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2025-003 – HOUSING CHOICE VOUCHER PAYMENT STANDARDS Federal Program Name: Housing Choice Voucher Cluster Assistance Listing Number: 14.871 and 14.879 Federal Agency: U.S. Department of Housing and Urban Development Compliance Requirements: Special Tests and Provisions Criteria: A PHA may establish payment standards within the basic range of 90% to 110% of the applicable Fair Market Rent (FMR) without HUD approval (24 CFR 982.503(b)). Standards above 110% and up to 120% of the FMR are exception payment standards requiring HUD approval or notification (24 CFR 982.503(d); HUD Notice PIH 2024-34). The monthly housing assistance payment (HAP) is based on the lower of the gross rent or the applicable payment standard, less the family's total tenant payment (24 CFR 982.505). Condition: For the 2025 program year, the Authority applied payment standards of 120% of the FMR for all bedroom sizes without the required HUD approval. The Authority's approval to use 120% exception standards expired December 31, 2024 and was not renewed. By correspondence dated February 19, 2026, HUD confirmed it had no record of an approval or notification for 2025. The maximum standard the Authority was authorized to use for 2025 was therefore 110% of the FMR. Cause: The Authority did not seek the required HUD approval or notification. Effect: Applying standards of 120% rather than 110% resulted in estimated excess housing assistance payments of $5,789 for 22 of the Authority's 198 active 2025 vouchers – those units for which the payment standard, rather than the gross rent, limited the subsidy. Questioned Costs: Known and likely questioned costs did not exceed the $25,000 reporting threshold in 2 CFR § 200.516(a)(3). Repeat Finding: No Recommendation: We recommend the Authority limit payment standards to no more than 110% of the applicable FMRs unless a current, documented HUD exception approval is on file, and verify annually that adopted standards are supported before implementation. Management's Response: The Authority will strengthen its annual payment standard review procedures to ensure payment standards are supported by current FMRs and any required HUD approval or notification is obtained and retained before implementation. HUD approval of 120% payment standards has been obtained for the 2026 program year.