On March 11, HUD issued PIH 2016-04 detailing its implementation of the Housing Choice Voucher (HCV) program funding provisions under the Consolidated Appropriations Act, 2016, which was enacted on December 18, 2015. NAHRO previously provided members within-depth coverage of the FY 2016 Appropriations Act, which provides $17.681 billion for HAP renewals, a $195 million increase over the FY 2015 funding level. HUD’s implementation notice describes the methodology for allocating housing assistance payments (HAP) renewal funds, new incremental vouchers and administrative fees.

On February 28, HUD hosted its annualwebcast to provide PHAs with detailed information and training on the CY 2016 HCV funding implementation. HUD encourages PHAs to send any follow-up questions to the Financial Management Division atPIH.Financial.Management.Division@hud.gov. The slides can be found here.

Each PHA will receive a funding letter with its individual funding calculations. If a PHA has questions related to the calculations, it may contact its assigned Financial Analyst at the Financial Management Center (FMC). Members may also contact Tushar Gurjal, NAHRO’s Section 8 Programs Policy Analyst, for assistance with HCV financial management.

Calculation of HAP Renewal Funding

HUD will provide CY 2016 HAP funding based on validated Voucher Management System (VMS) leasing and cost data for the prior calendar year (CY). HUD will provide renewal funding as described below.

Step 1: Determine HAP funding baseline from validated VMS leasing and cost data for CY 2014.

The 2015 Act continues to prohibit the use of appropriated HAP funds by any PHA, except for MTW PHAs, to lease units above their ACC baseline units during any calendar year. Therefore, HAP renewal funding cannot exceed the unit months available in a PHA’s FY 2014 Annual Contributions Contract (ACC). If a PHA engages in over-leasing, it must still report the over-leasing in VMS, identify other sources to pay for the over-leasing, and take immediate steps to eliminate any ongoing over-leasing.

Step 2: Make adjustments for first-time renewal of Tenant Protection Vouchers and special purpose vouchers such as VASH vouchers that are initially expiring in CY 2016.

The adjustment is an inflation factor to reflect cost increases expected in CY 2016. PHAs with first-time increments that were not initially funded for 12 months will receive the additional funding required for CY 2015, and these adjustments will be identified in their funding enclosures.

Step 3: Apply the Renewal Funding Inflation Factor adjusted for localities to PHAs’ renewal requirement.

The Renewal Funding Inflation Factor (RFIF) adjusted for localities is applied to the PHA’s calculated twelve month renewal requirement after the adjustments from steps one and two have been completed. Read more about NAHRO’s thoughts on the methodology to calculate the RFIF here.

Step 4: Determine total eligibility for all PHAs and compare the amount to the total available HAP renewal funding to determine a pro-ration factor.

As mentioned earlier, HUD anticipates fully funding HAP renewals.

HAP Disbursements and Frontloading

PHAs will receive monthly disbursements based on their budgetary allocations from HUD on a CY basis. PHAs are advised of the disbursements scheduled for a quarter before the beginning of each calendar year quarter. PHAs may submit a frontloading request to their FMC FA when monthly disbursements and available RNP and HUD-held reserves will not cover the expenses for the month or quarter.

Set-Aside Funding

In addition to HAP renewal funding, HUD has allocated up to $75 million for HAP set-aside funding for which PHAs may apply under the four categories outlined below. Awards may be reduced if PHAs have available RNP, HUD-held reserves, or a combination of the two above a reasonable threshold or if the $75 million is insufficient to cover all awards.

  • Category 1– Shortfall Funds:PHAs may be eligible to apply for set-aside funding if they are currently working with HUD’s Shortfall Prevention Team (SPT) and are already in a confirmed shortfall position, or, despite reasonable and responsible program management, are later determined to be in a SPT-confirmed shortfall position. PHAs with specific questions related to the calculation and determination of a HUD-confirmed shortfall should contact the SPT at2016ShortfallInquiries@hud.gov. The subject line of the e-mail must include the PHA’s number.
  • Category 2a – Unforeseen Circumstances: PHAs that experience an unforeseen circumstance may apply for set-aside funding. Unforeseen circumstances are circumstances that occur after or within the re-benchmarking period which the PHA could not reasonably have known in advance and was out of the PHA’s control. To apply for this category, PHAs must submit an attachment, a written narrative, evidence of the narrative, and a calculation of the increased cost.
  • Category 2b – Portability:PHAs must have experienced significant increases in renewal costs due to portability for tenant-based rental assistance.
  • Category 3 – Project Based Vouchers:PHAs that held vouchers during the prior 12-month period in order to make them available to meet a commitment for project-based voucher assistance.
  • Category 4 – HUD-VASH:PHAs must demonstrate need for additional funding as a result of:

○        Per Unit Cost (PUC) Increases: PHAs whose program-wide funded CY 2016 HAP PUC is less than their current VASH HAP PUC, based on their latest VASH HAP expenses in CY 2016;

○        Leasing Increases: PHAs whose total VASH leasing for CY 2016 will exceed the leasing level included in their renewal funding plus the leasing that will be supported by the NRA and program reserves retained for that purpose;

○        Or both.

Last year’s fifth category of “Maintain Leasing” in no longer available.

The application period for shortfall set-aside funding under Category 1 will remain open throughout the calendar year, but applications must be received by or before 5 p.m. EDST, November 9, 2016. PHAs apply or re-apply at any time during the application period. Applications for all other categories (2a, 2b, 3 and 4) must be received by 5 p.m. EDST on April 15, 2016.

HCV Financial Management

HUD’s notice states that “PHAs must manage their programs in a responsible manner to enable them to serve as many families within their CY 2016 allocations and voucher baselines.” Guidance on cost-savings measures for the HCV program that PHAs may take can be found in PIH Notice 2011-28.

Administrative Fees

The 2016 Act provides for $1.65 billion for administrative fees, of which $10 million will be made available as additional administrative fees. Ongoing administrative fees and administrative fees for new vouchers will be based on prior reported leasing and paid on the first day of each month for each voucher that is under a HAP contract. Administrative fee rates for each PHA have been posted to HUD’s website. HUD estimates that the CY 2016 administrative fee proration will be approximately 80 percent.

Blended Rate Administrative Fees

PHAs serving multiple administrative fee areas may request a blended rate based on the actual location of their assisted units. The blended rate will be used for the entire CY 2016. PHAs must submit their request in writing by close of business (5 p.m., EDST) Friday, April 15, 2016.

Special Fees

HUD will make up to $10 million available to PHAs that need additional funding to administer their HCV programs. These funds are subject to availability and may be provided for the following purposes:

  • Homeownership Fees: HUD will provide an automatic $200 special fee for every homeownership closing reported in PIC for families participating in the Voucher homeownership, Section 8 Family Self-Sufficiency, or Section 8 MTW Homeownership programs.
  • Special Fees for Multifamily Housing Conversion Actions: A special (one-time) fee of $200 will be automatically provided for each unit occupiedon the date of the eligibility event for multifamily housing conversions only. This special fee will also be paid to PHAs that agree to administer vouchers on behalf of a Multi-Family Choice Neighborhood Grantee.
  • Special Fees for Portability: PHAs that administer port-in vouchers which equal 20 percent or more of the PHA’s total number of leased vouchers as of December 31, 2015, are eligible to receive an automatic (one-time) award of 12 months of funding equal to five percent of the PHA’s 2016 Column A rate for administrative fees. PHAs should ensure that all PIC data has been updated and successfully submitted no later than 5 pm EST, April 15, 2016.
  • VASH Extraordinary Administrative Fees: HUD will reserve up to $5 million of the $10 million administrative fee set-aside. All applications must be received by HUD no later than 4 pm EST on Friday, May 6, 2016. All applications must be sent to VASH@hud.gov.

Moving to Work (MtW)

MTW agencies’ funding will continue to be determined pursuant to their MTW agreements. HUD is directed by the 2016 Act to apply the same proration factor to MTWs’ HCV allocations as is applied to all other PHAs. MTW agencies may still use Section 8 funding for Section 9 purposes in accordance with their agreements.

Tenant Protection Vouchers

The 2016 Act provides $130 million for Tenant Protection Vouchers (TPVs). These vouchers provide HUD-assisted protection from hardships, such as Section 18 demolitions or dispositions; Section 33 required conversions; Section 22 voluntary conversions; Section 32 homeownership plans; removals authorized under Choice Neighborhoods and HOPE VI grants; and a variety of actions from Multi-Family conversions.

Depending on the nature of the action causing the hardship for the HUD-assisted family, there are two types of TPV vouchers the family may receive. Relocation TPVs are provided as a temporary resource to assist only the individual families impacted by the conversion action until such time the family’s unit in the property is redeveloped or the project-based assistance is transferred to the new property, or to continue to assist those families who decide not to return to public housing or the project-based unit when the redevelopment or transfer is complete. In contrast, Replacement TPVs are TPVs made available as the result of an eligibility event that permanently reduces the number of HUD-assisted housing units to the community and are eligible for reissuance upon voucher turnover.

HUD will identify whether TPVs are replacement or relocation TPVs in the funding allocation letter. Instructions on how PHAs are to report the leasing status of relocation TPVs in VMS, the process by which HUD will adjust the PHA’s ACC, and renewal funding for relocation TPVs that cease to be leased will be provided in the Advice of Disbursement letter from the Financial Management Center (FMC). The distinction between relocation and replacement TPVs does not apply to TPVs that were funded from before the 2015 and 2016 appropriations bills.

Veterans Affairs Supportive Housing (VASH) Funding

The 2016 Appropriations Act provides for $60 million of new HUD-VASH vouchers. The majority of the funding will be awarded as tenant-based vouchers. HUD will also set aside a portion of this funding to be awarded on a competitive basis for project-based vouchers. Tenant-based vouchers are awarded based on need, as determined by HUD’s point-in-time data submitted by Continuums of Care (CoCs) as well as the Department of Veterans Affairs data on the number of contacts with homeless Veterans and other data. Once allocations are identified, HUD will identify a PHA partner–taking into account location and administrative performance. HUD will invite these PHAs to apply for HUD-VASH vouchers.

Due to anticipated demand, TPVs are not initially being provided for unoccupied units. Although the initial funding term is 12 months, the term may vary subject to availability of funding and demand.

Mainstream 5-Year Program (MS5)

The 2016 Act provides $107,074,000 for renewal funding and administrative fees for HCV units originally funded out of the Mainstream 5-Year Program. The program vouchers will be funded under the same terms and proration as other vouchers in the HCV program. Like last year, PHAs are not required to submit budgets, requisitions and Year-end Settlement Statements for MS5 vouchers. HAP reconciliations will be completed using MS5 leasing and cost data as reported in VMS. PHAs will be limited to their CY eligibility and HUD-held MS5 reserves and PHAs cannot incur over-leasing costs. MS5 programs are ineligible for funding under the $75 million HAP set-aside.

Use of HAP and HAP RNP

HAP RNP and HUD-held program may only be used for eligible HAP needs in the current calendar year. HAP or PHA reserves must not be used for any other purpose, such as administrative expenses, loaned, advanced, or transferred to other component units, or other programs.

VMS/FASS Reporting and Data Integrity

PHAs must submit required financial documents, including VMS and annual FASS electronic submissions. PHAs that fail to meet this requirement may have permanent reductions to their monthly administrative fees until the PHA is in compliance.

Use of Outside Sources of Funds

PIH Notice 2013-28, titled “Guidance on the Use of Outside Sources of Funds in the Housing Choice Voucher (HCV) Program,” provides additional information on using outside sources of funding.

The full notice can be read here.

Questions? Contact Tushar Gurjal at tgurjal@nahro.org.

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