purpose of calculating rent. This exclusion of income is allowed only during the job-training program.

It is the Department's position that this income exclusion promotes long-term upward mobility, educational achievement, and a decrease in the number of families dependent on welfare and other social services. The costs of this exclusion will be offset by the increasing number of economically self-sufficient families residing in assisted housing, thereby resulting in future cost savings to the federal government.

The following is an excerpt of the relevant sections from the Handbook. This notice is in the Occupancy Requirements of Subsidized Multifamily Housing Programs (Handbook 4350), Chapter 3.

1. Background. The Department recognizes the need to prepare tenants receiving rent subsidy in multifamily projects for long-term self-sufficiency, independence, and increased economic opportunity, to aid both welfare reform and Neighborhood Networks.

   In an effort to encourage and assist tenants toward long-term upward mobility, we provide clarity on the application and interpretation of the regulations at 24 CFR 813.106(c)(8)(i) which allow exclusion of income received under training programs funded by HUD. It is anticipated that the costs of these exclusions will be offset by long-term future savings to the Federal Government, because the exclusions will increase the number of economically self-sufficient families residing in assisted housing.

2. Project Eligibility. All insured and noninsured projects assisted under Section 215 Rent Supplement Payments, Section 236 Mortgage Insurance and Interest Reduction Payment for Rental Projects, including Section 236 Rental Assistance Payments, and Section 8 of the United States Housing Act of 1937.

3. Training Programs Funded by HUD. The Office of Multifamily Housing does not have special funds designated for job training programs.

   However, owners and/or management agents may request to use project funds and/or the release of funds from the Residual Receipts account to underwrite all or a portion of the cost of developing, maintaining, and managing a job training program for project residents if funds are available. The Field Office will make the determination if the job training program may be approved, and if project funds are sufficient to fund the job training program and maintain the physical and financial integrity of the project. Job training programs may either be on-site at the project or off-site. For example, job training programs that have partnerships with local colleges, community based organizations, or local business, may have in-house job training programs designed for project residents.

   Funds that an owner may choose to use to underwrite a job training program may include Section 8 funds, Community Development Block Grant funds, housing authority funds, modernization funds, etc. These funds may be used to cover the costs of various components of a job training program, i.e., course materials, computer software, computer hardware, personnel costs, etc.' Also, contractors and subcontractors, in connection with work performed under a Flexible Subsidy contract, may elect to hire project residents to perform certain skills required under the contract. If the employment of the project residents was pursuant to an apprenticeship program, this could constitute a training program using HUD funds, and income received by the tenants in the apprenticeship program will qualify as an exclusion from income.

   Participation in a job training program is voluntary on the part of the owner and tenant. However, in the context of Neighborhood Networks (see HBK 4381.5 REV-2, CHG-2, Chapter 9) and Welfare Reform, income exclusions for job training are a good incentive for getting people to work.

4. Criteria For Determining Income Received From Training Programs. Amounts received such as stipends, wages, transportation payments, and child care vouchers received, pursuant to the training program, are excluded from annual income for the purpose of calculating rent. Income received as compensation for employment is excluded only if the employment is a component of a job training program. Amounts excluded under this provision may include, but are not limited to, compensation received during:
   • On the job training programs.
   • Apprenticeship programs.
   • Third-party employment

   The exclusion of income earned is allowed only during the job training program, or training oriented employment, but not during employment secured or maintained once all training has been completed. Any additional compensation received during the training period that is unrelated to the job training program (i.e., income received prior to participating in the job training program, e.g., welfare benefits, social security payments, etc.) would not be excluded from income.

   Acceptable training-oriented employment for the purposes of excluding income for calculating rent must be distinguished from ordinary employment by its characteristics of 1) the activities occur under a training program that has clearly defined goals and objectives; and 2) the training program is for a pre-determined limited time period, and initially, not to exceed one year.

   It is acceptable that the program use both HUD funds and non-HUD funds, but HUD funding must be a material portion of the total funding designated for the training program. Owners/management agents are encouraged to seek partnerships with local service providers and to mobilize support and participation from corporate and community based organizations to provide key components of the training program.

5. Local HUD Office Review. Requests to use HUD funds to underwrite all or a portion of a job training program must be submitted to and approved by the Local HUD Field Office.

   Field Offices must verify that a material portion of the job training program is funded by HUD and that the employment activities are part of a training program. Owners and management agents should be required to submit regular reports detailing the operation of the program, funding sources received from other resources, the number of tenants participating in the program, etc. Frequency and content of the reports will be determined by the Field Office.

   At the conclusion of the pre-determined time period for the job training program, Field offices will review it to determine if it is meeting its defined goals, and if it would be advantageous to the tenants and to the Department to continue the program. However, the training program may only be extended for no more than one additional year. The total training program will not exceed two years.