To: Contra Costa County Housing Authority Board of Commissioners
From: Joseph Villarreal, Executive Director
Report Title: REPORT ON THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT’S (HUD) PROPOSED RULE CHANGING TREATMENT OF MIXED-STATUS HOUSEHOLDS IN HUD’S SECTION 214 PROGRAMS
☐Recommendation of the County Administrator ☐ Recommendation of Board Committee
RECOMMENDATIONS:
CONSIDER accepting a report on the U.S. Department of Housing and Urban Development’s (HUD) proposed rule changing treatment of mixed-status households in HUD’s section 214 programs. The proposed rule change will impact approximately 29 families/118 people in the voucher program and 7 families/31 people in public housing.
BACKGROUND:
Federal housing programs include both direct assistance programs that provide low-cost apartments and rental vouchers to low-income families, administered through local public, quasi-public, and private intermediaries; as well as relatively flexible grants to state and local governments that can be used to serve homeless people, build affordable housing, provide assistance to first-time homebuyers, and promote community development. The federal government also makes tax credits available to states to distribute to developers of low-cost housing and provides mortgage insurance or guarantees to lenders that make certain types of mortgages to eligible homebuyers or developers of multifamily housing.
Most of these programs are administered at the federal level by the Department of Housing and Urban Development (HUD), although some are administered by other agencies, including the Department of Agriculture's (USDA's) Rural Housing Service (RHS), the Internal Revenue Service (IRS), and the Department of Veterans Affairs (VA). In nearly all cases, the assistance the programs provide flows through other entities, including local, quasi-governmental Public Housing Agencies (PHAs); state or local governments; nonprofit or in some cases for-profit organizations; or, in the case of mortgage insurance programs, financial institutions.
Different laws, and different agency interpretations of those laws, govern noncitizen eligibility for federal housing programs. Two primary laws address their eligibility for the programs. Section 214 of the Housing and Community Development Act of 1980, as amended, makes certain categories of noncitizens eligible for a prescribed set of federal direct housing assistance programs (including the largest rental assistance programs: Public Housing, Housing Choice Vouchers, and Section 8 project-based rental assistance, as well as rural rental assistance). The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA, P.L. 104-193 <https://www.congress.gov/bill/104th-congress/house-bill/3734/text>), makes all noncitizens except those deemed qualified aliens ineligible for federal public benefits, defined to include housing assistance. A deeper discussion of these laws and who is covered by them, is attached. The analysis is written by the Congressional Research Service and is written for Congress.
On February 20, 2026, HUD published a proposed rule titled “Housing and Community Development Act of 1980: Verification of Eligible Status” with public comments due by April 21, 2026. The proposed rule is attached. The proposed rule seeks to forbid mixed-status families, households that contain both eligible U.S. citizens/legal residents and members with ineligible citizenship/immigration status, from receiving any federal housing assistance or living in federally funded housing under most of HACCC’s programs.
HUD’s current regulations have been in place since the 1990s and require that each family member applying for assistance under a Section 214 covered program either: (1) submit a declaration declaring that he or she is a U.S. citizen, as defined in 24 CFR 5.504(b), or a noncitizen with eligible immigration status; or (2) elect not to contend eligible immigration status and, therefore, not submit documentation for verification. If an applicant declares they are a U.S. citizen, then HUD’s current regulations do not require verification of citizenship. Applicants who declare eligible immigration status must submit evidence of their status. This status is then verified by housing authorities.
In the proposed rule, HUD seeks to significantly expand verification requirements and stop allowing mixed-status families to live in HUD-funded programs under Section 214. HUD summarizes their intent in the proposed rules as follows:
“SUMMARY: Section 214 of the Housing and Community Development Act of 1980, as amended (“Section 214”), prohibits the Secretary of HUD from making financial assistance available to persons other than United States citizens or certain categories of eligible noncitizens in HUD’s public and specified assisted housing programs. This proposed rule would revise HUD’s Section 214 implementing regulations to require the verification of U.S. citizenship or the eligible immigration status of all applicants and recipients of assistance under a covered program regardless of age. The proposed rule would also make prorated assistance a temporary condition pending verification of eligible status of all family members, where permitted by statute, as opposed to under HUD’s current regulations where prorated assistance could continue indefinitely. These amendments would bring HUD’s regulations into greater alignment with the wording and purpose of Section 214 and align with the current Administration’s priorities and regulatory reform efforts.”
Later in the proposed rule HUD states that they believe the “proposed rule would bring HUD’s Section 214 implementing regulations into greater alignment with the wording and purpose of Section 214 by revising HUD’s regulations to require the verification of U.S. citizenship or the eligible immigration status of all applicants and recipients of assistance under a covered program regardless of age, and to make prorated assistance a temporary condition pending verification of eligible status of all family members, where permitted by statute.” They also state their belief that the proposed amendments “would also align with the current Administration’s priorities and regulatory reform efforts. Further, on February 19, 2025, the President issued Executive Order 14218, “Ending Taxpayer Subsidization of Open Borders” (“EO 14218”).23 Among other provisions, section 2(a) of EO 14218 directs the head of each Department or agency, including HUD, to enhance eligibility verification systems, to the maximum extent possible, to ensure that taxpayer-funded benefits exclude any ineligible alien.”
HUD then goes on to state that they acknowledge “that this rulemaking would adversely affect some tenants and applicants for Section 214 covered programs, especially mixed families and ineligible aliens, as well as responsible entities. The most significant effect of this rulemaking would be to transfer assistance from mixed status families to fully eligible households. However, HUD believes that this cost is adequately offset by the reallocation of HUD funds to the intended recipients.”
Under current HUD regulations, mixed-status households may remain housed in Section 214 covered HUD programs with assistance that is prorated to eligible household members only. This approach was designed to ensure no federal subsidy is provided on behalf of ineligible members while allowing families, often including U.S. citizen children to remain stably housed. The proposed rule would require mixed status families to either remove ineligible members, regardless of age, or give up their housing assistance entirely in the case of the Housing Choice Voucher program, or be forced to move-out of (or be evicted from) HUD funded homes through programs such as Public Housing, Rental Assistance Demonstration Program, Project Based Assisted units etc. The proposed rule also removes the “do not contend” option and requires each family member to submit declarations and sign verification consent forms that allow information sharing with HUD and the Department of Homeland Security (DHS) for verification purposes. HUD has also informed housing authorities that quarterly reviews and updates of citizenship will be required and monitored, with sanctions for noncompliance.
HUD’s messaging on the proposed rule change implies that any mixed-status family removed from their housing program will be replaced on a one-for-one basis with an eligible family. However, staff’s preliminary analysis indicates that HACCC will likely see a small reduction in the number of families served. This is because mixed-families receive less subsidy than they would otherwise be entitled to receive combined with the fact that HACCC is on the verge of shortfall in the Voucher program and that HUD received a significant cut to the public housing program in the new federal budget. Based on average costs, HACCC expects to serve 9 fewer families on the Voucher program. Because mixed status families pay significantly higher rent than average, HACCC will almost certainly lose rental revenue on the public housing side.
The following example shows how the household rent is calculated for mixed-status families on the Voucher program. This is known as proration.
Family size: 6 people
Ineligible members: 3
Proration: 3 eligible members/6 total people in family = 50%
|
|
Regular HCV Calculation |
Prorated Calculation |
|
Total Rent |
$4,000 |
$4,000 |
|
Family Portion |
$1,000 |
$2,500 |
|
HACCC Subsidy |
$3,000 |
$1,500 |
Thus, replacing this mixed status family with a family where no members are mixed status but with all other facts the same (household size, income, etc.) would cost HACCC an extra $1,500 per month or $18,000 per year.
As required, HUD released its Regulatory Impact Analysis (RIA) of the proposed rule <https://www.regulations.gov/document/HUD-2026-0199-0006> on February 20. The RIA is required to change federal regulations and provides a relatively objective analysis of the costs and benefits of the proposed rule, including administrative costs if implemented. The RIA notes that “[m]ost of the costs of the rule would be … borne by the households adversely affected,” meaning immigrant families forced to separate. Since mixed-status families pay proportionately higher rent than fully eligible households, the proposed rule will leave public housing agencies (PHAs) and housing providers less money to serve families, at a time when families across the country are struggling to pay rent. The RIA confirms this: “Absent an increase in appropriations… fewer households would receive housing assistance.”
At the State level, there are over 7,000 mixed status households in California, many with children who have no adult eligible household members. Nationally, it is estimated that over 20,000 mixed-status households (roughly 80,000 people) currently receive HUD rental assistance, with a large share being children.
In addition to the analysis from the Congressional Research Service, attached are the following:
• An opinion piece discussing the proposed change from HUD Secretary Scott Turner published in the Washington Post;
• A screenshot from HUD’s webpage discussing the proposed change;
• A detailed analysis of the impacts of the proposed rule from the Center on Budget and Policy Priorities;
• An analysis of the proposed rule from the National Housing Law Project that focuses more on regulatory and legal issues;
• A letter opposing the proposed change from the California Association of Housing Authorities (of which HACCC is an active member); and
• The proposed regulatory change published in the Federal Register.
FISCAL IMPACT:
Based on average subsidy costs in the voucher program, this rule change would lead to more expensive subsidies. Because of this, it is expected that the Housing Authority (HACCC) will house fewer people if the rule is changed as proposed. Based on average costs for the families currently served, HACCC would see a 45% increase in costs and would serve 9 fewer families, a 31% reduction from the mixed-status families served currently. On the public housing side, the families served would remain the same but, on average, families with no mixed status members would pay less rent. Actual outcomes will depend on which families are next served based on wait list position, family income and size, etc.
CONSEQUENCE OF NEGATIVE ACTION:
None. Informational item only.