By: Tushar Gurjal, Senior Policy Manager

[8/20/2026 Editor’s Note: This post has been edited to include a link to an initial MTW Offset Appeal Application User Guide. NAHRO thanks the MTW Collaborative for sharing this guide.]

August 20, 2026 – Earlier today (though dated August 19), HUD published a notice titled “Offset of Excess Reserves for Initial Moving to Work Public Housing Agencies and PHA Appeals” (Notice PIH 2026-22). This notice discusses the implementation of an offset of funding for the original Moving to Work (MTW) agencies, describes the process by which those initial MTW agencies may appeal, and describes the criteria that HUD will use in evaluating appeals. Offset appeals for initial MTW agencies must be submitted by 5 pm ET on October 19, 2026.

The 2026 appropriations act gives HUD the authority to perform offsets on initial MTW housing agencies. The Department may offset amounts “subject to single-find budget authority” up until an initial MTW agency has a reserve balance equal to four months of operating expenses. The offsets may be conducted for the purposes of reducing the funding proration that HUD applies to renewal funding and allocating additional funds to housing agencies to mitigate shortfall harms.

Calculation of Excess Reserves and Offset Amount

At a high level, the offset calculation may be described in three steps. First, HUD calculates the average monthly operating expenses for an agency’s Housing Choice Voucher (HCV) and public housing programs. Second, it calculates the total and excess funding for the HCV and public housing funding reserves. Third, the Department calculates an offset amount which is a percentage of the agency’s excess reserves.

The notice provides additional information on how it calculates HCV operating expenses, public housing operating expenses, protected operating expenses, and excess reserves available for offset. In general, the formula to calculate excess reserves is the following:

Excess Reserves = End of Year HCV and Public Housing Reserve Balance – Protected Operating Expenses.

Offset Appeals

Initial MTW housing agencies have 60 days from the publication of this notice to appeal HCV reserve offsets. Additionally, HUD may not offset excess reserves if both of the following are true:

• The housing agency has committed reserve amounts to capital improvement, development, and other repositioning activities that are scheduled to close within 12 months of February 3, 2026; and
• The PHA’s protected operating expenses are insufficient to cover those costs.

Additionally, HUD cannot offset any portion of a housing agency’s excess amounts if that offset would put the housing agency in a shortfall position in calendar year (CY) 2026.

There are two categories of offset appeals. The first category is data correction appeals. HUD will consider appeals in instances where initial MTW agencies believe that the Financial Data Schedule (FDS) data is incorrect. The second category is statutory obligation appeals. The Department will accept appeals from initial MTW agencies for amounts that have been committed to the following capital improvement, development, and other repositioning activities and where there is evidence and supporting documentation to show that protected operating expenses are insufficient:

• Local, Non-Traditional Housing Development activities;
• Section 18 Demolitions/Dispositions;
• Section 22 Voluntary Conversions;
• Section 33 Required Conversions;
• Part 200 Retentions;
• De Minimis Demolitions (Section 118);
• Eminent domain actions;
• Mixed finance projects;
• Capital improvement activities;
• Project-Based Vouchers (PBVs) associated with capital improvement or development activity;
• RAD PBVs;
• RAD/Section 18 Blends;
• Restore-Rebuild projects (formerly Faircloth to RAD); and
• Low-Income Housing Tax Credit (LIHTC) projects with obligations of funds scheduled to close within 12 months of the enactment of the act.

Appeal Application Instructions

Offset appeals for initial MTW agencies must be submitted by 5 pm ET on October 19, 2026.

Initial MTW agencies wishing to appeal must use the Public Housing Portal to submit an appeal application. The notice provides detailed steps and information needed to submit an appeal.

HUD Review

First, HUD will review the submitted application for completeness. Then HUD will check that the initial MTW agency entered into obligations prior to February 3, 2026 and that the obligation will be fully expended by February 2, 2027. Following this initial review, HUD will analyze the appeal to assess the impact of the offset on an initial MTW PHA’s ability to complete the project. If HUD determines that the offset impedes the agency’s ability complete it, then HUD will reduce the offset by an amount that will ensure that the PHA can meet its eligible obligations.

HUD will communicate appeal decisions within 60 days of the appeal deadline.

The full notice can be read here.

A Public Housing Agency User Guide for MTW HCVP Offset Appeal Application for CY 2026 can be found here.

For questions regarding the notice, initial MTW agencies may email MTWOffsetAppeals@hud.gov.

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