Office of Housing Voucher Programs Implementation of 2011

Office of Housing Voucher Programs Implementation of 2011 Appropriations Housing Choice Voucher Program June 6, 2011

Purpose of This Broadcast • Review the provisions of the 2011 Appropriations Act – renewals, incrementals, administrative fees • Explain the CY 2011 Housing Choice Voucher Program funding allocations • Identify the requirements for PHA requests for additional funding under the HAP Set-Aside

CY 2011 HAP and Admin Fee Funding • Public Law 112 -10 enacted April 15, 2011 • URL: http//thomas. loc. gov/home/approp/app 11. html • funded via 6 Continuing Resolutions before the law was passed: – Provided funding at 2010 appropriated level – Continued 2010 appropriations requirements – January thru June disbursements equaled 1/12 of CY 2010 eligibility and set-aside plus funds for first time renewals l

HAP Funding – Appropriations 2010 Total Renewal Set-Aside (deduct) Available 2011 $16, 339, 200, 000 $16, 669, 282, 624 $150, 000 $149, 700, 000 $16, 189, 200, 000 $16, 519, 582, 624

HAP Funding – Provisions • Basic Funding Eligibility Components – FFY 2010 actual verified HAP Costs from VMS – Adjustments for HAP Costs for first time renewals, to fund a total of 12 months – Allowance for Family Self-Sufficiency escrow deposits – Application of Renewal Funding Annual Adjustment Factor

HAP Funding – Provisions Basic Funding Eligibility Components – Adjustment for Transfers to or from the PHA – Eligibility for DHAP to HCV and THU to HCV Voucher Renewals – VASH Renewals – Application of national pro-ration factor

HAP Funding - Provisions • Re-benchmarking, based on FFY 2010 validated cost data from VMS – October 2009 thru September 2010 • Including all categories of HAP Expense except 5 Year Mainstream • Including expenses for VASH vouchers leased • Including total HAP expenses for contracts effective after the first of the month

HAP Funding - Provisions – Deduction for over-leased unit months – Including funding for disaster vouchers expired 12/31/2010

HAP Funding – Provisions • VMS Data Integrity Efforts – To ensure HUD uses the final, accurate FFY 2010 HAP costs for every PHA – PHAs were advised of the deadline for submitting all data and data changes to VMS for FFY 2010 and Oct thru Dec 2010 – April 25 – for use in renewal and setaside calculations – Data sustained the regular on-line edits and was reviewed off line at the FMC

HAP Funding – Provisions • VMS Data Integrity Efforts – Database further reviewed at HQ by identifying missing items and monthly entries out of range for each PHA’s norm - reasonableness – FMC contacted PHAs with questionable or missing data to resolve all issues – Database finalized for CY 2011 funding calculations

HAP Funding – Provisions • VMS Data Integrity Efforts: – No further data changes considered unless directed by HUD – No further data extracts from VMS – PHAs should still update data as needed, but base for CY 2011 funding will not be changed

HAP Funding - Process • April 25 reviewed data is the starting point • Adjustments for 1 st time renewal of HOPE VI, tenant protection and incremental vouchers – To provide funding through 12/31/2011 for vouchers that are not represented for 12 months in the VMS data – First time renewal funding consists of initial funding, leaseup period, actual costs from VMS, and additional months required • Lease-up and additional months funding provided at the higher of the initial funding rate or VMS FFY 2010 average per unit cost

HAP Funding – Process • Example: TP increment with initial term April 1, 2010 thru March 31, 2011 • 2011 funding will consist of: – Original Funding 1/11 thru 3/11 3 mo – Funding based on VMS data for 7/10 to 9/10 included in re-benchmarking 3 mo -- Funding to cover lease-up period of 4/10 thru 6/10, not assumed in VMS 3 mo -- Funding for total months not covered above 3 mo

HAP Funding - Process • Adjustment for deposits to participants’ FSS escrow accounts (1 of 2 provisions) – Data from PIC – participants and monthly deposit amounts – Based on October thru December 2010 new accounts, with December deposits used as the base for the 12 months to be funded – Used both active and historical PIC data – Prior escrows (FFY 2010) are already in the rebenchmarking expenses via VMS reporting

HAP Funding - Process • 2011 Renewal Funding AAF applied – Renewal Funding AAFs published and posted • Two AAF tables this year – Applied an inflation factor to the AAF to account for time lag between end of re-benchmarking period on 9/30/10 and start of funding period on 1/1/11

HAP Funding Process • Adjustment for Transfers In or Out – Factored after application of AAF to ensure AAF of initial PHA is applied to its costs – Divesting PHA’s VMS costs within FFY 2010 and prior to the transfer are added to Receiving PHA’s VMS costs

HAP Funding - Process • Addition of DHAP to HCV Vouchers Renewal from CY 2010 – Converted to regular Vouchers for CY 2010; no adjustment needed or made for CY 2011 • Addition of DHAP to HCV Vouchers Renewal from CY 2011 – Only for voucher issued prior to 1/1/2010 and initial leased prior to May 2010 – Renewal eligibility based on each PHA’s December 2010 leasing of these vouchers

HAP Funding - Process – Renewal per unit funding based on higher of reported costs for these vouchers or the PHA’s program-wide FFY 2010 HAP costs • Addition of THU to HCV Vouchers Renewal – Funded through 12/31/2010 and then renewed as regular vouchers – Renewal eligibility based on each PHA’s December 2010 leasing of these vouchers – Renewal per unit funding based on higher of reported costs for these vouchers or the PHA’s program-wide FFY 2010 HAP costs

HAP Funding - Process • Result of these calculations is PHA’s 2011 renewal eligibility • Based on the total national eligibility and appropriated amount, a pro-ration factor will be set and applied to all PHAs’ eligibility to determine prorated eligibility, which is the funding amount – downward pro-ration is expected to be minimal • 2011 Appropriations Act does not provide for an NRA offset, and none was taken

HAP Funding - Process • MTW Agencies – Funded per the terms of the PHAs’ individual agreements – Pro-rated at same percentage as all other PHAs – Per 2011 Act, MTW agencies may use appropriated funds to lease vouchers in excess of baseline, but will not be funded for the excess leasing

HAP Funding - Process • 60 day completion requirement per appropriations act • Detailed funding allocation calculations will be provided to each PHA with an explanation of each step – Allocation Letter – Calculations – Notes explaining each data item in the calculations

HAP Funding - Process • Key Points – Letter references Appropriations Act Implementation notice – expected to be issued by June 6, 2011 as PIH Notice 2011 -27; posted on HUD web – Letter identifies total funding – Costs will not be updated for eligibility calculation except at HUD direction

HAP Funding - Process • Key Points: – Appropriated HAP funds may not be used to support leasing above baseline – Appropriated HAP funds may not be used for any other purposes – Administrative fees will be earned based on PHA leasing – Set-aside funding will be processed in accordance with details in the Notice

HAP Funding - Process • Disbursements for January thru June 2011 were based on 1/12 of CY 2010 eligibility plus set-aside award and monthly renewal amounts needed for new units • Front load funding has been provided as needed, if a PHA has insufficient funds (BA and NRA) to support present HAP contracts • Front load funding is an advance disbursement of CY 2011 eligibility, not additional eligibility

HAP Funding - Process • Based on established allocations – – Under-disbursements through June will be made up in an additional payment in July – Excess disbursements will be recouped evenly across the remaining 6 months of CY 2011 (July thru December) – Disbursements are even monthly, even though they include first time renewal of increments expiring during CY 2011

HAP Funding - Process Renewal Funding per FFY 2010 VMS: $ 24, 000 First Time Renewal Funding for 9/30/2011 Expiration: $ 1, 200, 000 Total Funding: $ 25, 200, 000 Total Advances January to June 2011: $ 11, 400, 000 Total Due PHA January to June 2011: $ 12, 600, 000 Make-Up Disbursement: $ 1, 200, 000 Remainder due PHA: $ 12, 600, 000 Disbursements July to December 2011: $ 2, 100, 000 True Need Monthly for Jan to Sept: $ 2, 000 True Need Monthly for Oct to Dec: $ 2, 400, 000

HAP Set-Aside • Expanded in CY 2009 thru CY 2011 to reduce impact on the renewal formula • Eligible Uses are the same as in 2010: – To adjust allocations for PHAs that experienced a significant increase in renewal costs, resulting from unforeseen circumstances or portability under section 8(r)

HAP Set-Aside – To adjust allocations for PHAs with leasing rates at the end of CY 2011 that exceed the average leasing for the 12 -month re-benchmarking period – To adjust for costs associated with VASH vouchers – To adjust for vouchers not in use during the 12 months in order to be available to meet a commitment under section 8(o)(13) – project-based vouchers

HAP Set-Aside • Exact procedures and application formats are provided in Notice PIH 2011 -27 • Applications are due to HUD HQ by 5: 00 pm on June 23, 2011 – Overnight (tracked) mail recommended – E-mails and faxes not acceptable – Do not submit to FMC or field office • PHAs are required to apply for each category for which they want consideration and provide the documentation required

HAP Set-Aside Unforeseen Circumstances – PHA must submit: • • Attachment A from Notice 2011 -27 Written justification Evidence to support justification PHA calculation of the 2011 increased cost Portability – PHA must submit: • Attachment A • No other documentation required – HUD will determine eligibility based on VMS data • Eligibility for average port paid cost in excess of 110% program-wide average cost

HAP Set-Aside • Additional Leasing – PHA must submit: – Attachment A – No other documentation required – HUD will determine eligibility based on leasing per VMS • HUD VASH – Attachment A – Evidence that 2011 anticipated VASH HAP costs exceed VASH funds (provide calculation of costs that exceed available funding)

HAP Set-Aside • Project Based Vouchers – PHA must submit: – Attachment A – Attachment B for each project – Executed AHAPs – Executed HAPs or statement by PHA that none have been executed yet

HAP Set-Aside • General Issues from Prior Years: – Failure to provide signed Attachment A or B – Failure to mark on Attachment A the category(ies) for which the PHA is applying – Incorrect PHA number on Attachment A or B – Submissions received after the deadline

HAP Set-Aside • Issues for Unforeseen Circumstances: – PHA failed to provide a direct link between the U/C and how it impacted the PHA’s HCV program costs – PHA failed to provide the calculated amount needed and/or did not provide documentation to support the calculated amount

HAP Set-Aside – U/C Example – PHAs that have experienced significant cost increases due to an unforeseeable rise in rental costs above that increase anticipated by the Renewal Funding AAFs provided by HUD; documentation could include: • Evidence of increased rents • Identification of affected contracts in the PHA’s HCV program • Calculation of the increased cost required

HAP Set-Aside – U/C Example – PHAs experiencing an increase in HAP per unit cost (PUC) in comparison to the pro-rated funded HAP PUC for CY 2011, due to economic conditions resulting in decreased total tenant payments; documentation could include: • Actual per unit tenant payments and HAP costs experienced by the PHA in CY 2011 • Calculation of increased cost required

HAP Set-Aside • Issues for Project Based Vouchers: – PHA failed to provide signed AHAP/HAP in its entirety (including exhibits) to support the number of unit withheld due to the commitment – PHA failed to provide Attachment B with the number of vouchers held from leasing each month for the specific PB commitment – PHA failed to provide separate Attachment B and documents for each project-based commitment

HAP Set-Aside • Issues for Project Based Vouchers: – PHA requested funding for an existing housing project based commitment, which is not eligible since there is no reason to withhold vouchers from leasing

HAP Set-Aside • All complete and timely applications will be reviewed for eligibility and to determine eligible funding amounts • Excess NRA funds will be applied to eligibility, to ensure set-aside funds are used where they are eligible and needed • If eligible requests exceed funds available, some or all categories will be pro-rated • Process will be completed as quickly as possible

HAP – Use of Funds • 2011 HAP funds, same as 2005 thru 2010, may only be used for eligible HAP expenses for unit months up to baseline – Rental or homeownership subsidy payments – Utility reimbursements – FSS escrow deposits

HAP – Use of Funds • Eligible uses are the same as when HUD held excess funds in the program reserve • Only difference: where the funds are held – PHA – and they can be used for eligible costs without requesting HUD approval • Any portion remaining at year’s end must be deposited to the NRA

HAP – Use of Funds • Interest earned on investment of NRA funds accrues as program receipts – belongs to the program • HAP and NRA funds may not be used for prior year deficits or any other purpose, including – Administrative costs – Public housing expenses – Other housing expenses

HAP – Use of Funds • Any funds which have been used for other purposes or transferred out of the NRA must be returned – no exceptions • PHAs that have diverted funds may be subject to administrative fee sanctions or other actions • HUD’s calculation of NRA balances assumes all HAP funds provided were used for eligible HAP purposes and reported in VMS or are in the NRA

Tenant Protection Funds - Provisions • $109, 780, 000 for all purposes • Eligible for PH demolition/disposition, multifamily conversions, Mod Rehab replacements; Section 202 re-financing • Vouchers provided for all units occupied during previous 24 months that cease to be available as assisted housing

Admin Fee Funding – Appropriations 2010 2011 Total Fees 1, 575, 000 1, 447, 100, 000 On-Going Fees 1, 525, 000 1, 427, 100, 000 50, 000 20, 000 0 0 Set-Aside Family Self Sufficiency

Administrative Fee Funding - Provisions • Fees based on provisions of section 8(q) of the Act, as it existed immediately prior to QHWRA • Same provisions as in 2010 – fee eligibility based on first of month leasing for all vouchers and on 2011 fee rates • For 2011, no separate fee rates (Column C) for PHA owned units – will be calculated the same as fees for all other Voucher leasing

Administrative Fee Funding - Provisions Fee rate schedules are posted at: http: //www/hud/gov/offices/pih/programs/hcv/ad minfees 2011. cfm Fees will be pro-rated as needed to stay within appropriation; reconciled based on using 1/12 of appropriated funds monthly Fee provisions apply to all vouchers – renewal, incremental, tenant protection, VASH

Administrative Fee Funding – Process • Fees advanced CY 2011 to date based on latest reconciled VMS data when funds were issued – Jan thru May at 92%; June at 80% • Fees advanced do not equal eligibility or fees earned – just an estimate • Fees will continue to be advanced based on leasing data – as it updates • Fees will be reconciled monthly as actual leasing data is updated

Administrative Fee Funding - Process • Average reconciled pro-ration for CY 2011 expected to be approximately 83% • Fee set-aside will be used for: – Homeownership incentive fees – One time special fees for Housing conversion tenant protection actions ($200 per occupied unit) – Program specific audits as required – PHAs in need of additional funds to administer their program (remainder)

Administrative Fee Funding – Process • Blended Rates – PHA must request; no justification required – Calculation based on location of participants per PIC – No reconciliation required – Request to: Financial Management Division (HQ) by June 23

Controlling Administrative Costs • HUD recognizes PHA challenges when admin fees are severely reduced – Fee reduction does not mean PHAs can immediately shed costs – HUD cannot adjust level of admin fees available – only funds appropriated for fees may be used • HUD working to identify ways for PHAs to reduce admin burdens and streamline business to cut costs

Controlling Administrative Costs • Notice forthcoming to remind PHAs of options currently available: – Verify the correction of HQS deficiencies remotely, via photographs or vendor receipts, for annual or interim inspections (not initial or for project-based units) – Separate the annual HQS inspection from the annual reexamination of income – to enable PHA to group inspections geographically – Streamline the reexamination process and verification procedures – Pool resources with other PHAs for specific administrative functions, such as inspections

Controlling Administrative Costs • A utility model is on-line to assist PHAs in setting utility allowances, which can save time and effort: http: //www. huduser. org/portal/resources/utilmodel. html • HUD’s 2012 budget request proposed legislative action: – three-year income certification for fixed income families – PHAs to approve exception payment standards for disabled households, up to 120% – THESE ARE PROPOSALS ONLY AT THIS TIME • HUD is reviewing program policy/regs and PHA suggestions for reforms aimed at reducing administrative complexity and streamlining requirements

Family Self-Sufficiency Coordinators • $59, 880, 000 for 2011 • Since the FSS funds are not administrative fees for 2011, a NOFA was required - applications due June 8 • PHAs may use administrative fee funds and request a frontload of fees to cover FSS coordinator costs until FSS funds are received • All 2010 awards have been announced

2011 Incremental Funding • VASH - $49, 900, 000 – Guidance forthcoming – Anticipate issuing invitations based on VA/HUD determination of needs of homeless veterans • No Family Unification or Non-Elderly Disabled funding for 2011

2011 Incremental Funding • Appropriations language for VASH requires continued use of the vouchers for the intended population upon turnover • This restriction also applies to vouchers provided for VASH, FUP and Non-Elderly Disabled populations under the 2008, 2009 and 2010 Appropriations Acts

Managing HAP Funds • PHAs must monitor leasing and HAP costs – Ensure effective use of BA and NRA funds – Ensure current leasing levels can be supported within funds available and known attrition – HUD cannot provide additional funds to PHAs that overspend and experience shortfall – HUD does not fund 100% of baseline units, but allocates funds based on the re-benchmark period alone

Managing HAP Funds • Track monthly and YTD leasing and costs as compared to unit months and Budget Authority available • Project unit months and BA available for the balance of the year and adjust program activities accordingly • Utilize tool to be posted on web to project leasing, funds and actions affecting costs (attrition, success rate) – seek field office assistance as needed • PHAs may request frontloading of HAP funds to support cash flow

Projection Spreadsheet • Purpose: – To support projections of funding, leasing and spending over 2 year period – To assist PHAs to decide number of vouchers to issue, which leads to leasing/costs • Goal: – Achieve optimal use of program – Avoid cyclical swings of lease-up and attrition – stabilize the program – Eliminate need for abrupt cutbacks affecting participants

Projection Spreadsheet • Common Cyclical Pattern/Problem: – PHA is below baseline and funding, so PHA leases up late in CY 1 – PHA starts CY 2 leased above CY 2 funding level (based on CY 1 average) and it cannot be sustained, so PHA reduces thru attrition – PHA then starts CY 3 below baseline and funds again (based on CY 2 average), and cycle repeats • Solution: Plan across multiple years by projecting funding, leasing, costs and the effects of PHA decisions

Projection Spreadsheet • Projections based on interacting variables supported by the spreadsheet – user can test scenarios to see what leasing and costs would result – supports successful program management: – Success rate (% of vouchers that result in leases) – Turnover rate (% of participants leaving the program each year) – Issuance to Leasing (% of vouchers leased within standard time frames or the average time in months to leasing) – Per Unit Cost (monthly HAP expenses / leases)

Projection Spreadsheet • Caution: – Accuracy of the projections depends on the accuracy of the variables entered – PHAs must carefully track the variables monthly, so accurate values are entered – If the data is less reliable, PHA must leave a larger margin for error – Historic data is valuable but does not always continue – review frequently!

Projection Spreadsheet • Funding Estimates: – Apply anticipated appropriations requirements and anticipate a pro-ration level – Actual funding will depend on funds appropriated, so the user can test various levels – There is no guarantee that the spreadsheet estimates will be the actual funding amounts

Projection Spreadsheet • Key Variable relevant to funding methodologies can be tested: – Re-benchmarking period (CY or FFY) – default is FFY – Set-Aside provided for last quarter leasing (yes or no) – default is Yes – NRA Offset as a percent of funding – default is None • Administrative Fees’ projections also provided • Full User’s Guide provided • Web Address: http: //portal. hud. gov/hudportal/HUD? src=/program_offices/public_india n_housing/programs/hcv

Managing HAP Funds • If a PHA anticipates a shortfall for CY 2011 and is not working with the Shortfall Prevention Team, contact your financial analyst at your field office or the FMC • If a PHA anticipates a shortfall for CY 2011, or SPT alerts the PHA to a shortfall, and PHA may qualify for set-aside, PHA must apply – not automatic if referred

Questions after the broadcast may be submitted to: PIH. Financial. Management. Division@HUD. GOV Questions and Answers applicable to many or all PHAs will be posted on the web site.