HUD Shortfall and Its Impact on Housing Programs
What ICMS providers need to know about the HUD funding shortfall, which programs are affected, and how to support participants during this pause in new voucher issuance and referrals.
Understanding Reserve Recapture and the LA County Housing Shortfall
Last Updated: March 14, 2025. This page will be updated as new information becomes available.
Reserve recapture occurs when HUD reclaims unused or excess funds from Public Housing Authorities (PHAs) to redistribute resources across the Housing Choice Voucher (HCV) program. These reserves, originally designated for rental assistance payments, may be recaptured when HUD determines that PHAs have unspent funds or when broader budget adjustments are necessary to address funding gaps nationwide.
This process is often used to balance the federal housing budget, stabilize underfunded regions, or respond to economic shifts affecting housing demand.
Important Note: In LA County, recent HUD recaptures and funding reductions have led to a shortfall for local PHAs, including HACLA and LACDA. As a result, both agencies have paused issuing new vouchers and accepting new referrals for several tenant-based programs, directly impacting ICMS participants. The tabs below outline the key changes and next steps for case managers.
Programs Currently Paused
Important Note: Both HACLA and LACDA have informed HSH that they will no longer accept new referrals or issue new vouchers for the following tenant-based programs. This pause also restricts participant mobility from Project-Based Voucher (PBV) units to Tenant-Based Vouchers (TBVs). Participants who were planning to transfer from a PBV to an HCV will no longer be able to do so at this time.
Homeless Vouchers
New referrals and voucher issuance paused for both HACLA and LACDA.
Tenant-Based Supportive Housing (TBSH)
New referrals and voucher issuance paused for both HACLA and LACDA.
LAUSD Housing Program
New referrals and voucher issuance paused for both HACLA and LACDA.
Non-Elderly Disabled (NED) Vouchers
New referrals and voucher issuance paused for both HACLA and LACDA.
Family Unification Program (FUP-FYI) Vouchers
New referrals and voucher issuance paused for both HACLA and LACDA.
Stability Vouchers
New referrals and voucher issuance paused for both HACLA and LACDA.
What Happens to Applications Already Submitted?
Note: The following applies to participants who have already submitted a housing application for one of the affected programs.
DHS is working closely with HACLA and LACDA to find alternative resources for participants with already-submitted applications. The goal is to transfer submitted applications to other available Permanent Supportive Housing (PSH) resources whenever possible.
DHS will also explore rematching opportunities through programs not currently affected by the shortfall. If a participant is eligible for a transfer, the case manager will be contacted with next steps.
Programs Available for Rematching
- HUD-VASH (Veteran Housing Vouchers)
- Project-Based Vouchers (PBV)
- Continuum of Care (CoC) Program
- Moderate Rehabilitation Program (MRP/MRS)
- Housing Opportunities for Persons with AIDS (HOPWA)
- Mainstream Vouchers (HACLA only; until full allocation met)
- Community Choice Demonstration Program
Domestic Violence and Reasonable Accommodation Transfers: Both HACLA and LACDA will continue processing VAWA (Violence Against Women Act) and Reasonable Accommodation (RA) transfer requests. Contact your program manager for assistance with submitting these requests.
Important: Both case managers and participants must remain responsive to all communications regarding their PSH match or housing application status. Missing communications may result in missed placement opportunities.
Next Steps for Case Managers
Do Not Submit New Referrals for Paused Programs
Both HACLA and LACDA will no longer accept new referrals or issue new vouchers for the affected programs listed in the Affected Programs tab. Do not submit new referrals for these programs until further notice.
Voucher Holders Must Lease Up Immediately
Participants who already have a voucher in hand must lease up as soon as possible. Extensions will be limited, and new vouchers will not be reissued at this time if a voucher expires.
Support Participants Still Seeking Housing
The HSH Housing Navigation team will distribute unit listings to case managers for participants who still need housing, including available units at the Flower St. Master Leasing Project and other vacancies listed on Padmission.
Note the PBV to TBV Mobility Restriction
Participants who were planning to transfer from a Project-Based Voucher (PBV) unit to a Tenant-Based Voucher (TBV) will no longer be able to do so at this time. Update care plans and discuss this change with affected participants.
Contact Your Program Manager
If you have questions about a specific participant’s situation, voucher status, or housing options during this pause, contact your program manager for guidance.
What Is Not Affected by the Shortfall?
Participants with Active Vouchers
Participants who already have an active voucher in hand are not affected by this pause. Case managers should continue to support these participants in their housing search and lease-up efforts.
ICMS Program Funding
At this time, there are no funding cuts to ICMS dollars. HSH has not been informed of additional funding reductions beyond the current limitations on federal housing vouchers.
Note: HSH will continue to update this page as new information becomes available. Please be aware that many PSH resources are currently fully utilized, and alternative subsidies for participants may be limited at this time. If you have questions, contact your program manager.