Capital Fund Guidebook - HUD

U.S. Department of Housing and Urban Development Office of Public and Indian Housing

Capital Fund Guidebook

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U.S. Department of Housing and Urban Development Office of Public and Indian Housing

Capital Fund Guidebook

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Table of ContentsChapter 1 Background and Introduction ........................................................................ 1

1.1. General Overview. ............................................................................................ 1

1.2. Types of Capital Funds Grants ............................................................................ 2

1.3. History of the Public Housing Program ............................................................... 3

Exhibit1.1.ExampleOpinionRegardingDeclarationofTrust ........................... 6

Chapter 2 Eligible Activities and Cost Limits .................................................................. 7

2.1. EligibleActivitiesOverview ................................................................................. 7

2.2. Development ...................................................................................................... 9

2.3. Financing. ........................................................................................................... 10

2.4. ModernizationandPhysicalWork ..................................................................... 11

2.5. SoftCosts. ........................................................................................................... 16

2.6. Safety and Security. ........................................................................................... 17

2.7. Other Costs. ...................................................................................................... 18

2.8. IneligibleActivities. ............................................................................................. 20

2.9. CostandOtherLimitations. ................................................................................ 21

Chapter 3 Planning, Annual Submission, and Distribution of Funds ...............................26

3.1. Overview. ............................................................................................................ 26

Capital Fund Program (CFP) Annual Formula Grant Process .......................................... 28

3.2. Planning – Physical Needs Assessment (PNA). ................................................... 29

3.3. Planning – Energy Audit. .................................................................................... 30

3.4. Planning – Public Hearing. .................................................................................. 30

3.5. Planning – Pre-Submission Details. .................................................................... 31

3.6. Capital Fund Submission. .................................................................................... 33

3.7. Amendingthe5-YearActionPlan. ...................................................................... 34

3.8. RelationshipBetweenCapitalFundSubmissionandPHAPlan. ......................... 35

3.9. Approvalof5-YearActionPlan.......................................................................... 35

3.10. Spreading Capital Fund Grants into LOCCS. ...................................................... 36

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3.11. InitialDisbursementofCapitalFunds. ................................................................ 37

3.12. MovingtoWork(MTW)PHAs. ........................................................................... 37

Exhibit3.1.CapitalFundSubmission:PHAsotherthanMTWPHAs .................. 40

Exhibit3.2.CapitalFundSubmission:MTWPHAs ............................................. 41

Chapter 4 Capital Fund Formula Calculation .................................................................. 42

4.1. PIC/IMSCertification .......................................................................................... 42

4.2. UnitCountforFormulaCalculation ................................................................... 42

4.3. ComputationofFormulaShares ......................................................................... 43

4.4. Faircloth Limit ..................................................................................................... 44

4.5. HighPerformerBonus ........................................................................................ 44

Chapter 5 Replacement Housing Factor Grants and Demolition and Disposition Transitional Funding ................................................................................................ 45

5.1. Replacement Housing Factor Grants (RHF) ........................................................ 45

5.2. RHF Planning Requirements ............................................................................... 46

5.3. ObligationEndDateandExpenditureEndDateRequirementsforRHFGrants . 48

5.4. RejectionofRHFGrants ...................................................................................... 49

5.5. DDTF .................................................................................................................. 49

5.6. TransitionfromRHFtoDDTF ............................................................................. 50

5.7. DeterminingDemolitionorDispositionDate ..................................................... 51

Exhibit5.1.DetailedDescriptionofRHFtoDDTFTransition ............................. 52

Exhibit 5.2. Model RHF Plan Submission ........................................................... 53

Chapter 6 General Program Requirements and Implementation ...................................54

6.1. Overview............................................................................................................. 54

6.2. Environmental Reviews [Reserved] .................................................................... 54

6.3. RealPropertyAcquisitionandRelocation .......................................................... 54

6.4. WageRates ........................................................................................................ 55

6.5. Procurement and Contract Requirements ......................................................... 57

6.6. Force Account Labor. .......................................................................................... 60

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6.7. ContractAdministrationandAcceptanceofWork ............................................. 62

6.8. NondiscriminationandEqualOpportunityRequirements ................................. 63

6.9. Compliance with Physical Standards ................................................................. 68

6.10. AffordabilityRequirements ............................................................................... 69

Exhibit 6.1. Mandatory Contract Clauses ........................................................... 71

Exhibit 6.2. Mandatory Contract Clauses – all purchases ................................. 72

Exhibit6.2.A.PeriodicPart58BroadScopeReviewofCategoricallyExcluded

CFPActivities ...................................................................................................... 75

Exhibit 6.3. Environmental Review Process ....................................................... 77

Chapter 7 Obligation, Budget Revision, Expenditure, and Closeout ...............................78

7.1. WhatisanObligation? ....................................................................................... 78

7.2. ObligationRequirementsofCapitalFundGrants. ............................................ 80

7.3. OED Extension .................................................................................................... 82

7.4. PHAReporting .................................................................................................... 83

7.5. HUD Monitoring ................................................................................................ 83

7.6. ConsequencesofNoncompliancewiththeObligationEndDate–PenaltiesandSanctions ....................................................................................................................... 84

7.7. TypesofBudgetRevisions .................................................................................. 86

7.8. BudgetRevisionProcedures ............................................................................... 88

7.9. Expenditure of Capital Fund Grants ................................................................... 89

7.10. Fiscal Closeout ................................................................................................... 92

Exhibit7.1.ObligationEndDatesandExpenditureEndDate ........................................ 95

Chapter 8 Emergency, Non-Presidentially Declared Natural Disaster, and Safety and Security Grants ........................................................................................................ 96

8.1. Overview. ........................................................................................................... 96

8.2. EmergencyandNon-PresidentiallyDeclaredNaturalDisasterGrants. .............. 96

8.3. EligibleandIneligibleUses:EmergencyandNon-PresidentiallyDeclaredNaturalDisaster Grants ............................................................................................................... 99

8.4. PreliminaryFunding:Non-PresidentiallyDeclaredNaturalDisastersOnly ........ 100

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8.5. EmergencyandNon-PresidentiallyDeclaredNaturalDisasterGrantApplications ................................................................................................................... 101

8.6. ManagingtheEmergencyandNon-PresidentiallyDeclaredNaturalDisaster Grant ................................................................................................................. 102

8.7. Safety and Security Grants .................................................................................. 103

8.8. Eligible and Ineligible Uses: Safety and Security Grants ..................................... 104

8.9. SafetyandSecurityGrantApplications .............................................................. 105

8.10. ObligationandExpenditureofSafetyandSecurityGrants ............................... 106

8.11. GrantCloseoutforEmergencyandNon-PresidentiallyDeclaredNaturalDisasterGrants & Safety and Security Grants .............................................................................. 107

Chapter 9 Public Housing Development ........................................................................ 108

9.1. Methods of Public Housing Development. ......................................................... 108

9.2. Development Process Overview. ........................................................................ 109

9.3. Sources of Funding For Development................................................................. 111

9.4. General Program Requirements. ........................................................................ 111

9.5. Mixed-Finance Development .............................................................................. 113

9.6. SiteAcquisitionProposal .................................................................................... 117

9.7. Development Proposal ....................................................................................... 119

9.8. Review of a Development Proposal .................................................................... 124

9.9. Funding and Disbursements ............................................................................... 127

Exhibit9.1.SiteAcquisitionChecklist ................................................................ 129

Exhibit9.2.DevelopmentProposalChecklist(Non-Mixed-Finance).................. 131

Exhibit9.3.FieldOfficeResponsibilitiesforMixed-FinanceProjects ................ 135

Chapter 10 DEMONSTRATION PROGRAMS: RAD AND MTW ............................................137

10.1. RentalAssistanceDemonstration(RAD) ............................................................. 137

10.2. Procedure for RAD Conversion .......................................................................... 138

10.3. MovingtoWork(MTW) ...................................................................................... 140

Chapter 11 Security Interests and Financing Activities .....................................................142

11.1. Capital Fund Financing Program (CFFP)(24 CFR Part 905, Subpart E) ................. 143

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11.2. OperatingFundFinancingProgram(OFFP) ........................................................ 148

11.3. PublicHousingMortgageProgram(PHMPorSection30) .................................. 152

11.4. CapitalFundEducationandTrainingCommunityFacilities(CFCF)Program ...... 156

11.5. CapitalFinancingNotSecuredByPublicHousingProperty ............................... 156

Exhibit11.1.HUDReviewChecklistforSection30ProposalsRelatedtoEPC .. Transactions ........................................................................................................ 159

Chapter 12 Compliance, Penalties and Sanctions ................................................................163

Appendix 1. Definitions: The following definitions apply to this guidebook: .....................166

Appendix 2. Eligible Activities Chart ................................................................................. 176

Appendix 3. Guide for Registration in SAM ....................................................................... 189

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Chapter 1 Background and Introduction

1.1. General Overview.

TheCapitalFundProgram(CFP)providesfinancialassistanceintheformofgrantstopublichousingagencies(PHAs)tocarryoutcapitalandmanagementactivitiesincludingthoselistedinSection9(d)(1)oftheUnitedStatesHousingActof1937(1937Act).CapitalFund(CF)grantscanalsobeenteredintowithresidentmanagementcorporations(RMCs)(see24CFR964.225(h)).TheCapitalFundProgramfinancialassistancemayalsobeprovidedtomixed-financeprojectsthat contain public housing units provided Amendments are entered into under the Mixed FinanceAnnualContributionsContract(ACC)AmendmentandCapitalFundACCAmendment.EligibleCapitalFundactivitiesarefurtherdescribedinthisguidebook.RegulationsonCapitalFundsareat24CodeofFederalRegulation(CFR)part905.

CongressprovidesCapitalFundsthroughannualappropriations.InordertoreceiveaCFPgrant,aPHAmustmeetthreeadministrativeprerequisiteswhichareto:

1. Validateproject-levelinformationinHUD’sdatasystems,

2. Haveanapproved5-YearActionPlanand

3. EnterintoaCapitalFundAnnualContributionsContractAmendmentwithHUD.

TheAnnualContributionContract(ACC)hasbroadercompliancerequirements,butthisguidebookconcernsonlytheCFACCAmendment.

Inadditiontotheseadministrativerequirements,therearealsolegalrequirements.PHAsmustbeabletoprovidewrittencertificationandcounsel’sopinionthatpropertyreceivingCFP assistance is under a current (i.e., have not expired and will not expire during the use term associated with the use of the CF grant)andeffective(i.e., no liens or encumbrances prior to the Declaration of Trust (DOT) or Declaration of Restrictive Covenants (DORC)), ACC and is in compliance with HUD requirements. Every public housing project must be under a DOT or DORC as required. See all DOT and DORC requirements at 24 CFR §§905.100(b), 905.108, 905.204, 905.304, 905.318, 905.505(c), 905.510, 905.600, 905.604. Exhibit 1.1 presents a sample opinion.

CFPwascreatedbyanamendmenttothe1937ActbytheQualityHousingandWorkResponsibilityAct(QHWRA)in1998(addingSection9(d)tothe1937Actmergingpreviousmodernizationanddevelopmentprograms).TheHousingandEconomicRecoveryAct(HERA)of2008affectedPHA’splanningprocessfornotonlyCapitalFunds,butalsoOperatingFundsandSection8.

Therecentregulatoryconsolidationof24CFRPart905incorporatedtheremainingapplicablesectionsofParts941and968oftheCFRforHUDalongwithexistingprovisionsofPart905whichincludedtheCFformula,eligibleCFactivities,CFobligationandexpenditurerequirements and Capital Fund Financing Program (CFFP).

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Guidebookuserswillrecognizethatthenewregulationsintroducedmanyreforms.Structurally,theregulationscombinetheCapitalFundrequirementsformodernizationanddevelopmentintoasingleregulation.TheseregulationsalsoupdateandstreamlinemanyoftheCapitalFundand development requirements, incorporate recent energy requirements, and direct more fundingtowardsmodernizationbywayofthenewDemolitionandDispositionTransitionalFunding (DDTF).

AllPHAsthathavepublichousingunitsunderanACCenteredintoHUD’sdatasystemsareeligibletoreceiveCFPgrants.HUDapprovalsrequiredbytheCFPmustbeinwritingfromanauthorizedPHAofficial.

1.2. Types of Capital Funds Grants

Type Description

Formula ThistypeofgrantisanallocationofCapitalFundstoPHAsinaccordancewiththeCapital Fund formula, as further described in Chapter 4. The Capital Fund formula factorsmodernizationbacklog(existingmodernizationneeds)andaccrualneedsinthecalculation.

Replacement Housing Factor (RHF)

RHF provides a formula-based add-on to Capital Funds for up to 10 years (in two 5-yearincrements)afteraPHAhasremovedunitsfromitsinventoryforHUD-approveddemolitionordisposition.RHFfundsmaybeusedonlytodevelopnewpublic housing units. RHF is being phased out and is to be replaced by the DDTF, whichisnotaseparategrant,afteratransitionperiod,asfurtherdescribedinChapter5.

DemolitionandDispositionTransitionalFunding (DDTF)

DDTF provides a formula-based add-on, not a separate grant, to the Capital Fund grantfor5yearsafteraPHAhasremovedunitsfromitsinventorybecauseofHUD-approveddemolitionordisposition.DDTFbeganinFederalFiscalYear2014andwillreplace the RHF grant, as further described in Chapter 5. PHAs will not get separate Capital Fund and DDTF grants.

Emergency and Non-PresidentiallyDeclaredNatural Disaster

Congressannuallyestablishesaset-asidefromtheCapitalFundappropriationforEmergenciesandNon-PresidentiallyDeclaredNaturalDisasters.Grantfundingisawardedonafirst-come,first-servedbasistoPHAsapplyingpursuanttotheprocedures described in Chapter 8.

Emergency Safety and Security

FromtheEmergencyandNon-PresidentiallyDeclaredNaturalDisasterSet-Aside,CongressauthorizesinHUDAnnualAppropriationActs,annualsetasidestoassistPHAs with threats to resident safety and security caused by a Safety and Security Emergency.HUDawardsthesegrantscompetitivelybasedonalotteryofallapplicationsthatmeetthresholdrequirements.

CapitalFundEducationand Training Community Facilities(CFCF)

InpreviousHUDAnnualAppropriationActsCongressauthorizedCFCFCapitalFundgrantstobedistributedcompetitivelytoPHAsfortheconstruction,rehabilitation,orpurchaseoffacilitiestoprovideearlychildhoodeducation,adulteducation,andjobtraining programs for public housing residents. Currently, CFCF is not authorized for FY 2015.

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1.3. History of the Public Housing Program

The public housing program was established by the 1937 Act. Its purpose was to enable local public housing agencies (PHAs), created pursuant to state law, to provide decent, safe, and sanitaryhousingforlow-incomefamilies.Initially,Congressauthorizedthefederalgovernmenttoissuebondstofinancethedevelopmentofnewpublichousing.PHAsmadethoseunitsavailabletoeligiblefamiliesat“lowrents,”whichiswhypublichousingwaspreviouslyknownas“low-renthousing.”Atthetimeoftheprogram’sinception,therewerenofederalsubsidiesprovidedfortheoperationorcapitalimprovementstothosehousingprojects.

In1968,Congresspassedthe“BrookeAmendment,”whichlimitedtheamountofrentPHAscouldchargetenantstoacertainpercentageofafamily’sadjustedincome.Tooffsettheimpactofreducingthetenant’sportionofarentpayment,CongressauthorizedfederaloperatingsubsidiesforPHAstosupplementPHAshousingoperationcosts.Priorto1968,thefederalgovernmentdidnotprovidefundingfortheoperationoforcapitalimprovementstopublichousing development.

Subsequently,Congressauthorizedundersection14ofthe1937Actandappropriatedfundingforcapitalimprovementsor“modernization”ofpublichousingdevelopment.Initially,thisprogramwasknownastheComprehensiveImprovementAssistanceProgram(CIAP).CIAPwasadiscretionarygrantprogramunderwhichaPHAhadtoapplytoHUDforfundingtomakecategoricallyspecificcapitalimprovementstoitspublichousingprojects.Typically,notallPHAapplicationswerefundedinagivenyear.

AsaresultoftheagingandincreasingcapitalimprovementneedsofexistingpublichousingandtheintermittentCapitalFundingforsomePHAs,therewasaneedforamorepredictableandsignificantstreamofmodernizationfunding.Congressrespondedbyauthorizingandfundingthe Comprehensive Grant Program (CGP) in the early 1990s. CGP was a formula grant, rather thanacompetitivegrant,whichprovidedfundstoPHAsbasedonthecharacteristicsofeachPHA’shousingstock.Initially,theCGPwasonlyforPHAsthathad500ormorepublichousingunits, while smaller PHAs remained in CIAP. The CGP was later revised to include PHAs with 250 or more public housing units, with smaller PHAs again remaining in CIAP. Eventually, CIAP was made subject to a formula.

CGPPHAswererequiredtodevelopandsubmit5-YearActionPlansandAnnualPlanstoidentifyandprioritizetheirmodernizationneeds.PHAswerealsorequiredtosubmitPerformanceandEvaluationReports(P&EReports).Thefunding,planning,andreportingstructureofCGPwasgovernedby24CFRPart968,whichHUDcontinuedtouseforpurposesthatwerenotrepealedbyQHWRA,andwasthebasisforthecurrentCFP.

HUDcontinuedtoprovidefundstoPHAsforthedevelopmentofnewpublichousingthroughconventional(newconstruction),turnkey,acquisition,oracquisitionwithrehabilitation.However,insteadofissuingbonds,CongressauthorizeddirectappropriationstoPHAsfordevelopmentgrants.SuchdevelopmentgrantswereauthorizedbySection5ofthe1937Act,whichalsoincludedaset-asideprogramforcertainlargemodernizationprojectsknownasMajorReconstructionofObsoleteProjects(MROP).In1994,Congressstoppedappropriatingseparate funding for the development of new public housing units. In 1996, the Part 941

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developmentregulationwasamendedtoaddnewSubpartFforMixed-FinanceDevelopment.

AspartoftheFFY1999HUDAppropriationsAct,CongressenactedtheQHWRA(TitleVofPub.L.105-276),whichincludedacomprehensivesetofamendmentstothe1937Act.WithrespecttoCapitalFundingforpublichousing,inanefforttostreamlineprogramsandconsistentlyprovideCapitalFundingforallPHAs,QHWRArepealedSection14andamendedsection5ofthe1937ActandcreatedanewCapitalFundProgramunderSection9(d)ofthe1937Act.ThissignaledtheendofseparatemodernizationprogramsforsmallerPHAs(CIAP)andlargerPHAs (CGP), as well as the public housing development program, by merging them into a single fund.LikeCGP,theCapitalFundProgramprovidesforannualformulagrantstoallPHAsbaseduponthecharacteristicsofeachPHA’spublichousingstock.CapitalFundsmaybeusedformodernization,development,managementimprovements,andtheothereligibleactivitiesdescribedinthisGuidebook.

Inaddition,QHWRAauthorizedanewplanningprocessforPHAsgenerallyknownasthe“PHA Plan,” which consists of a 5-Year Plan and an Annual Plan. The purpose of the PHA Plan istoprovideaunifiedlocalplanningprocessforallofaPHA’sactivitiesinitsupcomingfiscalyear, subject to resident involvement, a public hearing, and limited HUD review. The PHA PlanoutlinesthePHA’smissionandgoalsacrossallofthePHA’soperationsandactivities.Asimplemented by HUD, the PHA Plan fully incorporates a capital planning process for all PHAs, similartothatwhichhadbeendevelopedunderthePart968regulationsforCGP.

The Housing and Economic Recovery Act of 2008 (HERA) (Pub.L. 110-289) provided regulatory relieftosmallerPHAs,alsoknownasQualifiedPHAs.AQualifiedPHAisexemptfromfilingaPHAAnnualPlan,butmuststillfilethe5-YearPlan,makeanannualcivilrightscertification,consultwithitsResidentAdvisoryBoard,andholdapublichearingtodiscussanychangesinthegoals,objectives,orpoliciesofthehousingagencyafter45days’notice.AQualifiedPHA(1) has 550 or fewer public housing units and tenant choice vouchers and (2) is not designated astroubledanddoesnothaveafailingscoreundertheSection8ManagementAssessmentProgramduringtheprior12months.AnannualsubmissionisstillrequiredofallPHAs,bothQualifiedandnon-Qualified,inordertoeffectivelycalculateCapitalFundsandmonitortheuseof grant funds.

RegulationsimplementingvariousaspectsofQHWRAfortheCapitalFundProgramhavebeenpublishedseparatelyovertheyears.HeadquartersinstructedFieldOfficesandPHAstofollow24CFRPart905,buttocontinuetofollowmostaspectsof24CFRPart968formodernizationactivitiesand24CFRPart941fordevelopmentactivities(exceptwhereprovisionshadbeenrepealedbyQHWRAorHERA).

24 CFR Part 905 was published in the Federal RegisteronOctober24,2013(DocketNo.5236-F-02)andbecameeffectiveonNovember25,2013.ThiscomprehensivefinalruleupdatedtheexistingregulationspreviouslyissuedunderQHWRA,decoupledtheCapitalFundsubmissionfromthePHAPlansubmission,combinedCapitalFundanddevelopmentregulationsintoaconsolidatedregulation,andmadefurtherrevisionstotheCapitalFundProgramandrelatedprogram requirements.

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SubpartFoftheCFPFinalRuleaddressesthedevelopmentofbothmixed-financeandconventionalpublichousing.CapitalFundsmayalsobeusedinconversionsofpublichousingunitstolong-term,project-basedSection8assistanceundertheRentalAssistanceDemonstration(RAD)programunderrequirementsprovidedintheRADimplementationnotice(NoticePIH2012-32(HA),REV-2,issuedJune15,2015).

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Exhibit 1.1. Example Opinion Regarding Declaration of Trust [Date]

[Name] U.S. Department of Housing and Urban Development FieldOfficeDirector Any City, Any State

RE:ABCHousingAuthority

Dear Mr./Ms. [Name]:

Ourlawfirmisthe[localattorneyandgeneralcounsel]for_______________(nameofHousingAuthority),situatedin_______________________________(countyorcityandstate).Wearewellversedinrealpropertyownership,declarationsoftrust,liens,andrelatedmatters.

Attherequestofmyclient,the______________(nameofHousingAuthority),wehaveexaminedthefollowingDeclarationsofTrust.

Sunnyside Homes XYZ001000071

DeclarationofTrustdatedJanuary31,2012,andrecordedatBook1379,Pages1389-1391ofthe_________(e.g.,ClerkofSuperiorCourtofAnyCounty,AnyState)coveringandpertainingto500dwellingunitsknownas.

Project No. XYZ001000071 — 500 dwelling units

BakerHomesXYZ001000081

DeclarationofTrustdatedDecember31,2000,andrecordedatBook1390,Pages1631-1633oftheClerkofSuperiorCourtofAnyCounty,AnyState,coveringandpertainingto300dwellingunitsknownas:

Project No. XYZ001000081 — 300 dwelling units

TheseDeclarationsofTrustweredulyrecordeduponthepublicrecordsoftheClerkofCourtofAnyCounty,AnyState,andactasdirectrecordnoticefromthedateofrecordingoftheprovisions,termsandlimitationsallinfavorof the United States of America, Secretary of Housing and Urban Development (HUD).

WehavereviewedsufficientrecorddocumentationfromwhichwecananddocertifythatthepropertiesdescribedintheDeclarationsofTrustarealloftheABCHousingAuthority’spropertiesencumberedundertheACCandUnited States Housing Act of 1937 and that there is no lien in place on the public housing property described in the DeclarationsofTrust.TheDeclarationsofTrustareeffectiveandinfirstpositiononthedescribedrealpropertyforpurposes of security.

Very truly yours,

Jones&Jones,P.C. 123 Main Street Any City, Any State, XYZ 10000 AttorneysforABCHousingAuthority

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Chapter 2 Eligible Activities and Cost Limits

2.1. Eligible Activities Overview

CapitalFundsmayonlybeusedforactivitiesthataredescribedaseligibleactivitiesin24CFR905.200andareeitherspecifiedinanapproved5-YearActionPlan,asfurtherdescribedinChapter3,orapprovedbyHUDforemergencyworkorworkneededbecauseofaNon-PresidentiallyDeclaredNaturalDisaster.

MovingtoWorkPHAsmayuseCapitalFundsforactivitiesspecifiedintheirMTWAgreements,whichpermitPHAstocombinepublichousingCapitalFundswithpublichousingOperatingFundsandHousingChoiceVoucherfundsforpurposesdescribedintheMTWAgreement.

Role of HUD Role of PHA

ReviewandapprovePHA’s5-YearActionPlanthatdetails how the PHA intends to address capital and management improvement needs using Capital Funds

Determine capital and Management Improvement needs through, in part, a Physical Needs Assessment and Energy Audit

Review and approve funding proposals for emergency workorworkneededbecauseofNon-PresidentiallyDeclared Natural disaster

Create5-YearActionPlanthatdetailshowthePHAintends to address these needs using Capital Funds and obtain board and HUD approval

ReviewandapprovedevelopmentandsiteacquisitionproposalsthatdescribetheworkthePHAintendstoundertake

Prepare and submit proposals for development, site acquisition,andEmergencyWorkorworkneededbecauseofaNon-PresidentiallyDeclaredNaturalDisaster

Provide technical assistance and guidance to the PHA regardingwhichactivitiesareeligibleandineligibletobe funded with Capital Funds

EnsurethatactivitiestobefundedundertheCapitalFundProgramareEligibleActivities

MonitorPHA’sexpenditurestoensurethatactivitiesfunded with Capital Funds fall under one of the categoriesofEligibleActivities

Ensure that improvements or purchases are modest in design and cost based on what is customary for the locality

Monitor overall PHA performance

Asfurtherdescribedbelow,eligibleactivitiesaredividedintoseveralmajorcategories,includingdevelopment,financing,andmodernization.Inundertakingtheseeligibleactivities,PHAsshouldapplytheappropriatewagecategories(i.e.Davis-Baconandprevailingwages),detailedin Chapter 6.

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EligibleActivitiesmaybegenerallygroupedaccordingtothefollowingbudgetlineitems(BLIs).

BLI Quick Reference Chart

CapitalFundActivity BLIDevelopmentandPhysicalWork

• SiteAcquisition 1440• Site Improvement 1450• Dwelling Structure 1460• Dwelling equipment, nonexpendable 1465• Non-dwelling structures 1470• Non-dwelling equipment 1475• Demolition 1485• CFFP Debt Service Payments 1501 (by PHA) 9000 (by LOCCS)

SoftCosts• Financing 1430• TransfertoOperations 1406• Management Improvements 1408• ResidentRelocationandMobilityCounseling 1495• Safety and Security BLIforassociatedactivity*

Other Costs• AdministrativeCosts 1410• Capital Fund Program Fee 1410• Audit 1411• Fees and Costs, Legal 1430• Homeownership BLIforassociatedactivity*• Force Account Labor BLIforassociatedactivity*• Physical Needs Assessment and Energy Audit 1430• RAD 1503• RAD 1504• EconomicSelf-Sufficiency(softcost) 1408• EconomicSelf-Sufficiency(capitalexpenditure) BLIforassociatedhardcostactivity*

* Some items in this chart contain activities that can be booked in multiple categories but shall not be double booked. So Safety and Security could be booked under BLI 1430 for fees and costs like architect or engineers, under BI 1460 for dwelling structures related work such as security doors, security window screens, and BLI 1450 for site improvements such as exterior lighting on posts not attached to buildings. Similarly, Force Account Labor is charged to the BLI appropriate for work performed by staff.

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2.2. Development

Activitiesandrelatedcoststhataddto(orsignificantlyreconfigure)publichousingunitsinaPHA’sinventory,includingconstructionandacquisitionofadditionalpublichousingunits,withorwithoutrehabilitation,andanyandallundertakingsnecessaryforplanning,design,financing,landacquisition,demolition,construction,orequipmentofpublichousingunits,andrelatedbuildings,facilities,and/orappurtenances(i.e.,non-dwellingfacilities/spaces).

DevelopmentalsoincludesanyMixed-FinanceModernization,allrelevantModernizationuses(other than Management Improvements), Financing uses, and development of non-dwelling spacewheresuchspaceisneededtoadminister,andisofdirectbenefittoaPublicHousingProject (i.e. housing developed, acquired, or assisted by a PHA under the 1937 Act, and the improvement of any such housing), including the residents. These types of Development activitiesarefurtherdescribedinChapter9ofthisGuidebookand24CFR§§905.600,905.602,905.604, 905.606, 905.608 and 905.612.

Eligible Development costs include, but are not limited to, the costs for:

1. Constructionandacquisitionwithorwithoutrehabilitation,includingpropertypurchase,appraisal, survey, map, legal costs, and recording costs;

2. Development of Mixed-Finance Projects, including providing funds for eligible uses by loan, grant, lease, or other legal document;

3. Residentconsultationandmeetings;

4. Environmental review;

5. Consultantssuchasgrantwriters,strategicplanners,architects,engineers,attorneys,accountants,oranyothercontractornecessaryforanyotheraspect(e.g.,financial,abatementandSection3)fortheproject;

6. DuringtheInitialOperatingPeriod,operatingexpensesofaPublicHousingProject(orpublichousingunitsinaMixed-FinanceDevelopment)(1)frominitiallease-upuntilOperatingFundsarereceivedfromHUDfortheprojectand(2)priortoinitialoccupancy,salariesofpersonsresponsibleforselectingtenantsand/orhandlingtenantaccounts,costofstationery,forms,andofficesuppliesusedinoperationofaproject;

7. Predevelopmentandplanningcostssuchasmarketstudy,survey,title,applicationsforfunding and associated fees, planning costs, including architectural and engineering fees, consultingfees,permitfees,inspectioncosts,costsofsubmittingfundingapplications(including consultants such as grant writers), and housing surveys;

8. Contractorssuchasabatement,remediation,demolition,construction,siteandinfrastructurecontractors,aswellastheirfeesandtheunderlyingwork(includingdemolition,grading,sanitarysewers,stormsewers,waterdistributionsystems,gasdistributionsystems,electricaldistribution);

9. Costsassociatedwithundertakingacostcertification;

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10. FinancingcostsassociatedwiththeDevelopmentactivities;

11. Structures,fixtures,associatedamenitiessuchasparkinglots,playgrounds,laundries,childcarecenters,communitybuildings,NeighborhoodNetworkscomputercenters,andspaceforservicecoordinatorsandcommunityroomsforresidentorganizations;

12. AdministrativecostsattributabletoaspecificDevelopmentproject,solongastheyfallwithinthecostlimitsasfurtherdescribedinSection2.4.ThePHAisprohibitedfromtakinganAdministrationFeeinconnectionwithaDevelopmentproject;and

13. CostsassociatedwithundertakingaPhysicalNeedsAssessment(PNA). Note on non-dwelling space: If a community facility will be operated by an outside service provider, the PHA shall provide for HUD pre-review all leases of such space and shall maintain on file, for auditing purposes as requested by HUD, a copy of the agreement with the service provider indicating that the provider agrees to furnish, equip, operate, and maintain the facility, as well as provide insurance coverage.

2.3. Financing.

Debtandfinancingcosts(e.g.,originationfees,interest)incurredbyaPHAforDevelopmentorModernizationofPublicHousingProjects,includingMixed-FinanceDevelopment,asfurtherdescribed in Chapter 9; the Capital Fund Financing Program (CFFP), as further described in Chapter11;andanyotheruseauthorizedunderSection30ofthe1937Act.

Eligible financing costs include, but are not limited to, the costs of:

1. Preparingapplicationsforfunding(suchasforaChoiceNeighborhoodsgrantorataxcreditallocation),whetherornotthefundingisawarded;

2. Legal services for the PHA;

3. Constructionperiodinterest;

4. Duediligencesuchasmarketstudy,environmentaltesting,title,andsurvey;

5. Fairness opinion; and

6. OtherDevelopmentandModernizationactivitiesnecessarytoobtainfinancing.

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2.4. Modernization and Physical Work

Modernization.ModernizationincludesalleligibleactivitiesdescribedinthisSectionexceptforDevelopment and Financing.

Physical Work. SeveralEligibleActivitiesauthorizedby24CFR§905.200(b)maybegroupedtogetherasphysicalwork,thatis,workthatisdoneonthephysicalstructures,site,andgroundsofapublichousingpropertyorstructure.Theyare:demolition,reconfiguration,emergencyactivities,energyefficiency,non-routinemaintenance,plannedcodecompliance,andvacancyreduction.

Eligible physical work costs include, but are not limited to:

1. Demolition costs are those costs needed to demolish dwelling units or non-dwelling facilities,asapprovedbyHUD,otherrelatedcostsforactivitiessuchasrelocation,clearing,andgradingthesiteafterdemolitionorpriortodevelopment,andsubsequentsiteimprovementstobenefittheremainingportionoftheexistingPublicHousingProperty,asapplicable.RehabilitationthatishistoricallydescribedintheCapitalFundProgramandpreviousprogramsas“modernization”canincludedemolitioncosts.Developmentandrelatedcoststodevelopdwellingunitsornon-dwellingfacilitiesapprovedbyHUDcanincludecostsforactivitiessuchasrelocation,clearing,andgradingthe site.

2. Reconfiguration is the altering of the interior space of buildings (e.g., moving or removing interior walls to change the design, sizes, or number of units). Reconfigurationcostsarethosecostsneededtomodifyexistingdwellingunitstounitswithdifferentbedroomsizesortoanon-dwellinguseandmayincludetheexpansionofexistingdwellingspacetoenlargeroomsizes,providestorage,oraddadditionalbedrooms.Dependingonthescopeoftheworkandresulttounitcounts,reconfigurationmayneedtobeconsideredDevelopmentwork.

3. Planning Costs arethosecostsrelatedtoaPublicHousingModernizationorDevelopment Project, including architectural and engineering fees (such as costs of inspection,materialstests,andsoiltests),consultingfees,permitfees,inspectioncosts,costsofsubmittingfundingapplications(includingconsultantssuchasgrantwriters),surveys,boringsandsoiltestpits,photographs,blueprints,andspecifications.

4. Site Acquisition costs related to a Public Housing Development Project, including amountspaidforlandandexistingimprovements,includinganyamountsdisbursedfor prior-year taxes and deducted from the purchase price, and amounts disbursed for currenttaxesproratedtothedateofacquisition,thecostofboundary,propertyline,topographical,andutilitysurveys,includingmapsandperimeterdescriptions;thecostofmonumentsandlandmarks;andthecostofallblueprintsandworkproductfurnishedbythesurveyor,appraisals,titleinformationsuchaslegalservices,abstracts,titlecertificates,titlecommitmentsandpolicies,andothercostsinconnectiontherewith,legalcosts,includingthoserelatedtocondemnationproceedings.

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5. Site Improvement costs related to a Public Housing Modernization or Development Project, including:

• Grading.Thecostofstrippingtopsoil,andthecutting,filling,backfilling,andgradingnecessarytobringtheentireareaoutsideofthebuildingstothesubgrade levels of paved, surfaced, and planted areas.

• Sanitary Sewers. The cost of sanitary sewers, including the cost of normal excavation,backfilling,piping,manholes,cleanouts,sewagepumping,anddisposalfacilities,branchesandconnectionsuptobutoutsideofbuildingwalls,carryingsuchbranchesandconnectionsthroughbuildingsenroutetootherbuildings.

• StormSewers.Thecostofstormsewers,includingnormalexcavationandbackfill,piping,manholes,streetcatchbasinsandinlets,yardcatchbasinsandinlets, and cleanouts.

• WaterDistributionSystem.Thecostofwaterdistributionsystems,includingnormalexcavationandbackfill,piping,valvesandboxes,hydrants,curbcocksandboxes,yarddrinkingfountains,manholes,andmastermeterinstallation.

• GasDistributionSystem.Thecostofgasdistributionsystems,includingnormalexcavationandbackfill,piping,valvesandboxes,curbcocksandboxes,drippots,regulators,andmastermeterinstallations.

• ElectricDistributionSystem.Thecostofelectricdistributionsystems,includingnormalexcavation,backfill,overheadlinesandpoles,undergroundlines,transformers,transformervaults,yardlights,mastermeterinstallations,aswellasthecostofbranchesandconnectionsuptobutoutsideofbuildingwalls,andthecostofcarryingsuchbranchesandconnectionsthroughbuildingsenroutetootherbuildingsandanycostsofstreetlightingandfireandpolicealarmsystems.

• CorrectionofAbnormalSubsoilConditions.Thecostofabnormalexcavationresultingfromunusualsubsoilconditions,suchasrock,muck,water,quicksand,andoverandabovethecostfornormalroughgradingandexcavationwork.

• ExcessDwellingandNon-dwellingFoundations.Thecostofexcessfoundationworkinconnectionwithbuildings,utilities,andothersiteimprovementswherethe unusual character of the subsoil or site topography requires piling, caissons, underpinnings,orveryunusualdepthoffootings.

• Paved Areas. The cost of streets and alleys, including the cost of sub-grading, paving,curbs,curbandgutters;thecostofwalks;thecostofconstructingdriveways,parkingareas,playgrounds,andothersimilarsurfacedareas.

• FinishedGrading,Lawns,andPlanting.Thecostofsubgradepreparation,topsoiling,seeding,sodding,planting,includingtreesandscrubs,andotherlandscaping.

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• Miscellaneous.Thecostofbuildingretainingwallsandbulkheads,structuralplaygroundfacilities(suchasspray-pools),projectsignage,fences,garbagestations,andothersimilarappurtenances,andcostofbenches,clotheslines,andflagpoles,whenpermanentlyinstalled.

6. Dwelling Structure costs related to a Public Housing Development Project, including:

• General.Thecostofnormalexcavationandbackfill,normalfoundationsandother structural costs of dwelling buildings and spaces, including incinerators, laundryfacilities,closetspaces,halls,corridors,entrancelobbies,equipmentspaces,perambulatorandothertenantstoragespaces.Also,thecostoffixedcabinets,cupboards,shelving,andotherbuilt-infacilities.

• Plumbing.Thecostofallinteriorplumbing,gas,anddomestichotandcoldwaterinstallationswithindwellingbuildingwalls,piping,fixtures,bathroomaccessories,domestichotwaterheaters,circulatingpumps.Individualgasandwater meters should also be charged to this account.

• Heating.Thecostofallheatinginstallationswithindwellingbuildingwallsoringrouporcentralplants,piping,ducts,radiators,vents,grills,fans,fixedheatingunits(suchasfloorfurnaces,paneltypewallheaters,orotherheatingunitsbuiltintothestructure),andallaccessories.Ifacentralheatingplantisprovided,includetheentirecostofplantstructure,equipment,heatingmains,domestichot water mains, and pipe tunnels. The cost of pipe tunnels carrying several typesofutilitylinesshallbeproratedinthesameproportionasthecostofthelines carried.

• Electrical.Thecostofinteriordwellingelectricalinstallation(fromservicedrops);conduits,wiringdevices,broadbandwiringinstallation,boxes,receptacles,mastermeter,individualmeter,switches,finishedelectricalhardware,circuitbreakers,lights,fixtures,andallotherappurtenances.

7. Dwelling Equipment costs related to a Public Housing Modernization or Development Project, including the cost of all ranges, refrigerators, and other equipment that meets buildingcodesbutarenotconnectedtoductsorpipesforthedistributionofheat,shades, screens, and other similar equipment used for public housing units.

8. Non-dwelling Structure costs related to a Public Housing Modernization or Development Project,includingthecostofstructures,plumbing,heating,ventilating,andelectricalinstallationforadministrationbuildingsandspacesforpublichousingadministrationbuildings,communitybuildings,orrelatedspacesfortheuseofthepublic housing program and public housing residents.

9. Non-dwelling Equipment costs related to a Public Housing Modernization or Development Project,suchasforpublichousingCapitalFundProgramrelatedofficefurniture and equipment, community space, or computers (including central processing, andperipheralequipmentsuchasinputandoutputmachines,datapreparationmachines, data storage machines, and major components that “upgrade” and meet the

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requirements of management improvements under the Capital Fund Program for the processing of computers and/or peripheral equipment).

10. Demolition costsincurredinconnectionwithaPublicHousingModernizationorDevelopmentProjectfordemolishingandclearingexistingstructuresandotherimprovements,disconnectingutilities,andclearingthesite.Note: See 24 CFR Part 970 forrequirementsrelatedtodemolitionofpublichousingunits.

11. Purchase or Leasing of Vehicles,subjecttotherestrictionsidentifiedinthissectionand2 CFR Part 200. The purchase or leasing of new or replacement vehicles is an eligible cost wherethevehicleisneededonafull-timebasistoadminister/implementthephysicalandManagementImprovementssetforthintheCFPBudget.Furthermore,inordertobeaneligiblecostunderManagementImprovements,thevehicle’susemustalsobejustifiedforaPublicHousingModernizationorDevelopmentProject,oronaPHA-widebasis,asisneededto:(1)upgradeorimprovetheoperationormaintenanceofthe Public Housing Projects, (2) promote energy improvements, (3) sustain the physical improvements,or(4)correctamanagementdeficiency.[24CFR§905.200(b)(7)]

• Non-Passenger Vehicles.

▪ Whereneededtocarryoutphysicalimprovements,assetforthonthePhysicalNeedsAssessments,5-YearActionPlan,andwithForceAccountLaboronly,thecostsofnon-passengervehicles,suchasatruck,isaneligiblecost.

▪ WhereneededtocarryoutManagementImprovements,thecostofnon-passengervehicles,suchasatruckorsnowplow,isaneligiblecost.NoprorationisneededwheresuchvehiclewillbeusedexclusivelyforCapitalFundeligibleactivities.

• Passenger Vehicles. The cost of new or replacement passenger vehicles is an eligiblecostonlywherethevehiclewillbeusedonafull-timebasistocarryoutthe Capital Fund Program. For example, a car or van is needed by the Capital Fundcoordinatororin-housearchitectonafull-timebasistovisitworksitesortotraveltoresidentmeetingsrelatedtoCapitalFundactivities.Whenpassengervehiclesareneededonlessthanafull-timebasistocarryouttheCapitalFundProgram, the cost of the passenger vehicles are ineligible Capital Fund costs, but areeligibleOperatingFundcoststotheextentthatthevehiclesareusedonafull-timebasisforoperatingandmanagementofthePublicHousingProjectsandmeet the requirements of 2 CFR Part 200.

12. Emergency Activities.CapitalFundrelatedactivitiesidentifiedasEmergencyWork.EmergencyWorkdoesnotneedtobecoveredbyanapproved5-YearActionPlan.UpondeterminingtheneedforEmergencyWork,aPHAshouldperformtheworkandamendtheAnnualStatementbymakinganotethattheworkconstitutesEmergencyWorkforwhich no HUD preapproval is required.

13. Energy Efficiency.Activitiesdesignedtopromoteenergyconservationandefficiency

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measures,includinganyofthefollowingunlesstheseworkitemsarepartofEnergyPerformanceContract(EPC)financingapprovedandreceivingcorrespondingincentivesunder24CFR990.185oraspartofanEPCSection30approval:

• New or updated Energy Audits, but only to the extent that Public Housing OperatingFundsarenotavailableandtheauditispartofaCapitalFundprogram;

• ImplementationofanyenergyandwaterconservationmeasureidentifiedintheEnergy Audit;

• Integratedutilitymanagementandcapitalplanning;

• Installationoffixturesorfittingstoincreaseenergyandwater-useefficiency;

• InstallationanduseofEnergyStarappliancesaspartofareplacementprogramandinacost-effectivemanner;and

• Automationofutilityandenergymanagementsystems,includingchangingfrommaster metering to individual meters as part of a Capital Fund Program.

14. Non-routine Maintenance.Workitemsthatordinarilywouldbeperformedonaregularbasis in the course of property management and maintenance, but have become substantialinscopebecausetheyhavebeenpostponedandinvolveexpendituresthat would otherwise materially distort the level trend of maintenance expenses. Theseactivitiesalsoincludethereplacementofobsoleteutilitysystemsanddwellingequipment.

Note: A PHA should analyze carefully the appropriateness of any premature replacement of serviceable building components, systems, equipment, or materials. Generally, a PHA should not undertake premature replacements except where a payback analysis indicates that the replacement will be cost-effective, assuming a simple payback term of 10 years or less.

15. Planned Code Compliance.Buildingcodecomplianceincludesdesignandphysicalimprovement costs associated with compliance with a) local building code or the UniformPhysicalConditionStandards(UPCS)underPHAS,b)anationalbuildingcode,suchasthosedevelopedbytheInternationalCodeCouncilortheNationalFireProtectionAssociation,andc)the2009InternationalEnergyConservationCode(IECC),orASHRAEstandard90.1-2010,“EnergyStandardforBuildingsExceptLow-RiseResidentialBuildings,”formultifamilyhigh-rises(fourstoriesorhigher),orasuccessorenergycodeorstandardthatHUDadoptsfornewconstruction.

16. Vacancy Reduction. Physical improvements to reduce the number of vacant public housingunits,butexcludingcostsforroutinevacantunitturnaroundsuchaspainting,cleaning,andminorrepairs.VacancyreductionactivitiesmustremedyadefinedvacancyproblemasdetailedinavacancyreductionprograminthePHA’s5-YearActionPlan.

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2.5. Soft Costs.

SeveralEligibleActivitiesauthorizedby24CFR§905.200(b)maybegroupedtogetherassoftcosts,thatis,eligibleactivitiesandcoststhatdonotimpactthephysicalstructures.Theyare:economicself-sufficiency,ManagementImprovements,residentrelocationandmobilitycounseling, and safety and security.

Eligible soft costs include, but are not limited to:

1. Economic Self-Sufficiency. Capital expenditures to facilitate programs to improve the empowermentandeconomicself-sufficiencyofpublichousingresidents,includingcostsforresidentjobtraininganddevelopmentofresident-ownedbusinessesactivitiestoenableresidentsandtheirbusinessestocarryoutCapitalFund-assistedactivities.

2. Management Improvements. Noncapitalactivities,asdescribedinmoredetailatAppendix2,whichcanbeProject-specificorPHA-wideimprovements,thatareneededto1)upgradeorimprovetheoperationormanagementofthePHA’sPublicHousingProjects,2)promoteenergyconservation,3)sustainphysicalimprovementsatthoseprojects,or4)correctmanagementdeficiencies,identifiedbyHUD,anaudit,orthePHAitself.ThesemanagementdeficienciesmaybeidentifiedbythePHA,HUD,oraPHAauditor.ManagementImprovementsareEligibleActivitiesonlyfortheimplementationperiod of the physical improvements, unless a longer period (as proposed by the PHA and approved by HUD) is clearly necessary to achieve performance targets. However, that period may not exceed 4 years. Note: In order to fund Management Improvements with Capital Funds, a PHA must be able to demonstrate, upon request by HUD, the linkagebetweentheManagementImprovementandthecorrectionofanidentifiedmanagementdeficiency,includingsustainingthephysicalimprovements.

Eligible training and technical assistance activities include, but are not limited to, the following:

• TrainingforPHApersonnelinoperationsandprocedures,includingresidentselection,rentcollection,andeviction;

• ImprovementstothePHA’smanagement,financial,andaccountingcontrolsystems;

• TechnicalassistancetoaResidentCouncilorResidentManagementCorporation(RMC)toassessfeasibilityofcarryingoutmanagementfunctionsforaspecificproject or projects;

• Trainingresidentsinskillsdirectlyrelatedtotheoperationandmanagementofthedevelopment(s)forpotentialemploymentbytheRMC;

• TrainingRMCboardmembersincommunityorganization,boarddevelopment,and leadership;

• CostsassociatedwiththeformationofanRMC;

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• CoststopromotemoreeffectiveresidentparticipationintheoperationofthePHA’sCapitalFundactivities,includingcostsforstaffsupport,outreach,training,meetingandofficespace,childcare,transportation,andaccesstocomputersthatare modest and reasonable; and

• Developmentandimplementationofimprovedapplicantscreeningprocedures.

3. Resident Relocation and Mobility Counseling Due to Capital Fund Activity. Relocationandotherassistance(e.g.,reimbursementtoaffectedresidentsofreasonableout-of-pocketexpensesincurredinconnectionwithtemporaryrelocation,includingthecost of moving to and from temporary housing and any increase in monthly rent/utilitycosts)asmayberequiredorpermittedbyPublicHousingRequirementsforpermanentortemporaryrelocation,asadirectresultofmodernization,development,rehabilitation,demolition,disposition,reconfiguration,acquisition,anemergency,orNon-PresidentiallyDeclaredNaturaldisaster.

Eligible relocation costs include costs incurred for the relocation of public housing residents from the site of a low-income housing project in connection with Development or Modernization. Such costs include, but are not limited to:

• Public housing residents. Moving expenses and direct losses of property, and for additionalrelocationpaymentstoassistsuchpersonstoacquiredecent,safe,and sanitary dwellings;

• Directexpensesforthecostofservicesincidenttotherelocationofpublichousingresidents,includingthesalariesofadministrativepersonnelassignedfull-timedutiesrelatedtotherelocationofpublichousingresidents;

• SettlementcoststodisplacedoccupantsforreasonableandnecessaryexpensesincurredinconnectionwithPHAacquisitionorredevelopmentofproperty(e.g.,recording fees and transfer tax); and

• Replacement Housing Payments for an owner-occupant of a single or two-family dwelling acquired by the PHA.

2.6. Safety and Security.

Capital expenditures designed to improve the security and safety of residents. Note: Capital FundsmaynotbeusedtofundthesalariesandbenefitsofsecurityguardsorongoingsecuritycostsasManagementImprovementsaftertheendoftheimplementationperiodofthephysicalimprovements.

1. Eligible activities include, but are not limited to, the following:

• Security cameras;

• Security lights;

• Securityequipment(e.g.,barsforwindows,newdoorsandlocks,fencing);

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• Surveillance equipment;

• Access control systems;

• Training of in-house security personnel as a Management Improvement;

• Installationofsecurityhardwareandadditionallighting;

• Creationofdefensiblespacethroughredesignofentrances,commonareas,orother structural elements;

• Provision of fencing around the perimeter of the development;

• Conversionofadwellingunitintonon-dwellingspaceorconstructionofnon-dwelling space for use by project security and safety management, voluntary tenant patrols, security guards, or local law enforcement agencies; and

• Stabilizationofbuildingsthroughconsolidatingoccupiedunitsintoaspecificareaandsecuringvacantunits/floors.

2.7. Other Costs.

SeveralEligibleActivitiesauthorizedby24CFR§905.200(b)maybegroupedtogetherasothercosts,generallyCapitalFundeligiblecoststhatdonotimpactthephysicalstructuresorfitinthesoftcostsasdescribedabove.

Administrative Costs. For PHAs that have not converted to asset management pursuant toSupplementtoHUDHandbook7475.1REV.,CHG-1,FinancialManagementHandbook,AdministrativeCosts(BLI1410)thatarenecessaryfortheplanning,design,implementation,and monitoring of the physical and Management Improvements are eligible costs and include the following:

• Salaries. The salaries of nontechnical and technical PHA personnel assigned full-timeorpart-timetoCapitalFundactivitiesareeligiblecostsonlywherethescopeandvolumeofsuchworkarebeyondthatwhichcouldbereasonablyexpectedtobe accomplished by such personnel in the performance of their non-Capital Fund duties.ThePHAshallproperlyapportiontotheappropriateprogrambudgetanydirectchargesforthesalariesofpersonnelassignedfull-orpart-timetoCapitalFundactivities.ThePHAmayallocatesalaryexpensethroughuseofthetimesheetmethod,assetforthin2CFRPart200.TheallocationmethodshallreflectafairdistributionbetweenallprogramsadministeredbythePHAforwhichthereisacostimplication.ThecostallocationmethodologyissubjecttoHUDreviewand approval. Any direct charges to the Capital Fund Program for salaries shall resultinanappropriaterevisiontothePHA’soperatingbudget.

• EmployeeBenefitContributions.PHAcontributionstoemployeebenefitplansonbehalfofnontechnicalPHApersonnelareeligiblecostsinproportiontotheamountofsalarychargedtotheCapitalFundProgram.ThecostofterminatinganemployeehiredonatemporarybasistoworkonCapitalFundactivitiesis

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aneligiblecost,suchastheexpenseofunemploymentcompensationwhererequiredbystatelaw.ThePHAshallincludeanestimateofthesecostsintheCFPBudget.

• PreparationofDocuments.EligiblecostsincludethepreparationofCapitalFundProgram required documents.

• ResidentParticipation.EligiblecostsincludethoseassociatedwithensuringthemeaningfulparticipationofresidentsinthedevelopmentoftheAnnualSubmissionand5-YearActionPlan,andtheimplementationandmonitoringoftheapprovedCapitalFundprogram.SuchcostsmayincludetransportationandbabysittingcostsnecessaryforresidentattendanceatactivitiesrelatedtotheCapital Fund Program.

• LitigationExpenses.EligiblecostsincludefeespaidtoattorneysforthehandlingoflitigationrelatedtotheCapitalFundprogram,whereapprovedbytheappropriateHUDCounsel.SeeHUDOfficeofGeneralCounselHandbook1530.1rev-5.PriorHUDapprovalisrequiredbeforethePHAmayinitiatealawsuit,incurlitigationexpensesorenterintosettlements.SuchcostsarechargedtoLegalFeesandCosts(BLI1430).

Capital Fund Program Fee (CFP Fee). [RESERVED]

1. Audit.CostsofthePHA’sannualauditattributabletotheportionoftheauditcoveringthe Capital Fund Program in accordance with Chapter 7.

2. Legal Costs.LegalcostsassociatedwithEligibleActivitiesfundedundertheCapitalFundProgram,includingcostsrelatedtopreparingpropertydescriptionsfortheDOTorDORC,zoning,permitting,environmentalreview,procurement,contracting,DevelopmentactivitiesdescribedinChapter9,andreasonablefeespaidtoattorneysforhandlinglitigationrelatedtotheCapitalFundProgram.Note: Such costs are charged to Legal ExpenseandCosts(BLI1430).

3. Homeownership.Activitiesassociatedwithpublichousinghomeownership,asapprovedby HUD, including the following:

• DevelopmentactivitieslistedinSection2.2.AaboveandfinancinguseslistedinSection2.2.Babove,inserviceofapublichousinghomeownershipprogram;

• Modernizationofexistingpublichousingunitsforsaletoqualifiedhomebuyers;

• Feasibility study for conversion of rental units to homeownership;

• Preparationcostsforapplicationtoconvertrentalunitstohomeownership;

• Constructionoracquisitionofunits;

• Demolitiontomakewayfornewconstruction;

• Abatement of environmentally hazardous materials;

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• Site improvements;

• Constructionorpermanentfinancing,suchaswrite-downsfornewconstruction;

• Acquisitioncostswithorwithoutrehabilitation;

• Homebuyer assistance;

• Relocationassistanceandmobilitycounseling;

• Homeownership counseling;

• Administrativeandmarketingcosts;

• Down payment assistance;

• Closing cost assistance; and

• Subordinate Mortgage loans.

2.8. Ineligible Activities.

ThisfollowinglistdescribesineligibleactivitiesandcostsfortheCapitalFundProgram:

1. Not Related to Public Housing. PHAs may not spend Capital Funds on costs that are not associatedwithaPublicHousingDevelopmentorModernizationProject.

2. Notin5-YearActionPlan.PHAsmaynotspendCapitalFundsonactivitiesandcoststhatarenotincludedinthePHA’s5-YearActionPlan(N.B.EmergencyWorkorNon-PresidentiallyDeclaredNaturalDisasterassistancethatisnotidentifiedinthe5-YearActionPlanisaneligiblecost).

3. Not Modest Design. PHAs may not spend Capital Funds on improvements or purchases thatarenotconsideredmodestindesignandcostbecausetheyincludeamenities,materials, and design in excess of what is customary for the locality, as determined by thePHAandFieldOffice.Theseinclude,butarenotlimitedto,swimmingpools,saunas,whirlpool baths, and hot tubs.

4. NotEligiblebasedonOMBRegulatoryandCircularGuidance.PHAsmaynotspendCapitalFundsonanycostsnotauthorizedin2CFRPart200(formerlyOMBCircularA-87and2CFRPart225),includingindirectAdministrativeCosts,indemnification,andcapitalizing reserves.

5. OperatingAssistance.PHAsmaynotspendCapitalFundsonPublicHousingoperatingassistance,exceptasprovidedthroughtransferstoBLI1406.

6. BenefittingOtherPrograms.Eligiblecoststhatexceedtheamountdirectlyattributableto the public housing units when the physical or Management Improvements, including salariesandemployeebenefitsandcontributions,willbenefitprogramsotherthanpublichousing,suchasSection8HousingChoiceVoucher,orlocalrevitalizationprograms.

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Forexample,theannualauditcoversthebreadthofthePHA’sactivitiessuchastheOperatingFund,CapitalFund,HousingChoiceVouchers,andnon-federally-fundedactivities.OnlyaproratashareoftheAuditcostattributabletotheCapitalFundmaybecharged to the Capital Fund.

7. Security Services. Ongoing security services, including:

• Contracts with local police departments including above baseline police services exceptwherepermittedbyHUDFYAppropriationsActs;

• Thesalariesandbenefitsforsecurityguards,patrols,orpoliceofficers(eitherfull-time,part-time,orafterhours);and

• The purchase or leasing of vehicles for security personnel.

8. SupportiveServices.Theprovisionofsupportiveservicestopublichousingresidents,including:

• Thesalariesandbenefitsorcontractcostsforserviceproviders,includingresidentcoordinators,casemanagers,socialworkers,nurses,choreserviceproviders,supplementalpoliceorprobationservicesproviders,andtutors;

• Healthandwellnessactivities;

• Educationalenrichmentandrecreationalactivities,includingsocialorganizations;and

• Jobdevelopmentandplacementservices,includingthecostofprofessionallicenses,certificationsandexams,andtransportationassistance.

9. Duplicate Funding. An otherwise eligible cost that is funded by another source and would result in duplicate funding; and

10. OtherActivities.AnyotheractivitiesandcoststhatHUDmaydetermineareineligibleonacase-by-casebasis,consistentwiththe1937Actanditsregulations.

2.9. Cost and Other Limitations.

Allocation of Costs with Other Programs.

WherethephysicalorManagementImprovementcostswillbenefitprogramsotherthanpublichousing,suchastheHousingChoiceVoucherprogramorlocalrevitalizationprograms,CapitalFund-eligiblecostsarelimitedtotheamountdirectlyattributabletothepublichousingprogram.

Modernization Cost Limits.

APHAmaynotmodernizeaPublicHousingProjectiftheModernizationcostsaremorethan90%oftheapplicableTDC,alsoknownasReasonableCost.AdditionalcostsnotsubjecttotheTDC(exceptionstoTDC)are

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• EmergencyWork;

• EssentialmaintenancenecessarytokeepaPublicHousingProjecthabitableuntilademolitionordispositionapplicationisapproved;or

• The costs of maintaining the safety and security of a site that is undergoing demolition.[24CFR§905.314(g)]

Administrative Cost Limits and CFP Fee.

• Administrative Cost Limits (for non-asset management PHAs). A PHA that is not subject to asset management shall not budget or expend more than 10% of its annualCapitalFundgrantonAdministrativeCosts,inaccordancewiththe5-YearActionPlan.

• CFP Fee (for asset management PHAs) [RESERVED] ModernizationFeeCap.Formodernizationwork,thePHAshallnotbudgetorexpendmorethan10%ofitsannualCapitalFundgrantonAdministrativeCosts,inaccordancewithits5-YearActionPlan.The10%limitexcludesanycostsrelatedtolead-basedpaintorasbestostesting,in-housearchitecturalandengineeringwork,orotherspecialAdministrativeCostsrequiredbystateorlocallaw.

• Development.ForDevelopmentworkwithCapitalFundandRHFgrants,theadministrativecostlimitchargeablebyanassetmanagementPHAis3%ofthetotalprojectbudget,or,withHUD’sapproval,upto6%ofthetotalprojectbudget. [24 CFR § 905.314(h)]

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Management Improvement Cost Limits.

InordertodirectmoreCapitalFundstowardsmodernization,theCFPFinalRulereducedthemaximum percentage of an annual Capital Fund grant that may be used for Management Improvementsidentifiedinits5-YearActionPlanfrom20%to10%,withscheduledannualreductionstotransitiondownward,asfollows:

Federal Fiscal Year Maximum % allowed

2014 18%2015 16%2016 14%2017 12%

2018 and later 10%

Force Account Labor (including materials and equipment).

A PHA may use Force Account Labor, including materials and equipment for Development and Modernizationactivitiesifincludedina5-YearActionPlanthatisapprovedbythePHABoardof Commissioners and HUD. HUD approval to use Force Account Labor, including materials and equipment, is not required when the PHA is designated as a High Performer under PHAS. [24 CFR § 905.314(j)]

RMC Activities.

WhentheentireDevelopment,financing,orModernizationactivity,includingtheplanningandarchitecturaldesign,isadministeredbyanRMC,thePHAshallnotretainanyportionoftheCapitalFundsforanyadministrativeorotherreasonunlessthePHAandtheRMCprovideotherwisebycontract.[24CFR§905.314(k)]

Transfer of Capital Funds for Operating Costs.

APHAmayuseCapitalFundsforOperatingFundpurposesonlyifitisincludedinthe5-YearActionPlanthatisapprovedbythePHABoardofCommissionersandHUD,subjecttothelimitsdescribedinparagraphsG.1andG.2,below.CapitalFundsidentifiedinthe5-YearActionPlantobetransferredtooperationsareobligatedoncethefundshavebeenbudgetedanddrawndownby the PHA. Once such transfer of funds occurs, the PHA must follow the requirements of 24 CFR Part 990 with respect to those funds.

UnlessotherwiseprovidedinannualHUDAppropriationAct:

• Large PHAs. A PHA with 250 or more public housing units may use no more than 20%ofitsannualCapitalFundgrantforactivitiesthatareeligibleundertheOperatingFundat24CFRPart990.

• Small PHAs. A PHA with less than 250 public housing units, that is not designated as troubled under PHAS, may use up to 100% of its annual Capital Fund grant for activitiesthatareeligibleundertheOperatingFundat24CFRPart990,except

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thatthePHAmusthavewrittendeterminationsandprovidesuchrecordsofthisdeterminationuponHUDrequestthattherearenodebtservicepayments,significantCapitalFundneeds,oremergencyneedsthatmustbemetpriortotransferring100%ofitsCapitalFundstoOperatingFundpurposes.[24CFR§905.314(l)] Note:ASmallPHAmayalsouseitsOperatingFundsforCapitalFundProgrampurposesunderthesameconditions.

• MovingtoWorkPHAs. PHAsparticipatingintheMovingtoWork(MTW)program,subjecttothetermsoftheirspecificMTWAgreementswithHUD,haveauthoritytocombineCapitalFundswithOperatingFundsandSection8voucherfundsforMTWpurposes.

Total Development Cost (TDC) Limit.

The TDC limit is calculated by HUD according to 24 CFR §905.314(c). HUD typically publishes updated TDC and HCC limits annually. The TDC limit is the maximum amount of Public Housing Capital Assistance that may be used for HCC and Community Renewal Costs on a Project, absentawaiverfromHUD.PublicHousingCapitalAssistanceisdefinedasassistance provided byHUDunderthe1937Actinconnectionwiththedevelopmentandmodernizationofpublichousing,includingCapitalFundassistanceprovidedunderSection9(d)ofthe1937Act,publichousingdevelopmentassistanceprovidedunderSection5ofthe1937Act(priortoQHWRA),OperatingFundassistanceusedforcapitalpurposesunderSection9(g)(2)or9(e)(1)(I)(withHUD’sapprovalofsuchfinancingofrehabilitationanddevelopmentofpublichousingunits)ofthe 1937 Act, and HOPE VI grant assistance, as well as other funds deemed to be Capital Fund assistanceinthefutureunderapplicablestatutes,regulations,ornotices.

• HCC refers to the HUD-calculated cap on use of Public Housing Capital Fund Assistancefordwellingunithardcosts.Specifically,HCCisthesumofthefollowing HUD-approved costs related to the development of a Public Housing Project:dwellingunithardcosts(includingconstructionandequipment),builder’soverheadandprofit,thecostofextendingutilitiesfromthestreettothePublicHousingProject,finishlandscaping,andthepaymentofDavis-Baconwagerates(suchasgeneralcontractor)andfinishlandscaping.

• Community Renewal Costs describes allowable development costs, other than HCC, that may be funded by Public Housing Capital Assistance. The maximum amountisthedifferencebetweenallowedTDCandcalculatedHCC.Specifically,it is the sum of the following HUD-approved costs related to the development ofaPublicHousingProject:planning(includingproposalpreparation),administration,siteacquisition,relocation,demolitionof,andsiteremediationofenvironmental hazards associated with public housing units that will be replaced ontheProjectsite,interestandcarryingcharges,off-sitefacilities,communitybuildingsandnon-dwellingfacilities,contingencyallowance,insurancepremiums,anyinitialoperatingdeficit,onsitestreets,onsiteutilities,andothercosts necessary to develop the Project that are not covered under the HCC.

PHAsmayrequestanexceptionfromtheTDClimitonlyforenergyefficiency,integratedutility

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management,capitalplanning,andothercapitalandmanagementactivitiesthatpromoteenergyconservationandefficiency.HUDwillexaminetherequestforTDCexceptionstoensurethatitwouldbecost-effective,soastoensurethatup-frontexpendituressubjecttotheexceptionswouldbejustifiedbyfuturecostsavings.HOPEVIgranteeswillbeeligibletorequestaTDCexceptionforpublichousingandHOPEVIfundsawardedinFFY1996andprioryears.

HUD determines the HCC limit pursuant to 24 CFR §905.314(d) and typically publishes it annually along with an updated TDC limit.

TheHCClimitdoesnotapplytotheacquisitionofexistinghousing,whetherornotsuchhousingwillberehabilitated.However,theTDClimitdoesapplytosuchacquisition.TheHCClimitdoesnotapplytotherehabilitationofPublicHousingProjectsexceptforMixed-FinanceModernization.

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Chapter 3 Planning, Annual Submission, and Distribution of Funds

3.1. Overview.

ThischapterdescribestheCapitalFundplanningprocessandtheroleofHUDinassistingPHAsto determine the extent of their capital needs and the available strategies for achieving them.

Planning. The Capital Fund planning process begins with a Physical Needs Assessment (PNA) andEnergyAudittodeterminetheextentofthePHA’scapitalneeds.ThePHAshouldalsoconsideritsPHASscoreandtheprogressmadesinceitslastHUD-approved5-YearActionPlanand PHA Plan. From these, the PHA selects the public housing projects to be rehabilitated or redeveloped,multi-projectmodernizations,orothereligibleactivitiestobeconductedwithanticipatedCapitalFunding.Inpreparationforsubmittingtheplansdiscussedinthischapter,thePHAthenconductsoutreachmeetingswithpublichousingresidentsandresidentadvisoryboards(RABs),andpostsitsCapitalFundbudgetsforatleast45days.

Capital Fund Program Annual Submission.Eachyear,aPHAmustmakeaCapitalFundsubmission, as further described in this chapter, in order to receive Capital Fund grants. The keyelementoftheCapitalFundsubmissionisthe5-YearActionPlan,whichdescribesthePHA’s5-yearplansforCapitalFundactivities,andincludesabudgetforeachyearinthe5-yearActionPlan,whichdetailsspecificworktobeperformedineachyear.

Decoupling from PHA Plan. Prior to the CFP Final Rule, Capital Fund budgets were part of the noticeandapprovalprocessforthePHAPlan,includingthe5-YearPlanandAnnualPlan,asdefinedin24CFRPart903.TheCFPFinalRule“decoupled”theCapitalFundbudgetsfromthePHAPlanandnowrequirestheCapitalFundbudgetstobesubmittedalongwiththeannualCFPACCAmendmentandsupportingdocuments.Note: The two hearings required for each type of plan(thePHAPlanandthe5-YearActionPlan)canstillbeheldtogetherforthepurposesofRABconsultationandfulfillingthenoticeandcommentperiod,orcanbeheldseparately.

Asaresultofthedecoupling,thereisnodistinctionbetweenQualifiedandNonqualifiedPHAsunder the Capital Fund Program. All PHAs have the same annual submission requirements.

Approval, Drawdown, and Expenditure.TheFieldOffice’sapprovalofaCapitalFundSubmission does notconstituteapprovaltoundertakeactivitiesidentifiedintheCapitalFundSubmissionthatrequireseparateapprovals,includingdemolition,disposition,development,andsecuringsecondaryfinancingwithpublichousingrealorpersonalpropertyincludingapprovalsundersection30ofthe1937Act.SeeChapter11ofthisGuidebook.

DrawdownsandexpendituresarenotpermitteduntilanEnvironmentalReviewhasbeencompletedbytheResponsibleEntity(under24CFRPart58)orHUD(under24CFRPart50).DocumentationfromaResponsibleEntityofanexemptionorcategoricalexclusionfromenvironmental review must be obtained before such funds can be released. A PHA may processaseparaterequestfordeterminationofexemptionorcategoricalexclusiontoobtainthosefundsinadvanceofenvironmentalreviewfortheremainderoftheactivitiescoveredby

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thegrant.ThePHAmustprovideevidenceoftheResponsibleEntity’sdocumentationoftheexemptionorcategoricalexclusiontothefieldofficetoaccessthefunds.

Special Requirements for Moving to Work PHAs. Requirements regarding planning, annual submission,anddistributionoffundsforPHAsparticipatingintheMovingtoWork(MTW)programaresetforthintheMTWAgreementandrelatedguidanceissuedbyMTWprogramstaffwithintheOfficeofPublicHousingInvestments(OPHI)atHeadquarters,asfurtherdescribed in Chapter 10.

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Capital Fund Program (CFP) Annual Formula Grant Process

Step 1. Public Housing Authority (PHA) PreparationforAnnual Capital Fund Formula Grant Submission

Step 1. 1. 45DayNotice–postplannedCFPsubmission2. PublicHearing&ResidentAdvisoryBoard(RAB)Consultation3. BoardResolutionapproving5-yearactionplan(onfileifnottroubled)4. IMS/PICCertification5. DUNS renewal in the System for Awards Management (SAM) – DUNS Number and

CurrentSAMRegistration6. Physical Needs Assessment (PNA) – proposed submit every 5 years7. Energy Audit – every 5 years.

Step 2.ObligationEnd Date (OED)

Step 2. 1. AnnualContributionsContract(ACC)Amendment(s)2. PerformanceandEvaluationReport(P&EReport)3. 5-YearActionPlan(includinganannualbudgetforeachyearcoveredbythe5-Year

ActionPlan)4. StatementofSignificantAmendment5. AdditionalCertifications

a. DisclosureofLobbyingActivities–SF-LLLb. Civil Rights Compliance in a form prescribed by HUD;c. CertificationofPaymentstoInfluenceFederalTransactions(FormHUD-50071);

andd. CertificationofCompliancewithPublicHearingRequirementsinaform

prescribed by HUD.

Step 3. Expenditure End Date (EED)

Step 3. 1. FieldOffice(FO)confirmsEnvironmentalRequirementsaremet2. ExecutesACCAmendmentandmaintainsCFPrequiredpaperworkforrecords

management3. SpreadsinitialbudgetintheLineOfCreditControlSystem(LOCCS)andre-spreads

BudgetLineItems(BLI)accordingtoHUDapprovedbudget

Step 4. Grant Closeout

Step 4. 1. MaintainingobligationswithinBLIthresholds2. LOCCSMonthlyreporting3. EPICquarterlyreporting4. AnnualPerformanceandEvaluation(P&E)Report5. ObligationEndDate(OED)90%Obligatedwithin24MonthsofOSD6. Disbursement End Date (DED) 100% Disbursed within 48 Months of OSD

Step 5. Close out Procedure for Annual Capital Fund Formula Grant

Step 5. A. PHA1. SubmitsActualModernizationCostCertificate(AMCC)orActualDevelopmentCost

Certificate(ADCC)andP&EReportwithin90daysofDED.2. Includes AMCC and P&E Report in Audit, if necessary3. ContinuesMonthlyreportinginLOCCScontinuesuntilHUDplacesgrantin

“Pre-Audit” status in LOCCSB. B. Field Office1. Reviews, Approves AMCC/ADCC and P&E Report2. Enters Pre-Audit Date in LOCCS3. TransmitscompletedCloseoutpackagetoCFOFt.WorthAccountingCentertoplace

grant in Post Audit Status in LOCCS

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3.2. Planning – Physical Needs Assessment (PNA).

APNAidentifiesalloftheworkthataPHAwouldneedtoundertaketobringeachofitsProjectsuptotheapplicablemodernizationandenergyconservationstandards.APNAhelpsaPHAassessitsportfolio’scapitalneedstofacilitatecapitalplanningandtotakeadvantageofcapitalimprovementandspendingprioritizationopportunities.APNAalsoenablesHUDtomeasuretheimpactofannualCapitalFundappropriationsonthephysicalneedsofthepublichousinginventory.APNAcapturesthetotalneedsofaPHA,whilethe5-YearActionPlanonlyincludesworkitemsthePHAcanperformbasedonthefundingitreceives.

In order to receive future Capital Fund grants, PHAs will be required to comply with the PNA requirements found in the CFP Final Rule. The CFP Final Rule requires that Large PHAs (250 unitsandlarger),whichpreviouslyhadaPNArequirement,mustcontinuetoperformaPNAinorder to receive Capital Funds. However, Small PHAs (fewer than 250 units) will not be required toperformaPNAuntiltheissuanceofanoticeimplementingtherequirement,whichhasnotoccurredasofthewritingofthisGuidebook. HUDwillissueguidanceonthetimeandformatforsubmissionofaPNAinanotice(s)thatwillfollowpublicationofafinalruleonPNAsandenergy audits, and which will become an amendment to the CFP Final Rule.

Implementation of PNA Rule; Pending Changes.

In 2011, HUD issued a proposed rule ( 76 Federal Register 43219 (July 20, 2011)) that would establish standards for PNAs, but as of the date of publication of this Guidebook, no final rule has been issued; however, Congress has provided additional stipulations.

Section233oftheFederalFiscalYear2015HUDAppropriationsActprovides:“Noneofthe funds made available by this Act may be used to require or enforce the Physical Needs Assessment(PNA)”.Thissectionhascreatedsomeunderstandablequestionsandconcerns.Section233prohibitsHUDfromrequiringPHAstoconductaPNAduringFederalFiscalYear(FFY) 2015 and also prohibits HUD from enforcing a PNA requirement in FFY 2015. However, itdoesnotprohibittheuseofCapitalFundsorOperatingFundsbyaPHAtoperformaPNA.PHAsandotherHUDprogramsrelyuponaPNAtoaccesscreditmarketsandfortheirownlocalplanning.PHAsmayhavecontractualrelationshipswithprovidersoftheseservices,andthisisintendedtoclarifythatnothingintheAppropriationsActpreventsaPHAfromcontinuingthatrelationshipifithadplannedtouseFFY2015fundstopayfortheservices.PHAsshouldnotbe deterred from pursuing PNAs planned for capital planning purposes. Voluntary performance ofaPNAisnotprohibitedbytheAppropriationsAct.Further,section233doesnotmodifyorremovetheexistingrequirementintheCapitalFundregulationat24CFR905.300(a)forPHAstoperformaPNA;butdoespreventHUD’sabilitytorequireorenforcetheregulation.

Insupplementalappropriationdocumentation,CongressadvisesHUDtocontinueworkingon the PNA rule and requires HUD to provide a further report to Congress in March 2016 on HUD’seffortstoreducetheburdenofthePNAonPHAs.HUD’sfinalPNArulemakingisclosetopublication.However,itsimplementationastoFFY2015fundingislimitedbySection233.HUDremainscommittedtotheprincipleofcapitalplanningforpublichousingasakeycomponenttothe future of the program.

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3.3. Planning – Energy Audit.

AnEnergyAuditidentifiesthetypesandcostsofenergyuseinordertounderstandhowenergyisbeingusedandtoidentifyandanalyzealternativesthatcouldsubstantiallyreducecosts.AsufficientlydetailedEnergyAuditishelpfulinplanningeffectiveexpendituresofCapitalFundsasitcanbeusedtohelpholddownoperatingcosts,includingthecostofutilities,andensuresthatthelimitedfundsavailableforoperationsareusedasefficientlyaspossible.

Pending Changes. In 2011, HUD issued a proposed rule that would eliminate 24 CFR Part 965, SubpartCandbringEnergyAuditsintotheCapitalFund,butasofthedateofpublicationofthisGuidebook,nofinalrulehasbeenissued.

The proposed rule may be found at Public Housing Energy Audits: Proposed Rule, 76 Federal Register 71287 (Nov. 17, 2011).

3.4. Planning – Public Hearing.

ThepublichearingandaccompanyingnoticeandcommentperiodarekeyelementsininformingaPHA’sresidentsandthewidercommunityofthePHA’sgoalsanditsstrategyfor addressing capital needs. Among other things, it discloses changes in admissions and occupancypolicies,aswellasdevelopmentplansandnewPHApriorities.

All PHAs must conductapublichearingandconsultwiththePHA’sRABtodiscusstheCapitalFundSubmissionoranySignificantAmendment.Thehearingmustbeconductedatalocationthat is convenient to the residents served by the PHA.

The PHA may consolidate this hearing with the Annual Plan public hearing, or may conduct the two hearings separately.

Atleast45daysbeforethepublichearingistotakeplace,thePHAmust:

• MaketheCapitalFundSubmissionavailabletotheresidentsandtheRAB;

• Publishanoticeinformingthepublicthattheinformationisavailableforreviewandinspection,statingthatapublichearingwilltakeplaceontheCapitalFundSubmission,andthedate,time,andlocationofthehearing;and

• Conductreasonableoutreachactivitiestoencouragebroadpublicparticipationin the review of the Capital Fund Submission.

TheCapitalFundSubmissionmustincludeacopyoftherecommendationsmadebytheRAB(s)andadescriptionofthemannerinwhichthePHAaddressedthoserecommendations.

Timing of Public Hearing.

• If Capital Funds are distributed prior to the submission of the PHA Plan in the PHA’sfiscalyear,thenthePHAmayusethepublichearingfromitspreviousfiscalyear,solongasitemsinthe5-YearActionPlanwerecoveredinthathearing.ExceptwherepermittedthroughthefungibilityflexibilityidentifiedinChapter

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7ofthisGuidebook,thePHAmaynotfundworkitemsthathavenotbeenapprovedthroughtheRABconsultationandpublichearing.Suchnewworkitemsmust go through the public hearing process before being funded.

3.5. Planning – Pre-Submission Details.

Theadditionalpre-submissiondetailsidentifiedbelowensurethatthecorrectunitcountsareusedforcalculatingtheCapitalFundallocation,authorizingthePHAtoadoptthe5-YearActionPlanand/orrejectanyCapitalFundallocation,andensuringthatthePHAhasacurrentregistrationintheSystemforAwardManagement(SAM)forsubmission.

Certification of IMS/PIC Data.

Each year, aPHAmustcertifytoHUDtheaccuracyofthedataintheInventoryManagementSystem/PublicHousingInformationCenter(IMS/PIC)asofaReportingDateandmustfinalizethecertificationbyadeadlineestablishedbyHUD.AsfurtherdescribedinChapter4,theCapitalFundformulaisbasedontheunitinformationcertifiedbyPHAsanduncertifiedunitinformationforPHAsthatdonotcompletecertification,soitisimportantthatdatabeenteredcorrectlyandcertifiedbythedeadline.

IfaPHAhasnotcompletedcertificationofIMS/PICdatabythedeadline,HUDmaysuspendaccesstoallCapitalFundLOCCSaccountsforthatyearuntilthecertificationiscomplete.HUDwillruntheformulabasedonuncertifieddataandissueanACCAmendmentbutwillsuspendtheCapitalFundgrantuntilcompletionofthecertification.

HUDmayadjusttheCapitalFundgrantamountaftercertificationbutwillnotincreasetheamountfromtheamountresultingfromtheuncertifieddata.ObligationandExpenditureEndDates will not be extended as a result of any suspension.

Board Resolution.

APHAmusthaveacopyofaBoardResolutiononfileapprovingits5-YearActionPlan.OnlyPHAsthataretroubledunderSection6(j)ofthe1937Actmustsubmitacopyofthisresolutionin the Capital Fund Submission.

IfaPHAhasnotheldaboardmeetingonthe5-YearActionPlanforthecurrentfiscalyearatthetimetheCapitalFundgrantsareawarded,itmayusethepublichearingandboardresolutionfromitsmostrecent5-YearActionPlan.

IfaPHAdoesnothavea5-YearActionPlanapprovedbyitsBoardofCommissionersandHUD,HUD will reserve the Capital Funds and obligate to the PHA, but the PHA will not have access tothosefundsuntiltheboardresolutionisobtainedandHUDapprovestheCapitalFundSubmission.ObligationandExpenditureEndDateswillnotbeextendedasaresultofthissuspension.

DUNS Number and Current SAM Registration.

TheOfficeofManagementandBudgetrequiresthatallapplicantsforHUDfinancialassistancehaveaDunandBradstreetUniversalNumberingSystem(DUNS)numberthatisregisteredinthe

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System for Award Management (SAM).

In accordance with PIH 2011-60, all PHAs were required to obtain a DUNS number no later than April2012andtosubmitacertificationtotheirlocalFieldOfficetodemonstratecompliancewiththisrequirement.NofurtheractionisrequiredbyPHAstodemonstratethattheyhaveobtained the requisite DUNS number.

SAM,previouslyknownastheCentralContractorRegistrationorCCR,collects,validates,stores,and disseminates data in support of agency missions, including federal agency contract and assistance awards, and the electronic payment process.

AsofthedateofthisGuidebook,informationabouttheSAMregistrationprocessisavailableatwww.sam.gov,andtechnicalassistanceisavailablefromtheFederalHelpDeskatwww.fsd.gov.AshortguidetorenewingorupdatingaSAMregistrationisalsoprovidedatAppendix3.2.

ThePHA’sSAMregistrationmustbeupdatedannually.IfaPHAdoesnothaveacurrentSAMregistrationatthetimeCapitalFundsaredistributed,HeadquarterswillsuspendthePHA’saccesstothefundsuntilthePHAprovidesevidenceofitscurrentSAMregistrationtotheFieldOffice(forexample,acopyoftheconfirmationemailfromthePHA’sSAMrenewalorascreenshotofitsSAMregistrationexpirationdate).OncetheFieldOfficereceivessuchevidence,theFieldOfficewillreleasethesuspension,andthefundswillbeavailableforuse.Obligation and Expenditure End Dates will not be extended as a result of the suspension.

Rejection of Capital Fund Grant.

If a PHA elects to reject any Capital Fund grant, including any RHF grant, as further described in Chapter5,thePHA’sExecutiveDirectormustsendawrittenstatementtotheFieldOfficethatidentifiesthegrantnumberanddollaramountofthegrant(s)toberejected.

IfaPHAdoesnotsendawrittenstatementtotheFieldOffice,thegrantwillbeheldinreservefor90daysaftertheCapitalFundSubmissionduedate,afterwhichthegrantwillnolongerbeavailable to the PHA.

PHAsmusthaveonfilearesolutionfromtheBoardofCommissionersrejectingtheCapitalFundgrant(s) for the Federal Fiscal Year.

Summary of Planning Steps.Thefollowingchecklistsummarizesthekeyplanningcomponentsto be completed prior to preparing a Capital Fund Submission.

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Planning the Capital Fund Submission Yes N/APhysical Needs Assessment Energy AuditPublicHearing(with45days’notice)RABConsultationCertificationofIMS/PICDataBoardResolutionapproving5-YearActionPlanDUNS NumberCurrentSAMRegistration

3.6. Capital Fund Submission.

EachyeartheCapitalFundSubmissionmustbereceivedintheFieldOfficebythedateidentifiedontheHUDwebsiteorintheapplicablePIHnotice.

CapitalFundSubmissionsthatarereceivedintheFieldOfficeaftertheduedatewillhavethesame Obligation End Date as those that were received in a timely manner.

If a Capital Fund Submission is not received by the deadline, Headquarters will issue a second deadlinetosubmitthesignedACCAmendmenttotheFieldOffice.IftheFieldOfficedoesnotreceivetheCapitalFundSubmissionbytheseconddeadline,Headquartersmay,initsdiscretion,de-reserve the applicable Capital Funds.

Contents of Capital Fund Submission.

The“CapitalFundSubmission”consistsofthedocumentsidentifiedinthisSection3.6.PHAsareadvisedtochecktheCapitalFundwebpageforcurrentPIHguidanceontheCapitalFundSubmission.

CapitalFundSubmissionchecklistsforPHAs(QualifiedandOther)andMTWPHAsmaybefoundat the end of this chapter.

AsofthedateofthisGuidebook,theCapitalFundSubmissionshallinclude:

1. ACC Amendments.PHAswillfindtheirprepopulatedACCAmendmentsontheHUDCapital Fund website. PHAs must submit three originals, signed and dated, for CFP ACC Amendments, ACC Amendments for First Increment RHF Grant(s), if applicable, and ACC Amendments for Second Increment RHF Grant(s), if applicable.

2. 5-YearActionPlanwithaBudgetforEachYear.Inordertobeentitledtofungibilityofworkitems,PHAsmusthaveanapproved5-YearActionPlan.ExceptinthecaseofemergencyworkoraNon-PresidentiallyDeclaredNaturaldisaster,thePHAshallonlyspendCapitalFundsonworkthatisincludedinanapproved5-YearActionPlananditsamendments.The5-YearActionPlanmaybefixedorrolling.Fixedplansareupdatedatleastonceevery5yearsandsubmittedannuallyonlyifthePHAisrequestingachangethatconstitutesaSignificantAmendmentinaparticularyear.Rollingplansareupdatedannually andsubmittedannually.

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3. The5-YearActionPlanmustincludeabudgetforeachyearcoveredbytheplan.Thebudgetisusedtoidentifytheworkitemsfortheupcomingyearandamountstobeallocatedtothoseworkitems.ItalsoprovidestheinformationHUDneedstospreadthefunds into LOCCS. If the PHA has an approved CFFP loan, the budget should include debt service payments for the grants from which the payments are scheduled.

4. PerformanceandEvaluation Report (P&E Report). PHAs that are troubled or not in compliancewithsection9(j)ofthe1937ActmustprepareandsubmitaP&EReportforallopengrantstotheFieldOfficeaspartoftheCapitalFundSubmission.AllotherPHAsmustprepareaP&EReportforallopengrantsandkeepitonfileatthePHA.AtanytimeHUDmayrequesttheP&EReportsonfileatthePHA.

5. StatementofSignificantAmendment.TheStatementofSignificantAmendmentidentifiesthecriteriathatthePHAwillusefordeterminingwhetheranamendmentormodificationtothe5-YearActionPlanconstitutesaSignificantAmendmentorModification,asdescribedintheCFPFinalRuleandSection3.7below.

6. AdditionalCertifications.ThePHAisalsorequiredtosubmitvariouscertificationstoHUD, in a form prescribed by HUD, including:

• DisclosureofLobbyingActivities(StandardFormSF-LLL);

• Civil Rights Compliance in a form prescribed by HUD;

• CertificationofPaymentstoInfluenceFederalTransactions(currentlyFormHUD-50071); and

• CertificationofCompliancewithPublicHearingRequirementsinaformprescribed by HUD.

Note:Forthecertificationsregardingcivilrightscomplianceandcompletionofpublichearingrequirements,aPHAmaysubmitthecertificationsadoptedwithitsmostrecentPHAPlan.Thisaffectstimingonly;eachcertificationmustbeupdatedandsubmittedannually.

3.7. Amending the 5-Year Action Plan.

Aftersubmittingits5-YearActionPlan,aPHAmayamendormodifytheplan.

Each5-YearActionPlanshallincludethePHA’scriteriafordeterminingwhetheranamendmentormodificationissignificant.Anyproposeddemolition,disposition,homeownership,CFFPproposal,development,RADconversion,ormixed-financeproposalisconsideredaSignificantAmendmenttothe5-YearActionPlan.Atitsdiscretion,thePHAmayaddadditionalcriteria. Basedonthecriteriacontainedinits5-YearActionPlan,aPHAdetermineswhetheraproposedamendmentormodificationissignificant.

IftheamendmentormodificationisaSignificantAmendmentorModification,thePHA:

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• MaynotadopttheamendmentormodificationuntilitisapprovedbytheBoardofCommissionersinameetingthatisopentothepublic;and

• MaynotimplementtheamendmentormodificationuntilnotificationoftheamendmentormodificationisprovidedtoHUDandtheamendmentormodificationisapprovedbyHUDinaccordancewithHUD’splanreviewprocedures.

IfthechangeisnotaSignificantAmendmentormodification,noHUDapprovalisneeded.

3.8. Relationship Between Capital Fund Submission and PHA Plan.

The Annual PHA Plan and the 5-Year Plan contain required disclosures that relate to Capital Funds and development uses. These requirements did not change with the decoupling, but the procedure has.

PHAsthatsubmitAnnualPlans(i.e.,PHAsthatarenotQualifiedPHAsorMTWPHAs)must include a statement of capital improvements needed in the Annual Plan, as required by 24 CFR Part 903.7(g). Previously, PHAs met this requirement by including copies of their Capital Fund planning documents. In 2013, HUD published the CFP Final Rule, which decoupled the Capital FundSubmissionfromthePHAPlan.However,PHAsarestillrequiredtoincorporatesomeinformationonthecapitalimprovementneedsintheAnnualPlan.

To comply with this requirement, a PHA that is required to submit an Annual Plan must referencethemostrecentlyapproved5-YearActionPlaninitsAnnualPlan.PHAscanreferencetheformbyincludingthefollowinglanguageintheCapitalImprovementsSectionPHAPlanTemplate:“See5-YearActionPlanapprovedbyHUDonMM/DD/YYYY.”

Theapproved5-YearActionPlanshouldbeincludedwithmaterialsmadepublicthroughthehearingandcommentprocess.PHAsdonotneedtoattachacopyoftheapproved5-YearActionPlantotheAnnualPlanbecausetheFieldOfficealreadyhasacopy.DuringtheAnnualPlanreview,theFieldOfficewillnotberequiredtoreviewthepreviouslyapproved5-YearActionPlan.

3.9. Approval of 5-Year Action Plan.

The Capital Fund Submission must comply with the requirements of this chapter. A PHA must reviseorcorrectinformationthatisnotincompliance.HUDhastheauthoritytoimposeadministrativesanctionsuntiltheappropriaterevisionsaremade.HUDwillreviewtheCapitalFund Submission to determine whether:

• Alloftheinformationthatisrequiredtobesubmittedisincluded;

• TheinformationisconsistentwiththeneedsidentifiedinthePNAanddataavailable to HUD; and

• Thereareanyissuesofcompliancewithapplicablelaws,regulations,orcontractrequirements that have not been addressed with the proposed use of the Capital Fund.

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IftheFieldOfficedeterminesthatthe5-YearActionPlanisnotapprovable,itshallpreparealettertothePHAforthePublicHousingDirector’ssignaturedisapprovingitandexplainingthedeficienciesthatneedtobecorrectedinordertomakeitapprovable.

IftheFieldOfficedeterminesthatthe5-YearActionPlanisapprovable,itshallpreparealettertothePHAforthePublicHousingDirector’ssignatureapprovingthePlanandidentifyinganyconditionstotheapproval,ifapplicable.

ApprovaloftheCapitalFundSubmissionbytheFieldOfficedoesnotconstituteapprovalsthat are required separately, such as environmental review, public housing development, and placement of Security Interests on public housing property which requires HUD approval.

3.10. Spreading Capital Fund Grants into LOCCS.

LOCCS Initial Budget.

OnascheduleestablishedannuallybyHUDOCItheFieldOfficewillspreadtheinitialbudgetforall Capital Fund grants as follows:

LOCCS Initial Budget

BLI0100-ReservedBudget 72% of the grant authorized amount

Not disbursable ContactFieldOffice

BLI1408-ManagementImprovements

2014 – 18% Disbursable Auto-review if greater than the percentage permittedforthefiscalyear.

2015 – 16%2016 – 14%2017 – 12%2018 and later – 10%

BLI1410-AdministrativeCosts

10% of grant authorized amount

Disbursable Auto-review if greater than 10%

APHAcandrawdownfromtheManagementImprovements(BLI1408)andAdministrativeCosts(BLI1410)budgetlineitemsimmediately.

• TheFieldOfficewillbeabletoimmediatelyspreadfundstoReservedBudget(BLI0100)forallPHAswithanapproved5-YearActionPlanandanapprovedEnvironmental Review.

• EnvironmentalReview.AdditionalfundingrequestsaresubjecttothecompletionofEnvironmentalReviewpriortothePHA’scommitment(i.e.,obligation)offunds and expenditures of funds. Environmental Review procedures are more specificallydiscussedinSection6.2ofthisGuidebook.

• Site-SpecificPlanningActivities.Architecturalandengineeringwork,planningandcostsforconductingenvironmentalreviewandotherlineitems(includingmanyitemsunderBLI1430)canbefundedpriortocompletionofafull

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Environmental Review or Environmental Assessment. Even under these circumstances,thePHAwillstillneedtosubmitallrequireddocumentstotheResponsibleEntity,includingdocumentationofanyexemptionsorcategoricalexclusions,asapplicable.See24CFRPart50.19(a)and58.35(b)forspecificdetails.

• ActivitiesAlreadyCleared.TheFieldOfficecanreviewaPHA’srequestforreleaseofCapitalFundsforthecurrentyearbasedona5-YearActionPlaneventhoughall items may not be part of a completed Environmental Review, so long as all activitiesorworkitemsrelatedtothecurrentrequestarepartofacompletedEnvironmental Review.

• OtherActivities.AswithallCapitalFundexpenditures,includingexpenditureof funds from any other budget line item, a PHA must complete all necessary EnvironmentalReviewsbeforethePHAsubmitsdrawrequestdocumentationtotheFieldOfficeforreview.

3.11. Initial Disbursement of Capital Funds.

APHAmayrequisitionCapitalFundsfromHUDonlywhensuchfundsaredueandpayable,unless HUD approves another payment schedule as authorized by 2 CFR Part 200, Subpart D.

OnceithasdeterminedthattheEnvironmentalReviewiscomplete,theFieldOfficewillreviewthesubmitteddocumentationtosupporttheexpenditureandwillapproveorrejecttherequestbasedonthedocumentation.

Iftherequesteddocumentationisapproved,thentheFieldOfficewillupdatetheappropriatebudgetlineitemauthorizationsfortheamountoftherequestedexpenditure.

TheFieldOfficemustnotifythePHAinwritingoftheapprovalorrejectionoftherequest.Iftherequestisapproved,theFieldOfficeupdatestheauthorizationandthePHAcanvoucherfortheexpensesupportedbythedocumentation.

OncethePHAsubmitsitsvoucherforinitialdisbursementandtheCapitalFundsaredrawndown via LOCCS, the PHA should properly expend the funds within 3 business days. Following thisinitialdisbursement,thePHAmustthenshowreasonableprogressthroughincreasedexpendituresataratewhichwouldallowcompletionoftheCapitalFundactivity(ies)withinthetimeframesetforthintheprogressscheduleforthespecificworkitems.TherequirementsfortheObligationandExpenditureofCapitalFundsarefurtherdescribedinChapter7ofthisGuidebook.

3.12. Moving to Work (MTW) PHAs.

EachMTWPHAhasenteredintoanMTWAgreementwithHUD,whichincludesasetofattachments,someofwhichvaryamongPHAs.

TheMTWAgreementestablishesplanning,annualsubmission,anddistributionoffundsrequirementsforMTWPHAsthatdifferinsomerespectsfromthosefornon-MTWPHAs,as

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described below.

InplaceofaPHA’s5-YearPlanandAnnualPlan,anMTWPHAsubmitsanAnnualMTWPlanandalsoanAnnualMTWReport,thetimingandcontentsofwhichareestablishedbytheMTWAgreement.

Planning – PNA and Energy Audit.MTWPHAsaretocomplywiththePNAandEnergyAuditrequirementsdescribedaboveinSections3.2and3.3.

Planning – Public Process.InplaceoftherequirementsdescribedaboveinSection3.4,MTWPHAsaretofollowtherequirementsoftheMTWAgreement,whichrequireapublichearing,considerationofcomments,andPHABoardapproval.

Planning – Pre-Submission Details.WithrespecttotheprovisionsofSection3.5above,MTWPHAsaresubjecttotherequirements,asfurtherdescribedinSection3.5,regardingcertificationofIMS/PICdata,maintenanceofanactiveDUNSNumber,andrejectionofaCapitalFundgrant.InplaceoftheBoardresolutionrequirementdescribedinSection3.5.C,MTWPHAsaretosubmitBoardresolutionsinaccordancewiththeMTWAgreementandotherHUDMTWguidance.

Capital Fund Submission. In place of the Capital Fund Submission described above in this chapter,MTWPHAsaretosubmittheCapitalFundsubmissionsaspartoftheAnnualMTWPlanannually,inaccordancewiththeMTWAgreement.

• In the CFP Final Rule, HUD decoupled the Capital Fund submissions from the PHA5-YearandAnnualPlansfornon-MTWPHAs.However,forMTWPHAs,theCapitalFundsubmissions,asdescribedbelow,remainpartoftheAnnualMTWPlan,withtheexceptionoftheACCAmendment(s)asdescribedintheparagraphbelow.

• Even though the Capital Fund submissions are not decoupled from the Annual MTWPlan,anMTWPHAwillsubmititsACCAmendmentfortheCapitalFundformula grant and its ACC Amendments for First Increment RHF and Second IncrementRHFGrantsonthesamescheduleasnon-MTWPHAs.

• TheformatandcontentsoftheCapitalFundsubmissionsforanMTWPHAareestablishedbyAttachmentBtotheAmendedandRestatedMovingtoWorkAgreement (currently Form HUD-50900).

• TheinformationrelatingtotheCapitalFundPrograminanAnnualMTWPlanisincludedwithallotherinformationonthePHA’soperationsandactivitiesunderitsMTWprogramforthecomingyear.AnAnnualMTWPlanmustcontainthefollowinginformationrelatedtotheCapitalFundProgram(referencesaretoForm HUD-50900):

▪ Housing Stock Information–GeneralDescriptionofAllPlannedCapitalFund Expenditures During the Plan Year by Development. Form HUD-50900 requestsonlyageneraldescriptionofCapitalFundexpenditures.SectionII.A.

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▪ Example:AssumeaPHAisplanningcapitalworkonelevatorsbutdecisionsatthe development or building level have not been made about which elevators willberenovatedfirst.InitsAnnualMTWPlan,thePHAcanstatethatitintendstodoelevatorupgradesinportionsofitsportfolioandlistalloftheapplicableprojectsorAMPnumbers.InitslaterMTWReportsubmission,thePHA can specify which developments received the upgrades.

▪ Plan Sources and Uses of MTW Funds –FDS Line Item 70610, Capital Grants. SectionV.1.

▪ CFP Budget and P&E ReportorsubsequentformrequiredbyHUDforMTWandnon-MTWCapitalFundgrantsforeachgrantthathasunexpendedamounts,includingestimatesforthePlanYearandallthreepartsofthereport.UnderFormHUD-50900,MTWPHAs:

▪ MustprovideAnnualP&EReportsforactiveMTWandnon-MTWCapitalFundgrants.ThereisnoseparateMTWform.

▪ ListtheirCapitalFundsundertheMTWbudgetlineitem(BLI1492)ifthefunds are being used in non-Capital Fund purposes under the Fungibility (singlefundbudget)provisionsoftheStandardMTWAgreement.SectionVI.Administrative,ItemD.

▪ Certifications of Compliance.AllcertificationsrequiredforanMTWPHA’sCapitalFundsubmissionsaremadeaspartoftheCertificationsofCompliancerequiredbyAttachmentB(FormHUD-50900)totheStandardMTWAgreement.

• PlanSubmissionandApproval.AnAnnualMTWPlanisapprovedbyHeadquartersinconsultationwiththeFieldOffice.

• Plan Amendments.

▪ SectionV.BoftheMTWAgreementstatestherequirementsandproceduresforamendinganAnnualMTWPlan.AmendmentstotheAnnualMTWPlanonlyneedtobemadeiftheproposedMTWactivityfallsoutsidethescopeoftheHUD-approvedAnnualMTWPlan.

▪ Separate Approvals.

• ApprovaloftheAnnualMTWPlandoesnotconstituteapprovalsthatarerequired separately, such as environmental review, public housing development, and placement of Security Interests (when HUD approval is required).

Spreading Capital Fund Grants into LOCCs.OnceanMTWPHA’sAnnualMTWPlanisapprovedand the PHA submits its executed ACC(s), HUD will distribute a Capital Fund grant to the PHA. TheFieldOfficewillspreadthefundsinLOCCsinthesamemannerasfornon-MTWPHAs.Note:MostPHAswillusethesingleMTWbudgetlineitem(BLI1492),asdescribedabove.

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Disbursement of Capital Funds.AswithotherPHAs,anMTWPHAmayrequisitionCapitalFundsfrom HUD only when such funds are due and payable, unless HUD approves another payment schedule. Note:UnderMTWblockgrantauthority,anMTWPHAmaydrawdownanduseitsCapitalFundsforamuchbroaderrangeofactivitiesthananon-MTWPHA.However,undertheMTWAgreement,anMTWPHAmaynotacceleratedrawdownsoffundsinordertofundreserves.

Exhibit 3.1. Capital Fund Submission: PHAs other than MTW PHAs

ACC Amendments: Three originals, signed and dated Yes N/AACC Amendment for Capital Fund formula grantACC Amendment for First Increment RHF Grant ACC Amendment for Second Increment RHF Grant

CFP Budget and Capital Fund 5-Year Action Plan Yes N/ACFPBudget(FormHUD-50075.1(PartsIandII))5-YearActionPlan(fixedorrolling)(FormHUD-50075.2)P&E Report (Form HUD-50075.1), if troubled or not in compliance with 24 CFR Part 905.306StatementofSignificantAmendment

Certifications Yes N/ALobbying Form – SFLLLCertificationofCompliancew/PublicHearing:(copyofoneofthefollowing)Non-QualifiedPHAs-FormHUD-50077QualifiedPHAs-AstatementcertifyingthatthePHAconductedapublichearingincompliancewith24CFRPart905,signedanddatedbytheexecutivedirector.CertificationofPaymentstoInfluenceFederalTransactions(FormHUD-50071)CivilRightsCertification(copyofoneofthefollowing)Non-QualifiedPHAs-FormHUD-50077QualifiedPHAs-FormHUD-50077-CR

Other Yes N/ARecommendationsmadebytheRAB(s)andadescriptionofhowthePHAwilladdresstherecommendations(ifapplicable)BoardResolutionapproving5-YearActionPlan(ifPHAistroubled)Environmental Review

Not submitted, but on file at the PHA Yes N/AEvidenceofCompletionofEnvironmentalReviewforproposedactivitiesPhysical Needs Assessment (PNA)Energy Audit (every 5 years)

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Exhibit 3.2. Capital Fund Submission: MTW PHAs

ACC Amendments: Three originals, signed and dated Yes N/A

ACC Amendment for Capital Fund formula grant

ACC Amendment for First Increment RHF Grant ACC Amendment for Second Increment RHF Grant

Field Review of Approved Annual MTW Plan (Form HUD-50900) Yes N/AGeneralDescriptionofallplannedCapitalFundexpendituresduringtheplanyear,bydevelopment.SectionII(A).PlanSources&UsesofFunds,SectionV(1)P&E Reports (Form HUD-50075.1), if troubled or not in compliance with 24 CFR Part 905.306CFPBudget(FormHUD-50075.1(PartsIandII))CertificationsofCompliance,Paragraph3

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Chapter 4 Capital Fund Formula CalculationCapital Fund grants are allocated to the PHAs in accordance with the Capital Fund formula, whichmeasurestheexistingmodernizationneedsandaccrualneedsofPHAsinordertodeterminearelativeformulashareforeacheligiblePHA.One-halfoftheavailableCapitalFundsinagivenyearareallocatedbasedonrelativeexistingmodernizationneedsandtheotherhalfareallocatedbasedonrelativeaccrualneeds.Modernizationneeds(alsoknownasbacklogneeds)areexistingcapitalimprovementneedsofaPHA’spublichousing.AccrualneedsarethelevelofadditionalcapitalimprovementneedsthatareexpectedtoariseataPHA’spublichousing projects in each successive year based on the age of each project and other factors.

HUDbasestheformulacalculationondatasubmittedbyPHAsintheInventoryManagementSystem/PublicHousingInformationCenter(IMS/PIC)system;therefore,PHAsmustannuallyverifyandcertifytoinformationrelatingtounits(knownastheIMS/PICCertificationProcess).TheCapitalFundformulaalsoincludescalculationsforRHFandDDTF,whichprovidefundingtoPHAsthathaveremovedpublichousingunitsfromtheirinventoriesthroughdemolitionordisposition,topartiallyoffsetthesubsequentreductionintheformulaunitcountfortheCapitalFundformulacalculation,andthoseprogramsarefurtherdescribedinChapter5.

4.1. PIC/IMS Certification

ThemostimportantfactorsindeterminingaPHA’sformulasharearethenumberandtypeofpublichousingunitsinitsinventory.PHAsareresponsibleforensuringthattheinformationreported in IMS is accurate, including the number of public housing units in each building, the numberofbuildings,thebedroomdistributionoftheunits,andthehouseholdtypeforeachunit.HUDannuallysetsdeadlinesbywhichPHAsmustreportdatainIMS/PICandcertifytothe data provided. If the PHA determines that data in IMS/PIC are correct, it shall provide a certificationoftheaccuracyofthedatareportedinIMS/PICintheformrequiredbyHUDandinadvance of the deadline date imposed by HUD.

IfthePHAdeterminesthattheIMSdataareincorrect,itcaneithercorrecttheinformationitselforworkwiththeapplicableFieldOfficetoresolvediscrepancies.IfthePHAandFieldOfficecannotresolvediscrepancies,thePHAshould“submitaticket”toHUD’sRealEstateAssessmentCenter, Technical Assistance Center. If the discrepancy is not resolved by the deadline to submit acertificationofunits,thePHAshallrejectthecertificationandprovideajustificationinIMS/PIC. If the issue is not resolved prior to the Capital Fund formula run date, the grant may be placedinpendingstatusuntilresolved.

TheCapitalFundDataCertificationStep-by-StepInstructionGuide,offersdetailedinstructionsforPHAswithrespecttoreviewingtheexistingIMS/PICdata,correctinganyincorrectdata,andcertifyingtotheaccuracyofthedata.PHAsandFieldOfficesshouldrefertoboththeissuedguidanceandtheCapitalFundDataCertificationInstructionGuideforfurtherguidance.

4.2. Unit Count for Formula Calculation

1. ForpurposesofdeterminingthenumberofaPHA’spublichousingunitsandtherelative

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modernizationneedsofPHAsHUDshallcount:

• EachpublichousingunitandSection23bond-financedCapitalFundunitasoneunit,

• EachexistingunitundertheMutualHelpprogramasoneunit,

• EachexistingunitundertheTurnkeyIIIprogramasone-fourthofaunit,

• UnitsreceivingOperatingFundAssistanceonlyshallnotbecounted

2. HUDwillincreasetheunitcounttoreflectanyunitsthatthePHAaddstoitsinventorywhile the units are under CF ACC Amendment and have reached DOFA by the date that HUD establishes for the Federal Fiscal Year in which the Capital Fund formula is being run(ReportingDate).TheDOFAmustbeenteredintoPIC.NewCapitalFundunitsandthoseunitsreachingDOFAafterthereportingdatewillbecountedintheCapitalFundformulacalculationforthefollowingFederalFiscalYear.

3. Reconfigurationisalteringtheinteriorspaceofbuildings(e.g.,movingorremovinginteriorwallstochangethedesign,sizes,ornumberofunits).ItcausesthePHA’sformulasharetobecalculatedbasedonthecountofexistingunitsafterthereconfiguration.TobasethecalculationonthecountbeforereconfigurationwouldprovideCapitalFundsforthemodernizationneedsoradministrativecostsofunitsthatwould no longer exist as a result of conversion.

4. ForaProjectlosingunitsasaresultofdemolitionanddisposition,thenumberofunitson which the Capital Fund formula is based will be the number of units reported as eligibleforCapitalFundsasoftheReportingDate.UnitsareeligibleforfundinguntiltheyareremovedfromthePHA’sinventoryduetodemolitionanddisposition,asfurtherdescribed in Chapter 5.

4.3. Computation of Formula Shares

1. ThetotalestimatedexistingmodernizationneedofaPHAundertheCapitalFundformulaistheresultofmultiplyingthePHA’stotalnumberofformulaunitsforeachprojectbyitsestimatedexistingmodernizationneedperunit,andcalculatingthesumoftheseestimatedprojectneeds.

2. The total accrual need of a PHA under the Capital Fund formula is the result of multiplyingforeachProjectthePHA’stotalnumberofformulaunitsbyitsestimatedaccrualneedperunit,andcalculatingthesumoftheseestimatedaccrualneeds.

3. APHA’sformulashareofexistingmodernizationneedundertheCapitalFundformulaisthePHA’stotalestimatedexistingmodernizationneeddividedbythetotalexistingmodernizationneedofallPHAs.

4. APHA’sformulashareofaccrualneedundertheCapitalFundformulaisthePHA’stotalestimatedaccrualneeddividedbythetotalexistingaccrualneedofallPHAs.

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5. APHA’sformulashareofcapitalneedundertheCapitalFundformulaistheaverageofthePHA’sshareofexistingmodernizationneedanditsshareofaccrualneed(bywhichmethod each share is weighted 50%).

4.4. Faircloth Limit

DiscussedfurtherinChapter9ofthisGuidebook.HUDmaintainsapubliclyavailablelistoftheunitlimitsbrokendownbyPHA,whichisavailableattheHUDOfficeofCapitalImprovementswebsite.IfaPHAdeterminesitsunitlimitisnotcorrect,itshouldcontacttheFieldOffice,whowillworkinconjunctionwithHeadquarters,tocorrectthelimit.IftheissueisnotresolvedpriortotheCFFrundate,thegrantwillbeplacedinpendingstatusuntilresolved.

4.5. High Performer Bonus

APHAthatisdesignatedahighperformerunderthePHA’smostrecentfinalPHASscoremayreceive a performance bonus that is 5% above its base formula amount. In order to determine which PHAs qualify for the bonus, HUD issues a list of high-performing PHAs according to PHAS designationsfortheapplicableFederalFiscalYear.PHAsthenreviewthelistandresolveanydiscrepancieswithHUD’sRealEstateAssessmentCenter.PHAsmustresolvethediscrepancywithHUD’sRealEstateAssessmentCenterwithinthetimeframeannouncedbyHUDguidance.

ThisbonuspoolispartiallyfundedwiththeCapitalFundsthatHeadquartershasrecapturedfromPHAsthathavefailedtocomplywiththeObligationEndDateandExpenditureEndDaterequirements, as further described in Chapter 7. The failure to comply with these requirements canalsomakeaPHAineligibleforthebonusasitsfailuretocomplycannegativelyaffectitsPHAS score. The bonus pool may also reduce the formula share available to non-high performer PHAs. However, the performance bonus requires that no PHA will lose more than 5% of its base formulaamountasaresultoftheredistributionoffundingfromnon-highperformerstohighperformers.

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Chapter 5 Replacement Housing Factor Grants and Demolition and Disposition Transitional Funding

5.1. Replacement Housing Factor Grants (RHF)

RHF grants were established in FY 2000 to provide PHAs that reduced their unit counts though aHUD-approveddemolitionordispositionwithfundingtobuildreplacementunits.RHFgrantswereonlyallowedtobeusedfordevelopmentoracquisitionofpublichousingunitstoreplacetheunitslostthoughtheHUD-approveddemolitionordisposition.TheamountoftheRHFgrantdoesnotrelatetothecostofthereplacementunits,butinsteadonlyreflectsthePHA’sCapitalFundformulaallocationfortheunitsremovedfromthePHA’sinventorywithHUDapproval.PHAscouldreceiveRHFgrantsforupto10years.PHAsautomaticallyreceivedfiveyearsofRHFfunding,knownasFirstIncrementRHFgrants,theyearafterunitsapprovedfordemolitionordispositionwereremovedfromthepublichousinginventoryandthePHAreportedtheremovalinPIC.Inaddition,ifthePHAmetcertaincriteria,itcouldapplyforandHUDcouldapproveasecond,5-yearincrementofRHFgrantsknownassecondincrementRHFgrants. RHF grants are awarded to PHAs as a separate Capital Fund grant and are calculated basedontheunitsremovedfromitsinventorythroughaHUD-approveddemolitionordispositionapplication.RHFfundsmayonlybeusedtodevelopnewpublichousingunits.APHAiseligibleforanautomaticFirstIncrementRHFgrantforpublichousingunitsremovedfromitsinventorythroughdemolitionordispositiononorbeforeJune30,2013.

1st Increment RHF Eligibility 2nd Increment RHF Eligibility

APHAwasautomaticallyeligibleforaFirstIncrementRHF grant if it met the following requirements:

A PHA was eligible to receive Second Increment RHF ifitcontinuedtomeettherequirementsforFirst

IncrementEligibilityandadditionallymetthefollowingleveraging requirements:

PHA reported in IMS/PIC the removal of units from inventoryduetoHUDapproveddemolitionordisposition

A commitment of funds (other than public housing funds), for replacement housing

The PHA has not received funding for public housing unitsthatwillreplacethelostunitsfromDispositionProceeds, or under Public Housing Development, HOPE VI,ChoiceNeighborhoodsInitiative,orprogramsthatotherwise provide for replacement with public housing units

Project-by-Project basis. For example, the PHA cannot count leverage requirement at Development A towards theleveragerequirementatDevelopmentB

The PHA is not troubledLeverage generated for a First Increment RHF grant counts only if such funds are used in the same development as the Second Increment RHF grant

RHF Eligible and Ineligible Uses. A PHA may only use RHF funds to develop or acquire additionalpublichousingunitsinaccordancewith24CFRPart905,SubpartF.DevelopmentofthereplacementhousingmustbeundertakeninaccordancewithPublicHousingRequirementsandtheprovisionsofChapter9ofthisGuidebook,whichsetsforththoserequirementsparticulartothedevelopmentofpublichousingunitswithCapitalFunds.

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Eligible Uses for RHF Grants Ineligible Uses for RHF GrantsDevelopmentActivities,

including but not limited to:Non-developmentActivities, including but not limited to:

AcquisitionofunitsthatmeetUniformPhysicalConditionStandards(UPCS)atthetimeofacquisition Modernizationofpublichousingunits

Acquisitionwithrehabilitationofnon-publichousingunitsthatdonotmeetUPCSatthetimeofacquisition,but will be brought into compliance with UPCS and will be brought under the ACC

DemolitionofpublichousingunitsunlessthePHAplans to rebuild public housing units on the same site

ConstructionofnewpublichousingunitsthroughConventionalDevelopmentorMixed-FinanceDevelopment

Development of homeownership units

Infrastructure.Costsrelatedtositework,grading,on-siteinfrastructure,andoff-siteinfrastructureareeligible

ManagementImprovements(BLI1408)

AdministrativeCosts.Amaximumof3%,ofthetotalprojectbudget,or,withHUD’sapproval,upto6%ofthetotalprojectbudget(BLI1410)

TransfertoOperations(BLI1406)

CFFPfinancingtocarryoutnon-developmentactivities

Accumulation. RHF grants are calculated based on the formula share of the units removed from inventory, and are not based on the cost of developing replacement units. As a result of thiscalculation,asingleRHFgrantmaynotprovideenoughfundingtodevelopreplacementunits.APHAmayaccumulateupto5yearsofRHFgrantsuntilithasenoughfundingtodevelopreplacementunits,althoughotherfinancinginadditiontotheaccumulatedRHFfundsistypicallynecessary.AccumulationextendstheobligationandexpenditureperiodsofeachRHFgrantyeartotheObligationEndDate(OED)andExpenditureEndDate(EED)ofthefinalRHFgrantintheaccumulation.APHAcannotaccumulateFirstIncrementRHFfundswithSecondIncrement RHF funds. A PHA may choose to accumulate less than 5 years of funding. A PHA mustsubmitanRHFPlaninordertorequestaccumulationofgrants.

5.2. RHF Planning Requirements

• PHAsmustincludeuseofRHFgrantsinthe5-YearActionPlan.

• If a PHA wishes to accumulate First Increment RHF grants, it must submit a First Increment RHF Plan.

• AllPHAsrequestingaSecondIncrementofRHFgrantsmustsubmitaSecondIncrement RHF Plan.

FieldOfficeapprovalofanRHFPlanconstitutesapprovaltoaccumulatefunds.WithoutanRHFplan, the PHA has no authority to accumulate funding. PHAs are encouraged to use the model RHF Plan found at Exhibit 5.2 at the end of this chapter.

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First Increment RHF Plan Requirements. An RHF plan is required for First Increment RHF only if the PHA intends to accumulate the funds. No plan is required if the PHA does not intend to accumulate funds. PHAs are encouraged to use the model RHF Plan found at Exhibit 5.2 at the end of this chapter.

TheFirstIncrementRHFplanforaccumulationmustincludethefollowing:

• AstatementofthePHA’sintentiontoaccumulateitsFirstIncrementRHFgrants;

• The grant numbers and amounts of grants to be accumulated; and

• A statement that the PHA intends to use the RHF funds to develop public housing units.

TheFieldOfficeshouldreviewallRHFPlanstoensurethatthePHAhas:(1)requestedaccumulation,(2)identifiedthegrantnumbersandgrantamounts,and(3)attestedthatthefundswillbeusedforthedevelopmentofadditionalpublichousingunits.

IftheFieldOfficedeterminesthattheRHFPlandoesnotcomplywiththerequirementsofthissection,itshallnotifythePHApromptlyinwriting.ThePHAmayworkwiththeFieldOfficetocorrectdeficiencies.

IftheFieldOfficedeterminesthattheRHFPlancomplieswiththerequirementsofthissection,itshallnotifythePHApromptlyinwritingandentertherevisedobligationandexpenditureenddates into LOCCS.

Second Increment RHF Plan Requirements.

Submission of a Second Increment RHF Plan shall include:

• Items required in a First Increment RHF Plan, and

• ConfirmationthatthePHAwillobtainleverageforthetotalofthe5yearsofRHFsecond increment grants.

• PHAs are encouraged to use the model RHF Plan found at Exhibit 5.2 at the end of this chapter.

TheFieldOfficewillreviewtheapplicationtodeterminethatthePHAhas:(1)requestedaccumulation,(2)identifiedthegrantnumbersandgrantamounts,(3)attestedthatthefundswillbeusedforthedevelopmentofadditionalpublichousingACCunits,and(4)confirmedthatit will provide leverage for the total 5 years of Second Increment RHF.

IftheFieldOfficedeterminesthattheRHFPlandoesnotdemonstratecompliancewiththeleveragerequirement,itwillissueanapprovalcontingentuponsecuringtherequiredleverage.

TheFieldOfficewillnotallowdrawdownofSecondIncrementRHFgrantsuntilthePHAdemonstrates leverage.

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Amending an Approved RHF Plan (Either Increment). Atanytime,aPHAmaysubmitaproposedrevisiontoanRHFPlanforeitherincrement,alongwithsupportingdocumentation,totheFieldOffice.Supportingdocumentationshouldincludeanyrequiredrevisionstothe5-YearActionPlan.

IftheFieldOfficedeterminesthattheproposedrevisiondoesnotcomplywiththerequirementsofthischapter,itshallrejecttheproposedrevisioninwriting.

IftheFieldOfficedeterminesthattheproposedrevisionisvalidbutrequiresadditionalsupportordocumentation,itshallidentifytherequiredinformationinwritingtothePHA.ThePHAmayworkwiththeFieldOfficetoprovidetherequestedinformation.

OncetheFieldOfficedeterminesthattheproposedrevisionisacceptable,itshallissueawrittenapprovaltothePHA.Inaddition,itshallmakeanychangesinIMS/PICindicatedbytherevision,such as changes to the OED or EED.

InreviewingRHFPlans,FieldOfficesshouldensurethatthesubmittedRHFPlanisconsistentwiththePHA’s5-YearActionPlan,asapplicable.UponapprovaloftheRHFPlan,theFieldOfficeshouldkeeptheplanonfileforthedurationoftheaccumulation.APHAmaychoosetorequestHUDapprovalforan“accumulation”ofRHFfunds.

WhenHUDapprovesaPHA’srequesttoaccumulateRHFgrants,theFieldOfficewillsettheOEDandEEDforalltheRHFgrantsintheaccumulationatthedatesthatHUDwouldsetforthemostrecentgrantintheaccumulationifthatgrantwereastand-alonegrant(i.e.,24and48monthsfromtheobligationstartdateofthatgrant).

Inordertoincludeagrantwithinanaccumulationofgrants,aPHAmustsubmititsrequestatleast90dayspriortotheobligationenddate(setat24monthsfromtheobligationstartdateofthatgrant)oftheoldestgrantintheproposedaccumulation.[24CFRPart905.400(i)(7)]

The approval of an RHF plan does not constitute approval to begin building, acquiring, or otherwise developing replacement public housing units. PHAs must follow the separate development approval process in Chapter 9 to obtain the required development approval.

5.3. Obligation End Date and Expenditure End Date Requirements for RHF Grants

TheOEDandEEDforRHFgrantsareautomaticallysetat24monthsand48months,respectively,fromtheobligationstartdate.RHFgrantsinanapprovedaccumulationwillhaveanOEDandEED24and48monthsfromtheobligationstartdateofthelastgrantincludedintheaccumulation.

If a PHA fails to obligate 90% of an RHF grant by the applicable OED, HUD will recapture the unobligatedportionofthegrant,andwillsendanamendedACCtothePHAtorecapturetheportionofthegrantthatthePHAfailedtoobligatebytheOED.

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If a PHA fails to expend 100% of an RHF grant by the applicable EED, HUD will recapture the undisbursedportionofthegrantandwillsendanamendedACCtothePHAcoveringthatportionofthegrantthatthePHAdisbursedbythedeadline.

IfaPHAmissestheOEDorEED,HeadquarterswillnotifytheFieldOfficeandsendalettertothePHAprovidingnoticethatthePHAisinviolationoftheapplicabledeadline.TheletterwillgivethePHAtheopportunitytoprovidedocumentationthatitdidinfactobligateorexpendbytheapplicabledeadline.IfthePHAfailstoprovideadequatedocumentation,HeadquarterswillnotifythePHAthatHUDisrecapturingtheunobligatedbalanceandwillprovideanamendedACCtoreflecttherecapture.

TheprocessforextendingtheOEDforanRHFgrant(otherthanthroughaccumulation)ishandled in the same manner as a Capital Fund formula grant, as further described in Chapter 7.

MonthlyReportingonOED/EEDStatus.PHAsthatreceiveRHFgrantsmustsubmitmonthlyreportsinLOCCSregardingtheobligationandexpenditureofthefunds.Reportsareduewithin5businessdaysofthefinaldayofthepreviousmonth.PHAsmustsubmitareportinLOCCSwithin 5 business days of the OED. This usually means that PHAs must submit two reports in LOCCS during the month when the OED occurs.

RHF Grant Closeout. The closeout procedure for RHF grants is described in Chapter 7 of this Guidebook.

5.4. Rejection of RHF Grants

APHAautomaticallyreceives5yearsofFirstIncrementRHFfundingfortheFederalFiscalYearafterthePHAentersthedemolitionordispositionoftheunitsinIMS/PIC,providedthatalleligibility requirements are met.

If a PHA does not wish to receive RHF funding, it must reject the First Increment RHF grant by sendingawrittenstatementofrejectiontotheFieldOfficeeveryFederalFiscalYearthatitdoesnotwishtoacceptthefunds.TheFieldOfficeshouldpromptlytransmitthePHA’sstatementofrejectiontoHeadquarters.

5.5. DDTF

WhentheCapitalFundFinalRulewaspublished,itreplacedRHFgrantswithDemolitionandDispositionTransitionalFunding(DDTF)forpublichousingunitsremovedfromaPHA’sinventoryonorafterJuly1,2013.IncontrasttotheRHFgrant,DDTFisincludedinthePHA’sannualCapital Fund formula grant, and is not given as a separate grant. Since it is included in the annualformulagrant,DDTFcanbeusedforanyeligibleactivityundertheCapitalFundProgramincludingdevelopmentofreplacementunitsormodernization.PHAsthatremoveunitsfrominventoryduetoHUD-approveddemolitionordispositionareeligibletoupto5yearsofDDTF.(Note: For MTW PHAs, the use of RHF and DDTF funds may be affected by the PHA’s MTW Agreement with HUD.)

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APHA’sDDTFallocationiscalculatedinthesamemannerasRHFfunds.However,DDTFisnotgivenasaseparategrant,andisaddeddirectlytothePHA’sannualCapitalFundformulagrant.PHAsmayuseDDTFforanyeligibleactivitiesundertheCapitalFundProgram.

ThereisnoseparateplanningrequirementforDDTF.ThePHAmustincludeanyactivitiestobefundedwithDDTFinits5-YearActionPlanaspartoftheactivitiestobefundedwiththeoverallCapital Fund formula grant.

The PHA obligates and expends DDTF as part of and in the same manner as the overall Capital Fundformulagrant.Assuch,therewillnotbeaseparatedeterminationofcompliancewithDDTF.

(Note: A PHA will automatically receive DDTF for removed units as part of its next annual Capital Fund formula grant following the IMS/PIC entry unless the PHA rejects DDTF for that Federal Fiscal Year by sending a written statement of rejection to the Field Office. [24 CFR Part 905.400(j)(4)(i)])

Comparison of RHF to DDTF

RHF DDTF

Accumulation YesNo.Sameobligationandexpenditurerequirements as the Capital Fund formula grant

Eligible Activities

Development of replacement public housing units AnyCapitalFundeligibleactivity

Funding Delivery

Stand-alone RHF grant each year; separate ACC Amendments

IncludedinthePHA’sannualCapitalFundformula grant

Years of Funding 5 or 10 5

5.6. Transition from RHF to DDTF

UnitsdemolishedordisposedofafterJune30,2013,areeligiblefor5yearsofDDTF.TheCapitalFundFinalRuleprovidesatransitionfromRHFgranttoDDTFtoallowPHAsthatwerealready receiving RHF grants in FY 2013 for units removed from inventory in FY 2012 or prior, to receive up to 10 years of funding for those units. See Exhibit 5.1 for a detailed chart of the RHF transition.

If in FY 2014, a PHA received year 2, 3, 4 or 5 of First Increment RHF (for units removed from inventorypriortoJune30,2012),itwillreceivetheremainingyearsofFirstIncrementRHFandanadditional5yearsofDDTFtoreplace5yearsofSecondIncrementgrants.Notethatthe PHA does not need to meet the leverage requirements of Second Increment RHF grants to receivethe5yearsofDDTFafteritsFirstIncrementRHF.

If in FY 2014, a PHA received year 7, 8, 9 or 10 of Second Increment RHF (for units removed from inventorypriortoJune30,2012),itwillreceivetheremainingyearsoftheSecondIncrementRHF.

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IfaPHAhasunitsthatwereremovedfromIMS/PICforthefirsttimeinFFY2013,anddidnotpreviously receive First Increment RHF or Second Increment RHF, the PHA will only receive DDTF for 5 years. It will not receive any RHF funds.

FollowingisachartthatsummarizesPHAs’statusinFFY2014andeligibilityforRHForDDTFfunds. A detailed year-by-year chart is found at Exhibit 5.1 at the end of this chapter.

Summary of RHF to DDTF Transition

Status Applicable RHF Funds Applicable DDTF Funds

PHAsthatremovedunitsonorafterJuly1,2013

None 5 Years

PHAs that received Years 1-4 of First Increment RHF funding in FFY 2013

For the remaining years of the First Increment RHF grants

5 Years (if eligible for Second Increment RHF grants)

PHAs that received Years 6-9 of Second Increment RHF funding in FFY 2013

For the remaining years of the Second Increment RHF grants

None

5.7. Determining Demolition or Disposition Date

APHAenterstheactualdatesofdispositionordemolitionintotheIMS/PICsystem.ThedateofIMS/PICentry(asapprovedbytheFieldOffice)isusedincalculatingeligibilityforRHFandDDTF.

Demolition-Usedateoffinalpaymenttodemolitioncontractor.

Disposition - Use date of the deed or ground lease transferring the property.

PHAsthatreporttheremovalofunitspriortoJune30willbeeligibleforDDTForRHFfunds,asapplicable, in the following Federal Fiscal Year.

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Exhibit 5.1. Detailed Description of RHF to DDTF Transition

Detailed Description of RHF to DDTF Transition

FFY 2014

FFY 2015

FFY 2016

FFY 2017

FFY 2018

FFY 2019

FFY 2020

FFY 2021

FFY 2022

InFY20

14wha

tyea

roffun

ding

(outof1

0years)isth

ePH

Areceiving?

Year 1 Year 1 of DDTF

Year 2 of DDTF

Year 3 of DDTF

Year 4 of DDTF

Year 5 of DDTF

Year 2 Year 2 of 1st Incr RHF

Year 3 of 1st Incr RHF



DDTF* DDTF* DDTF* DDTF* DDTF*










Year 6 DDTF DDTF DDTF DDTF DDTF

Year 7 Year 2 of 2nd Incr RHF

Year 3 of 2nd Incr RHF









*ReplaceswhatwouldhavebeenaFirstorSecondRHFIncrementunderthepreviousregulation.

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Exhibit 5.2. Model RHF Plan Submission

Anyplace Housing Authority123 Main Street

Anyplace, State 12345-9876

Director, Public Housing Division

HUD Field Office

456 Main Street

Anyplace, State 12345-6789

Subject: First Increment RHF Plan-Accumulation of First Increment RHF Grants (or Second Increment RHF Plan-Accumulation of Second Increment RHF Grants)

Dear Public Housing Director:

TheAnyplaceHousingAuthority(AHA)wouldliketoaccumulatefiveyearsoffirst(orsecond)incrementReplacementHousingFactor(RHF)grants,totalingapproximately$1,500,000,toacquireanexistingmulti-familybuilding to develop new public housing rental ACC units. AHA needs to accumulate the grants in order to have sufficientfundstopurchaseandrenovatetheunits.

The subject grants are the following:

AB36R00150112:$300,000

AB36R00150113 $300,000

AB36R00150114 $300,000

AB36R00150115 $300,000

AB36R00150116 $300,000(estimated)

AHAunderstandsfromtheinformationpostedontheCapitalFundwebpagethattheobligationenddateforthesegrantswillbeOctober29,2018.ThePHAwillacquiretheseunitsinaccordancewiththeregulationsfound at 24 CFR part 905.

(For Second Increment RHF Grants Only)

AHAconfirmsthatitsCapitalFundFiveYearActionPlanandAnnualStatementshavebeenapprovedbyHUD.AHAisincompliancewiththeobligationandexpendituredeadlinesonallofitsCapitalFundgrantsandiscurrentinitsLOCCSreporting.AHArecognizesthatismustsecureatleast$500,000infirmfinancialcommitmentsas leverage for its second increments grants.

Ifyourofficehasanyquestions,pleasecontactAbbyAdams,DirectorofDevelopment,at123-456-7890.

Sincerely,

Edwina Director

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Chapter 6 General Program Requirements and Implementation

6.1. Overview

Capital Fund grants are federal funds appropriated by Congress and are subject to various other federallaws,regulations,executiveorders,2CFRPart200(codifyingOMBCirculars),andotherrequirementsinadditiontothoseexpresslyprovidedbythe1937ActandtheCFPFinalRule,oftencalledCross-CuttingRequirements.Thischapteraddressescompliancewiththesecross-cuttingrequirements.Compliancewithsuchotherrequirements,wherenecessary,willinvolvereferencetoresourcematerialsandconsultationwithstaffoutsideoftheCapitalFundProgram.This chapter also addresses some regulatory requirements imposed by the 1937 Act.

6.2. Environmental Reviews [Reserved]

6.3. Real Property Acquisition and Relocation

Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA). The URAisaFederallawthatestablishesminimumstandardswithrespecttoacquisitionsofrealpropertyandrelocationofpersonsresultingfromtheacquisition,rehabilitation,ordemolitionof real property for a federally-funded program or project. 49 CFR 24 is the government-wide regulationthatimplementstheURA.HUDHandbook1378-TenantAssistance,Relocation,andRealPropertyAcquisitionprovidesHUDpolicyandguidanceonimplementingtheURAand49CFR24forHUD-fundedprogramsandprojects.DemolitionordispositionunderSection18ofthe1937Actiscoveredbytherelocationprovisionsat24CFRPart970.21,nottheURA.However,ifthedemolitionordispositionispartofaprojectinvolvingCapitalFundsoranyadditionalHUDfunds(otherthanSection18dispositionproceeds),theURAwillapply.PHAsareadvisedtobeginplanningURAcomplianceassoonastheybeginplanninganyactivitythatwilleventuallyrequirelandacquisitionortenantrelocation,eitherofexistingpublichousingresidentsorresidentsofacquiredproperties.

Section 104(d) of the Housing and Community Development Act of 1974 (section 104(d)). Section104(d)isafederallawthatappliestoCommunityDevelopmentBlockGrant(CDBG),HomeInvestmentPartnerships(HOME),andUrbanDevelopmentActionGrant(UDAG)programs (Note: UDAG is not an active program and no funds have been appropriated since 1998).Section104(d)relocationandone-for-onereplacementhousingrequirementsmayapplywhenCDBG,HOME,orUDAGfundsareusedinconnectionwiththedemolitionorconversionoflower-incomedwellingunits.24CFRPart42subpartCaretheregulationsthatimplementsection104(d).HUDHandbook1378-TenantAssistance,Relocation,andRealPropertyAcquisition,Chapter7,providesHUDpolicyandguidanceonimplementingsection104(d)and24CFRPart42subpartCforCDBG,HOME,andUDAG-fundedprogramandprojects.

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ForadditionalinformationandresourcesforURAandsection104(d)matters,visitHUD’sRealEstateAcquisitionandRelocationwebsitewww.hud.gov/relocation. The website also includes contactinformationforHUD’sRegionalRelocationSpecialistswhoareavailabletoprovideproject-level assistance in their assigned geographic areas.

6.4. Wage Rates

Davis-Bacon Wage Rates. Exceptfornon-routinemaintenancework(definedbelow),forallworkorcontractsexceeding$2,000inconnectionwithdevelopmentormodernizationactivitiesforapublichousingproject(regardlessofsourceoffunds),alllaborersandmechanicsemployedintheconstruction,alteration,orrepairworkshallbepaidnotlessthanDavis-Baconwagerates.HUDdoesnotissueDavis-Baconwagerates,whichareinsteadavailablethroughtheU.S.DepartmentofLabor’sWageandHourDivision.

Developmentormodernizationisdefinedasanyorallundertakingsnecessaryforplanning,landacquisition,demolition,construction,orequipmentinconnectionwithapublichousingproject.

Demolition,byitself,isnotconsideredsubjecttoDavis-Baconwagerequirements.However,ifsubsequentconstructionatthesiteisplannedaspartofthesameprojectthatwillinvolveCapitalFunds,thenthedemolitionworkwouldbecoveredbyDavis-Baconwagerequirements.

HUD-Determined Prevailing Wage Rates. Foralloperationsworkforapublichousingproject,includingroutineandnon-routinemaintenancework,alllaborersandmechanicsemployedshall be paid not less than the wages prevailing in the locality, as determined or adopted by HUD.Allarchitect,technicalengineers,draftspeople,andtechniciansemployedatthepublichousing project shall also be paid such prevailing wages. HUD wage decisions may be obtained fromHUD’sOfficeofLaborRelationsstaff;theseratesrequireadeterminationastowhethermaintenanceisroutineornon-routine.

Routinemaintenanceinvolvestheregularupkeepandpreservationofbuildings,grounds,andfacilities.Thismayincludegroundskeeping,janitorialwork,patchingand/orfinishingofinteriorandexteriorwallsandothersurfaces,andthepreservation,inspection,andgeneralupkeepofelectric,plumbing,andheatingandair-conditioningsystems.

Non-routinemaintenanceincludesworkitemsthatordinarilywouldbeperformedonaregularbasisinthecourseofupkeepofapropertybuthavebecomesubstantialinscopebecausetheyhavebeenputoff.Non-routinemaintenanceincludesreplacementofmaterialsandequipmentthathavebecomeunsatisfactorybecauseofnormalwearandtearwithitemsofsubstantiallythesamekindofmaterialsandequipment.However,reconstruction,substantialimprovementinthequalityorkindofmaterialsandequipmentthataltersthenatureofthetypeofhousingisnotnon-routinemaintenance,butisinsteadModernizationorDevelopmentsubjecttotheDavis-Baconrequirementsdescribedabove.

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• Exclusion from HUD-Determined Prevailing Wage Rates. Contracts for certain professional services are excluded from coverage by HUD-determined prevailing wagerates.Theseexclusionsincludecontractsforinspectionsortestingofequipmentwithoutrepairs,warrantyinspections,andserviceormaintenanceofleasedequipment,fixtures,orappliances.

State Wage Rates. State wage rates are preempted by federal wage rates in any public housing modernizationordevelopmentproject,asprovidedat24CFR§965.101.

Volunteers. Theprevailingwagerequirementsofthissectiondonotapplytovolunteersperformingdevelopment,modernization,ornon-routinemaintenanceworkundertheconditionssetoutin24CFRPart70.

Technical Wage Rates. Allarchitects,technicalengineers,draftsmen,andtechnicians(otherthanvolunteersundertheconditionssetoutin24CFRPart70)employedinadevelopmentormodernizationprojectshallbepaidnotlessthanthewagesprevailinginthelocality,asdeterminedoradopted(subsequenttoadeterminationunderapplicablestateorlocallaw)byHUD.

Wage Rate Reference Materials

Reference Description

Labor Standards Handbook.

PHAsandFieldOfficesareencouragedtorefertoHUDHandbook:FederalLaborStandardsRequirements in HUD Programs (1344.1, REV-2, dated 2/2012) for requirements related to implementing,monitoring,andenforcingwageraterequirements.

PHA Procurement Handbook.

Davis-BaconcontractingrequirementsareappliedtoPHAconstructionandmodernizationcontractsinSections10.1,10.3,10.5,10.9,10.10,and10.11ofProcurementHandbookforPublicHousingAgencies(7460.8,REV-2,dated2/2007)(PHAProcurementHandbook).

Davis-BaconLabor Standards.

AContractor’sGuidetoPrevailingWageRequirementsforFederally-AssistedConstructionProjects.(Jan.2012)Thisplain-languageguidetoageneralcontractor’sobligationsinHUD-assistedconstructionprojectsisavailablefromtheHUDOfficeofLaborRelationswebsite,and is a useful handout for contractors.

MakingDavis-BaconWork.

APracticalGuideforStates,IndianTribes,andLocalAgencies.(Sept.2011).Thisplain-languageguideidentifiesaPHA’sresponsibilitiesasrecipientofHUDfundsandcontractortothirdparty.ItisavailablefromtheHUDOfficeofLaborRelationswebsite.

ThefollowingtabledescribesthePHA’sresponsibilitiesforwagerates:

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PHA Responsibility Description

Required Clauses and WageRates.

PHAsmustincorporatetheclausescontainedinFormHUD-5370,GeneralConditionsoftheContractforConstruction,inconstructioncontracts.PHAsareencouraged,but not required, to use the following HUD forms to pass along wage rate requirementsaccurately:ConstructionContractsover$100,000.FormHUD-5370“GeneralConditionsoftheContractforConstruction.”ConstructionorDevelopmentContractsbetween$2,000and$100,000.HUD-5370-EZ“GeneralConditionsoftheContractforSmallConstruction/DevelopmentContracts.”

PreconstructionConference/ Technical Advice.

PHAsareencouraged,butnotrequired,toholdapreconstructionconferenceatwhichwagerateresponsibilitiesarediscussed.PHAsareencouragedtoprovidebasic training and technical support to contractors to ensure that they understand theirobligationsunderprevailingwageandreportingrequirements.

Designate Contract Administrator for construction

ProvidecontacttotheappropriateHUDOfficeforLaborRelations(OLR).

Monitor compliance through wage surveys and interviews.

PHAsmustconducton-siteinspectionsincludinginterviewswithlaborersandmechanicsemployedontheconstructionproject.Thecontractadministratororadesignee(suchasanagencyconstructioninspector)mustperiodicallyconductinterviewswiththeconstructionworkersonthejobsite.Thepurposeoftheinterviewsistocaptureobservationsoftheworkbeingperformedandtogettheworkers’viewsonthenumberofhourstheywork,thetypeofworktheyperform,andthewagestheyreceive.Informationgatheredduringtheinterviewsisrecordedon Form HUD-11, Record of Employee Interview. Completed HUD-11s must be comparedtothecorrespondingcontractorandsubcontractorcertifiedpayrollstotestandverifytheaccuracyofthepayrollinformation.FormHUD-11sareavailableon-lineinEnglishandinSpanishinafillableformatviatheHUDFormswebsiteandat the OLR website.PHAsmustensurethattheapplicableDavis-BaconwagedecisionandDepartmentofLabor(DOL)Davis-Baconposter(FormWH-1321)aredisplayedatthejobsite.

CertifiedPayroll.

PHAsmustreviewweeklycertifiedpayrollreports(DOLFormWH-347isoptionalbutadvised)andrelateddocumentation.PHAsmustidentifyanydiscrepanciesand/orviolations.PHAsmustensureanyneededcorrectionsaremadepromptly,includingthepaymentofwagerestitution,asneeded,andtheassessmentandcollectionofliquidated damages, as appropriate.

Report to HUD.

PHAsmustsemi-annuallyfileFormHUD-4710identifyingcontractsawardedoverthepast6monthsandenforcementactivity,regardlessofcontractdate,overthepast6months.PHAsmustreferpotentialcriminalorcomplexenforcementactionstoHUD,inadditiontoContractWorkHoursandSafetyStandardsActliquidateddamagesassessmentsforovertimeviolationsanddebarmentrecommendations.

6.5. Procurement and Contract Requirements

WhenprocuringpropertiesorservicesusingCapitalFunds,PHAsmustcomplywith2CFR§200.317to§200.326,andHUDimplementinginstructions,exceptasprovidedinHUDregulationsat24CFRPart905discussedherein.PHAsmustalsofollowtheirownprocurementpolicies and procedures.

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Allprocurementtransactionsshouldbeconductedinamannerthatprovides,tothemaximumextentpractical,fullandopencompetition,asrequiredby2CFR§200.319.ExamplesofrequirementsthatHUDconsidersrestrictiveofcompetitionincludethefollowing:

• Placingunreasonablerequirementsonfirmsinorderforthemtoqualifytodobusiness with the PHA;

• Requiring unnecessary experience and excessive bonding;

• Makingnoncompetitiveawardstoconsultantsthatareonretainercontracts;

• Specifying only a brand name product instead of allowing an equal product to be offered;and

• Imposing in-state or local geographic preferences unless expressly mandated or encouraged by federal statute.

PHAsmustperformacostorpriceanalysisinconnectionwitheveryprocurementaction.Themethodanddegreeofanalysisdependonthefactsoftheparticularprocurement,buttypicallytheanalysisincludesbothanindependentcostestimateandapriceorcostanalysis.

• Independent Cost Estimate.Anindependentcostestimateisrequiredforallprocurementactionsinexcessofthemicro-purchaselevel(see2CFR200.67and200.320)nottoexceed$3,000,or$2,000inthecaseofacquisitionsforconstructionsubjecttotheDavis-BaconAct.Thisestimateispreparedbeforereceivingbidsorproposals,andservesasthePHA’sbenchmarkforevaluatingthereasonablenessofthecontractors’proposedcostsorpricesalongwiththecostguidelinesin2CFRPart200.Italsofacilitatestheselectionofthemethodofprocurement.

• Price Reasonableness.Incompetitiveprocurements,theforceofcompetitionisusuallyadequatetoallowthePHAtomakeapricereasonablenessdeterminationbasedsimplyonacomparisonoftheofferedprices.WherethePHAcannototherwise document price reasonableness through a price analysis, formal cost analysis must be used.

• Force Account Labor.WhilePHAsdonotnegotiatewithathirdpartywhendeterminingtousetheirownlaborforcetoperformatask(i.e.,ForceAccountLabor),thePHAshouldstilldocumentthecostreasonablenessofusingitsownlaborratherthanprocuringtheseservicesthroughcompetitiveprocurement.In Force Account Labor, the PHA procures needed materials and equipment pursuantto2CFRPart200.AdditionaldiscussionofForceAccountLabormaybefoundinSection6.5.

Method of Procurement. MostCapitalFundprocurementswillbeaccomplishedbyoneoffivebasic procurement methods:

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Methods of Procurement

Small Purchase.

Thesearerelativelysimpleandinformalprocurementmethodsforsecuringservices,supplies, or other property. The PHA should obtain price or rate quotes from an adequate numberofqualifiedsources,typicallyatleastthree.Themaximumamount(thesimplifiedacquisitionthreshold)is$150,000asofpublicationofthisGuidebook.[2CFR§200.88]

(Note:IfaPHA’sprocurementpolicy(e.g.,ifbasedonlocalorstatelaw)setsalowersmallpurchase threshold, that threshold must be used.)

Micro Purchase.

Documentationshouldbekepttoaminimumformicropurchases,andsolicitationofonesourceonlyispermitted.Themaximumamount(themicropurchasethreshold)is$3,000asofpublicationofthisGuidebook.[2CFR§200.67]

(Note:IfaPHA’sprocurementpolicysetsalowersmallpurchasethreshold,thatthresholdshould be used.)

SealedBids.Sealedbidsareusedformostconstructioncontractsthatexceedthesimplifiedacquisitionthreshold.Bidsarepubliclysolicitedandafirmfixed-pricecontractisawardedtotheresponsive and responsible bidder with the lowest bid.

CompetitiveProcedures.

Competitiveproceduresareusedwhenconditionsarenotappropriatefortheuseofsealed bids, especially when price may not be the primary determining factor for contract award.Granteesmayalsousethisapproachforqualifications-basedprocurementofarchitectural/engineering professional services and for procurement of developers of mixed-financedevelopers,asdiscussedbelow.

NoncompetitiveProcedures.

Thismethodinvolvessolicitationofaproposalfromonlyonesource,andmaybeused only when: The item is available only from a single source; the public exigency oremergencyfortherequirementwillnotpermitadelayresultingfromcompetitivesolicitation;theFederalawardingagencyorpass-throughentityexpresslyauthorizesnoncompetitiveproposalsinresponsetoawrittenrequestfromthenon-Federalentity;oraftersolicitationismadetoanumberofsources,butcompetitionisdeterminedinadequate.

Mixed-Finance Development Projects. Mixed-Finance Development Partners may be selected inaccordancewiththe24CFR§905.604(h)(describedinChapter9ofthisGuidebook).Contracts and other agreements with Mixed-Finance Development Partners must specify that theycomplywiththerequirementsof24CFR§905.602and§905.604(describedinSections9.5and9.6ofthisGuidebook).

Mandatory Contract Clauses. PHAs shall incorporate all mandatory contract clauses required byHUD.PHAsmayaccomplishthisby(1)attachingtheapplicableHUDform(s)and/orwagedecisions,(2)incorporatingthetextoftheapplicableHUDdocumentdirectlyintothePHA’sowncontractdocuments,and(3)incorporatingtheclausesorHUDformsand/oranyapplicableDavis-Baconwagedecisionsbyreference.Whenincorporatingclausesorformsbyreference,the reference must specify which clauses or forms are incorporated, and where the clauses or formsmaybeaccessed.Ifaformisnotprescribed,thePHAmayuseanyOfficeofManagementandBudget(OMB)approvedHUDformsthatcontainsallapplicablefederalrequirementsandcontract clauses.

AdditionalinformationonmandatoryclausesmaybefoundinExhibits6.1and6.2.

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Assurances of Completion. Notwithstanding the bonding requirements described at 2 CFR §200.325,foreachCapitalFundconstructioncontractover$100,000,thecontractorshallfurnishthePHAwiththefollowingbasedonanexceptionto24CFR85.36(h)(Seethe2013editionof85.36(h)andHUDConformingrulefor2CFRPart200):

• A bid guarantee from each bidder equivalent to 5% of the bid price; and

• At least one of the following:

▪ A performance bond and payment bond for 100% of the contract price;

▪ A performance bond and a payment bond, each for 50% or more of the contract price;

▪ A 20% cash escrow;

▪ A10%irrevocableletterofcreditwithtermsacceptabletoHUD;or

▪ Any other payment method acceptable to HUD.

Procurement of Recovered Materials. PHAs must give preference in their own procurement practicestomaterialsontheU.S.EnvironmentalProtectionAgency’sapprovedlistinaccordancewiththerequirementsofSection6002oftheSolidWasteDisposalAct.Amongotherthings,these requirements apply where the purchase price of the item exceeds $10,000, or the value ofthequantityacquiredintheprecedingfiscalyearexceeded$10,000.[2CFR§200.322]

6.6. Force Account Labor.

Force account labor is labor employed directly by a PHA on either a permanent or temporary basistocarryoutphysicalworkfundedbytheCapitalFund.ThePHAusesemployees,eitherexistingornewlyhired,pursuanttoitspersonnelpolicytoperformwork,ratherthanprocuringacontractortoperformcertainactivities.Anygoodsorservicespurchasedinthecourseoftheforceaccountworkmustbeprocuredinaccordancewith2CFRPart200.

APHAmayuseforceaccountlaboriftheplantodosoisincludedinthePHA’s5-YearActionPlanthatisapprovedbythePHABoardofCommissionersandHUD.HUDapprovalisnotrequired to use force account labor when the PHA is designated as a high performer under PHAS.

Intheannualbudgetincludedinthe5-YearActionPlan,forceaccountlaborcostsshallbechargedtotheappropriateBLI.AcarpenterworkingonabuildingframewouldbeallocatedtoDwellingStructures(BLI1460).Laterwhenthecarpenterisworkingonacommunitybuilding,thecostswouldbeallocatedtoNondwellingStructures(BLI1470).

TheFieldOfficeshouldonlyapproveuseofForceAccountLaborifitdeterminesthat:

• theuseofforceaccountlaboriscost-effectiveandappropriatetotheCapitalFundactivitiesbeingundertaken(seecostbenefitanalysissectionbelow);

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• and the PHA has the capacity to serve as its own contractor.

ThePHAshalluseacostbenefitanalysistocomparetheoverallbenefitsofhiringandadministeringitsownlaborforcetoprocuringtheworkfromanoutsidecontractor.Theextentand nature of the analysis should be commensurate with the scope of planned improvements.

• Example:Forbasicworkitems,itmaybemorecosteffectivetousethePHA’sexistingmaintenancestafftoundertaketherepairs.However,forlarger,morecomplicatedrehabilitation,aPHAmayconsiderprocuringanA/Efirmtooverseethework.

Iftheanalysisdeterminesthattheuseofforceaccountlaboristhemostcosteffectiveapproach,thePHAshouldproceedwiththeforceaccountwork.Otherwise,thePHAshouldprocureoutsidecontractorstoundertaketheplannedactivities.

Davis-Baconandprevailingwagedeterminationsapplytoemployeesconductingforceaccountworkjustastheywouldapplytoageneralcontractor’semployees.

• Example: A journeyman licensed electrician employed by the PHA for developmentormodernizationactivitiesshouldbepaidthesamewagerateasa journeyman licensed electrician employed by a general contractor performing thesamework.

Atthebeginningofthework,thePHAshouldobtainawagedeterminationjustasitwouldforathird-partyworkforce.

Theemployees’contractsorjobdescriptionsshouldoutlinethelaborskillsrequired,licensingrequirements,durationoftheassignment,wagesearned,fringebenefits.

Personnel Issues. APHAmayuseexistingemployeesorhirenewemployeespursuanttoitspersonnel policy. New employees may be hired on a permanent or temporary basis.

CurrentPHAemployeesmaybecomeforceaccountworkersprovidedthat:

• theirregulardutiesareeithersuspendedorreassigned;

• maintenanceofthepropertiesisnotcompromised;and

• employees’regularworkassignmentsarenotadverselyaffected.

Aswithallhiring,nohiringmayviolatetheconflictofinterestpoliciesunderthePHA’sprocurement policy, the ACC, or 2 CFR Part 200.

Equipment and Materials. Allequipment,toolsandmaterialsusedinforceaccountworkmustbeprocuredfollowingtherequirementsoutlinedinSection6.4ofthisGuidebook.Thepurchaseorleaseofequipment(includingvehiclesanddumptrucks)mustbejustifiedbythescopeofwork.Anydedicatedorspecializedequipmentmustbeusedordisposedofinaccordancewith2CFR§200.313.Thecostandadministrationofallrelatedequipmentandmaterialsmustbeclearlyidentifiedinthecostbenefitanalysis.

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The obligation and expenditure requirements for Capital Funds used for force account work are described in Chapter 7 of this Guidebook.

Summary of Force Account Labor RequirementsPHAsmustmeetbasicrequirementsrelatedtotheirabilitytostaff,superviseandmanagetheproposedforceaccountwork.

PHAsmustperformacostbenefitanalysisfortheproposedforceaccountwork.

HUD approval is required unless the PHA is a PHAS high performer.

Davis-Baconwageand/orprevailingwageratesmayapply.

ObligationandexpenditureEndDatesfortheCapitalFundsusedfortheforceaccountworkmustbeobserved.

6.7. Contract Administration and Acceptance of Work

PHAsareresponsible,inaccordancewiththeprocurementregulationsat2CFR§200.317to§200.326,forallcontractualandadministrativeissuesarisingoutoftheirprocurements.PHAsshallmaintainacontractadministrationsystemtoensurethateachcontractorfulfillsallofthetermsandconditionsofeachcontractandshallmaintainfullandcompleterecordsonthehistoryofeachprocurementtransaction.

Inspection and Acceptance. PHAs, or, in the case of Mixed-Finance Development, the Owner Entity,shallcarryoutinspectionsofworkinprogressandgoodsdelivered,asnecessary,toensurecompliancewithexistingcontracts.If,uponinspection,aPHAdeterminesthattheworkand/orgoodsarecomplete,satisfactory,and,asapplicable,otherwiseundamaged,exceptforanyworkthatisappropriatefordelayedcompletion,thePHAshallacceptthework.PHAsshalldetermineanyholdbackforitemsofdelayedcompletionandtheamountdueandpayablefortheworkthathasbeenaccepted,includinganyconditionsprecedenttopaymentthatarestatedintheconstructioncontractorcontractofsale.ThecontractorshallbepaidforitemsonlyafterthePHAinspectsandacceptsthatwork.

Guarantees and Warranties. PHAs, or, in the case of Mixed-Finance Development, the Owner Entity,shallspecifytheguarantyperiodandamountstobewithheld,asapplicable,andshallprovidethatallcontractor,manufacturer,andsupplierwarrantiesrequiredbytheconstructionandmodernizationdocumentsshallbeassignedtothePHA.PHAsshallinspecteachdwellingunitandtheoverallprojectapproximately3monthsafterthebeginningoftheprojectguarantyperiod,3monthsbeforeitsexpiration,andatothertimesasmaybenecessarytoexerciseitsrightsbeforeexpirationofanywarranties.PHAsshallrequirerepairorreplacementofalldefectiveitemspriortotheexpirationoftheguarantyorwarrantyperiods.

Notification of Completion. The PHA, or, in the case of Mixed-Finance Development, the OwnerEntity,shallrequirethatallcontractorsanddevelopersnotifythePHAinwritingwhenthecontractwork,includinganyapprovedoff-sitework,willbecompletedandreadyforinspection.

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6.8. Nondiscrimination and Equal Opportunity Requirements

NondiscriminationandEqualOpportunityAdministrativeRequirements:

CapitalimprovementsusingCapitalFundaresubject,generally,tonondiscriminationandequalopportunity requirements. The more extensive the improvements, the more requirements tend toapply.Apartialoutlineoftheserequirementsisasfollows:

• 24 CFR § 960.103: PHAs must administer public housing in accordance with the nondiscriminationandequalopportunityrequirementsimposedbycontractorfederallaw,includingtheauthoritiescitedin24CFR5.105(a)(seebelow)andprovisionstoaffirmativelyfurtherfairhousing.

• 24 CFR § 5.105(a)liststhefederallawsandregulationsthatapplytoHUDprograms,includingtheactivitiesofPHAs.Theyinclude,forexample:

§TheFairHousingActandimplementingregulationsat24CFRPart100;

§TitleVIoftheCivilRightsActof1964andimplementingregulationsat24CFR Part 1;

§AgeDiscriminationActof1975andimplementingregulationsat24CFRPart 146;

§Section504oftheRehabilitationActof1973andimplementingregulationsat24CFRPart8;and

§TitleIIoftheAmericanswithDisabilitiesActof1990.

Thefollowingdocumentsarealsorelevantinthecontextofnon-discriminationandequalopportunity requirements:

Plan Documents: PHAs submit a Five Year Agency Plan and Annual Plan Update (HUD-50075),requiredbySection5Aofthe1937Act.IncludedwiththeseplansmustbeacivilrightscertificationasspecifiedinHUD’sregulationsat24CFR§903.7(o):PHAsmustcertifyannuallythattheywillcomplywithTitleVIoftheCivilRightsActof1964,theFairHousingAct,Section504oftheRehabilitationActof1973,andTitleIIoftheAmericanswithDisabilitiesActof1990,andwillaffirmativelyfurtherfairhousing.PHAsthatdonotsubmitPHAAnnualPlansmustsubmitthecivilrightscertification.

The Fair Housing Act

The Fair Housing Act is Title VIII of the Civil Rights Act of 1968 (42 U.S.C. §§ 3601 – 3619), as amendedin1988,whichprohibitsdiscriminationagainstindividualsbecauseofrace,color,religion,sex,disability,nationalorigin,orfamilialstatus.TheFairHousingActprohibitsdiscriminationagainstprotectedclassmembersinthesale,rental,conditions,andfinancingofdwellingsandinotherhousing-relatedtransactions.TheFairHousingActanditsimplementingregulationsat24CFRPart100definewhoisprotected,whattypeofhousingthelawcoversandwhattypesofactionsconstituteillegaldiscrimination.24CFRPart100interpretsthescopeoftheFairHousingActandsimilarlyprohibitsdiscriminationinthesaleorrentalofdwellings,the

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provisionofservicesinconnectionwithhousingandtheavailabilityofresidentialrealestate-relatedtransactions.

Affirmatively Furthering Fair Housing

1. Purpose Section808(e)(5)oftheFairHousingAct(42U.S.C.§3608(e)(5))requirestheSecretaryofHUDtoadministerhousingandurbandevelopmentprogramsandactivitiesinamannerthataffirmativelyfurthersfairhousing.Therequirementstoaffirmativelyfurther fair housing apply to PHAs.

2. ObligationsofPHAstoAffirmativelyFurtherFairHousing PHAsmustcertifythattheyareaffirmativelyfurtheringfairhousingintheirAnnualPlan.PHAsparticipatingintheMTWdemonstrationsubmitthiscertificationasapartoftheirAnnualMTWPlan,referencedinAttachmentBoftheStandardMTWAgreement.

Thespecificcertificationrequirementsdetailedat24CFR§903.7(o)providethataPHAiscompliantinaffirmativelyfurtheringfairhousingifthePHAfulfillssection903.2(b)andtakesactionto:

1. Examine programs or proposed programs;

2. Identifyanyimpedimentstofairhousingchoicewithinthoseprograms;

3. Address those impediments in a reasonable fashion in view of the resources available;

4. Workwithlocaljurisdictionstoimplementanyofthejurisdiction’sinitiativestoaffirmativelyfurtherfairhousingthatrequirePHAinvolvement;and

5. Maintainrecordsreflectingtheseanalysesandactions.

Section24CFR903.2(d)reinforcestheobligationsamongPHAstofollowFairHousingActrequirementsandaffirmativelyfurtherfairhousinginadmissionandoccupancypolicies;preventdiscriminationagainstand/orsegregationbecauseofrace,color,religion,sex,disability,familialstatusornationalorigin;reduceracialandnationaloriginconcentrationsinthedesignofeligibility,selectionandadmissionspolicies;andtakeaffirmativestepstoovercometheeffectsofconditionswhichresultedinlimitedparticipationofpersonsbecauseoftheirrace,nationalorigin,orotherprohibitedbasis.

Title VI of the Civil Rights Act of 1964

HUD’sTitleVIregulationstatesthatnopersonintheUnitedStatesshall,onthegroundofrace,color,ornationalorigin,beexcludedfromparticipationin,bedeniedthebenefitsof,orbeotherwisesubjectedtodiscriminationunderanyprogramoractivityreceivingfederalfinancialassistancefromHUD(24CFR§1.1).AllPHAs,includingthosethatparticipateintheMTW

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demonstration,mustfullycomplywiththenon-discriminationprovisionsofTitleVIand24CFRPart1,whichincludetheprohibitionondiscriminationinprovidingaccommodations,facilities,services,financialaid,andanyotherbenefitsprovidedbyMTWPHAs(see24CFR§§1.1,1.2).

PHA contracts must contain assurances that contractors comply with Title VI. Real property acquiredthroughfederalfinancialassistancemusthavearecordedcovenantthatassuresnondiscrimination(24CFR§1.5).

24 CFR § 1.4(b)(6) provides that if a recipient of federal funds has previously discriminated againstpersonsonthegroundofrace,color,ornationalorigin,thentherecipientmusttakeaffirmativeactiontoovercomeorcorrecttheeffectsofpriordiscriminationinprogramadministration.Intheabsenceofsuchpriordiscrimination,arecipientoffederalassistanceshouldtakeaffirmativeactiontoovercometheeffectsofconditionswhichresultedinlimitingparticipationbypersonsofaparticularrace,color,ornationalorigin(24CFR§1.4(b)(6)(ii)).

HUD’sTitleVIregulationsrequirePHAstocompletecompliancereports.PHAssubmitcompliancereportstotheappropriatefieldcivilrightsofficialinatimely,completeandaccuratemanneratsuchtimesasthecivilrightsofficialdeterminesnecessary.Reportsincluderacialandethnicdataofthebeneficiariesoffederally-assistedprograms.TheresponsibleDepartmentofficialorhisdesigneeshallmakeapromptinvestigationwheneveracompliancereview,report,complaint,oranyotherinformationindicatesapossiblefailuretocomplywithpart1.PHAsmustnotretaliateagainstapersonwhomakesacomplaintorassistsinaninvestigation.Consequencesforviolationsincludeinformalresolution,terminationoffederalfinancialassistance,referraltotheDepartmentofJusticeandtheinitiationofdebarmentproceedings(see 24 CFR §§ 1.6, 1.7, and 1.8).

Section 504 of the Rehabilitation Act of 1973

Section504oftheRehabilitationActof1973(29U.S.C.§794)prohibitsdiscriminationbasedondisabilityinprogramsoractivitiesoperatedbyrecipientsoffederalfinancialassistance,includingPHAs.ThiscoverageextendstoallaspectsofprogramadministrationandimplementationbyPHAs,aswellastheactualhousingownedormanagedbyPHAs.

UnderSection504,anindividualwithdisabilitiesmeansanypersonwhohasaphysicalormentalimpairmentthatsubstantiallylimitsoneormoremajorlifeactivities;hasarecordofsuch an impairment; or is regarded as having such an impairment (24 CFR § 8.3). Generally, thedeterminationismeasuredwithoutconsiderationoftheameliorativeeffectsofmedicineordevices.Majorlifeactivitiesinclude,forexample,takingcareofoneself,performingmanualtasks,walking,seeing,hearing,speaking,breathing,learningandworking(See24CFR§8.3concerningthesection504provisionsforalcoholanddrugabusers).

Reasonable Accommodations

PHAsarerequiredtomakereasonableadjustmentstotheirrules,policies,practicesandprocedures in order to enable an applicant or resident with a disability to have an equal opportunitytouseandenjoythehousingunit,thecommonareasofadwellingorparticipateinoraccessprogramsandactivitiesconductedorsponsoredbythePHA(see24CFR§§8.20,8.21,8.24and8.33).Whenafamilymemberrequiresapolicymodificationtoaccommodate

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adisability,PHAsmustmakethepolicymodificationunlessdoingsowouldresultinafundamentalalterationinthenatureoftheprogramoranunduefinancialandadministrativeburden. For example:

• A PHA that has a no pets policy must permit the use of an assistance animal as a reasonableaccommodationiftheanimalisneededtoprovidetheresidentwithadisability an equal opportunity to use and enjoy the housing;

• APHAgivespriorityparkingforapersonwithamobilitydisabilitywhorequestsanassignedparkingspot.

The Americans with Disabilities Act

TitleIIoftheAmericanswithDisabilitiesAct(ADA)prohibitsdiscriminationonthebasisofdisabilitybypublicentities.Publicentitymeansanystateorlocalgovernment;oranydepartment, agency, special purpose district or other instrumentality of a state or states or local government,includingaPHA.See28CFR35.102and35.104.Apublicentityshalloperateeachservice,programoractivitysothatwhenviewedinitsentirety,eachservice,programoractivityisreadilyaccessibletoandusablebyindividualswithdisabilities(see28CFR§35.151(a)).

TheTitleIIregulationsat28CFRPart35containextensiverequirementsthatapplytopublicentities,includingPHAs,andshouldbereviewedintheirentiretytoensurecompliancewiththeADA.

Site and neighborhood standards

HUD’ssiteandneighborhoodstandardsimplementTitleVIoftheCivilRightsActof1964,theFairHousingAct,Section504oftheRehabilitationActof1973,andvariousExecutiveOrdersandimplementingregulationswithrespecttothesiteselectionforhousingreceivingHUDassistance.SiteandneighborhoodstandardsapplywhenPHAsuseHUDfinancialassistancetoacquire, rehabilitate, or construct housing

Provisionsof24CFR§1.4applytothesitesandlocationsofhousingandfacilities.Specifically,PHAsmustnotselectsitesorlocationswithadiscriminatorypurposeandselectionsmustnothaveadiscriminatoryeffect.Thisincludessitingdecisionsthatsegregateminoritypopulations(see 24 CFR §§ 1.4(b) (1) (iii) and 1.4(b) (3)).

Provisionsof24CFRpart8applytothesitesandlocationsofhousingandfacilities.Specifically,PHAsmustnotselectsitesorlocationsofafederallyassistedfacilitywhichhasthepurposeoreffectofexcludingpersonswithdisabilitiesfrom,denyingthemthebenefitsof,orotherwisesubjectingthemtodiscriminationundertheFederallyassistedprogramoractivity(see24CFR§8.4(b)(5)).

Systemic Violations

APHAisineligibletoreceiveaSafetyandSecurityGrantorotherdiscretionaryCapitalFundsifithasreceivedanyofthefollowingcharges,causedeterminations,lawsuits,orlettersoffindings;andiftheviolationisnotresolvedtoHUD’ssatisfactionatthetimeadecisionismadetoawardfunds.

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• ThePHAhasbeenchargedwithasystemicviolationoftheFairHousingActorreceivedacausedeterminationfromasubstantiallyequivalentstateorlocalfairhousingagencyconcerningasystemicviolationofasubstantiallyequivalentstateorlocalfairhousinglawproscribingdiscriminationbecauseofrace,color,religion,sex,nationalorigin,disability,orfamilialstatus;

• ThePHAisadefendantinaFairHousingActlawsuitfiledbytheDepartmentofJusticeallegingapatternorpracticeofdiscriminationordenialofrightstoagroup of persons raising an issue of general public importance pursuant to 42 U.S.C. 3614(a);

• ThePHAisadefendantinanyotherlawsuitfiledorjoinedbytheDepartmentofJusticeallegingapatternorpracticeorsystemicviolationofTitleVIoftheCivilRightsActof1964,Section504oftheRehabilitationActof1973,Section109ofthe Housing and Community Development Act of 1974, Title II of the Americans withDisabilitiesAct,oraclaimundertheFalseClaimsActrelatedtofairhousing,nondiscrimination,orcivilrightsgenerallyincludinganallegedfailuretoaffirmativelyfurtherfairhousing;

• ThePHAhasreceivedaletteroffindingsidentifyingsystemicnoncomplianceunderTitleVIoftheCivilRightsActof1964,Section504oftheRehabilitationActof1973,Section109oftheHousingandCommunityDevelopmentActof1974;orTitleIIoftheAmericanswithDisabilitiesAct;

• ThePHAhasreceivedacausedeterminationfromasubstantiallyequivalentstateorlocalfairhousingagencyconcerningasystemicviolationofprovisionsofastateorlocallawprescribingdiscriminationinhousingbasedonsexualorientationorgenderidentity;or

• ThePHAhasreceivedacausedeterminationfromasubstantiallyequivalentstateorlocalfairhousingagencyconcerningasystemicviolationofastateorlocallawproscribingdiscriminationinhousingbasedonlawfulsourceofincome.

PHAsareremindedthattherequirementsofSection3areapplicabletofundsreceivedunderthistypeofgranttothesameextentthattheywouldotherwiseapplytoSection3-coveredassistance.

ThefollowingtabledescribesrequirementsforPHAsrelatedtotheUniformRelocationAssistanceandRealPropertyAcquisitionAct(URA):

Nondiscrimination and Equal Opportunity Requirements

Parts 5 and 200. PHAs shall comply with the requirements of 24 CFR Part 5 (General HUD Program Requirements;Waivers)and2CFRPart200(UniformAdministrativeRequirements,Cost Principles and Audit Requirements for Federal Awards).

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Nondiscrimination and Equal Opportunity Requirements

NondiscriminationandEqual Opportunity.

PHAsshallcomplywithallapplicablenondiscriminationandequalopportunityrequirements,includingHUD’sgenerallyapplicablenondiscriminationandequalopportunityrequirementsat24CFR§5.105(a)andtheArchitecturalBarriersActof1968(42U.S.C.§4151etseq.),anditsimplementingregulationsat24CFRParts40and41.PHAsshallaffirmativelyfurtherfairhousingintheiruseoffundsunderthispart,whichincludes,butisnotlimitedto,addressingmodernizationanddevelopmentinthecompletionofrequirementsat24CFR§903.7(o).

Displacement, Relocation,andRealPropertyAcquisition.

AllacquisitionorrehabilitationactivitiescarriedoutundertheCapitalFundmustcomplywiththeUniformRelocationAct(URA).

TheURAisafederallawthatprescribesrequirementsthatmustbesatisfiedwhenreal property is acquired for a federally-funded project. The URA also prescribes relocationassistanceandpaymentsthatmustbeprovidedtopersonsdisplacedasaresultofacquisition,rehabilitation,ordemolitionofrealpropertyforafederally-funded project.

HUDHandbook1378(RealEstateAcquisitionandRelocationPolicyandGuidance)providesHUDpolicyandadditionalguidanceonimplementingtheURAand49CFRPart 24 for HUD-funded programs and projects.

DemolitionordispositionunderSection18ofthe1937Actiscoveredbytherelocationprovisionsat24CFR§970.21,nottheURA.However,ifthedemolitionordispositionispartofaprojectinvolvingCapitalFundsoranyadditionalHUDfunds(otherthanSection18dispositionproceeds),theURAwillapply.

PHAs are advised to begin planning URA compliance as soon as they begin planning anyactivitythatwilleventuallyrequirelandacquisitionortenantrelocation,eitherofexistingpublichousingresidentsorresidentsofacquiredproperties.

Section3.

PHAsandtheircontractorsshallcomplywithSection3oftheHousingandCommunityDevelopmentActof1968(12U.S.C.§1701u)andHUD’simplementingrulesat24CFRPart135.UnderSection3,tothegreatestextentfeasible,newemployment,contracting,orjobtrainingopportunitiescreatedinconnectionwithhousingrehabilitation,housingconstruction,orotherpublicconstructionprojectsmustbegiventoSection3residents.Inaddition,tothegreatestextentfeasible,newcontractsforhousingrehabilitation,housingconstruction,orotherpublicconstructionprojectsmustbeawardedtoSection3businessconcerns.

6.9. Compliance with Physical Standards

Lead-Based Paint and Fire Safety.

PHAsshallcomplywiththelead-basedpaintpoisoningprotectionstandardsat24CFR§905.308

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(b)(5)andthefiresafetystandardsat24CFR§905.308(b)(6).

Design and Construction.

PHAsshallmeetthefollowingdesignandconstructionstandards,asapplicable,foralldevelopmentandmodernization:

• Physical structures shall be designed, constructed, and equipped to be consistent with the neighborhoods they occupy; meet contemporary standards of modest design,comfort,andlivability;promotesecurity;promoteenergyconservation;andbeattractivesoastoharmonizewiththecommunity.

• All development projects shall be designed and constructed in compliance with thefollowingcodes,laws,andstandardsidentifiedin24CFR§905.312(b)and(c),specifically:

▪ Anationalbuildingcode,suchasthosedevelopedbytheInternationalCodeCouncilortheNationalFireProtectionAssociation;andthe2009InternationalEnergyConservationCode(IECC),orASHRAEstandard90.1-2010,“EnergyStandardforBuildingsExceptLow-RiseResidentialBuildings,”formultifamilyhigh-rises(4storiesorhigher)(see24CFR905.110), or a successor energy code or standard that has been adopted by HUD pursuant to 42 U.S.C. 12709 or other relevant authority;

▪ Applicablestateandlocallaws,codes,ordinances,andregulations;

▪ Otherfederalrequirements,includingfireprotectionandsafetystandardsimplementedundersection31oftheFireAdministrationAuthorizationAct of 1992, 15 U.S.C. 2227 and HUD minimum property standards (e.g., 24 CFR Part 200, Subpart S);

• AccessibilityrequirementsasrequiredbySection504oftheRehabilitationAct(29U.S.C.794)andimplementingregulationsat24CFRPart8;TitleIIoftheAmericanswithDisabilitiesAct(42U.S.C.12101etseq.)andimplementingregulationsat28CFRPart35;and,ifapplicable,theFairHousingAct (42U.S.C.3601-3619)andimplementingregulationsat24CFRPart100;and

• Pursuant to 42 U.S.C. 1437d(a), a high-rise elevator structure shall not be provided for families with children regardless of density, unless the PHA demonstratesandHUDdeterminesthatthereisnopracticalalternative.

6.10. Affordability Requirements

Operation as Public Housing.

EachPublicHousingProjectmustbemaintainedandoperatedaspublichousinguntilthelatestexpirationdateofanyofthethreerestrictiveuseperiodsbelow:

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• Development as Public Housing. 40-year period that begins on the date on which the Project becomes available for occupancy, as determined by HUD;

• ModernizationwithCapitalFunds. (other than for Management Improvements) 20-year period that begins on the most recent date that the PHA expended Capital Funds to a Project; and

• Operatingfund.10-yearperiodbeginningupontheconclusionofthefiscalyear for which such amounts were provided, except for such shorter period as permittedbyHUD.

Example. An existing project was constructed in 1964, at which time a 40-year use restriction was placed on the property. That use restriction expired in 2004. The project received Capital Funds for modernization in 1984 and again in 2001; these 20-year use restrictions expire in 2004 and 2021. The project stops accepting Operating Fund Assistance in 2025. The project must be operated as public housing until 2035, 10 years after the latest date the project received subsidy, unless HUD permits disposition of the property from the public housing program pursuant to Section 18 of the 1937 Act.

Use Restriction Secured by Declarations. TheuserestrictionidentifiedaboveismemorializedintheACCandtheCFACCAmendment,aswellasbyDeclarationsrecordedagainsttheproperty.

• ForlandacquiredwithCapitalFunds,aDeclarationofTrust(Development)(currently Form HUD-52190-A) (or in the case of Mixed-Finance Development, a DeclarationofRestrictiveCovenants)mustberecordedagainsttheproperty.

• ForPublicHousingProjectsdevelopedbyamethodotherthanbymixedfinance,aDeclarationofTrust(Development)(currentlyFormHUD-52190-A),havingaminimumtermof40years,mustberecordedupontheearlierofacquisitionofproperty or HUD approval of the Development Proposal.

• For Public Housing Projects developed by the Mixed-Finance Development method,aDeclarationofRestrictiveCovenants,inaformapprovedbyHUD,andhaving a minimum term of 40 years, must be recorded at closing.

• ForModernizationprojects,aDeclarationofTrust(Modernization)(currentlyFormHUD-52190-B),havingatermof20years,beginsonthelatestdateaPHAsigns CF ACC Amendment for a Public Housing Project.

Restriction on Transfers. Amongotherthings,theDeclarations,ACCsandSection30ofthe1937 Act prohibit any Mortgage or Security Interest against a Public Housing Project without HUD’spriorwrittenapproval.APHAmayobtainsuchapprovalthroughapprovalofaSecurityInterest pursuant to Chapter 11 or approval of a Mixed-Finance Project pursuant to Chapter 9.

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Exhibit 6.1. Mandatory Contract Clauses

(For purchases above the Federal Small Purchase Threshold)

• Mandatory Requirements for Construction/Development Contracts greater than $150,000*. PHAs must incorporate the clauses contained in Form HUD-5370,GeneralConditionsoftheContractforConstruction,andtheapplicableDavis-Baconwagedecision.

• Mandatory Requirements for Non-Construction Contracts (without maintenance work) greater than $150,000*. PHAs must incorporate the clauses containedinSectionIofFormHUD-5370-C,GeneralConditionsforNon-ConstructionContracts.

• Mandatory Requirements for Maintenance Contracts (including non-routine maintenance work) greater than $150,000.* PHAs must incorporate the clauses containedinSectionsIandIIofFormHUD-5370-C,GeneralConditionsforNon-ConstructionContracts.

Acceptable Methods of Incorporation.PHAsmayutilizeanyoneoranycombinationofthefollowing methods to incorporate mandatory clauses and applicable wage decisions into bid specificationsandcontracts.PHAsmay:

AttachtheHUDform(s),and/orwagedecisions,asprinted;

Incorporate the clauses/text of the applicable HUD form and wage decision into other documents(e.g.,intothePHA’sownforms)thatarebound/attachedtothecontract(andbidspecifications,ifapplicable)orincorporatedbyreference(seeparagraph3,below).

IncorporatetheclausesorHUDformsand/oranyapplicableDavis-BaconorHUDwagedecisionbyreference.Thereferencemustbespecificastotheexactclausesorform(s)thatareincorporated, and where the clauses or forms(s) may be accessed or obtained (e.g.,HUDClips orPHAwebsite).ADavis-Baconwagedecision(applicabletoconstruction/developmentwork)maybeincorporatedbyreferencetowww.wdol.govandtothespecificnumber,modificationnumber,anddateofthewagedecision.HUDwagedecisions(applicabletomaintenancework)arenotavailableatHUD’swebsite;however,aPHAmaypostanyapplicableHUDwagedecisionto its own website and reference that site. PHAs must provide hard-copies of any referenced clauses, forms, and/or wage decisions on request.

However,PHAsmaynotmakeanychangestotheseHUDformswithoutHUD’sapproval.Anychanges currently require approval of the Assistant Secretary of Public and Indian Housing, the Principal Deputy Assistant Secretary of Public and Indian Housing or the General Deputy Assistant Secretary for Public and Indian Housing.

*The$150,000thresholdistiedtotheFederalSimplifiedAcquisitionThreshold(2CFR200.88).WhentheFederalSimplifiedAcquisitionThresholdchanges,thesethresholdschangeaccordingly.

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Exhibit 6.2. Mandatory Contract Clauses – all purchases

InadditiontootherprovisionsrequiredbyHUD,pursuantto2CFRPart200,AppendixII,“ContractProvisionsfornon-FederalEntityContractsUnderFederalAwards”allPHAcontractsexpending Capital Funds must contain provisions covering the following, as applicable copied from Appendix II to Part 200 (requirement referenced at 2 CFR 200.326).

A. Contracts for more than the simplified acquisition threshold currently set at $150,000, whichistheinflationadjustedamountdeterminedbytheCivilianAgencyAcquisitionCouncilandtheDefenseAcquisitionRegulationsCouncil(Councils)asauthorizedby41U.S.C.1908,mustaddressadministrative,contractual,orlegalremediesininstanceswherecontractorsviolateorbreachcontractterms,andprovideforsuchsanctionsandpenaltiesasappropriate.

B. All contracts in excess of $10,000mustaddressterminationforcauseandforconveniencebythePHAincludingthemannerbywhichitwillbeeffectedandthebasisforsettlement.

C. Equal Employment Opportunity. Except as otherwise provided under 41 CFR Part 60, all contractsthatmeetthedefinitionof‘‘federallyassistedconstructioncontract’’in41CFRPart 60–1.3 must include the equal opportunity clause provided under 41 CFR 60–1.4(b), inaccordancewithExecutiveOrder11246,‘‘EqualEmploymentOpportunity’’(30FR12319,12935,3CFRPart,1964–1965Comp.,p.339),asamendedbyExecutiveOrder11375,‘‘AmendingExecutiveOrder11246RelatingtoEqualEmploymentOpportunity,’’andimplementingregulationsat41CFRpart60,‘‘OfficeofFederalContractCompliancePrograms,EqualEmploymentOpportunity,DepartmentofLabor.’’

D. Davis-Bacon Act, as amended (40 U.S.C. 3141–3148). WhenrequiredbyFederalprogramlegislation,allprimeconstructioncontractsinexcessof$2,000awardedbyPHAsmustincludeaprovisionforcompliancewiththeDavis-BaconAct(40U.S.C.3141–3144,and3146–3148)assupplementedbyDepartmentofLaborregulations(29CFRPart5,‘‘LaborStandards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction’’).Inaccordancewiththestatute,contractorsmustberequiredtopaywagestolaborersandmechanicsataratenotlessthantheprevailingwagesspecifiedinawagedeterminationmadebytheSecretaryofLabor.Inaddition,contractorsmustberequiredtopaywagesnotlessthanonceaweek.ThePHAmustplaceacopyofthecurrentprevailingwagedeterminationissuedbytheDepartmentofLaborineachsolicitation.Thedecisiontoawardacontractorsubcontractmustbeconditionedupontheacceptanceofthewagedetermination.ThePHAmustreportallsuspectedorreportedviolationsandmustalsoincludeaprovisionforcompliancewiththeCopeland‘‘Anti-Kickback’’Act(40U.S.C.3145),assupplementedbyDepartmentofLaborregulations(29CFRPart3,‘‘ContractorsandSubcontractorsonPublicBuildingorPublicWorkFinancedinWholeorinPartbyLoansorGrantsfromtheUnitedStates’’).TheActprovidesthateachcontractororsubrecipientmustbeprohibitedfrominducing,byanymeans,anypersonemployedintheconstruction,completion,orrepairofpublicwork,togiveupanypartofthecompensationtowhichheorsheisotherwiseentitled.ThePHAmustreportallsuspectedorreportedviolationstotheFederal awarding agency.

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E. Contract Work Hours and Safety Standards Act (40 U.S.C. 3701–3708).Whereapplicable,all contracts awarded by the PHA in excess of $100,000 that involve the employment of mechanics or laborers must include a provision for compliance with 40 U.S.C. 3702 and 3704,assupplementedbyDepartmentofLaborregulations(29CFRPart5).Under40U.S.C. 3702 of the Act, each contractor must be required to compute the wages of every mechanicandlaboreronthebasisofastandardworkweekof40hours.Workinexcessofthestandardworkweekispermissibleprovidedthattheworkeriscompensatedatarateofnotlessthanoneandahalftimesthebasicrateofpayforallhoursworkedinexcessof40hoursintheworkweek.Therequirementsof40U.S.C.3704areapplicabletoconstructionworkandprovidethatnolaborerormechanicmustberequiredtoworkinsurroundingsorunderworkingconditionsthatareunsanitary,hazardousordangerous.Theserequirementsdonotapplytothepurchasesofsuppliesormaterialsorarticlesordinarilyavailableontheopenmarket,orcontractsfortransportationortransmissionofintelligence.

F. Rights to Inventions Made Under a Contract or Agreement. If the Federal award meets thedefinitionof‘‘fundingagreement’’under37CFR§401.2(a)andtherecipientorsub-recipientwishestoenterintoacontractwithasmallbusinessfirmornonprofitorganizationregardingthesubstitutionofparties,assignmentorperformanceofexperimental,developmental,orresearchworkunderthat‘‘fundingagreement,’’therecipientorsub-recipientmustcomplywiththerequirementsof37CFRPart401,‘‘RightstoInventionsMadebyNonprofitOrganizationsandSmallBusinessFirmsUnderGovernmentGrants,ContractsandCooperativeAgreements,’’andanyimplementingregulationsissuedbytheawarding agency.

G. Clean Air Act (42 U.S.C. 7401–7671q.) and the Federal Water Pollution Control Act (33 U.S.C. 1251–1387), as amended— Contracts and sub-grants of amounts in excess of $150,000 must contain a provision that requires the contractor to agree to comply with all applicablestandards,ordersorregulationsissuedpursuanttotheCleanAirAct(42U.S.C.7401–7671q)andtheFederalWaterPollutionControlActasamended(33U.S.C.1251–1387).ViolationsmustbereportedtotheFederalawardingagencyandtheRegionalOfficeoftheEnvironmentalProtectionAgency(EPA).

H. Mandatory standards and policies relating to energy efficiency which are contained in the state energy conservation plan issued in compliance with the Energy Policy and Conservation Act (42 U.S.C. 6201).

I. Debarment and Suspension (Executive Orders 12549 and 12689)—A contract award (see 2 CFR180.220)mustnotbemadetopartieslistedonthegovernment-wideExcludedPartiesListSystemintheSystemforAwardManagement(SAM),inaccordancewiththeOMBguidelinesat2CFR180thatimplementExecutiveOrders12549(3CFRPart1986Comp.,p.189)and12689(3CFRPart1989Comp.,p.235),‘‘DebarmentandSuspension.’’TheExcludedPartiesListSysteminSAMcontainsthenamesofpartiesdebarred,suspended,orotherwiseexcludedbyagencies,aswellaspartiesdeclaredineligibleunderstatutoryorregulatoryauthorityotherthanExecutiveOrder12549.

J. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)—Contractors that apply or bid for an awardof$100,000ormoremustfiletherequiredcertification.Eachtiercertifiestothe

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tierabovethatitwillnotandhasnotusedFederalappropriatedfundstopayanypersonororganizationforinfluencingorattemptingtoinfluenceanofficeroremployeeofanyagency,amemberofCongress,officeroremployeeofCongress,oranemployeeofamemberofCongressinconnectionwithobtaininganyFederalcontract,grantoranyotherawardcoveredby31U.S.C.1352.Eachtiermustalsodiscloseanylobbyingwithnon-FederalfundsthattakesplaceinconnectionwithobtaininganyFederalaward.Suchdisclosuresareforwardedfromtiertotieruptothenon-Federalaward.

K. See § 200.322 Procurement of recovered materials.

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Exhibit 6.2.A. Periodic Part 58 Broad Scope Review of Categorically Excluded CFP Activities

EXEMPT

58.34(a):ExemptActivities

I. Environmentalstudies(completionofPart58review)

II. Informationandfinancialservices(IPAAudits)

III. Administrativeandmanagementactivities

IV. Public Services with no physical impact, including but not limited to services concerned with

a. Employment

b. CrimePrevention

c. Child Care

d. Health

e. Drug Abuse

f. Counseling Services

g. EducationPrograms

h. EnergyConservation

i. Welfareorrecreationalneeds

V. Inspectionandtestingofpropertiesforhazardsordefects

VI. Purchase of insurance

VII. Purchase of tools

VIII. Engineering or design costs

IX. Technical assistance and training

X. Assistance for temporary or permanent improvements that do not alter environmentalconditionsandarelimitedtoprotection,repair,orrestorationactivitiesnecessaryonlytocontrolorarresttheeffectsfromdisastersorimminentthreatstopublicsafetyincludingthoseresultingfromphysicaldeterioration

XI. Payment of principal and interest on loans made or guaranteed by HUD

XII. Categorical Exclusion items that require no compliance with any other Federal laws andauthoritiescitedin24CFR58.5

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CEST Categorically Excluded Subject to 58.5

58.35 (a): Categorical Exclusions, Subject to 58.5

*Notetheseprojectsoftenconverttoexemptpursuantto24CFR58.34(a)(12)

I. Modernization/Rehabilitation

CENST Categorically Excluded not subject to 58.5

58.35 (b): Categorical exclusions not subject to §58.5

I. Tenant-based rental assistance

II. SupportiveServices(healthcare)

III. Operatingcosts

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Exhibit 6.3. Environmental Review Process

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Chapter 7 Obligation, Budget Revision, Expenditure, and Closeout

ThischapterdescribestherequirementsrelatingtotheobligationandexpenditureofCapitalFundgrantsinatimelymanner.ItalsodescribestheconditionsunderwhichaPHAmayrequestanextensionoftheobligationenddateandotherrelatedadministrativeactionsassociatedwithobligation,expenditure,andcloseoutofCapitalFundgrants,suchasmonitoringandsanctions.

7.1. What is an Obligation?

Generally,anobligationisabindingagreement(executedbyallparties)forworkorfinancingthat will result in outlays of Capital Funds by the PHA, immediately or in the future. The date ofthecontractsigningistheobligationdate.Ifthepartiessignthecontractatdifferenttimes,thedateofthelastsignatureistheobligationdate.Insomeinstances,apurchaseorderwouldconstituteanobligation(e.g.,largeitemssuchasstovesorrefrigerators).Allobligationsshouldreflectworkitemsdetailedintheapproved5-yearactionplan.

Certaincostshavedifferentdefinitionsofobligationbasedonthenatureofthecost.Thetablebelow describes when certain costs under the Capital Fund Program are considered obligated.

Cost When Obligation Occurs

AdministrativeCosts(BLI1410).

WhenHUDapprovesaPHA’s5-YearActionPlanthatincludesAdministrativeCostsinthebudget.Oncethe5-YearActionPlanisapproved,thePHAcanvoucheranddrawdownfundsinalumpsumorovertime(forexample,onamonthlybasis)topaystaffsalariesandbenefitsuptothe10%costlimitation.PHAscandrawfundsup to, but not more than, 3 days in advance of a valid expense and should only draw the amount needed to cover such costs.

Capital Funding Financing Program(CFFP)Transactions.

WhenthePHAexecutestheloanorbonddocumentsthatobligatethePHAtorepaytheseproceeds,alsoknownasthefinancialclosing.BeforeexecutionofanyCFFPobligation,theremustbeaHUD-approvedCFFPproposalinplace,andtheCFFPobligationmustadheretotheHUD-approvedCFFPproposal.

CFP Fee. WhenHUDapprovesthePHA’s5-YearActionPlanthatincludestheCFPFeeinthebudget. The CFP Fee is a type of administrative cost for Asset Management PHAs.

Contingency(BLI1502).

FundscannotbeobligatedunderContingency(BLI1502)ThePHAmustsubmitabudgetrevisiontomovefundsfromContingencytoanotherlineitem.Oncethebudgetrevisionisapproved,theBLItowhichthefundsarere-budgetedwilldeterminewhatconstitutesanObligationofthosefunds.FundsthatarebudgetedinBLI1502,butarenotdrawndown,arenotobligatedforCapitalFundpurposes.(Note:BLI1502cannotbereplenishedandcanonlybeusedforchangeordersunderBLI1460.Ifnochangeorderswererequired,thefundsmayonlyforusedforBLI1460eligibleitems.)

ConventionalDevelopment. Whenthecontractforconstructionordevelopmentworkisexecuted.

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Cost When Obligation OccursMixed-Finance Development.

Whenthetransaction’sfinancialclosingoccurs.

Predevelopment.

Capital Funds intended for predevelopment assistance in accordance with Section9.10.AofthisGuidebookand24CFR§905.612areobligatedunderthestandard procedures (i.e., when the PHA enters into a binding contract, such asforarchitecturalandengineeringservicesand,demolition,abatement.)ForConventionalDevelopment,thePHAcanobligateupto5%ofthetotaldevelopment cost for predevelopment costs without HUD approval. For Mixed-Finance Development, the PHA cannot obligate Capital Funds for predevelopment costs without HUD approval.

Force Account Labor Single task.

CapitalFundsusedforonespecifictaskperformedwithForceAccountLaborareobligatedwhenthespecifictaskisstartedandincludesmaterialsandequipmentincludedwiththattaskifpurchasedatthesametime(otherwisetheobligationfor materials and equipment occurs when such items are actually purchased).

Force Account Labor Multiple,butrelatedtasks.

WhenCapitalFundsareobligatedformultiple,butrelatedtasks,theremustbeanexusbetweentheactivitiessuchthatthecompletionofoneleadstothebeginningofthenext.CapitalFundsusedformultiple,butrelatedtasks,areconsideredobligatedwhenthefirsttaskisstarted,suchaskitchencabinetreplacementfollowedbykitchenfloorreplacement,butonlywherefundscontinuetobeexpendedatareasonablerate.

Multiple,butunrelatedtasks.

CapitalFundsusedformultiple,butunrelatedtasks,suchaskitchencabinetreplacement followed by roof replacement, are considered obligated when each separatetaskisstartedandmaterialsandequipmentmustfollowthesameprocess.PHAsshoulddocumenteachsuchObligationwithtimesheetsandpayrollrecordsthataretieddirectlytoworkidentifiedinthe5-YearActionPlanthatwastobeaccomplished using Force Account Labor.

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Cost When Obligation Occurs

Management Improvements (BLI1408)

CapitalFundsusedforManagementImprovements.(BLI1408)areobligatedwhenthePHAhasobligatingdocuments,suchasanexecutedcontract,fortheapplicableworkitems.Funds are available to be drawn down once HUD has approved the budget includedinthe5-YearActionPlanandtheyareavailableinLOCCS.Fundscannotbedisbursedwithoutobligatingdocuments.Example1:IftheManagementImprovementsworkitemistrainingforPHApersonnelinaccountingsystems,anacceptableobligatingdocumentwouldbethe contract for a third party to conduct the training.Example2:IftheManagementImprovementsworkitemisanactivityconductedbyPHAstaffintendedtofosterequalopportunityorresidentself-sufficiency,theacceptableobligatingdocumentwouldbethePHA’splanfortheactivitythatidentifiesthetaskstobeperformedbyPHApersonnel,thePHApersonnelperformingthetasks,theamountoftimeforeachstaffmemberandabudgetaccountingforthecosts(personnelandmaterials).Inthisinstance,theobligationoccursonthedatethePHApersonnelinitiatesthefirsttaskassociatedwiththeworkitem.InorderforHUDtomonitorgrantsaccurately,thePHAshouldnotifytheFieldOfficewhenthefirsttaskisinitiated.

TransferstoOperations(BLI1406).

WhenthePHAsubmitsavouchertodrawdownthefundsfromLOCCS.ThedateofthevouchersubmissionistheObligationdate.FundsthatarebudgetedinBLI1406,butarenotdrawndown,arenotobligatedfor Capital Fund purposes.

7.2. Obligation Requirements of Capital Fund Grants.

Generally the statute requires that at least 90 percent of a Capital Fund grant be obligated within two years of the date that funds are made available. The date the funds are made availableisestablishedastheobligationstartdateintheLineofCreditControlSystem(LOCCS),andtwoyearsfromtheobligationstartdateistheobligationenddate(OED).Theobligationrequirementisstatedinsection905.306(a)oftheCapitalFundFinalRule.(N.B.Therequirementsonobligationandexpenditureswereformerlylocatedin24CFR905.120oftheregulation).TherequiredtimeframesforobligationmaydifferdependingonthetypeofCapitalFund Grant as indicated below:

1. Capital Fund Formula Grants-PHAshave24monthsfromtheobligationstartdate,identifiedinLOCCS,toobligateaminimumof90%oftheauthorizedamountofaCapitalFund grant.

• In the case of Capital Fund formula grants, the PHA signs a Capital Fund ACC Amendment.ThisACCAmendmentestablishesthetimeframeforobligationandexpenditure.Theobligationstartdateisidentifiedasthe“effectivedate”ontheACC Amendment.

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• DemolitionDispositionTransitionalFundingisincludedintheCapitalFundFormulaGrant.UnlikeRHF,itisNOTgiveasaseparategrant;therefore,theOEDfor DDTF is the same OED as the Formula Grant.

2. Replacement Housing Factor Grants - In the case of Replacement Housing Factor (RHF) grants,PHAshave24monthsfromthetimetheyaccumulateadequatefunding1 (up to 5 years of grants) to obligate a minimum of 90% of the authorized amount:

• AllRHFgrantsintheHUD-approvedaccumulationmustobligate90%bytheobligationenddateestablishedfortheaccumulation.InorderforaPHAtoaccumulateRHFgrantsthePHAmusthavetheaccumulationapprovedbytheFieldOffice(FO)intheRHFPlan.(SeeNoticePIH2012-41)AllRHFgrantsintheaccumulationhavethesameOED2.

• For non-accumulated RHF grants, the OED is the same as the OED of the formula grantforthatfiscalyear.ThePHAmustobligateatleast90%oftheCapitalFundRHF grant by the OED in LOCCS.

3. Emergency & Safety and Security Grants-PHAshave12monthsfromtheobligationstart date established in LOCCS to obligate a minimum of 90% of the authorized amount of Emergency Grants and Safety and Security Grants.

• In the case of emergency grants the PHA has an emergency ACC Amendment whichestablishesthetimeframeforobligationandexpenditure.TheACCAmendmentspecifiestheobligationstartdate,identifiedasthe“effectivedate.”

4. Disaster Grants-PHAshave24months,fromtheobligationstartdate,establishedinLOCCS, to obligate at least 90% of the authorized amount of a Disaster grant.

• Disaster Grants follow the requirements of Capital Fund formula grants which establishthetimeframeforobligationandexpenditure.TheACCAmendmentspecifiestheobligationstartdate,identifiedasthe“effectivedate”ontheACCAmendment.

5. RAD Conversion. At the request of the PHA, HUD will extend the OED for Capital Funds (includingRHFandDDTF)usedinaRADconversionforupto60months(5years)aftertheeffectivedateoftheapplicableACCAmendment.[PIH-2012-32(HA),REV-1]

CapitalFundsmayonlybeobligatedforEligibleActivitiesidentifiedinthe5-YearActionPlanthathasbeenapprovedbythePHABoardofCommissionersandHUD.ThisrequirementappliestofundsobligatedbythePHAbothforworktobeperformedbycontractlabor(i.e.,contractaward)orbyForceAccountLabor(i.e.,workperformedbyPHAemployees).

1 PHAs are required to submit a RHF Plan to the HUD Field Office for approval See Notice 2012-41 PHA. A PHA can propose to accumulate 2 years, 3 years, 4 years or 5 years.2 Due to the Account Closing Statute, one exception to this rule is as follows: when a PHA accumulates 5 consecutive years of RHF grants, the Disbursement End Date (DED) for the first grant in the accumulation must fall before the end of the fiscal year in which the other 4 grants have their DED. For example, if a PHA accumulates 2010-2014 grants, HUD sets July 29, 2018 as the DED for the first grant in the accumulation and October 29, 2018 as the DED for the remaining 4 grants.

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7.3. OED Extension

PHAsmayrequestanextensionoftheobligationenddateforreasonsidentifiedinthestatuteandregulations.HUDHeadquarterswillreceiveandreviewtheserequestsandpreparethemforapprovalorrejectionbytheSecretary,DeputySecretaryorAssistantSecretary.The Assistant Secretary has been given this authority to approve extensions in annual HUD AppropriationsActs.

Theauthorityforextensionsissection9(j)ofthe1937Actandthecorrespondingregulationsat24 CFR 905.306.

Justifications for Extension of the Obligation End Date. On August 1, 2003, the Department issuedaregulationintheFederal RegisterthatimplementedSection9(j)ofthe1937Act.TheregulationaddedSection905.120to24CFRPart905.ThenewCFPRulemovedthisauthorityto 24 CFR 905.306. Under this authority, a PHA may request:

(1) an extension of the OED, for a period of up to 12 months, based on:

I. The size of the PHA;

II. The complexity of the Capital Fund Program of the PHA;

III. AnylimitationsontheabilityofthePHAtoobligateamountsallocatedfortheagencyfromtheCapitalFundinatimelymannerasaresultofStateorlocallaw;or

IV. Such other factors as the Secretary determines to be relevant

(2) an extension of the OED for such a period as determined to be necessary, if HUD determines thatthefailureofthePHAtoobligateassistanceinatimelymannerisattributableto:

I. Litigation;

II. Delay in obtaining approvals of the Federal, State, or local government, that is not the fault of the PHA;

III. Compliance with environmental assessment or abatement requirements;

IV. Relocatingresidents;

V. An event beyond the control of the PHA; or

VI. AnyotherreasonestablishedbytheSecretaryinanoticeintheFederal Register. (HUDhasnotissuedanoticeestablishingadditionalreasons;consequently,atthistimeHUDcannotapproveextensionsbasedonthiscriteria.)

AllrequestsforextensionsoftheOEDshouldbesubmittedtoHQatleast45daysbeforetheOED.Submissionsshouldbesentto,theDirectoroftheOfficeofCapitalImprovements.Acopyof the extension request should be sent to [email protected] and the subject line should read asfollows:RequestfortheExtensionoftheObligationEndDatefor<PHAname>(<PHAcode>),forCapitalFund<GrantNumber>.Seepage3ofPIHNotice2011-24(HA).

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TheOCIstaff,inconjunctionwithProgramCounsel,reviewsrequestsforextensionsoftheobligationenddateandmakesrecommendation,totheAssistantSecretary,forapproval/disapproval.OCIsendsalettertothehousingauthorityeitherapprovingordenyingthePHA’srequest for an extension; a copy will be sent to FO.

Approval of an OED extension automatically extends the grant’s Expenditure End Date. The statute and the regulations only allow an extension of the expenditure end date by virtue of an approval of an extension of the obligation end date.

7.4. PHA Reporting

• PHAsshallreportmonthlyontheobligationandexpenditureofeachopenCapital Fund grant in LOCCS. The grant closeout process is further discussed in Section7.7.

• PHAshave5businessdaysafterthedateoftheOEDtoreporttheirobligationinformationinLOCCS.

• PHAsthatdonotreportmonthlyinLOCCSmaybesubjecttoadditionalreviewsofsupportingdocuments.

• IfaPHAfailstocompleteitsmonthlyreportinginLOCCS,thesystemwillsuspenddrawdowns for all open Capital Fund grants; the PHA will not be allowed to voucherfundsuntilitcompletesobligationreporting.

• PHAsmustreportontheOED,eveniftheyreportedatleast90%Obligationoftheauthorizedamountinthepreviousreportingperiod.MonthlyobligationandexpenditurereportinginLOCCSisrequireduntilthegrantisplacedin“Pre-Audit”status in LOCCS.

7.5. HUD Monitoring

HeadquarterswillmakeinformationavailabletoFieldOfficesregardinggrantswithupcomingOEDs,providingreportsatintervalsof90,60and30dayspriortotheOED.Thisinformationwillincludegrantsthathavenotyetreached90%obligation,havefailedtoreportobligationamountsinLOCCS,andhaveundisbursedfundsinBLI1406.

TheFieldOfficesareresponsibleformonitoringtheobligationofgrantfundsagainsttheapplicabledeadlinesinLOCCSandcommunicatingwithPHAsintheirjurisdictioninordertoconfirmdataiscorrect,toestimatewhetherthePHAwillmeetthe90%obligationbytheOED,andtoworkwiththePHAtomeettheOED.

Determining Compliance. Todeterminecompliancewiththe90%obligationrequirement,HUDmayrequestand/orreviewsomeorallPHAdocumentationsupportingtheobligationofeachgrantatanytimeandasHUDdeterminesappropriate.

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Determining Noncompliance. The 1937 Act requires that all subsequent Capital Fund grants be withheldfromaPHAthatisnotincompliancewiththedeadlinesdescribedinthissection.IfHeadquartersdeterminesthataPHAhasfailedtomeetthe90%Obligationrequirement,itwill:

• NotifythePHAandFieldOfficeoftheviolation;and

• Suspend the award of all Capital Fund grants (including Capital Fund formula grant)forthefollowingyear(and,ifnecessary,forsubsequentyears)untilthePHA’sfailuretomeetthe90%Obligationrequirementhasbeencured,thepenalty described below has been applied against the Capital Fund formula grant for the following year, or the noncompliance has been otherwise resolved.

(Note: As of November 25, 2013, if a PHA fails to obligate 90 percent of any RHF grant, the RHF funds that have not been obligated by the OED are automatically recaptured.)

De-obligation and Re-obligation. IfaPHAhasalegitimateobligationforaCapitalFundgrant and if the PHA subsequently must void that contract, (e.g., a PHA may have signed contractswitharchitectsandengineerstodevelopnewunitsatanidentifiedsiteandthenanenvironmental review indicates that the site cannot be approved for development) then the PHA may de-obligate the funds, locate a new site for development, and then re-obligate the funds.

Inthisinstance,thePHAwillnotbepenalizediftheobligationenddatehaspassedandthePHA has to report that the grant is no longer 90 percent obligated. This is one of the reasons whyPHAsmustreportthepercentageobligatedontheobligationenddate,eveniftheyhavereported90percentormoreobligatedforreportingperiodspriortotheobligationenddate.However, if the expenditure end date has passed, the grant cannot be re-obligated and the funds must be recaptured.

ThePHAshouldcontacttheFieldOfficeanddescribetheconditionsthathavecausedthePHAtovoidtheoriginalcontracts.IftheFieldOfficeacceptsthePHA’sdescription,thePHAshouldreportthede-obligationofthefundsandtheFieldOfficeshouldincludeaProjectNote.

7.6. Consequences of Noncompliance with the Obligation End Date – Penalties and Sanctions

WhenaPHAfailstocomplywiththeOED,thestatuteandregulationsrequirethatHUDwithholdthePHA’snextCapitalFundgrantuntilthePHAobligatesatleast90%ofitspastduegrant.

• HUD(HQOCI)suspendsthePHA’snextCapitalFundgrantonceithasbeenawarded.

• HUD (HQ OCI) enters the standard OED project note into LOCCS to explain why the grant has been suspended, i.e. This PHA failed to obligate 90% of (grant #) in violationoftheOEDbytheobligationenddateof_________.

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WhenthePHAcuresthenon-compliance,HUDwillreleasetheCapitalFundGrantthathasbeenwithheld, less any penalty.

• Thepenaltyfornon-complianceisareductionofthenewCapitalFundGrantby1/12foreverymonthorportionofthemonththatthePHAwasinnon-compliance with the OED requirements of the previous grant. To determine the 1/12penaltyHUDdividestheauthorizedamountofthenextyear’sCapitalFundgrantawardby12andthenmultipliestheresulting$amountbythenumberofmonths of noncompliance.

• The penalty is not imposed on the noncompliant grant; it is applied to the suspended grant. The PHA is encouraged to obligate the noncompliant grant as quicklyaspossibletoreducetheamountofthePHA’spenalty.

• REAC is given a list of PHAs that have a penalty applied to Capital Fund grants as a result of noncompliance with the OED. PHAs will receive a reduced PHAS score for the FY of the grant that is penalized. See 24 CFR 902 Subpart E.

Example of penalty application for a PHA which failed to meet an OED: A PHA failed to obligate atleast90percentofaFY2010CapitalFundformulagrantbytheOEDofJuly10,2012.

• ThePHAmustcontinuetoobligatethisnoncompliantgrantuntilitcandemonstrate to HUD that it has obligated 90% of the grant.

• ThePHAreportsthatitachieved90%obligationoftheFY2010grantonOctober12,2012,exactly3monthsand2daysaftertheobligationenddate.ThisinformationisusedbyHUDtocalculatethePHA’spenalty.

• ThePHAwillhavea4monthpenaltyonthenextyear’sCapitalFundformulagrantforbeinginnoncompliance.Even2daysisconsideredaportionofamonth,andwillresultinanadditional1/12beingcalculatedtowardsthepenalty.

• If the FY 2013 grant is the next formula grant to be awarded and the authorized amount is $140,000, HUD divides the FY 2013 grant amount by 12 which equals $11,667.ThePHA’spenaltyis$11,667times4or$46,668.Thepenaltyamountis subtracted from the authorized amount of the FY 2013 grant. Subsequently, thePHA’sFY2013grantisreducedfrom$140,000to$93,332.

• (Authorized Amount of new grant)-[(Authorized Amount of new grant/12) *(penaltymonths)]=ReducedGrantamount

• HUD sends the PHA a new FY 2013 ACC Amendment to execute and thereby recaptures the $46,668 penalty.

• HUDnotifiesREACandthePHAreceivesareductiontoitsFY2013PHASscore.

The maximum penalty a PHA can incur is to lose 12/12 or 100% of the next year’s Capital Fund grant.

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7.7. Types of Budget Revisions

ThePHA’sbudgetinLOCCSisbasedupontheHUDapprovedAnnualStatementandCapitalFund5-YearActionPlan.Duringthe48monthperiodoftheCapitalFundgrantitmaybenecessarytorevisethebudgetinorderforthePHAtoobligateandexpenditsgrant.ThetimingofthePHA’sbudgetrevisionsiscritical.AbudgetrevisionthatissubmittedbythePHAandentered into LOCCS by the FO aftertheDEDdoesnotallowthePHAtodisbursefundsintimetomeettheestablishedDED,therefore,allbudgetrevisionsshouldbesubmittedtotheFO45daysprior to the DED.

PHAsmustamendthebudgetanytimethereisachangeintheworkitemsoramountstoreflectitsactualexpenditureoftheCapitalFunds.Budgetrevisionsaretypicallysubmittedforthe following reasons:

• To conform to a reissued CF ACC Amendment (for example, a recapture for late obligation);

• Toreflectachangeinplansduringtheobligationandexpenditurephases(forexample,aconstructionchangeorderisissuedtore-budgetfundsfromContingency(BLI1502)toDwellingStructures(BLI1460));

• AspartofthepreparationofthePerformanceandEvaluationReport(P&EReport);

• At closeout of a Capital Fund grant; and

• TocomplywithHUDrequirementsfollowingaprogramassessment,officialauditreview, or similar review.

PHAsareencouragedtoeffectivelymanagetheirfundedactivities(managementaswellasphysicalimprovements)inatimelymannersoastoprovideampletimetoundertakethenecessary budget revisions.

Thefollowingtabledescribesthedifferenttypesofbudgetrevisions.

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Budget Revision Type Description

BudgetRevisionsDuetoRevised ACC Issuance

If a Capital Fund grant needs to be amended by issuance of a revised ACC Amendment, the PHA must revise its budget to distribute any increase or decreaseortozerooutpreviouslylistedworkitems.AmendedACCsareissuedwhentheinitialgrantisreducedasaresultofanauditorapenalty,whereHUDdeterminesthatthePHAisnotincompliancewithobligationandexpendituredeadlines,orforotheradministrativeorprogrammaticreasonsasestablishedbyHUD. A budget revision is not required when HUD fully recaptures a Capital Fund Grant except as part of the closeout process.

BudgetRevisionsRelatedtoObligation,Expenditure,andCloseout

InadministeringtheCapitalFundgrant,PHAshavetheoperationalflexibilitytoincrease,decreaseorzero-outpreviouslyapprovedworkitems.Onceeligibleactivitiesareofficiallycontracted,aPHAcanreporttherelatedobligated funds in LOCCS with disbursements and expenditures reported in LOCCS thereafter.PHAsmustsubmitbudgetrevisionstotheFieldOfficebeforetheobligationenddate and expenditure end date established in LOCCS for each grant. Late budget revisions cannot be processed if the proposed revisions impact the total of funds obligatedasoftheobligationenddate.PHAs should submit budget revisions no later than 45 days prior to the EED in ordertoproperlyexpendCapitalFundsinatimelymanner.

InConnectionwithP&EReports.

As the PHA prepares the P&E Report for closeout, it may determine that budget revisions are necessary in order to line up the budgets and expenditures.

Closeout of Capital Fund Grant.

PHAs may submit budget revisions toward the end of the EED in order to properlyexpendCapitalFundsinatimelymanner.APHAmaysimultaneouslysubmitabudgetrevisionandafinalbudgetforcloseoutofaCapitalFundgrant.

OtherBudgetRevisions

TheFieldOfficemayrequireaPHAtoamendits5-YearActionPlanasaresultofaprogramrevieworassessment,anofficialauditreviewbytheOIGorotherauthorizedentity,orotheradministrativereasons.ExamplesincludePHAsunderreceivership,aCFPwithadefinedHUDreviewthreshold following a management review or program audit, or other administrativedirectives(suchasvoucherapprovalfordisbursementthresholdexceeding10%oftheauthorizedamountintheBLIs1410through1485).Inthesecases,theFieldOfficewilladvisethePHAandprovideguidanceregardingtheneededchangestothe5-YearActionPlan.

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7.8. Budget Revision Procedures

APHAmayamendits5-YearActionPlanwithoutHUDapprovalunlesstheamendmentconstitutesaSignificantAmendment.ThePHAshallprovideacopyofanyamended5-YearActionPlantotheFieldOfficebeforethePHAundertakesanyrelatedcontractobligationsand/orexpenditures.Thisincludesbudgetrevisionsthatidentifynewworkitems,onlyredistributefundsamongBLIsorwithinaBLI,oreliminatefundingforpreviouslylistedactivities.

Significant Amendments. Any budgetrevisionthatconstitutesaPHA’sSignificantAmendmentorModificationtoits5-YearActionPlan,mustbesubmittedtoHUDforreviewandapproval.

Amendments without HUD Approval (Fungibility). The CFP Final Rule permits a PHA to substituteworkitemsamonganyyearsinthelatestapproved5-YearActionPlanwithoutHUDapproval.FungibilityisdesignedtoassistthePHAinmeetingtheOEDandEEDdescribedinthischapterwhenthePHAmightotherwisemissOEDorEED.Inordertotakeadvantageoffungibility,thefollowingconditionsmustbemet:

• Theworkitemisincludedinthe5-YearActionPlan;

• Theworkitemmustbeinabudgetlineitemthatappearsinbothyears’5-yearActionPlanbudgets(e.g.,aworkiteminBLI1460canonlybemovedtoBLI1460oftheotheryear’sgrantandthenewworkitemmusthaveanenvironmentalreview completed);

• TheworkitemtobemovedmusthaveanOEDthatmeetsthetimeframeoftheCapitalFundgranttowhichtheworkitemistobemoved;and

• The Capital Fund Program grant is an open grant (i.e., the PHA does not have a pre-audit date).

Fungibility with HUD Approval.Ifaplannedfungibilityinvolvesanewworkitem,anyrequestforaSignificantAmendmentorModificationofthe5-YearActionPlantoincludetheworkitemmustbesubmittedtotheFieldOfficeatleast30dayspriortotheOEDorEED.

HUD Approval Process. HUDApprovalisonlyrequiredforanewworkitem,andanyrequestforaSignificantAmendmentorModificationofthe5-YearActionPlan.However,theFieldOfficeshouldreviewallbudgetrevisions,(exceptforthoserelatingtopreviouslyapprovedworkitemsorzeroing-outoflineitems),toensurethatthebudgetrevisionsdonotconstituteasignificantamendmentandtodetermineiftheexistingEnvironmentalReviewunder24CFRParts50or58issufficientorifadditionalenvironmentalreviewisrequired.

• IftheFieldOfficerejectsabudgetrevision,itshalladvisethePHAonthecorrectionsneededtoprovideanapprovablebudgetamendmentrequest.

• Uponapproval,theDirectorofPublicHousingfortheFieldOfficeshallsignanddate the approved budget revision. No HUD signature is required for budget revisions not requiring HUD approval.

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The PHA must submit any budget revisions to the Field Office in time for the PHA to obligate the funds prior to the OED. PHAs must submit budget revisions at least 30 days prior to the OED or EED.

7.9. Expenditure of Capital Fund Grants

What is an Expenditure?

Forfundstobeconsideredexpended,paymentsmustmeetthedefinitionof“Expenditure”foundinChapter1ofthisGuidebook.WhileExpenditurerelatestotheamountofbillsdueandpayable,aswholeoronaparticularitem,pursuanttoanexecutedcontractoranothertypeofobligatingdocument,disbursementistheactofdistributingCapitalFundsfromtheHUDaccountingsystemthroughLOCCStothePHA’sbankaccountforthepurposeofpayingthosebills.

Expenditure End Date (EED) Requirements. TheEEDisthefinaldatethataPHAmayexpend(pay out) funds drawn from LOCCS for bills due and payable for Capital Fund-related expenses. Generally the statute requires that 100% percent of a Capital Fund grant be expended within fouryearsofthedatethatfundsaremadeavailable,ortheobligationstartdate.TherequiredtimeframesforexpendituremaydifferdependingonthetypeofCapitalFundGrantasindicatedbelow:

• Capital Fund and Disaster Grants. Nolaterthan48monthsafterHUDexecutesthe applicable CF ACC Amendment, a PHA must expend 100% of each Capital Fund grant, including formula grants, RHF (if funds have not been accumulated to extendtheOED),andNon-PresidentiallyDeclaredNaturalDisasterGrants.

• Emergency Grants. Nolaterthan24monthsafterHUDexecutestheapplicableCF ACC Amendment, a PHA must expend 100% of any Emergency Grant, including Safety and Security Grants.

• Accumulated RHF Funds. IftheFieldOfficehasapprovedaccumulationofRHFfunds,theEEDforallaccumulatedyearsisthesameastheEEDofthefinalRHFgrant in the 5-year grant period.

• RAD Conversion. If HUD has approved extension of the OED for Capital Fundsto60months(5years)aftertheeffectivedateoftheapplicableCFACCAmendment, the EED is also extended in the same amount.

The EED may be extended only by the period of time of a HUD-approved extension of the OED. No other extensions of the EED are permissible under the 1937 Act. All Capital Funds not expended by a PHA by the EED will be recaptured by HUD.

Disbursements. Asnotedabove,disbursementisthedistributionofCapitalFundsfromtheHUDaccountingsystemthroughLOCCStothePHA’sbankaccountforthepurposeofpayingbillsthataredueandpayable.ThisprocessrequiresthatthePHAhavefirstobligatedtheCapitalFunds

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ToinitiatedisbursementofCapitalFunds,thePHAmustsubmitavoucherforpaymentthroughLOCCS.ThePHAmayonlysubmitavouchertodisbursefundsforbillsdueandpayableforworkthat has already been performed or for items received.

Oncefundsaredisbursed,i.e.transferredfromLOCCStothePHA’sbankaccount,thePHAmustpaytheapplicablebill(s)within3businessdaysafterthedepositofthefundsintothePHA’sbankaccount.PHAscannotexpendnonfederalfundsfirsttopaytheapplicablebillsandthenuse Capital Funds to reimburse themselves.

TheDisbursementEndDate(DED)isthefinaldatethataPHAmaysubmitavoucherfordisbursementofCapitalFunds.HUDusestheDEDtotrack,throughLOCCS,aPHA’scompliancewithEEDasthePHAcannotexpendfundsinordertomeetitsEEDobligationswithouthavingfirstsubmittedavoucherfordisbursementofthefundsintothePHA’sbankaccount.

Drawdown Process. AfterapprovalofthePHA’s5-YearActionPlanthePHAcangenerallydrawdownfundswithoutfurtherHUDreview,unlesstheFieldOfficedeterminesotherwise.Ifadditionalreviewisrequired,theFieldOfficeshallrequestadditionaldocumentationfromthePHAinordertocompletethereview.IftheFieldOfficedoesnotapproveaparticulardrawrequest,theFieldOfficewillnotifythePHAofthereason(s)foritsdecision.Additionalreviewsmay,atthediscretionoftheFieldOffice,berequiredforthefollowing:

• Individual drawdowns;

• DrawdownsaboveacertainthresholddeterminedbytheFieldOffice(e.g.,$100,000); or

• Alldrawdowns,alsoknownasautoreview.

PHAsmaynotdrawdownfundsfromoneBLIforexpendituresassociatedwithanotherBLI.IfaPHAdisbursesfundsfromthewrongBLI,theFieldOfficewilldirectthePHAtoimmediatelytransferthosefundsbacktoLOCCS,andthefundswillbecreditedbacktotheBLIfromwhichthe funds were incorrectly withdrawn. Once the misdirected funds are returned to LOCCS, the PHAcansubmitabudgetrevisiontomovethefundstoanotherBLI.HUDdiscouragesFieldOfficesfromexecutingdisbursementadjustmentsinLOCCS.Pleasefollowthestandardbudgetadjustment process for amending funds in LOCCS.

• Administrative Costs(BLI1410).PHAscanvoucheranddrawdownfundsforAdministrativeCostsinalumpsumorovertime(forexample,onamonthlybasis)topaystaffsalariesandbenefitsuptothe10%limit.PHAscandrawfundsup to, but not more than, 3 days in advance of a valid expense and should only draw the amount needed to cover such costs.

• Transfers to Operations(BLI1406).PHAscanvoucheranddrawdownfundstoOperationsatanytimeafterHUDapprovalofthe5-YearActionPlan.

▪ Funds are available to be drawn down once HUD has approved the 5-Year ActionPlanandthefundsareavailableinLOCCS.

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▪ A PHA is not able to submit a voucher in LOCCS before it self-reports the funds as obligated; therefore, the PHA should report the funds as obligated, andthendrawdownthefundsimmediatelyaftertheself-report.

▪ ThedateofthevouchersubmissionisboththeObligationandtheExpenditure date.

▪ FundsthatarebudgetedinBLI1406,butarenotdrawndown,arenotexpended for Capital Fund purposes.

▪ Upon drawdown, the funds are subject to the requirements of 24 CFR Part 990regardingOperatingFunds.

PHA Reporting. PHAsmustreportobligationsandexpendituresinLOCCSonamonthlybasisforeachopenCapitalFundgrant.ThePHAshallreportmonthlyuntila“pre-auditdate”isenteredinLOCCSbytheFieldOfficeafterthePHAsubmitsitscloseoutdocuments.FailuretoreportwillresultinfundsbeingheldinLOCCSuntilthePHAhascuredthefailure.

The PHA must ensure that reported Capital Fund expenditures do not exceed the disbursements madefromLOCCS.ThisimbalancemaybeanindicationthatthePHAhaspaidCapitalFundexpenses from another restricted PHA account, which is prohibited.

HUD Monitoring. PHAs self-report expenditures in LOCCS; therefore, Headquarters monitors disbursements of funds from LOCCS in order to monitor compliance with EED since the disbursementsareautomaticallytrackedbyLOCCS.HeadquarterswillmakeinformationavailabletoFieldOfficesregardinggrantswithupcomingEEDs,providingreportsatintervalsof90,60and30dayspriortoEED.Thisinformationwillincludegrantsforwhich100%ofthefundshave not yet been disbursed from LOCCS or reported as expended.

FieldOfficesareresponsibleformonitoringtheexpenditureofgrantfundsagainsttheapplicabledeadlinesinLOCCSandforcommunicatingwithPHAsintheirjurisdictionthathavenotexpendedallfundsinordertoconfirmdataarecorrect,toestimatewhetherthePHAwillmeettheEED,andtoworkwiththePHAtomeettheEED.Forexample,aPHAmayamendits5-YearActionPlantotransferfromlaterCapitalFundgrantyears’workitemsthathavealreadybeen expended to the year in which the EED is approaching. Any such amendment must occur prior to the EED. If HUD approval of the budget revision is required, such approval must occur prior to the EED.

Failure to Expend Penalty. If HUD reports indicate that a PHA has failed to expend 100% of the applicable Capital Fund grant by the EED, it:

• NotifiesthePHAandFieldOfficeoftheviolation;and

• Suspends the applicable Capital Fund grant in LOCCS.

(Note: PHAs have until 5 days after the EED to enter expenditures into LOCCS.)

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IfaPHAhasabillorinvoicethatwasdueorpayablepriortotheEED,itshallprovidebackupdocumentationtotheFieldOffice,enablingtheFieldOfficetodeterminewhetherornotthebillor invoice may be charged against the applicable Capital Fund grant.

If Headquarters concurs that the documented bill or invoice may be charged against the applicableCapitalFundgrant,theLOCCSsuspensionisliftedandthePHAmaydrawthefunds.

Failure to expend all funds in a Capital Fund grant from LOCCS by the EED will result in all unexpended funds being recaptured by HUD. Note: Obligation of those funds is not sufficient to meet this expenditure requirement. If Headquarters concurs that the PHA was not in compliancewiththeEED,itsendsanoncompliancelettertothePHA(copyingtheFieldOffice)with a unilaterally executed ACC Amendment recapturing the unexpended, undisbursed balance of the applicable Capital Fund grant. Since Headquarters executed a unilateral ACC Amendment, the PHA is not required to sign and return the ACC Amendment to Headquarters. At this point, a PHA may begin to close out the applicable Capital Fund grant in accordance with paragraph 7.7 ofthisGuidebook.

7.10. Fiscal Closeout

FiscalcloseoutofaCapitalFundgrantincludesthesubmissionofacostcertificate;afinalPerformance&EvaluationReport(P&EReport);HUDapprovalofthecostcertificate;andanaudit, if applicable.

Inordertoinitiatethecloseoutprocess,thePHAshallsubmittotheFieldOffice:theAMCCorADCC,asapplicable(CostCertificate)andtheP&EReport,marked“final.”Thissubmissionmayalsoincludeabudgetrevisionconformingthe5-YearActionPlantotheP&EReport.[2CFR §200.343] The PHA will submit these reports in LOCCS or the Energy and Performance InformationCenter(EPIC).

• Actual Development Cost Certificate (ADCC). For development projects, the PHA shall submit the ADCC (currently Form HUD-52427). Costs incurred between the completionofthedevelopmentandtheDateofFullAvailability(DOFA)arepartof the actual development cost. The PHA must submit the ADCC within 90 days aftertheDOFA.

• Actual Modernization Cost Certificate (AMCC).Formodernizationprojects,thePHA shall submit the AMCC (currently Form HUD-53001). The PHA must submit theAMCCwithin90daysafterEED.

• P&E Report.AlongwiththeCostCertificate,thePHAshallsubmitafinalP&EReport with a budget revision, if applicable.

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Field Office Review of Cost Certificate.

Uponreceiptoftherequireddocuments,theFieldOfficeshallreviewthedocumentsasfollows:

Anyneworexistingdeficiencyitemshavebeenresolved.Grantswithexistingdeficienciescannotbeclosedoutuntilthedeficiencieshavebeenresolved.

TheamountsonthefinalP&EReportandtheCostCertificatemustagreeastofundsapproved,obligated and expended.

The grant number and the amount of grant funds approved, disbursed and expended on the CostCertificatemustagreewiththerecordsinLOCCS.

IfthefinalP&EReportandtheCostCertificateindicatethatexcessfunds,suchasfundsspentonanineligibleactivity,havebeenprovidedtothePHA,theFieldOfficeshalldirectthePHAtoremitimmediatelytheexcessfunds,withoutwaitingfortheaudit,andthensubsequentlytosubmitarevised“final”P&EReportorCostCertificate,showingthattotalfundsdisbursed,obligatedandexpendedareequalamounts.IftheauditCostCertificateshowsthatthePHAover-remittedfunds,HUDwillreturntheamountoftheoverremittancetothePHA.

Whentheamountsdisbursed,obligatedandexpendedareequalinLOCCS,theFieldOfficeshallenter the pre-audit date in LOCCS (the pre-audit date cannot be a future date and does not have tobeaquarter-enddate).Notethatthepre-auditdatecannotbeentereduntiltheobligationend date has been reached.

AgrantisconsideredopenuntiltheFieldOfficeentersapre-auditdateinLOCCS,butoncetheFieldOfficeentersthepre-auditdateintoLOCCS,thePHAwillnolongerhavetoentermonthlyreports in LOCCS for that grant.

Note: PHAs should not pay invoices from other sources, and later reimburse that source from the Capital Fund.

Penalty for Failure to Submit Cost Certificate and P&E Report.

IfthePHAdoesnotsubmittheCostCertificateandthefinalP&EReportwithintheperiodprescribedinthissection,HUDmayimposerestrictionsonopenCapitalFundgrants,e.g.,establishreviewthresholds,setthegrantto“auto-review”(inwhichHUDautomaticallyreviewsitonaperiodicbasis),orsuspendgrants,untilthecostcertificatefortheaffectedgrantissubmitted.TheserestrictionsmaybeimposedbyHUDafternotificationtothePHA.

Audit Procedures.

SomePHAsdonotreceivesufficientfederalfundstobesubjecttotheauditrequirementsin2CFRPart200,SubpartF.ThissectiongovernsPHAsthatdoperformanannualaudit.

WhentheFieldOfficenotifiesaPHAinwritingthattheCostCertificateandfinalP&EReportareapprovedforaudit,thePHAshallsubmitacopyoftheCostCertificateandfinalP&EReporttoits independent public auditor for inclusion in annual audit.

The PHA shall provide a copy of the annual audit to HUD within 9 months from the start of the

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PHA’snextfiscalyear.Iftheauditcontainsfindings,thePHAshallalsosubmitascheduletocompleteanycorrectiveactionsrecommendedbytheauditor.

Review and Approval of Cost Certificate and Audit. For PHAs that do not perform an annual audit,HUDwillreviewandapprovetheCostCertificatebasedonavailableinformationanditsknowledgeoftheCapitalFundgrant.ForPHAssubjecttoanaudit,HUDwillreviewtheinformationfromtheannualauditprovidedbythePHA.TheFieldOfficeshallreviewtheaudittodetermineiftheauditedcostsagreewiththecostsshownontheCostCertificate.

• IftheauditedCostCertificateindicatesthattherearestillexcessfunds,thePHAshallremittheexcessfunds,asdirectedbytheFieldOffice.

• IftheauditedCostCertificatedisclosesunauthorizedexpenditures,thePHAshalltakesuchnecessaryactionsastheFieldOfficemaydirect.

AftertheFieldOfficeassignedtothePHAhasreconciledallauditedcosts,thegrantisapprovedfor closeout.

OncetheCostCertificatehasbeenreconciledwiththeavailableinformationoraudit,asapplicable,theFieldOfficewillsendacloseoutlettertothePHA(CloseoutLetter)andenterthepost-audit end date in LOCCS, which closes out the grant.

Document Retention by Field Office.

UponcertifyingthatthegrantisclosedinLOCCS,theFieldOfficeshallreduceeachfiletotheabsolute minimum of regulatory required elements, including:

• ACC Amendment form;

• Environmental Assessment (currently Form HUD-4128, Form-7015.16 or equivalent);

• Final Signed AMCC (currently Form HUD-53001) or ADCC (currently Form HUD-52426);

• CloseoutLetter;

• Final5YearActionPlanBudgetfromthatFY(currentlyFormHUD-50075.1),pages 1 and 2; and

• Anyothersignificantdocumentationsuchasthatrelatedtorecaptureordetailing issues with grant use or abuse issue.

(Note: LOCCS forms and banking forms must be secured and kept in accordance with the record keeping requirements of 2 CFR Part 200.)

TheFieldOfficeshallfilethereducedpackageintheappropriatePHACapitalFundgrantcloseoutfolderinaccordancewith2CFRPart200(seee.g.,200.333-.337)theFieldOffice’srecordmanagementplan,HUDHandbook2225.6,RecordsDispositionSchedulesandHUDHandbook2228.2,GeneralRecordsSchedules.

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Exhibit 7.1. Obligation End Dates and Expenditure End Date

Step 1. Capital Fund ACC Amendment Executed

12 Months for Emergency

GrantsUntilOED

24 Months for All Other Cap Fund Grants UntilOED

Preparing for OED (Step 2.)• 90 Days before OED: Headquarters and Field

Officemonitorreportingactivity.• 60 Days before OED: Headquarters and Field

Officemonitorreportingactivity.• 30DaysbeforeOED:Headquartersnotifies

FieldOfficeofPHAsindangerofnon-compliance.

Step2.ObligationEndDate(OED)

24 Months for Emergency

Grants UntilOED

48 Months for All Other Cap Fund Grants UntilOED

Preparing for and Meeting EED (Step 3.)• 90 Days before EED: Headquarters and Field

Officemonitorreportingactivity.• 60 Days before EED: Headquarters and Field

Officemonitorreportingactivity.• 30DaysbeforeEED:Headquartersnotifies

FieldOfficeofPHAsindangerofnon-compliance.

• 5DaysafterEED:PHAmustenterallexpenditures into LOCCS.

Step 3. Expenditure End Date (EED)

Preparing for Grant Closeout (Step 4.)• 30DaysafterEED:Headquartersstarts

recapture process, if necessary.

Step 4. Grant Closeout

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Chapter 8 Emergency, Non-Presidentially Declared Natural Disaster, and Safety and Security Grants

8.1. Overview.

Thischapterdiscussestheapplication,award,monitoring,andcloseoutproceduresforEmergencyandNon-PresidentiallyDeclaredNaturalDisasterGrants,includingSafetyandSecurity Grants.

Congress annually appropriates funds for the Capital Fund, including the Emergency and Non-PresidentiallyDeclaredNaturalDisasterset-aside.TheAnnualAppropriationsActsalsopermitHUDtouseaportionoftheEmergencyandNon-PresidentiallyDeclaredNaturalDisasterset-asideforsafetyandsecurityfundingasdescribedinSection8.7below.

HUDawardsEmergencyandNon-PresidentiallyDeclaredNaturalDisasterGrantstocovercapitalneedsarisingfromemergenciesandNon-PresidentiallyDeclaredNaturalDisastersoccurring in the same Federal Fiscal Year. For example, PHAs with capital needs arising from aNon-PresidentiallyDeclaredNaturalDisasterinFFY2015mayonlyreceivefundsfromtheFFY2015EmergencyandNon-PresidentiallyDeclaredNaturalDisasterset-aside.Grantsareawardedonafirst-come,first-servedbasisuntiltheEmergencyandNon-PresidentiallyDeclaredNatural Disaster set-aside funds are exhausted.

Insurancecoverage,whichisrequiredbytheACC,shouldbeaPHA’sprimarysourceoffundingforrepairorreplacementcostsassociatedwithEmergenciesandNon-PresidentiallyDeclaredNatural Disasters.

PHAsareeligibleforpermanentreconstructionassistancethroughtheFederalEmergencyManagementAgency(FEMA)forPresidentially-DeclaredNaturalDisasters.FEMAmayalsoprovideEmergencyassistanceduringNon-PresidentiallyDeclaredNaturalDisastersforcertainactivitiessuchasdebrisremoval,demolitionofunsafestructures,andanyactionsnecessarytoreduce an immediate threat to life, property, and public health and safety.

8.2. Emergency and Non-Presidentially Declared Natural Disaster Grants.

Thedefinitionsof“Emergency”and“Non-PresidentiallyDeclaredNaturalDisaster”thatfollowareusedindeterminingeligibilityforEmergencyandNon-PresidentiallyDeclaredNaturalDisaster Grants:

• Emergency: an unforeseen or unpreventable event or occurrence that poses an immediatethreattothehealthandsafetyoftheresidents(includingfiresafety)that must be corrected within one year of funding. Examples of Emergencies are boiler failure, water intrusion causing mold growth, sewer line failure, and severe electrical problems. A PHA must be able to demonstrate that it has properly maintained structures and equipment.

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• Non-PresidentiallyDeclaredNaturalDisaster:anextraordinaryevent,suchasanearthquake,flood,orhurricane,affectingaPublicHousingPropertyownedandmanagedbyaPHA,butexcludingareascoveredbyaPresidentially-DeclaredemergenciesandmajordisastersundertheRobertT.StaffordDisasterReliefand Emergency Assistance Act, as those areas are eligible for funding from the Federal Management Agency (FEMA).

• IfthePHAorFieldOfficeisunsurewhethertheaffectedPublicHousingPropertyislocatedinaPresidentially-Declareddisasterarea,itshouldcontactHeadquartersforadetermination.FEMAalsoprovidesawebsitethatlistsPresidentially-Declareddisasterareasbystateandcounty.AsofthedateofpublicationofthisGuidebook,theFEMAwebsiteislocatedatwww.fema.gov/femaNews/disasterSearch.do.

Safety and Security Grants.

HUDhasthediscretiontosetasideaportionoftheEmergencyandNon-PresidentiallyDeclaredNaturalDisasterset-asideforassistancetoaPHAtofundone-timeadditionalmeasuresnecessary to address threats to resident safety and security caused by a Safety and Security Emergency that must be corrected within 1 year of funding.

Emergency and Non-Presidentially Declared Natural Disaster Roles

HHQ FO PHAAssign, distribute, and record funds inHUD’sfinancialandaccountingsystems for the approved applications

Facilitate and assist Headquarters with receipt, review, approval, and monitoring of Emergency and Non-PresidentiallyDeclaredNaturalDisaster Grants

AssesstheneededworkitemsresultingfromanEmergency,including a Safety and Security Emergency, or Natural Disaster and determine whether to request an EmergencyorNon-PresidentiallyDeclared Natural Disaster Grant

Develop policies and procedures fordistributingfundsfortheEmergencyandNon-PresidentiallyDeclared Natural Disaster Grants

Reviewapplicationforcompleteness, eligibility, and appropriateness of proposed costs

WorkwiththeFieldOfficetoprepareanapplicationthatcomplies with HUD requirements

Oversee and monitor the submission, review, and approval of grantapplications

Upon receipt of a complete application,stampdate.Incompleteapplicationsarenotdateduntilallnecessaryinformationisreceived

SubmitcompleteapplicationtotheFieldOfficeandrespondtoanyrequestsforadditionalinformation

DeterminewhetheraPHA’srequestmeets the requirements for EmergencyorNon-PresidentiallyDeclared Natural Disaster

Forwardmemoofrecommendation(approve or reject), signed by Field OfficeDirectortoHeadquarters

Ensure that the environmental review is complete under 24 CFR Part 58 or request that HUD complete an environmental review under 24 CFR Part 50, as both are further described in Chapter 6

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Emergency and Non-Presidentially Declared Natural Disaster Roles

HHQ FO PHAApprove the request subject to the availability of funds in the EmergencyandNon-PresidentiallyDeclared Natural Disaster set-aside, in the order in which requests are received and are determined approvable

Coordinate Headquarters review for PHA and forward any responses from PHA to Headquarters

Upon approval of an Emergency and Non-PresidentiallyDeclaredNaturalDisasterGrantapplication,signanddate three copies of the issued CF ACC Amendment and return the copiestotheFieldOfficebythedateindicatedintheapprovalletter

Countersign the 3 copies of the CF ACC Amendment executed by the PHA, or in any other method as prescribed by HUD

Issueanapprovalletterandthreecopies of the CF ACC Amendment, or in any other method as prescribed by HUD

Confirmthatithasonfile,orthePHA submits, evidence of current (i.e., have not expired and will not expire during the use term associated with the use of the CFgrant)andeffective(i.e.,noliens or encumbrances prior to theDeclarationsofTrust(DOTs))with a remaining term of 20 years forthepublichousingpropertiescovered by the grant within 60 days of grant approval. Newly recorded DeclarationsofTrustmustusetheHUD form having a 20-year term

Within60daysofgrantapproval,submittotheFieldOfficeevidenceofcurrentandeffectiveDeclarationsofTrust(DOTs)witharemaining term of 20 years for the publichousingpropertiescoveredby the grant. Newly recorded DeclarationsofTrustmustusetheHUD form having a 20-year term

Upon request from a PHA or Field Office,identifywhetherthePHAislocatedinapresidentially-declareddisaster area

Monitortheobligationandexpenditure of grant funds against the applicable deadlines in LOCCS

Obligate and expend grant funds within required statutory and regulatorytimelines

Monitor Emergency and Non-PresidentiallyDeclaredNaturalDisaster Grants through closeout

Ensure proper grant closeout. Submit grant closeout documents totheFieldOffice

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8.3. Eligible and Ineligible Uses: Emergency and Non-Presidentially Declared Natural Disaster Grants

ThefollowingtabledescribeseligibleandineligibleusesforEmergencyandNon-PresidentiallyDeclared Natural Disaster grants:

Eligible Uses for Emergency and Non-Presidentially Declared

Natural Disaster Grants

Ineligible Uses for Emergency and Non-Presidentially Declared Natural Disaster Grants

Costs associated with the repair or replacement of a Public Housing Project only if the Public Housing Project was damaged as a result of an Emergency orNon-PresidentiallyDeclaredNaturalDisaster.

The cost (including labor, material, supplies and equipment used by PHA personnel) of routine and preventive maintenance, including suchasroutineunitturnaround,janitorialservices,elevatorservice,exterminationofrodentsandhouseholdpests,andrubbishandgarbagecollection.Transfers to Operations.Operationscostsarenotcapitalneeds.Inaddition,ifaPHAroutinelytransfersthemaximumamountofCapitalFundstooperationsandfindsitselfinneedofanEmergencyandNon-PresidentiallyDeclaredNaturalDisasterGrant,itshouldalter its policies to convert a lower percentage of Capital Funds tooperationstoavoidforeseeable,self-createdemergenciesthatdonotqualifyforanEmergencyandNon-PresidentiallyDeclaredNatural Disaster Grant.

Relocationandthecosttoprovidetemporary housing to public housing residentsuntilpublichousingunitscan be repaired can be covered by the EmergencyandNon-PresidentiallyDeclared Natural Disaster Grant (such as hotel, moving van rental, temporary storage,boxes.)(BLI1495).(Note: The cost to provide temporary housing to public housing residents for this purpose can also be covered by the PHA’s Capital Fund grant).

Management Improvements.ReplacementoffixturesandapplianceswheretheneeddoesnotariseaspartoftheEmergencyorNon-PresidentiallyDeclaredNatural Disaster. e.g., if a project’s roof is destroyed by an Emergency but the bathrooms are intact on all floors but the top floor, a PHA cannot use an Emergency and Non-Presidentially Declared Natural Disaster Grant to replace the toilets, sinks, and tubs on lower floors, even if such items need replacement. This extra work must be funded by Capital Funds.

Costs for repairs of a Public Housing Project that were not due to damagefromtheEmergencyorNon-PresidentiallyDeclaredNaturalDisaster.

Contingency (BLI 1502).PHAsmaybudgetupto8%oftheinitialbudgetofanEmergencyorNon-PresidentiallyDeclaredNaturalDisastergrantforContingency(BLI1502).AnyamountsincontingencyfromtheinitialbudgetshouldbespreadtotheappropriateBLI(BLI1430,1450,1460.) Any amounts not expended by the PHA are to be returned to HUD;

Administrative Costs (BLI 1410).PHAsarelimitedtouseupto2%oftheinitialbudgetforAdministrativeCosts(BLI1410).Higherpercentagesmaybeapprovedinverylimitedinstancesandrequirejustification;

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• TheOperatingFundprovidesanAssetRepositioningFeeforprojectsandbuildingswithinprojectsthataretransitionedoutofaPHA’sinventory.Thisfeesupplementsthecostsassociatedwith(1)administrationandmanagementofdemolitionordisposition,(2)tenantrelocation,and(3)minimumprotectionandserviceassociatedwithsuchefforts.IfavailabletoaPHA,thesefundscansupplementthecostsofadministeringanEmergencyandNon-PresidentiallyDeclared Natural Disaster Grant.

8.4. Preliminary Funding: Non-Presidentially Declared Natural Disasters Only

(Emergency Grants are Only Issued as Final Grants)

A PHA may request preliminary funding if:

• Ithasurgentworkitemsneededtoensurethesafetyofpublichousingresidentsor to preserve the Public Housing Project; AND

• ThePHAhasnotyetcompiledallinformationneededforanapplication,suchas a detailed third-party damage assessment and/or the amounts of other reimbursements such as insurance proceeds or state or local funds.

(Note: Examples of urgent work items include shoring up buildings to prevent collapse after an earthquake, relocating residents from uninhabitable units, temporary covers to damaged leaking roofs to prevent water damage to unit interiors .)

TherequestforpreliminarydisasterfundingshouldreasonablyidentifydamagecausedbytheNon-PresidentiallyDeclaredNaturalDisasterandthecostsnecessaryfortheprotectionofthepublichousingresidentsandtheimmediatepreservationofthePublicHousingProject.TherequestforpreliminaryfundingmustbesubmittedtothePublicHousingDirectoroftheFieldOfficeassoonastheaboveinformationisknown.

APHAthatsubmitsapreliminarydisasterfundingapplicationmustalsosubmitalloftheremainingapplicationmaterials(forexample,athirdpartydamageassessment)oncematerialsarepreparedpursuanttoSection8.5.

Determining Which Type of Disaster Application to SubmitPreliminaryDisasterApplication FinalDisasterApplicationDamages pose immediate threat to resident health and safety; and/or

No immediate threat to resident health and safety; and

Immediate repairs required to preserve the property; and

No immediate repairs required to preserve the property; and

Nothird-partycostestimate;Haveinitialcostestimate(not detailed); and/or

Detailed,independentthird-partycostestimate;and

Othersourcesoffundsnotknown(statefunds,insurance proceeds, FEMA)

Othersourcesoffundsareknown

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8.5. Emergency and Non-Presidentially Declared Natural Disaster Grant Applications

InordertosubmitanapplicationforanEmergencyandNon-PresidentiallyDeclaredNaturalDisasterGrant(orafinalapplicationifaPreliminaryNon-PresidentiallyDeclaredNaturalDisasterGrantapplicationwasfiledpursuanttoSection8.4),aPHAshouldsubmitthefollowingitemstotheFieldOffice’sPublicHousingDirector:

• TransmittalletterfromthePHAsubmittingtheapplication;

• BudgetandP&EReportintheformsrequiredbyHUDfortherequestedfunds;

• Detailednarrativethatidentifies:

▪ ThePublicHousingProject(s)affectedbytheNon-PresidentiallyDeclaredNatural Disaster or Emergency;

▪ ForEmergencies,theconditionsthatpresentanunforeseenorunpreventablethreat to the health, life, or safety of residents;

▪ ForNon-PresidentiallyDeclaredNaturalDisasters,thename(ifapplicable),date,andadescriptionoftheNon-PresidentiallyDeclaredNaturalDisaster(e.g., hurricane or tornado);

▪ DamagecausedbytheNon-PresidentiallyDeclaredNaturalDisasterandthecostsnecessaryfortheimmediatepreservationofPublicHousingPropertyandtheprotectionofpublichousingresidents(appliestoapreliminaryfundingapplicationonly);

▪ ActivitiestobeundertakentocorrecttheEmergencyortheconditionscausedbytheNon-PresidentiallyDeclaredNaturalDisasterandtheestimatedcost;

▪ Sources of available funds (e.g., insurance proceeds, unobligated Capital Funds, other federal or state assistance). If the amount of other funds is not availableforapreliminaryfundingapplication,thePHAisrequiredtosubmitthisinformationalongwiththeindependentthird-partydamageassessmentinordertofinalizethegrantapplication;

▪ DemonstrationthatwithouttherequestedEmergencyandNon-PresidentiallyDeclared Natural Disaster Grant funds, the PHA does not have adequate fundsavailabletocorrecttheconditionscausedbytheEmergencyorNon-PresidentiallyDeclaredNaturalDisaster;and

▪ Any other materials required by HUD.

• An independent third-party damage assessment (for a preliminary funding application,thisassessmentwillbesubmittedwhenitisprepared);

• CertificationforContracts,Grants,LoansandCooperativeAgreements;

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• StandardForm(SF)-LLL,DisclosureofLobbyingActivities;

• PHACertificationsofCompliancewiththePHAPlansandRelatedRegulationsfornon-QualifiedPHAsorCivilRightsCertificationforQualifiedPHAs;

• WrittenstatementorletterfromthePHA’sinsurancecompanyattestingthattheinsurance company will not approve claims for any of the damage described in thePHA’snarrative.Iftheinsurancecompanyisapprovingclaimsforaportionofthedamage,thePHAmustsubmitawrittenstatementorletterfromtheinsurancecompanycertifyingtheamountofinsuranceproceedsthatwillbepaidout and the damage for which these claims are being paid; and

• StatementofPHAcertifyingthatithasexhausteditsCapitalFundsorhascommittedthosefundstootherpublichousingactivitiesorcapitalimprovements.

8.6. Managing the Emergency and Non-Presidentially Declared Natural Disaster Grant

TheFieldOfficewillhaveprimaryresponsibilityformonitoringcompliance,completion,andcloseoutofthegrant.TheFieldOfficewillberesponsiblefortakingsanctionsbelow.HeadquarterswillalsomonitorandprovideguidancetotheFieldOfficewhennecessary.

For an Emergency grant, a PHA has 12 months to obligate 90% of the grant and 48 months toexpend100%ofthegrant.(Note:HeadquartersrecommendsthattheFieldOfficeplaceEmergencygrantsonauto-reviewduetotightobligationandexpendituredeadlinestoensurethe grants will be more closely monitored.)

ForaNon-PresidentiallyDeclaredNaturalDisastergrant,aPHAhas24monthstoobligate90%of the grant and 48 months to expend 100% of the grant.

APHAmayrequestanextensionforitsObligationEndDate.Anextensionrequestshouldbemanaged in the same manner as a regular Capital Fund grant, as further described in Chapter 7.

Penalties for Noncompliance.

IfaPHAfailstoobligate90%ofanEmergencyandNon-PresidentiallyDeclaredNaturalDisasterGrantbytheOED,HUDwillrecapturetheunobligatedportionofthegrant.

• TheFieldOfficewillsendanACCAmendmenttothePHAtorecapturetheportionofthegrantthatthePHAfailedtoobligatebytheOED.

• UponreceiptoftheexecutedACCfromthePHA,theFieldOfficewillinitiaterecapture of the balance of the unobligated funds in LOCCS.

IfaPHAfailstodisburse100%ofanEmergencyandNon-PresidentiallyDeclaredNaturalDisasterGrantbytheEED,theFieldOfficewillrecapturetheundisbursedportionofthegrantandwillsendanACCAmendmenttorecapturetheportionofthegrantthatthePHAfailedtoexpend by the EED.

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8.7. Safety and Security Grants

The requirements for Emergency Safety and Security Grants are detailed in the most recent PIH notice2014-09announcingtheavailabilityofsuchfunds.

TheSafetyandSecurityEmergencythatisthesubjectofthegrantapplicationmustoccurwithin the same Federal Fiscal Year that Safety and Security Grant funding is being requested. Inthenarrative,thePHAshouldidentifyeachitemincludingthenumberofeligibleitemsbeingrequestedandidentifywheretherequestedeligibleitemswillbelocatedontheproperty,aswellasthecostperitemandanyinstallationcosts.

Giventhelimitedavailabilityoffunding,HUDiscurrentlyonlyacceptingoneSafetyandSecurityGrantapplicationperPHAeachFederalFiscalYear.Safetyandsecurityfundinghastodatebeenlimited to $250,000 per proposal.

Thecurrent$250,000awardlimitisamaximum.APHA’sfundingawardhasbeenbasedonanumberoffactorsincludingtheproposal’scostestimate,thenumberofunitsidentifiedwithintheproposal,andthedescriptionoftheidentifiedsafetyandsecurityneed.

Currently,aPHAmaysubmitanapplicationinwhichitrequestsfundingforoneormoreofitsdevelopments as long as its total request does not exceed $250,000. AHA is ineligible to receive safety and security funding if it has previously received safety and security funding for the same development or developments for which the funds are currently being requested.

Note: A long-standing problem does not constitute a Safety and Security Emergency because it is not unforeseen and likely to be unpreventable.

Fair Housing, Civil Rights, and Section 3 Requirements. A PHA is ineligible to receive a Safety andSecurityGrantifithasreceivedanyofthefollowingcharges,causedeterminations,lawsuits,orlettersoffindings;andiftheviolationisnotresolvedtoHUD’ssatisfactionatthetimeadecisionismadetoawardfunds.

• ThePHAhasbeenchargedwithasystemicviolationoftheFairHousingActorreceivedacausedeterminationfromasubstantiallyequivalentstateorlocalfairhousingagencyconcerningasystemicviolationofasubstantiallyequivalentstateorlocalfairhousinglawproscribingdiscriminationbecauseofrace,color,religion,sex,nationalorigin,disability,orfamilialstatus;

• ThePHAisadefendantinaFairHousingActlawsuitfiledbytheDepartmentofJusticeallegingapatternorpracticeofdiscriminationordenialofrightstoagroup of persons raising an issue of general public importance pursuant to 42 U.S.C. 3614(a);

• ThePHAisadefendantinanyotherlawsuitfiledorjoinedbytheDepartmentofJusticeallegingapatternorpracticeorsystemicviolationofTitleVIoftheCivilRightsActof1964,Section504oftheRehabilitationActof1973,Section109ofthe Housing and Community Development Act of 1974, Title II of the Americans withDisabilitiesAct,oraclaimundertheFalseClaimsActrelatedtofairhousing,nondiscrimination,orcivilrightsgenerallyincludinganallegedfailureto

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affirmativelyfurtherfairhousing;

• ThePHAhasreceivedaletteroffindingsidentifyingsystemicnoncomplianceunderTitleVIoftheCivilRightsActof1964,Section504oftheRehabilitationActof1973,Section109oftheHousingandCommunityDevelopmentActof1974;orTitleIIoftheAmericanswithDisabilitiesAct;

• ThePHAhasreceivedacausedeterminationfromasubstantiallyequivalentstateorlocalfairhousingagencyconcerningasystemicviolationofprovisionsofastateorlocallawprescribingdiscriminationinhousingbasedonsexualorientationorgenderidentity;or

• ThePHAhasreceivedacausedeterminationfromasubstantiallyequivalentstateorlocalfairhousingagencyconcerningasystemicviolationofastateorlocallawproscribingdiscriminationinhousingbasedonlawfulsourceofincome.

PHAsareremindedthattherequirementsofSection3areapplicabletofundsreceivedunderthistypeofgranttothesameextentthattheywouldotherwiseapplytoSection3-coveredassistance.

8.8. Eligible and Ineligible Uses: Safety and Security Grants

Funding from a Safety and Security Grant can only be used to cover eligible expenses that address threats to resident safety and security caused by a Safety and Security Emergency. Grants must be used for Capital Fund eligible items that address an emergency capital need.

TheapplicationforaSafetyandSecuritygrantmustidentifyoneormorethreatsthatcrimeanddrug-relatedactivitiesposetothehealthandsafetyofthePHA’spublichousingresidents.Thecapitalneedsrequestmustaddresstheidentifiedthreatthatthecrimeanddrug-relatedactivityposestothehealthandsafetyofaPHA’spublichousingresidents.Theintentofthisgrantistoprovideone-timeassistanceforsafetyandsecurityitemsthatcouldnotbeabsorbedwithinthePHA’sannualCapitalFundgrant.

Developments that have already been funded previously with a Safety and Security grant are noteligibleforadditionalfunding.

Safety and security grant funds may be used to install, repair, or replace capital needs items. (Note:SafetyandSecurity-eligibleitemsmustmeetUniformPhysicalConditionStandards(UPCS) and local code requirements for egress where necessary.) The following table lists eligibleandineligibleusesforSafetyandSecurityGrants.TheselistsarenotexhaustiveandthePHAshouldcontacttheFieldOfficeforclarificationifnecessary.

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Eligible Safety and Security Grant Costs Ineligible Safety and Security Grant Costs

Security systems/cameras, including digital video recorders Patrol cars

Fencing SalariesforPHAstaff,includingsecuritystaff

LightingsystemsSecurity patrol contracts or payment to local law enforcementforadditionalsecuritypatrolsEmergency alarm systems

Windowbars

Deadboltlocks AdministrativeCosts(BLI1410)

Doors TransferstoOperations(BLI1406)

8.9. Safety and Security Grant Applications

InordertosubmitanapplicationforaSafetyandSecurityGrant,aPHAshouldsubmitallrequireditemsinaccordancewiththemostrecentapplicablePIHNotice.(Note: Safety and Security Grants are also subject to environmental review requirements under 24 CFR Part 50, as further described in Chapter 6.)

InordertosubmitanapplicationforaSafetyandSecurityGrant,aPHAshouldsubmitthefollowingitemstotheFieldOffice’sPublicHousingDirector:

• TransmittalletterfromthePHAsubmittingtheapplication.

• CFPBudgetandP&EReportintheformsrequiredbyHUDfortherequestedfunds.

• Note:TheinformationprovidedshouldbespecifictotheproposedSafetyandSecuritygrant.PleasedonotsubmitinformationonthecurrentCFPBudget.TheproposedworkdoesnotneedtobeincludedinthePHA’s5-YearActionPlan.MTWagenciesmaysubmitaBlockgrantbudgetinlieuoftheCFPBudgetandP&E Report.

• Detailednarrativethatidentifies:

▪ Athoroughyetconcisedescriptionand/orexplanationofhowthePHAhasexperienced an increased threat to the health and safety of its public housing residents, and

▪ CrimedataofthePHA’slocality(i.e.,town,city,parish,county.)fromarecognized source such as local law enforcement or uniform crime reports;

• At least one of the following:

▪ NarrativedocumentationfromPHAofficials,ResidentAdvisoryBoards,orPHA security personnel;

▪ Narrativedocumentationfromlocalcommunitypolicingorganizations;or

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▪ Narrativedocumentationfromlocalofficials(e.g.,businesscouncilexecutives,citycouncilexecutives).

• Documentedabilitytopartiallyfinancetheproposedproject:

▪ DescribetheactivitiesthatwillbeundertakentocorrecttheSafetyandSecurityEmergencyandtheestimatedcost.IncludeastatementthatthePHA has not previously received safety and security funding for the project or projectsforwhichthePHAiscurrentlyrequestingsafetyandsecurityfunding.

▪ Ifthecostestimateexceedsthe$250,000maximumgrantsize,thePHAmustincludedocumentsindicatingotherfunding,includingCapitalFunds,thatareavailabletocovertheproposal’sadditionalcosts.FundsmustbefromagrantthatiscurrentlyavailabletothePHAasofthedateofapplicationsubmissionnot for proposed funding.

• CertificationforContracts,Grants,LoansandCooperativeAgreements3;

• StandardForm(SF)-LLL,DisclosureofLobbyingActivities;

• PHACertificationsofCompliancewiththePHAPlansandRelatedRegulationsforstandardPHAsorCivilRightsCertificationforQualifiedPHAs;

• AstatementcertifyingthatthePHAisincompliancewiththecivilrightsthresholdrequirementssetforthatSection8.7.

8.10. Obligation and Expenditure of Safety and Security Grants

TheFieldOfficemonitorstheobligationandexpenditureoffundsagainsttheapplicabledeadlines in LOCCS.

A PHA has 12 months to obligate 90% of the Safety and Security Grant and 24 months to disburse100%oftheSafetyandSecurityGrant.ItisrecommendedthattheFieldOfficeplaceSafetyandSecurityGrantsonauto-reviewduetothetightobligationandexpendituredeadlinesto ensure the grants will be more closely monitored. If the PHA receives funding in excess of thecostsincurredtoaddresstheSafetyandSecurityEmergency,thePHAmustnotifytheFieldOfficeandreturntheexcessfunds.

If a PHA fails to obligate 90% of a Safety and Security Grant by the OED, HUD will recapture the unobligatedportionofthegrant.HUDwillsendanACCAmendmenttothePHAtorecapturetheportionofthegrantthatthePHAfailedtoobligatebytheobligationenddate.

If a PHA fails to disburse 100% of a Safety and Security Grant by the EED, HUD will recapture the undisbursedportionofthegrant.HUDwillsendanamendedACCtothePHAtorecapturetheportionofthegrantthatthePHAfailedtoexpendbytheEED.

3 Currently, that form is Form HUD-50071.

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8.11. Grant Closeout for Emergency and Non-Presidentially Declared Natural Disaster Grants & Safety and Security Grants

Grant closeout should be managed in the same manner as a regular Capital Fund grant.

Whenalloftheworkidentifiediscompleteandthegrantfundsarefullyobligatedandexpended,thePHAisresponsibleforsubmittingafinalP&EReportandanActualModernizationCertificate(AMCC)(currentlyFormHUD-53001)totheFieldOffice.

If the PHA receives less than $750,000 in federal funds (including federal funds not derived from HUD)intheyearitreceivedanEmergencyandNon-PresidentiallyDeclaredNaturalDisasterGrantorSafetyandSecurityGrant,theFieldOfficemayapprovebothformsifitbelievesthereports are true and accurate. See 2 CFR part 200, Subpart F.

Audit and Closeout Approval. If the PHA receives more than $750,000 in federal funds (including federal funds not derived from HUD) in the year it received an Emergency and Non-PresidentiallyDeclaredNaturalDisasterGrantorSafetyandSecurityGrant,thePHAwillbe required to comply with an annual audit under the Single Audit Act. See 2 CFR Part 200, Subpart F.

ThePHAshouldnotifytheFieldOfficethatthetwoformswereincludedwiththeotherfinancialstatementsprovidedtoitsindependentpublicauditor.TheFieldOfficewillthenenterintoLOCCS that the grant is in the pre-audit stage.

Oncetheannualauditiscompleted,thePHAwillnotifytheFieldOfficeandidentifyanyexceptionsnoted,ifapplicable,intheaudit.Ifthereareexceptions,thePHAwillbeexpectedtomaketheappropriateadjustments.Iftherearenoexceptions,HeadquarterswillapprovetheAMCC and enter into LOCCS.

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Chapter 9 Public Housing DevelopmentThischapterprovidesanoverviewofthepublichousingdevelopmentprocessandidentifiesgeneral program requirements. The process described in this chapter is the method through which HUD approves all public housing development projects - whether newly constructed or acquired(withorwithoutrehabilitation),ownedbythePHA,orownedbyanotherentity.PHAsmustcomply(orcausetheOwnerEntityanditscontractorstocomply)withtheprovisionsofthischapter.Italsodescribestheadditionalrequirementsthatapplytomixed-financepublic housing development (i.e., development of public housing units that will be owned in wholeorinpartbyanentityotherthanaPHA).ItincludestherequirementsforsubmissionofaSiteAcquisitionProposal,aproposalwhichseeksacquisitionoflandpriortosubmissionof a Development Proposal, and the Development Proposal. Finally, the chapter concludes with a discussion of requirements and procedures for drawing down predevelopment and developmentfundingandincludesdevelopmentproposalchecklistsforreferenceanduse.

9.1. Methods of Public Housing Development.

APHAmaydeveloppublichousingthroughtheconstructionofnewunitsorthroughacquisitionofexistinghousingunits,whichmayormaynotrequirerehabilitation.APHAmayuseanygenerally accepted method of development including the following methods:

Method DescriptionConventional (may be used for new construction or rehabilitation)

• ThePHAdesignsaproject(eithernewconstructionorrehabilitationofanexistingbuilding)onlandthatitowns.

• ThePHAadvertisesforadeveloperviacompetitivebidstobuildorrehabilitate the property on the PHA-owned site in accordance with the PHA’sdesigns.

• ThePHAawardstheconstructioncontractinaccordancewithfederalprocurementregulations.

• ThecontractorreceivesprogresspaymentsfromthePHAduringconstructionorrehabilitationandafinalpaymentuponcompletionoftheprojectinaccordancewiththeconstructioncontract.

Turnkey (may be used for new construction or rehabilitation)

• The PHA selects a developer to develop a project on a site owned or to be purchasedbytheselectedturnkeydeveloper.

• The Development Proposal is approved by HUD and the PHA and the selected turnkeydeveloperexecuteacontractofsaleandtheturnkeydeveloperbuilds the Project.

• Theturnkeydeveloperfinancesthecostofdevelopmentfromitsownresources.

• Uponcompletionofprojectconstructionorrehabilitationinaccordancewiththecontractofsale,thePHApurchasesthepropertyfromtheturnkeydeveloper.

• TheturnkeydeveloperonlygetspaiduponacceptanceoftheProjectbythePHA.ThePHAdoesnotmakeprogresspayments.

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Method DescriptionAcquisitionWithorWithoutRehabilitation

• ThePHAacquiresanexistinghousingpropertythatrequiressubstantial,moderate, or no repair.

• AnyrepairworkisdonebyPHAstafforcontractedoutbythePHA.• ThePHAmustcertifythatthepropertywasnotoriginallyconstructedwith

theintentofsellingittothePHAoralternatively,thePHAmustcertifythatHUD requirements were followed in the development of the property.

• UnlessHUDdeterminesotherwise,initssolediscretion,nocertificationisrequiredforacquisitionofapropertythatisolderthan2yearsorhasnotbeen rehabilitated within the last 2 years. In this case, only a Development Proposal is required.

Force Account Labor • ThePHAstaffcarriesoutnewconstructionorrehabilitation.• A PHA may use Force Account Labor if the plan to use Force Account Labor

isincludedinthePHA’sApproved5-YearActionPlan(seeChapter6foradditionalrequirements).

• HUD approval to use Force Account Labor is not required when the PHA is designated as a High Performer under PHAS at the start of development.

Mixed-Finance • Developmentormodernizationofpublichousing,wherethepublichousingunitsareownedinwholeorinpartbyanentityotherthanaPHA.

• Thedevelopmentmayinvolvefinancingfrombothpublicandprivatesources.

Other Methods • PHAs may use other methods, or a hybrid method, as long as the requirements of 24 CFR 905, Subpart F are met.

9.2. Development Process Overview.

1. Select Site. ThePHAidentifiesasitetobeacquired(includingexistinghousingtobebroughtintothePublicHousingProgram,whichmaybeownedbythePHAorthirdparties)oraPublicHousingProjecttobedevelopedorredeveloped.Forturnkeyprojects,thesitewillnotbeidentifieduntilthePHAadvertisesandselectsaproposalthatcontainsadeveloper-selected site.

2. Update Annual Plan and 5-Year Action Plan. Alldevelopmentactivities(construction,rehabilitation,acquisition,demolition,and/ordisposition)undertakenbyaPHAmustbeidentifiedinanapprovedAnnualPlan.IfaPHAplansdevelopmentactivitiesthatarenotalready in its approved Annual Plan, it amends the Annual Plan as soon as possible and in accordancewith24CFR§903.21.Inaddition,ifaPHAplanstouseCapitalFundsoranySecuredFinancingasdescribedinChapter11,thePHAmustalsoidentifyandprovideadescriptionoftheplannedactivitiesinthe5-YearActionPlanandupdatesuchplanasnecessary following the guidance in Chapter 3.

3. Consult with Residents. ThePHAmustconsultwithaffectedresidentsandsolicittheirinputwith regard to the development of the Public Housing Project prior to submission of a Site AcquisitionProposal,DevelopmentProposal,orboth,toHUD.ThisconsultationmaybemetthroughresidentmeetingsaspartoftheAnnualPlanorannualCapitalFundSubmission,asdescribedinfurtherdetailinChapter3,orbymeetingsconvenedspecificallytodiscussthedevelopmentoracquisition.

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4. Submit Site Acquisition Proposal, if necessary. If the PHA wishes to expend Public Housing Capital Funds to purchase vacant land, but is not yet prepared to submit a Development Proposal,itshouldsubmitaSiteAcquisitionProposalpursuanttoSection9.7.Theterm “vacant land” includes land with dilapidated structures that will be torn down priortodevelopment,butdoesnotincludeexistinghousingthatwillbepurchasedandrehabilitated.AsfurtherdescribedinSection9.10.A,aPHAmayrequestpredevelopmentfundingnecessarytoprepareaSiteAcquisitionProposal.ASiteAcquisitionproposalisalso required if a PHA wishes to acquire land for non-development purposes, such as blight eliminationorgreenspace.

5. Submit Development Proposal. The PHA prepares a Development Proposal, which describestheproposedproject,itsfinancing,andcompliancewithregulatoryrequirementspursuanttoSection9.8,andsubmitstheDevelopmentProposaltoHUDforapproval.APHAmay request predevelopment funding necessary to prepare a Development Proposal.

6. Establish Project in IMS/PIC. Upon receipt of the Development Proposal, the PHA and Field OfficemustassignaprojectnumberandentertheinitialprojectinformationintoPIC.Atarget DOFA date should be established.

7. Execute Declaration of Trust or Declaration of Restrictive Covenants. AfterHUDapprovestheSiteAcquisitionProposaland/orDevelopmentProposal,thePHArecordsaDeclarationofTrustorDeclarationofRestrictiveCovenants(forMixed-FinanceProjectsonly)onallpropertyacquiredand/ortobedeveloped.Ifapplicable,thePHAmustfirstreleasethedevelopmentpropertyfromtheexistingDeclarationofTrustandensurethatthetermsofanySACdispositionletteraremet.IfCapitalFundsaretobeused,theFieldOfficemakesthe funds available in LOCCS, if the funds are not already available. For other Public Housing Funds,suchasHOPEVIorCNI,HeadquartersmakesthefundsavailableinLOCCS.

8. Execute Mixed-Finance ACC Amendment (for Mixed-Finance Projects only). AfterHUDapproves the Development Proposal for a Mixed-Finance Project, the PHA and the Field OfficeexecuteaMixed-FinanceACCAmendmentfortheProject.ForNon-Mixed-Financedevelopment,executionofanACCAmendment,isnolongernecessary.Thepreviouslyexecuted CFP/RHF Amendments, together with the IMS/PIC system approval of the buildings andunits,willsatisfytherequirementsof24CFR905.610(b).

9. Execute Documents (for Mixed-Finance Projects only). AfterHUDapprovestheDevelopmentProposal,PHAsexecuteallotherevidentiarydocumentsand,afterreviewand approval, HUD authorizes the expenditure of Public Housing Funds for development purposes.

10. Establish Date of Full Availability (DOFA). UponcompletionofthePublicHousingProject,thePHAwillestablishtheDOFAandreportthedatetotheFieldOffice.

11. Finalize Cost Certification. AftertheDOFA,thePHAwillsubmitacostcertificateonaformprescribedbyHUDtoHUDattestingtotheactualcostoftheProjectthatwillbesubjecttoaudit.

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9.3. Sources of Funding For Development.

APHAmayengageindevelopmentactivitiesusinganyoneoracombinationofthefollowingsources of funding:

• Capital Funds (including its subcategories RHF and DDTF);

• HOPE VI funds;

• ChoiceNeighborhoodsInitiative(CNI)funds;

• CommunityDevelopmentBlockGrantfunds;

• HOMEInvestmentPartnerships(HOME)funds(inaccordancewiththelimitationsdescribed in 24 CFR 92.213);

• Proceeds from the sale of units under a homeownership program in accordance with 24 CFR Part 906;

• ProceedsresultingfromthedispositionofPHA-ownedlandorimprovementsfromthePublicHousingProgram(DispositionProceedsasdescribedinsection18 of the 1937 Act and 24 CFR Part 970);

• PrivatefinancingusedinaccordancewithMixed-FinanceDevelopment;

• Capital Fund Financing Program (CFFP) proceeds;

• ProceedsresultingfromanOperatingFundFinancingProgram(OFFP)approvedbyHUDpursuantto24CFRPart990orotherSection30approval;and

• Funds available from any other eligible sources.

9.4. General Program Requirements.

AsamplechecklistforFieldOfficereviewoftheserequirementsisfoundatExhibit9.3,separated for Mixed-Finance and non-Mixed-Finance Projects.

1. New Construction Limitations. These requirements apply to the development of publichousing.Developmentmeansnotonlyconstructionofnewunits,butalsotheacquisitionofunits(whetherornotrehabilitationisneeded)thatwillbeconvertedto public housing. All proposed new development projects must meet both of the following requirements:

• “Faircloth Limit” on the number of units. A PHA may not use Capital Funds orOperatingFundstodeveloppublichousingunitsinexcessoftheFairclothLimitdefinedinChapter1.APHAmaydeveloppublichousingunitsinexcessofthelimitation,andwiththeapprovaloftheSecretary,onlyif(1)theunitsareavailableandaffordabletoeligiblelowincomefamiliesandnoCapitalFundswillbeprovidedforconstruction,modernization,andoperatingexpensesrelatedtothe new units or (2) the units are part of a Mixed-Finance Project or otherwise

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leveragesignificantnon-publichousinginvestment,andthecostofmaintainingtheunitsovertheirusefullifeislessthantheestimatedcostofprovidingtenant-basedassistanceunderSection8(o)ofthe1937Act.

• NewConstructionCostComparisontoExistingHousing.APHAmaynotconstructnewpublichousingunlessthecostofconstructionislessthanthecostofacquisition(oracquisitionwithrehabilitationofexistingunits),includingtheamount required to establish an up-front reserve for replacement accounts for major repairs. A PHA shall provide evidence of compliance with this requirement either by:

▪ PreparingacostcomparisonwhichconfirmsthatthecostofnewconstructionintheneighborhoodwherethePHAproposestoconstructthehousingislessthanthecostofacquisitionofcomparableexistinghousingwithorwithoutrehabilitationinthesameneighborhood;or

▪ Providingdocumentationsupportingtheassertionthatthereisinsufficientcomparableexistinghousingintheneighborhood.Incompilingitsevidenceofcompliance,thePHAmayrelyonitsownknowledgeoftheneighborhood,anymarketstudypreparedbyexperiencedmarketprofessionals,anassessmentofcomparableprojectsandpropertiesonthemarket,oranotherreasonable method.

2. Existing PHA-Owned, Non-Public Housing Properties.Non-publichousingpropertiesthatareownedbyaPHAmaybeaddedtothePHA’spublichousingACCbyfollowingthedevelopment procedures described in 24 CFR Part 905, Subpart F.

3. Site and Neighborhood Standards. Each proposed site to be newly acquired for a PublicHousingProjectandforconstructionorrehabilitationofpublichousingmustcomplywiththedetailedsiteselectionstandardsin24CFR§905.602(d),whichconsiderneighborhoodamenities,safety,areasofminorityconcentration,fairhousing,andrelated issues. Current public housing projects are only exempt from 24 CFR 905.602(d)(3)and(4)ifoneormoreoftheexceptionsin24CFR905.602(d)(5)apply. Compliance with site and neighborhood standards is reviewed and approved by the Field Office,OfficeofPublicHousing,andOfficeofFairHousingandEqualOpportunity,andmayrequiresignificanttimeinsomecircumstances.PHAsareurgedtoworkwiththeFieldOfficeand/orHeadquartersforMixed-Financeprojects,todeterminetheneedforthis review at the earliest possible date. PHAs should be aware that some other HUD programs, such as project-based vouchers, have similar requirements. PHAs must comply with the applicable site and neighborhood standards in 24 CFR §905.602(d) and any applicable standards for other HUD funding sources of a project.

4. Cross-Cutting Federal Requirements.AlldevelopmentactivitiesarealsosubjecttothefederalrequirementsthatapplytoCapitalFundactivities,asdescribedinChapter6.

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9.5. Mixed-Finance Development

Mixed-Finance Development refers to the development of public housing units (through new constructionoracquisition,withorwithoutrehabilitation)whenthepublichousingunitsareownedbyanentityotherthanaPHA.Mixed-FinanceProjectsmostcommonlycontainamixofunittypes,includingpublichousing,otheraffordableunitsand/ormarketrateorunrestrictedunits. However, Mixed-Finance Projects may be 100% public housing as long as the units are ownedbyanentityotherthanthePHA.IfunitswillbeownedbyaPHAInstrumentality(24CFR905.604(a)(3))orPHAAffiliate(24CFR905.604(a)(4)),theProjectisconsideredmixed-finance.

Key Difference from Other Public Housing Development.

If the public housing units being developed are 100% owned by the PHA, the Project is not Mixed-Finance and is not subject to the mixed-finance requirements.

Mixed-FinanceProjectsaresubjecttoallDevelopmentrequirementsofthisGuidebook,inadditiontothespecificmixed-financerequirementsfoundat24CFR§905.604.AllHUDactionsand approvals related to Mixed-Finance Development are provided by Headquarters, unless the FieldOfficeisauthorizedinwritingbyHeadquarterstocarryoutaspecificfunctionrelatedto Mixed-Finance Development.

IfthereisaconflictbetweentheMixed-FinanceRequirementsandtheotherdevelopmentrequirements in Subpart F, the Mixed-Finance Requirements shall apply, unless Headquarters determines otherwise.

Mixed-FinanceProjectsmustsubmitaDevelopmentProposalunlessotherwisespecifiedbyHeadquarters.

Structure of Mixed-Finance Projects. AMixed-FinanceProjectmayinvolvenewconstruction,acquisitionwithorwithoutrehabilitation,ormodernizationofexistingpublichousingunits.

• Ownership.OwnershipstructuresofMixed-FinanceProjectsmaytakevariousforms.HUDhasnotestablishedrequirementsorprohibitionsfortheownershipstructure.BecauseMixed-FinanceProjectsoftenincludeLowIncomeHousingTaxCredits,ownershipentitiesaremostcommonlylimitedpartnershipsandlimitedliabilitycompanies.APHA,PHAAffiliate,orPHAInstrumentalitymayormaynotbepartoftheOwnerEntity.

• InstrumentalitiesandAffiliates.InMixed-FinanceDevelopment,PHAsoftenworkthroughaPHAAffiliateorPHAInstrumentality.

▪ PHA Affiliate.Anentity,otherthanaPHAInstrumentality,formedbyaPHAinwhichaPHAhasafinancialorownershipinterestorparticipatesin its governance. The PHA has some measure of control over the assets, operations,ormanagementoftheaffiliatebutsuchcontroldoesnotrisetothelevelofcontroltoqualifytheentityasaninstrumentality.Forthepurposes of development, ownership of public housing units by a PHA AffiliateisconsideredMixed-FinanceDevelopment.Affiliatesmustbeprocured.

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▪ PHA Instrumentality.AnentityrelatedtoaPHAwhoseassets,operations,andmanagementarelegallyandeffectivelycontrolledbythePHA,throughwhichPHAfunctionsorpoliciesareimplemented,andwhichutilizesPublicHousing Funds or public housing assets for the purpose of carrying out public housingdevelopmentfunctionsofthePHA.APHAInstrumentalityassumesthe role of the PHA and is the PHA under the Public Housing Requirements, asdefinedin24CFR905.109andAppendix1,forpurposesofimplementingpublichousingdevelopmentactivitiesandprograms,andmustabidebythePublicHousingRequirements.PHAInstrumentalitiesmustbeauthorizedtoactforandtoassumesuchresponsibilities.Forpurposesofdevelopment,ownership of public housing units by a PHA Instrumentality is considered Mixed-Finance Development.

Funding.

Mixed-FinanceDevelopmentsmayincludeoneoranycombinationoffundsidentifiedabove.However,PublicHousingFundscommittedtoaMixed-FinanceProjectmayonlybeusedtopayforcostsassociatedwiththepublichousingunits,includingcostsassociatedwithdemolition,sitework,infrastructure,andcommonareaimprovements.

Pro-Rata Test.

To ensure that Public Housing Funds are being used to fund public housing costs, Mixed-Finance Projectsmustpassthe“pro-ratatest,”whichrequiresthattheproportionofPublicHousingFundstototalsourcescommittedtoaProjectmustnotexceedtheproportionofpublichousingunits compared to the total number of units contained in the Project.

For example, if there are a total of 120 units in the Project and 50 are public housing units, the public housing units are 42% of the total number of units in the Project. Therefore the amount ofPublicHousingFundscommittedtotheProjectcannotexceed42%ofthetotalProjectbudget, unless otherwise approved by the Secretary.

If Public Housing Funds are to be used to pay for more than the pro rata cost of common area improvements, HUD will evaluate the proposal to ensure that common area improvements will benefitthepublichousingresidentsoftheMixed-FinanceProject.

Design.

Public housing units built as part of a Mixed-Finance Project must be comparable in size, location,externalappearance,anddistributiontonon-publichousingunitswithinthedevelopment.

Mixed-Finance Procurement.

The requirements of 2 CFR §200.319(b) and 24 CFR §905.316 apply to Mixed-Finance Development,withthefollowingexceptions:

• PHAsmayselectadevelopmentpartnerusingcompetitiveproposalproceduresforqualifications-basedprocurementactions(i.e.,aRequestforQualifications

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orRFQ),subjecttonegotiationoffairandreasonablecompensationandcompliancewithTDClimitsandotherapplicablecostlimitations.Theterm“development partner” generally means a developer or owner-developer of a Mixed-Finance Project;

• AnOwnerEntityordeveloperthatiscompetitivelyselectedbyaPHAisnotnormally subject to the requirements of 24 CFR Part 200. However, the Owner Entityordevelopermustcomplywith24CFRPart200ifHUDdeterminesthatthe PHA or a PHA Instrumentality or either of their members or employees “exercisessignificantdecisionmakingfunctions”withintheOwnerEntitywith“respect to managing the development of the proposed units.” HUD may, on acase-by-casebasis,exemptsuchanOwnerEntityfromtheneedtocomplywith24CFRPart200ifitdeterminesthattheOwnerEntityhasdevelopedanacceptablealternativeprocurementplan.

RefertoSection16.6oftheProcurementHandbookforPublicHousingAuthorities(7460.8rev2),whichidentifiesspecificactionsthatqualifyas“exercisingsignificantfunctions”andothersthat do not.

Conceptually,anOwnerEntitywouldberequiredtocomplywith24CFRPart200initsprocurements if: (1) a PHA or a PHA Instrumentality is the managing member or general partner oftheOwnerEntityand(2)managesthedevelopmentprocess.

AMixed-FinanceProjectinwhichaPHAInstrumentalityistheOwnerEntity’smanagingmemberorgeneralpartner,butthedevelopmentworkismanagedbyaprocuredthird-partydeveloper, would not be required to comply with 24 CFR Part 200 because the PHA is not “managing” the development process.

Identity of Interest.IftheOwnerEntityoraPartner(oranyotherentitywithanidentityofinterestwiththeOwnerEntityorPartner)ofaMixed-FinanceProjectwantstoserveasthegeneralcontractorfortheMixed-FinanceProject,itmayawarditselftheconstructioncontract only if: (1) theidentityofinterestgeneralcontractor’sbidisthelowestbidsubmittedinresponsetoarequestforbidsor(2)thePHAsubmitsawrittenjustificationtoHUDthatincludesanindependentthird-partycostestimatewhichshowsthattheidentityofinterestgeneralcontractor’scostsarelessthanorequaltotheindependentthird-partycostestimateand(3)HUDhasapprovedtheidentityofinterestgeneralcontractorinconjunctionwithHUD’sapproval of the Development Proposal for the Mixed-Finance Project.

Tobeconsideredindependent,thecostestimatorshouldnotbeworkingontheProject.Forexample, a Project architect retained by a private developer to design or oversee a Mixed-Finance Project cannot be considered independent.

Tobeconsideredthird-party,thecostestimatorshouldnotbeanindividualemployedbythePHA,anypartyinvolvedintheMixed-FinanceDevelopment,oranaffiliateofanypartyinvolvedin the Mixed-Finance Development. [24 CFR §905.604(i)]

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Modernization DOFA.AMixed-FinanceProjectthatinvolvesmodernizingorrehabilitatingexistingpublichousingaftertransfertoanOwnerEntity:(1)maintainstheDOFAdatethatexistedpriortomodernizationand(2)mustbeoperatedaspublichousingforthesametimeperiod as newly constructed public housing. [24 CFR §905.604(a)(4)]

Operating Subsidy-Only Development. Most Mixed-Finance Projects use Public Housing Funds topayforbothdevelopmentandoperatingcostsrelatedtothepublichousingunits.Operating Subsidy-Only development refers to a Mixed-Finance Project that is developed without Public HousingCapitalAssistance,butforwhichHUDagreestoprovideOperatingFundAssistanceunderthetermsandconditionsofanOperatingSubsidy-OnlyACCAmendment.AnOperatingSubsidy-Only Project is subject to the following provisions:

ThenewlydevelopedpublichousingunitswillbeincludedinthecalculationoftheCapitalFundformula, as further described in Chapter 4.

AnACCAmendmentwillbeexecutedtoincludethenewpublichousingunits.TheOwnerEntitymaynotdisposeofthepublichousingunitswithoutthepriorwrittenapprovalofHUDduringandfor10yearsaftertheendoftheperiodinwhichthepublichousingunitsreceiveOperatingFund Assistance from the PHA.

IfthePHAisnolongerabletoprovideOperatingFundAssistancetotheOwnerEntity,itmay(onbehalfoftheOwnerEntity)requestthatHUDterminatetheDeclarationofTrustorDeclarationofRestrictiveCovenants,asapplicable.ThePHAmustprovidepublichousingresidentswithadecent,safe,sanitary,andaffordableunittowhichtheycanrelocate,whichmayincludeapublic housing unit in another development or a Housing Choice Voucher, and must pay for the tenant’sreasonablemovingcosts.ThissituationalonedoesnotcausetheUniformRelocationAct to apply.

If the PHA elects in the future to use Public Housing Capital Assistance to modernize an OperatingSubsidy-OnlyProject,thePHAmustexecuteanACCAmendmentwitha20-yearuserestrictionandrecordaDeclarationofTrustorDeclarationofRestrictiveCovenantsasdescribedinSection9.3.Afterthat,theremaybenodispositionofthepublichousingunitswithoutthepriorwrittenapprovalofHUDduringthe20-yearperiodandthepublichousingunitsshallbe maintained and operated in accordance with all applicable Public Housing Requirements (includingtheACC),asthoserequirementsmaybeamendedfromtimetotime.[24CFR§905.604(j)]

AnOperatingSubsidy-OnlyprojectmustcomplywithPublicHousingRequirements.

OperatingSubsidy-OnlyprojectsmustfollowthesameapprovalprocessasotherMixed-FinanceProjects.[24CFR§905.604(k)]

Capital Fund-Only Development.

Capital Fund-Only Development refers to a Mixed-Finance Project where a PHA and/or its Partners develop public housing units using Public Housing Funds for development, but for whichHUDwillnotprovideOperatingFundAssistance.

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ThenewlydevelopedpublichousingunitswillnotbeincludedinthecalculationoftheOperatingFundformula.ThePHAmustsignanACCAmendmentwitha40-yearuserestrictionandrecordaDeclarationofTrustorDeclarationofRestrictiveCovenants,unlessthetimeperiodisreducedbytheSecretary.TheOwnerEntitymaynotdisposeofthePublicHousingProjectwithoutthepriorwrittenapprovalofHUDduringa40-yearperiod.PriorwrittenapprovalconsistsofwrittenapprovalbyHeadquarters.

A Capital Fund-Only Project must follow the same approval process as other Mixed-Finance Projects.

Deviation from HUD Requirements Related to Public Housing Management.

Each Mixed-Finance Project must have a legal document between the PHA and the Owner EntitythatrequirestheOwnerEntitytooperateaspecificnumberofunitsaspublichousing.Usually,thisrequirementisfoundinadocumentcalleda“Regulatory&OperatingAgreement.”TheRegulatory&OperatingAgreementmayincludeprovisionsthatallowtheOwnerEntitytodeviate from Public Housing Requirements related to management of the public housing units (suchasrentsandincomeeligibility),ifspecificHUDrequirementsarefirstmet.Often,theRegulatory&OperatingAgreementdescribespotentialdeviationsas“Transformation.”

Theregulationsat24CFR905.604(k)setstheparametersunderwhichsuchdeviationsmayoccur,includingtherequiredsubmissionofan“AlternativeManagementPlan,”whichmustbeapprovedbyHUD.AllsubmissionsinconnectionwithdeviationfromPublicHousingRequirementsshallbesubmittedtoHeadquarters.

9.6. Site Acquisition Proposal

When to Submit a Site Acquisition Proposal.

WhenaPHAdecidestousePublicHousingFundstoacquirevacantland(orlandwithexistingdilapidated structures to be torn down prior to development) for the future development of new public housing units, but is not yet prepared to submit a Development Proposal, the PHA mustsubmitaSiteAcquisitionProposaltoHUDforreviewandapprovalpriortoacquisition.

OncethePHAfinalizesitsplanfordevelopmentofthesite,itmustsubmitaDevelopmentProposaltoHUDforreviewandapprovalbeforestartingdevelopment.

If a PHA proposes to acquire land using non-Public Housing Funds and the site will not be placed underanACC,aSiteAcquisitionProposalisnotrequired.However,ifthePHAintendstoplace the property under its ACC and/or subsequently use Public Housing Funds to maintain or redeveloptheproperty,thePHAmustcompletetheEnvironmentalReviewpriortoacquisition.It is also recommended that the PHA complete a Site and Neighborhood Standards analysis priortoacquisition.

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Where to Submit a Site Acquisition Proposal.

TheSiteAcquisitionProposalissubmittedtotheFieldOffice.However,iftheacquiredlandwillbepartofamixed-financedevelopment,thePHAshouldconsultwithHeadquartersbeforeproceedingwithsubmissionofaSiteAcquisitionProposal.

A sample Site Acquisition Proposal Checklist is found at Exhibit 9.1.

Contents of the Site Acquisition Proposal.

TheSiteAcquisitionProposalshallincludethefollowing:

• Justification.AjustificationforacquiringvacantlandpriortoDevelopmentProposalsubmissionandapproval.Typically,timingistheissue.Forexample,acitymayofferparcelsforsaletoaPHAto“seed”adevelopmentproject.Or,aPHAmayacquirescatteredsitepropertiesonebyoneinordertodevelopasaunit once all parcels have been acquired.

• Description.Adescriptionoftheland(i.e.,proposedsiteand/orproject)tobeacquired.APHAshouldprovidebothanarrativedescriptionofthesiteandalegaldescriptionoftheland.

• Projectdescription;siteandneighborhoodstandards.IdentifyanddescribetheproposedProject,siteplanandneighborhood,andprovidesufficientinformationforHUDtodeterminewhethertheproposedsitemeetsthesiteandneighborhoodstandardsdescribedinSection9.5.D.PHAsmaywishtoprovidesupportingmapsanddescriptionofbusroutesandotherpublictransportationoptions,alongwithsocial,recreational,commercial,andhealthfacilities.

• Zoning. DocumentationthattheproposedProjectispermittedbycurrentzoningordinancesorregulationsorevidencetoindicatethatneededrezoningislikelyand will not delay the Project. If no change in zoning is needed, the PHA may submitaconfirmationletterfromthezoningauthority,azoningmapidentifyingthesite,orotherdocumentationdeemedsufficientbytheFieldOffice.Ifachange in zoning is needed, the PHA should provide evidence to indicate that the requiredrezoningwilllikelybeobtainedandwillnotdelaytheproject.

• Appraisal. An appraisal of the proposed property by an independent, state-certifiedappraisershowingthatthepurchasepriceofthesite/propertydoesnotexceedtheappraisedvalue;however,theFieldOfficemayapproveapurchasepricethatexceedstheappraisedvalue,ifjustified. Foracquisitionsthatdonotinvolve payment or involve only nominal payment, no appraisal is needed. (The URAincludesappraisalandappraisalreviewrequirementsforcertainacquisitionsunder49CFRPart24subpartB.TheURA’sappraisalandappraisalreviewrequirementsmaydifferfromthoserequiredunderprogramrules.)

• Schedule. AscheduleoftheactivitiestobecarriedoutbythePHA.Identifyanyduediligenceperiod,HUDreviewperiod,andproposedacquisitiondate.

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• Environmental Review. APHAmustprovidedocumentationdemonstratingcompletionoftheEnvironmentalReviewinaccordancewith24CFRPart50or24CFRPart58andasexplainedinmoredetailinSection6.2,priortoacquiringanyproperty.HUDwillnotapproveaSiteAcquisitionProposalwithoutthisdocumentation.

• URARealPropertyAcquisitionRequirements.Realpropertyacquisitionsmustcomplywithapplicablerequirementsof49CFR24subpartBandHUDHandbook1378, Chapter 5.

Processing and Approval.

TheFieldOfficeshallreviewallSiteAcquisitionProposalsforcompliancewithPublicHousingRequirements, including 24 CFR Part 905, that apply to the development of public housing and theparticularproject.Inparticular,theFieldOfficeshallconfirmthatallrequiredelementsoftheSiteAcquisitionProposalhavebeenprovided.TheFieldOfficemayrequestadditionalinformation,back-updocumentationorotherdatanecessarytomakeadetermination.

IftheFieldOfficedeterminestoapprovetheSiteAcquisitionProposal,thePublicHousingDirectorshallissueanapprovalletterthat:(1)attachesaDeclarationofTrust,(2)requiresthePHAtoexecuteandrecordtheDeclarationofTrustimmediatelyuponpurchaseoftheapprovedsite, and (3) authorizes the expenditure of requested Public Housing Funds for the purchase.

ThePHAshallprovidetheFieldOfficewithacopyoftherecordedDeclarationofTrustforitsrecords.

9.7. Development Proposal

When to Submit a Development Proposal.

Beforedevelopingpublichousing,eitherthroughnewconstructionorthroughacquisition,withorwithoutrehabilitation,aPHAmustsubmitaDevelopmentProposaltoHUDforapproval.(Note: Failure to obtain HUD approval of a Development Proposal before expenditure of funds other than predevelopment costs identified in 24 CFR §905.612 may result in the Public Housing Funds used in conjunction with the Project being deemed ineligible expenses and the funds being repaid to HUD.)

Where to Submit a Development Proposal

• Fornon-MixedFinanceProjects,DevelopmentProposalsmustbesubmittedtotheFieldOffice.

• ForMixed-FinanceProjects,DevelopmentProposalsmustbesubmittedtoHeadquarters.

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Sample Checklist.

AsampleChecklistforDevelopmentProposals(Non-Mixed-Finance)isfoundatExhibit9.2.SpecificdetailsregardingsubmissionsforMixed-Financeandnon-Mixed-FinanceDevelopmentarefoundinSection9.8.

Submission Contents.

TheDevelopmentProposalsubmittedtoHUDmust,ataminimum,includethefollowingrequirements.SpecificdetailsregardingMixed-Financeandnon-Mixed-FinanceDevelopmentfollow.

1. Project description. AdescriptionoftheproposedProject,proposeddevelopmentmethod;certificationofcompliancewithpublichousingrequirementsiftheProjectisless than 2 years old; number and type of units (detached, semi-detached, row house, walkuporelevator)brokenoutbypublichousingunitsandnon-publichousingunitsifapplicable;bedroomcount;targetpopulation(e.g.,family,elderly,personswithdisabilities);andthetypeandsizeofnon-dwellingspace,ifapplicable.

· IftheProjectrequiresadesignationaselderly-onlyordisabled-only,aPHAmust obtain separate HUD approval prior to approval of the Development Proposal.PHAsshouldcontacttheFieldOfficeassoonaspossible.

· IftheProjectincludesProject-BasedVouchers,thePHAmustsubmitaseparateSubsidyLayeringAnalysistotheFieldOfficeforapprovalpriortoDevelopment Proposal approval.

· IftheProjectincludesdemolitionand/ordisposition,thePHAmustsubmitaseparatedemolitionand/ordispositionapplicationtotheHUDSpecialApplicationsCenterforapprovalpriortoDevelopmentProposalapproval.

· IftheProjectinvolvestheCFFP,OFFP,orotherSection30programs,thePHAmustsubmittherequireddocumentationfortheseprogramsandsecureapproval prior to Development Proposal approval.

2. Site Information. DescriptionoftheproposedsiteandthesurroundingneighborhoodsufficienttoenableHUDtodeterminethattheproposedsitemeetsthesiteandneighborhood standards described in 24 CFR §905.602(d) and Chapter 9 of this Guidebook.Discusssiteandareaamenities,theadequacyofpublicfacilities,andanyenvironmental issues.

· Forprojectsincludingacquisition,whereanAcquisitionProposalhasnotbeenpreviouslysubmitted,provideanindependentappraisalwhichsupportstheacquisitioncost.

· Provide evidence of compliance with zoning or, if a change is needed, that the rezoning will be approved.

· ProvideanALTAsurveyandtitlereportshowingcleanandmarketabletitle.

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3. Participant Description. IdentifyallmajorparticipatingpartiesandtheirrelationshipwiththePHA.Theterm“participatingparty”includesanythird-partyfunder(e.g.,lender,equityinvestor,orgrantor),developer,anyentityhavinganownershipinterest,landseller,privatemanagementagent,orgeneralcontractor,totheextentsuchpartiesare involved.

(Note: Engineers, attorneys, financial and development consultants, accountants, historic consultants, Section 3 consultants, social services providers, subcontractors, and similar parties are not participating parties.)

4. Development Project schedule. ProvideaschedulefortheProject’sdevelopmentthatincludes each major stage of development through and including the submission of the finalprojectcoststoHUD.

5. Accessibility. SchematicdrawingssufficientforHUDtodeterminethatdwellingunitsandotherpublichousingfacilitiesmeetaccessibilityrequirementsspecifiedinthedesignandconstructionstandardsdescribedin24CFR§905.312.

(Note: Among other requirements, a minimum of 5% of a Project’s units and all common areas, including paths of egress, must be accessible to persons with mobility disabilities, and an additional 2% of the units must be accessible for individuals with hearing or vision disabilities.)

6. Project costs. To allow HUD to assess sources of funding and projected uses of funds, the PHA shall submit:

· Development Budgets. Project budget, in the form prescribed by HUD, reflectingallconstructionperiodandpermanentperiodsourcesandusesoffunds(includinghardandsoftcosts),whetherornotsuchcostsareincludedintheTDCcalculationdescribedinChapter2.

· Construction Period Draw Schedule. The PHA shall submit a schedule showingthetimingofeachconstructionpayment,brokendownbysourcesoffunds and uses of funds. Required for Mixed-Finance Development and any other development that includes funding other than Public Housing Capital Assistance.

· Independent Construction Cost Estimate or Construction Contract. The PHAshallsubmitanindependentconstructioncostestimateortheactualconstructioncontractthatsupportsthepermanentandconstructionbudgets.

· TDC calculation.ThePHAmustsubmitacalculationofTDCandHCCusingHUDrequiredforms.TheTDCCalculationisaddressedinChapter2.TDClimitationsapplyonlytoPublicHousingCapitalAssistance.APHAmayuseotherfundingsources,includingdispositionproceeds,whicharenotsubjectto the TDC limit in order to cover development costs that exceed the TDC or HCC limit. Such funds, however, may not be used for items that would result insubstantiallyincreasedoperating,maintenance,orreplacementcosts.

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· Financing. APHAmustsubmitadetailednarrativewithadescriptionofallfinancingnecessaryfortheimplementationoftheproject,specifyingallsources and uses.

§For Mixed-Finance Projects, should HUD determine that more detail isrequired,itmayrequiresubmissionoffinancingdocuments(e.g.loandocuments,partnershiporoperatingagreements,Regulatory&OperatingAgreement)indraftandfinalformaftertheinitialsubmission of the Development Proposal.

§Note: PHAs must assure that all funds other than Public Housing CapitalAssistanceareirrevocablycommittedtotheProject,inaccordancewith24CFR§905.606(a)(6)(ii)(A)and(B).

· Operating Pro Forma/Operating Fund Methodology. To allow HUD to assess thefinancialfeasibilityofProjects,PHAsshallsubmita10-yearoperatingproformaincludingallincomeandexpenseassumptions,toassurethatoperatingexpensesdonotexceedoperatingincome.ForMixed-FinanceDevelopment, the PHA must also describe its methodology for providing and distributingOperatingFundAssistancetotheOwnerEntityforthepublichousing units.

7. Local Cooperation Agreement and Real Estate Taxes. For non-Mixed-Finance Projects, a PHAshallsubmiteither:(1)acopyofanexecutedCooperationAgreementbetweenthePHAandthetaxingjurisdictionor(2)anopinionofcounselthattheexisting,amended,orsupplementarycooperationagreementbetweenthejurisdictionandthePHAincludesthe public housing units being developed.

· For Mixed-Finance Projects,aPHAmaysubmiteitheritsexemptionforpublic housing units from payment of taxes or a payment in lieu of taxes asevidencedbytheCooperationAgreementdescribedabove,orthePHAmayelect(referredtoasaSection35(f)election)topayrealestatetaxesandprovidedocumentationfromanauthorizedofficialofthelocaljurisdictionthattheProjectisconsistentwiththejurisdiction’sConsolidatedPlan(formerlyknownasthecomprehensivehousingaffordabilitystrategy).Typically,acertificationfromthepersonheadingthejurisdiction’sHOMEandCDBGfundingprogramsthattheproposedProjectisconsistentwiththeConsolidatedPlanissufficient.

8. Environmental requirements. The PHA must provide evidence that the Environmental Review process has been completed in accordance with 24 CFR Part 58 or Part 50, as furtherdescribedinSection6.2ofthisGuidebook.HUDwillnotapproveaDevelopmentProposal without the appropriate environmental approval. PHAs are advised to begin thisprocessasearlyaspossible,asreviewandprocessingcantakeseveralmonths.(Note that if there are multiple sources of federal funding, such as CDBG or HOME, separate Environmental Reviews may be required and must be provided to HUD. PHAs should consult with the Field Office to assure all required reviews are completed.)

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9. Market analysis. For a Mixed-Finance Development that includes non- public housing units,thePHAmustincludeananalysisoftheprojectedmarketfortheproposedProject.UnlessotherwiseindicatedbyHUD,onlytheexecutivesummaryofthemarketstudyneedstobesubmitted.

10. Program income and fees. ThePHAmustprovideinformationidentifyingfeestobepaidtothePHA,itsPartner(s),theOwnerEntity,and/orotherparticipatingpartiesidentifiedbyHUD(onanyHUD-issuedforms).Inaddition,thePHAmustidentifytheproposedreceiptanduseofprogramincome,inaccordancewiththedefinitionandrequirementsat24CFRPart200.ForMixed-FinanceProjects,usethedefinitionof“programincome”provided in the exhibits to the Mixed-Finance ACC Amendment.

11. Additional HUD-requested information. PHAsarerequiredtoprovideanyadditionalinformationthatHUDmayneedtoassesstheDevelopmentProposal.PHAsareencouragedtoprovideacompleteDevelopmentProposalsothatnoadditionalinformationisnecessary.WhenaPHAsubmitsaDevelopmentProposalandsubsequentlyplacesthenewpublichousingunitsunderthePHA’sACC,itisdeemedtohavecertifiedbythoseexecutedsubmissionsitscompliancewith24CFR905,SubpartF.

Submission Requirements for Non-Mixed-Finance Projects. PHAs shall use any HUD-required formsdevelopedforDevelopmentProposalsfornon-MixedFinanceProjects.UntilHUDformsareredesignedtocomplywiththe24CFR905,PHAsmaysubmitanarrative,usetheirownforms,andadaptmixed-financeformsastheydeemappropriate.

Submission Requirements for Mixed-Finance Projects

• Three-StageSubmission.PHAstypicallymakeathree-stagesubmission.ThefirstsubmissionistheDevelopmentProposal,usingtheHUD-requiredformsfor Development Proposals for Mixed-Finance Projects. The second submission includescertainlegaldocumentsindraftform,typicallycalled“evidentiaries,”which are reviewed by Headquarters, with some documents reviewed by Field Counsel.ThethirdsubmissionisprovidedtoHeadquartersafterfinancialclosingandincludesthefinal,executedversionoftheevidentiaries.

• EvidentiaryDocumentSubmission.Asdescribedabove,forMixed-FinanceProjects,HUDrequiressubmissionofcertainevidentiarydocumentsaftersubmissionoftheDevelopmentProposal.ThefollowingevidentiariesmustfirstbesubmittedindraftformforHUDreviewandapprovalpriortofinancialclosing.Afterclosing,finalcopiesoftheexecuted(andrecorded,ifapplicable)documentsmustberesubmittedtoHUDforapprovalpriortotheexpenditureofPublicHousingCapitalAssistance.TheModelDocumentsidentifiedbelowmaybefoundonHUD’smixed-financewebsite.ThefollowingdocumentsmustbesubmittedtoHeadquarters:

▪ Mixed-Finance ACC Amendment (HUD Model Document);

▪ DeclarationofRestrictiveCovenants(HUDModelDocument);

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▪ Regulatory&OperatingAgreementbetweenthePHAandtheOwnerEntity;

▪ Ground Lease (and a Memorandum of Lease, if applicable) between the PHA andtheOwnerEntity,ifapplicable;

▪ Legal opinion from PHA counsel (HUD Model Document);

▪ HUDCertificationsandAssurances(currentlyFormHUD-50151);

▪ ALTAtitleproformashowingDeclarationofRestrictiveCovenantrecordedinthefirstpriorityorintheorderapprovedbyHUD(tobereviewedbyFieldOfficeGeneralCounsel);

▪ ALTAsurvey(tobereviewedbyFieldOfficeGeneralCounsel).(Note:ThesurveysubmittedtotheFieldOfficeshouldbefull-sizedifpossible);

▪ Management Plan, Management Agreement, and sample Tenant Lease (to be reviewedbytheFieldOffice);and

▪ Other documents as may be required by HUD.

9.8. Review of a Development Proposal

HUDshallreviewallDevelopmentProposals,includingevidentiaries,forMixed-FinanceProjectsfor compliance with Public Housing Requirements that apply to the development of public housing and the Project. HUD will evaluate whether the proposed sources and uses of funds areeligibleandreasonable,andwhetherthefinancingandotherdocumentationestablishtoHUD’ssatisfactionthattheProjectisfinanciallyviableandstructuredsoastoadequatelyprotect the federal investment of funds in the development.

Amendments to Approved Development Proposals. HUD must approve any material change to anapprovedDevelopmentProposal.HUDdefinesmaterialchangeas:

• A change in the number of public housing units;

• An increase or decrease of more than 10% of the number of public housing bedrooms;

• Anincreaseordecreaseofmorethan10%intheprojectcostorfinancing;or

• A change in the site.

Review and Approval of Development Proposals for Mixed-Finance Projects. The review processstartswhenthePHAmakesitsfirstsubmissionoftheDevelopmentProposal,coupledwithorcloselyfollowedbythefirstevidentiarysubmission.

1. AssignmentofProjectManager.OnceaDevelopmentProposalhasbeensubmitted,a HUD Project Manager will be assigned to the project. The Project Manager will be responsibleforreviewingalldocumentationandforworkingwiththePHAtomovetheprojecttofinalapprovalandreleaseoffunds.

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2. Project Review.

• Safe Harbor Standards.TheProjectManagerwillreviewthePHA’sDevelopmentProposal for compliance with Cost Control and Safe Harbor Standards for Rental Mixed-Finance Development (revised April 9, 2003), which outlines maximum fee ranges for a number of development costs. If a Project is at or below each safe harbor standard, no further review will be required by HUD. If a Project is above a safe harbor standard in one or more areas, the PHA must demonstrate to HUD inwritingthatthenegotiatedtermsareappropriateforthelevelofriskinvolvedintheProject,thescopeofwork,anyspecificcircumstancesofthedevelopment,andthelocalornationalmarketfortheservicesprovided.

• Project Review Panel.AfterinitialreviewbytheProjectManager,theProjectReviewPanelconfirmsthattheprojectmeetsallPublicHousingRequirementsandisfinanciallyviable.TheProjectManagerworkswiththePHAtoprepareasubmission to the Project Review Panel and to secure approval.

• Subsidy Layering Analysis. The Project Manager carries out a subsidy layering analysis to determine that the amount of public assistance being provided to a projectisnotmorethannecessarytomaketheprojectfeasibleaftertakingintoaccount all the other governmental assistance. The Project Manager includes the resultsofthatanalysisintheapprovalletter.

• Evidentiary Document Review. Upon receipt from a PHA, the Project Manager willdistributedraftevidentiarydocumentstotheOfficeoftheGeneralCounsel(OGC)atHeadquartersandtheFieldCounselOfficeforreview.

• Field Office Review.TheFieldOfficewillberesponsibleforreviewandapprovalof the Management Documents, including the Management Plan, Management Agreement, and Tenant Lease for public housing units. Approval should be provided to the Project Manager. Field Counsel will be responsible for review andapprovalofthesurveyandtitleproforma/policy.Approvalshouldbeprovided to the Project Manager. Prior to approval of the Development Proposal, theFieldOfficewillworkwiththePHAtoestablishtheprojectinIMS/PIC,includingidentificationofanewprojectnumberandestimatedDOFAdate.

• Approval of Development Proposal including Draft Evidentiary Documents. HeadquartersissuesaletterapprovingtheDevelopmentProposalandthedraftevidentiarydocuments.ThisletteralsoauthorizesthePHAtoproceedwiththefinancialclosingandattachesaMixed-FinanceACCAmendmentforexecution.

▪ (Note:ExpenditureofPublicHousingFundsisnotauthorizeduntiltheexecutedevidentiarydocumentsaresubmittedbythePHAandapprovedbyHUD,withtheexceptionofexpenditureofanypredevelopmentfundsapproved by HUD.)

• Execution of Mixed-Finance ACC Amendment. The PHA executes the number of originals of the Mixed-Finance ACC Amendment as indicated in the approval

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letter,providesallcopiestotheFieldOfficeDirectorofPublicHousingforsignatureandalsoexecutesreleasesofanyexistingDeclarationofTrustorDeclarationofRestrictiveCovenantsorotherevidentiarydocument.

• Approval of Final Evidentiary Documents. Afterclosing,thePHAmustsubmittoHUDforreviewandapprovalcopiesofthefinalexecutedandrecordedevidentiarydocumentswhichwerepreviouslyapprovedbyHUDindraftform.ThePHAmustincludewiththefinaldocumentsacertificationstatingthatthedocumentshavenotbeenmateriallychangedfromthedraftspreviouslyapprovedbyHUDor,ifchangeshavebeenmade,thechangesmustbeidentified.Inaddition,anALTAtitlepolicyshowingrecordationofdocumentsintheorderapprovedbyHUDmustbesubmitted.HUDwillissuealetterwhichapprovesthefinalevidentiarydocumentsandauthorizestheexpenditureofPublicHousingFunds, in accordance with the approved project budget.

• DOFA.PromptlyuponachievingDOFA,thePHAmustsubmitnotificationintheformrequiredbyHUD,whichiscurrentlyFormHUD-52423,totheFieldOffice,sounitswillbeeligibletoreceiveOperatingFundAssistance.

• Cost Certificate.WithinoneyearofProjectcompletion,thePHAshallsubmittotheFieldOfficetheActualDevelopmentCostCertificate(ADCC)(currentlyFormHUD-52427),theDevelopmentCostBudget/CostStatement(currentlyFormHUD-52484),and/orotherdocumentationrequiredbytheFieldOffice.

Review and Approval of Development Proposals for Non-Mixed-Finance Projects. PHAs must submitaDevelopmentProposal,containingtheinformationidentifiedinSection9.7,tothePublicHousingDirectoroftheappropriateFieldOffice.

• TheFieldOfficewillassignaProjectManager.

• TheFieldOfficeProjectManagerwillreviewtheDevelopmentProposaltoensureitscompletenessandwillworkwiththePHAtoresolveanyissues.

• TheFieldOfficewillissuealetterapprovingtheDevelopmentProposalandauthorizing the PHA to proceed with development and expenditure of Public Housing Funds.

• TheFieldOfficewillworkwiththePHAtoestablishtheprojectinIMS/PIC.AnACCAmendmentisnolongernecessaryforconventionalpublichousingdevelopment,pursuanttoPIHNotice2009-28.

• The PHA shall ensure that the DOT is recorded on the property and shall promptlysubmittoHUDacopyoftherecordedDOTandthefinaltitlepolicyshowing the DOT was recorded in the order approved by HUD.

• PromptlyuponachievingDOFA,thePHAmustsubmitnotificationintheformrequiredbyHUD(currentlyFormHUD-52423)totheFieldOffice,sounitswillbeeligibletoreceiveOperatingFundAssistance.

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• WithinoneyearofProjectcompletion,thePHAshallsubmittheActualDevelopmentCostCertificate(ADCC)(currentlyFormHUD-52427)andtheDevelopmentCostBudget/CostStatement(currentlyFormHUD-52484)totheFieldOffice.

9.9. Funding and Disbursements

PredevelopmentCosts.AfteranewdevelopmentProjectisincludedinthe5-YearActionPlanapprovedbythePHABoardofCommissionersandHUD,aPHAmayusePublicHousingCapital Assistance for predevelopment expenses. Predevelopment funds may be expended in accordance with the following requirements:

• Predevelopment assistance may be used to pay for materials and services relatedtopreparationoftheDevelopmentProposalandprojectsoftcoststhatareEligibleActivitiesunder24CFR§905.200andChapter2.Itmayalsobeusedtopayforeligiblecostsrelatedtothedemolitionofunitsonaproposedsite,aslongasHUDhasprovideddemolitionapproval.AbsentHUDapproval,predevelopmentassistancemaynotbeusedtopayforsitework,installationofinfrastructure,construction,orotherhardcostsrelatedtoadevelopment.(Note: PHAs must comply with Environmental Review requirements prior to the use of funds for predevelopment expenses.)

• For non-Mixed Finance Projects, PHAs may use up to 5% of the total amount ofthePublicHousingFundscommittedtotheProjecttopayforeligiblepredevelopmentcostswithoutFieldOfficeapproval.TheFieldOfficeshalldetermine on a case-by-case basis whether an amount greater than 5% may be drawn down by a PHA to pay for necessary and reasonable pre-development costs,baseduponaconsiderationofthenatureandscopeofactivitiesproposedtobecarriedoutbythePHA.Beforearequestforpredevelopmentassistanceinexcessof5%maybeapproved,thePHAmustsubmittheinformationanddocumentationspecifiedinSections9.7(SiteAcquisitionProposal)and/orSection9.8(DevelopmentProposal),asHUDdeemsappropriate.

• For Mixed-Finance Developments, all funding for predevelopment costs must be reviewed and approved by Headquarters prior to expenditure. PHAs must submit awrittenrequestidentifyingthesourcesandusesoffunds.TherequirementtodisbursefundsforMixed-FinanceProjectsinanapprovedratioofPublicHousing Funds to non-public housing funds does not apply to disbursement of predevelopment funds.

Standard Drawdown Requirements. For non-Mixed-Finance Projects, upon approval of the Development Proposal, the PHA may draw Capital Fund amounts that are necessary and consistent with the approved Development Proposal without further HUD approval, unless HUD determinesthatsuchapprovalisnecessary.OnceHUDapprovestheSiteAcquisitionProposal,aPHAmayrequestfundsforacquisitionactivities.APHAmustalsomaintainfulldocumentationevidencingtheneedforeachdrawdown,includingcontracts,invoices,andinspectionreports.

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For Mixed-Finance Projects, prior to PHA expenditure of Public Housing Funds, except predevelopmentfundsasdescribedabove,aPHAmustsubmittoHUDcopiesoffinal,fullyexecuted,and,whereappropriate,recordedevidentiarydocuments,submittedaspartoftheDevelopment Proposal process for review and approval.

UponcompletionoftheProject,theratioofPublicHousingFundstonon-PublicHousingFundsfortheoverallProjectmustremainasreflectedintheexecuteddocumentsuponconstructioncompletion.Theratiodoesnotapplyduringtheconstructionperiod.

Special Disbursement Requirements and Issues.

• RHF. If a PHA plans to accumulate RHF funds, as further described in Chapter 5, theFieldOfficemustapprovetheRHFPlan,whichdetailstheaccumulation,priorto disbursing RHF for predevelopment or development costs.

• DispositionProceeds.IfaPHAplanstouseDispositionProceedsinaProject,itmustfollowtherequirementsintheDispositionApprovaland24CFRPart970andobtaintheFieldOffice’swrittenapprovalthatthefundsmaybeappliedtothe project.

• RAD.TheFieldOfficeshallplaceintheRADbudgetlineitem(BLI1503&1504)anyCapitalFundsdesignatedforuseinaRADconversioninthePHA’sapproved5-YearActionPlan.BeforeHUD’sexecutionoftheRADConversionCommitment(RCC) (currently Form HUD-52624), a PHA may expend up to $100,000 in Public Housing Capital Assistance for materials and services related to proposed developmentandpreliminarydevelopmentwork.Headquarters’sexecutionoftheRCCconstitutesapprovalforthePHAtoexpendadditionalCapitalFundsonpredevelopmentcosts.Headquarters’sissuanceofasignedRADUseAgreement(currentlyFormHUD-52625)constitutesapprovalforthePHAtoexpendanyadditionalRADfundsauthorizedfordevelopmentactivitiesintheRAD Conversion Commitment. If the RCC authorizes the use of Capital Funds, includingRHF,formakingHAPpayments,thePHAisauthorizedtodrawdownthemonthlyamountidentifiedinExhibitAtotheRCC. As of the date of publication of this Guidebook, additional details on the use of Capital Funds in a RAD conversion may be found in Notice PIH-2012-32 (HA), REV 1.

Each Draw of Capital Funds Attests to Compliance. Each Capital Fund disbursement from HUD isdeemedtobeanattestationofcompliancebythePHAwiththerequirementsoftheCFPFinalRule. If HUD determines that the PHA is in noncompliance with any provision of this part, the PHAmaybesubjecttothesanctionsin24CFR§905.804.

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Exhibit 9.1. Site Acquisition Checklist

PartI-FieldOfficeReviewChecklistper24CFR§§905.602,905.606,and905.608

PHAandcode: ______________________________________

DevelopmentName: ______________________________________

Reviewer: ______________________________________

DevelopmentMethod:______________________________________

DateProposalReceived:____________________________________

Site Acquisition Requirements 24 CFR §905.602 Guidebook Section 9.5

Yes No N/AComment

Proposed Development included in Annual Plan

5-Year Action Plan includes any proposed use of Public Housing Capital Assistance or Secured Financing. 24 CFR §905.200(a) and 905.300 Threshold eligibility. Is the PHA proposing to buy vacant land or bring vacantlanditalreadyownsintothepublichousingprogram?Ifyes,continue.Ifnot,rejectandaskPHAtosubmitaDevelopmentProposal.24 CR 905.608• Acquisitionofexistinghousingforpurchaseorpurchaseandrehabis

DevelopmentnotSiteAcquisition.• The term “vacant land” includes land that has dilapidated structures

that will be torn down prior to development.

Site Acquisition Proposal CFR §905.608(b) Guidebook Section 9.7

Yes No N/AComment

Justification. Explanationforacquiringvacantpropertybeforedevelopment proposal submission and approval. Timing issues are sufficient.Description. Legalandnarrativedescriptionsoftheproposedsite.Project description; site and neighborhood standards.Anidentificationanddescriptionofthesiteandneighborhood,togetherwithinformationsufficienttoenableHUDtodeterminethattheproposedsitemeetsthesite and neighborhood standards at § 905.602(d). FHEO in the Field OfficeorHeadquartersshouldsignoff.

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Zoning.Documentationthattheproposedprojectispermittedbycurrentzoningordinancesorregulationsorevidencetoindicatethatneededrezoningislikelyandwillnotdelaytheproject.Ifnorezoningisnecessary,azoningmap,survey,orletterissuedbythezoningentityissufficient.Uniform Relocation Act (URA). DocumentationthatthePHAhascomplied with the applicable requirements of the URA.Appraisal. Appraisal prepared by an independent, state-certifiedappraiser.FieldOfficemustapproveanypurchasepriceexceeding appraised value. Schedule. Identifyanyduediligenceperiod,HUDreviewperiod,andproposedacquisitiondate.Environmental Assessment. ConfirmenvironmentalreviewhasbeenappropriatelycompletedbyparticipatingjurisdictionunderPart58orHUD agrees to do review under Part 50.Title and Survey. ALTAsurveyandtitleproformatobereviewedbyFieldCounselforaccuracyandconsistencyofthelegaldescriptionofProjectamongthesurvey,titleproforma,andDeclarationofTrust.FHAtitleendorsements are not required.Approval letter by Director, Office of Public Housing, attachingDeclarationofTrust(FormHUD-52190-A,fordevelopmentprojects). - - - Date:

Executed, Recorded Declaration of Trust returned to FO by PHA. PIH and Counsel should retain a copy.

Date:

ReviewComments: ____________________________________________________________

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Exhibit 9.2. Exhibit 9.2. Development Proposal Checklist (Non-Mixed-Finance)

PartI-FieldOfficeReviewChecklistper24CFR§905.602,§905.606,and905.608

PHAandcode: ______________________________________


Reviewer: ______________________________________

DevelopmentMethod: ______________________________________

DateProposalReceived: ______________________________________

Development Requirements not in Proposal 24 CFR §905.602 Guidebook Section 9.5

Yes No N/A Comment

Proposed Development included in Annual Plan.5-Year Action Plan includes any proposed use of Public Housing Capital Assistanceorsecuredfinancing.24CFR§905.200(a)and905.300Faircloth Limit. PHAs may not exceed the number they owned, assisted, or operated on 10/1/99. Exclude from the count MF units or units not included in Capital Fund formula. 905.602(b)(1)UnitsinIMS/PIC:_____________(Carveouts):-_____________PropUnits:+_____________NewTotal:_____________

Faircloth Limit:

Relocation. PHA has/will provide any URArelocationassistanceandpaymentsincludingrequiredrelocationnoticestopropertyownersandexistingtenantsandhasarelocationplan. Submission of Development ProposalconstitutescertificationofcompliancewithURArequirements(49 CFR 24).

Development Proposal (Not Mixed-Finance) 24 CFR §905.606(a) Guidebook Section 9.8

Yes No N/A Comment

I. Project description. Including number of units.

II. Development Method.Descriptionofdevelopmentmethod,including Force Account Labor, if any.

III. New Construction Justification. Either (1) comparison of costs ofnewconstructionandacquisitioninneighborhoodor(2) documentationthatthereisinsufficientexistinghousingtodevelopbyacquisition.

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IV. Acquisition Certification.Neededonlyforacquisitionofexistingpropertylessthan2yearsold.Obtaincertificationrequiredby24 CFR §905.606(a)(1)(i).

V. Target Population.Whetherfamily, non-designated elderly, or designated elderly-only or disabled-only.

VI. Unit Mix. Number and Type of Unit (detached, semi-detached,rowhouse,walkupelevator,withbedroomcount,brokenoutby public housing v. non-public housing, if applicable).

VII. Non-Dwelling Space. Type and size of non-dwelling space (including any units not designated for occupancy).

VIII. Schematicdrawingsofproposed building and unit plans.

Site information. Describe proposed site and neighborhood; provide siteplanandneighborhoodmap.ConfirmcompliancewithSiteandNeighborhood Standards under 24 CFR §905.602(d). FHEO in the Field OfficeorHeadquartersshouldsignoffifthesiteisnotcurrentlypublichousing.Participating Parties.Identifyparticipatingparties(includingPHA)andtheirroles.LegalandbusinessrelationshipbetweenPHAandthirdparties.Development Schedule. Include each major stage of development throughsubmissionofActualDevelopmentCostCertificate(ADCC)toHUD.Keymilestonesinclude:relocationstartandcompletion(ifapplicable),acquisition(ifapplicable),constructionstartandcompletion, lease-upstartandcompletion(DOFA),startofoperatingfundassistance,and ADCC.Accessibility.UseschematicdrawingsandunitplansfromSection1(vii)to determine compliance with §905.312.

Development Proposal (Not Mixed-Finance) 24 CFR §905.606(a) Guidebook Section 9.8

Yes No N/A Comment

Budgets:• Sources And Uses(includinghardandsoftcosts)forconstruction

period and permanent period. • Construction period draw schedule if funds other than Public Housing

Capital Assistance are used. • Eitherindependentcostestimateorconstructioncontracttosupport

hard costs.TDC and HCC are less than 100% of maximum. Operating Pro Forma. 10-yearproformashowingoperatingexpensesdonot exceed income. CooperationAgreementcoveringtheproposedunitsoropinionofcounseldemonstratingthatCAcoversproposedunits (24 CFR §905.602).Environmental Review. PHA should (1) provide evidence that ER review hasbeenappropriatelycompletedbyparticipatingjurisdictionunderPart58 or (2) request that HUD review under Part 50.

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Market Analysis. Only needed if there are non-public housing units in the project.

Program Income and Fees.EarnedbybothPHA,itsinstrumentalities,andparticipatingparties(developer,generalcontractor,privatemanagement agent).

Zoning.Documentationthattheproposedprojectispermittedbycurrentzoningordinancesorregulationsorevidencetoindicatethatneededrezoningislikelyandwillnotdelaytheproject.Ifnorezoningisnecessary,azoningmap,survey,orletterissuedbythezoningentityissufficient.

Title and Survey. ALTAsurveyandtitleproformatobereviewedbyFieldCounselforaccuracyandconsistencyofthelegaldescriptionofProjectamongthesurvey,titleproforma,andDeclarationofTrust.FHAtitleendorsementsarenotrequired.

AdditionalinformationrequestedbyHUD

ReviewComments: ____________________________________________________________

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PartII-PostDevelopmentActivitiesbyFieldOffice

FO Actions Immediately Prior to Issuing Approval Letter and after Issuing Approval Letter Yes No N/A Comment

Create new project number in IMS/PIC, prior to approval of Development Proposal.EnterBuildingandUnitinformationandtargetDateofFullAvailability(DOFA) into IMS/PIC prior to approval of Development Proposal.ApprovalLetterbyDirector,OfficeofPublicHousing,attachingDeclarationofTrust(formHUD52190-Afordevelopmentprojects)Obtaincopyofexecuted,recordedDeclarationofTrustandprovidecopyto Legal Department.

FO and PHA Follow-up and Closeout Actions PHA submits Form HUD-52423 (DOFA) when 95% of the units are ready for occupancy to establish the DOFA Date. FO enters DOFA Date into IMS/PIC. PHAsubmitsActualDevelopmentCostCertificate(ADCC)withinoneyearofprojectcompletion.FormHUD-52427(24CFR§905.322(b)(i))orHUD52484

Date of approval:

PHA submits updated ADCC if changes recommended by its Auditor. Form HUD-52427 (24 CFR §905.322(c))

Date of approval:

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Exhibit 9.3. Field Office Responsibilities for Mixed-Finance Projects

PartI-FieldOfficeReviewChecklistper24CFR§905.602and§905.606

PHAandcode: ______________________________________


Reviewer: ______________________________________

DevelopmentMethod: ______________________________________

DateProposalReceived: ______________________________________

Development Requirements not in Proposal 24 CFR §905.602 Guidebook Section 9.5 Field Office should notify Headquarters Project Manager that all requirements are met or if there are any issues.

Yes No N/A Comment

Proposed Development included in Annual Plan.5-Year Action Plan includes any proposed use of Public Housing Capital Assistanceorsecuredfinancing.24CFR§905.300.Faircloth Limit. PHAs may not exceed the number it owned, assisted, or operated on 10/1/99. Exclude from the count MF units or units not included in Capital Fund formula. 905.602(b)(1)UnitsinIMS/PIC:_____________(Carveouts):-_____________PropUnits:+_____________NewTotal:_____________

Faircloth Limit:

Relocation. PHA has/will provide any URA-requirednoticestopropertyownersandexistingtenantsandhasarelocationplan. Submission of DevelopmentProposalconstitutescertificationofcompliancewithURA. 49 CFR part 24IMS/PIC.EnterBuildingandUnitinformationandtargetDateofFullAvailability (DOFA) into IMS/PIC prior to approval of the Development Proposal.

Development Proposal Yes No N/A CommentEnvironmental Review. PHA should (1) provide evidence that ER review hasbeenappropriatelycompletedbyparticipatingjurisdictionunderPart58or(2)requestthatHUDreviewunderPart50.Providedocumentationof compliance to Headquarters Project Manager.Site and Neighborhood Standards. Review the proposed site for compliancewith906.602(d).NotifyHeadquartersProjectManagerofapproval.

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Evidentiary Documents: provide approval of documents to Headquarter’s Project Manager Yes No N/A Comment

Management Documents. Review Management Plan, Management Agreement, and sample public housing tenant lease for compliance with Public Housing Requirements.Title and Survey. ALTAsurveyandtitleproformatobereviewedbyFieldCounselforaccuracyandconsistencyofthelegaldescriptionofProjectamongthesurvey,titleproforma,andDeclarationofRestrictiveCovenants.ReviewanyreleaseofanexistingDeclarationofTrust.DeclarationofRestrictiveCovenantsshouldberecordedintheorderapproved by HUD Headquarters Counsel.

Closing. Upon receipt of approval letter from Headquarters Yes No N/A CommentExecutereleaseofexistingDeclarationofTrust. Date:CountersignMFACCAmendments.Retainonecopyforoffice.Returnremainder to PHA.ObtaintwocopiesofrecordedDeclarationofRestrictiveCovenants.Provide one to legal department.

FO and PHA Follow-up and Closeout Actions Yes No N/A CommentPHA submits Form HUD-52423 (DOFA) when 95% of the units are ready for occupancy to establish the DOFA Date. FOentersfinalDOFADateintoIMS/PIC.

PHAsubmitsActualDevelopmentCostCertificate(ADCC)withinoneyearofprojectcompletion.FormHUD-52427(24CFR§905.322(b)(i))

Date of approval:

PHA submits updated ADCC if changes recommended by its Auditor. Form HUD-52427 (24 CFR §905.322(c))

Date of approval:

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Chapter 10 DEMONSTRATION PROGRAMS: RAD AND MTW

ThischapterexplainstherelationshipbetweentheCapitalFundProgramandtwosignificantdemonstrationprogramsthatHUDisimplementingpursuanttoCongressionalauthorization:theRentalAssistanceDemonstration(RAD)andtheMovingtoWorkdemonstration(MTW).

10.1. Rental Assistance Demonstration (RAD)

RADwasinitiallyauthorizedbytheConsolidatedandFurtherContinuingAppropriationsActof 2012 (Pub. L. 112-55) (RAD Statute), which authorized HUD to allow PHAs throughout the nationtoelecttoconvertupto60,000publichousingunitstooneoftwoformsoflong-term,project-basedSection8assistance–Project-BasedRentalAssistance(i.e.,MultifamilySection8orPBRA)orProject-BasedVouchers(PBV).ProgramrulesandrequirementsarecontainedinPIH-2012-32(HA),REV-2(issuedJune15,2015),asmaybeamended(RADNotice).AsofthedateofpublicationofthisGuidebook,CongresshasauthorizedHUDtoallowPHAstoconvertupto185,000publichousingunits.UpdatedinformationabouttheRADprogrammaybefoundattheRADResourceDeskwebsite,whichislocatedatwww.radresource.netasofthedateofthepublicationofthisGuidebook.

FollowingtheapprovalofaRADapplication,HUDissuesaCommitmenttoEnterintoaHousingAssistance Payments Contract (CHAP), which describes the terms under which HUD will enter intoaHAPcontractwiththeprojectowner.(Formulti-phaseorportfolioapplications,HUDissuesCHAPsfortheapprovedRADapplicationsandawardlettersreservingtheconversionauthority for the remainder of the Projects).

The following Public Housing Requirements apply to Capital Funds used for RAD conversions:

• Procurement.Publichousingprogramfundsspentpriortotheeffectivedateof the RAD conversion are subject to public housing requirements including procurementrulesat2CFRPart200.However,afterRADconversion(transferofpublichousingassistancetoSection8),CapitalFundsmaynotbeusedforSection8RADpurposes.

• Obligation and Expenditure Deadlines.PursuanttotheRADNotice,PHAsmayapplyforanextension,upto5years,totheobligationenddate(OED)applicableto the Capital Fund grants used in a RAD conversion. An OED extension for RAD conversionisnotautomaticallygranted;instead,PHAsshouldfollowtheOEDextension request procedures described in Chapter 7. Upon extending the OED, HUD will extend the Expenditure End Date by a corresponding period.

• Faircloth Limit.RADconversionsdecreasethenumberofunitsinaPHA’sFaircloth Limit.

Once a public housing property’s assistance is converted to Section 8 under RAD, the PHA will no longer receive Capital Funds, including RHF and DDTF funds, for those properties after the initial year of conversion.

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10.2. Procedure for RAD Conversion

• APHAsubmitsanapplicationtotheOfficeofAffordableHousingPrograms(OAHP) at Headquarters.

• ApplicationsrequireinformationonProjectbackgroundandanestimateofcapitalneeds(ifarehabilitation),futureoperatingexpenses,andproposedfinancing.OAHPreviewseachapplicationforcompletenessandfinancialfeasibility.

• ApplicationreviewersquerytheapplicableFieldOfficeforbackgroundonPHAcapacityandtheOfficeofFairHousingandEqualOpportunityandtheOfficeofInspectorGeneralforinformationonoutstandingfindings.

• UponitsapprovaloftheRADapplication,HUDissuestheCHAPtothePHA,asdescribed above.

ConversionofaProjectpursuanttoRADconstitutesaSignificantAmendmenttothe5-YearActionPlan.Thus,PHAsmustfollowtherequirementsofChapter3regardingthesubmissionoftheSignificantAmendmenttoHUD.Inadditiontodisclosuresrequiredunder24CFRPart903,Attachment1DtotheRADNoticerequiresaPHAtomakethefollowingdisclosures:

• That current and future Capital Fund grants will be reduced as a result of any propertiesconvertingunderRAD.

• AnestimateoftheamountofthecurrentCapitalFundgrantthatisassociatedwiththeproposedProject(s)andtheimpactonthePHA’scurrent5-YearActionPlan.

• IftheRADconversionwillimpactanexistingCFFPoruseRHFfundstofacilitateconversion,theestimatedimpactofthoseactivities.

ThePCAissimilartothePhysicalNeedsAssessmentdescribedinChapter3,butisnotidentical,andisusedforadifferentpurpose.ThePCAidentifiesrepairsthatmustbeaddressedthroughaRAD conversion. The PNA is a comprehensive assessment of the capital improvement needs of a PHA’spublichousingproject.

Additional RAD interactions with the Capital Fund. PHAs may use Public Housing Funds to supportpredevelopmentcostsassociatedwiththeRADconversion.BeforeHUD’sexecutionof the RCC for a Project, a PHA may expend up to $100,000 in Capital Funds on materials and services (provided 2 CFR Part 200 is followed as to the procurement of these materials andservices)relatedtotheProject’sdevelopmentandpreliminarydevelopmentwork.Headquarters’sexecutionoftheRCCconstitutesapprovalforthePHAtoexpendadditionalCapital Funds on predevelopment costs.

Capital Funds Uses for RAD. During the pre-conversion period (before RAD conversion closing), thePHAhasseveraloptionsforuseofitsexistingCapitalFunds.PHAsmayuseCapitalFundspre-conversionforModernizationactivitiesatthepublichousingprojectsthatareproposedforRAD conversion.

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BLI1503andBLI1504areusedinRADconversions;fundsinthoseBLIsmaybedrawndowntofundpost-conversionactivitiesaswell.Afterthefinalclosingconversion(inwhichthePHAwillconvert all of its public housing), a PHA will not be able to draw down Capital Funds from any budgetlineitemotherthanBLI1503and1504.However,itmaycontinuetousethoseformerCapitalFunds,nowSection8fundsinBLI1503and1504forconstructionorrehabilitationaspart of the RAD conversion, as approved by Headquarters in the RAD Conversion Commitment and related closing documents.

InorderforaPHAtousealloraportionofaspecificCapitalFundgrantasapartoftheRADconversion,thePHAmustprepareanamendedCapitalFundBudgetfortheannualgrantinquestion.IftheamendmentconstitutesaSignificantAmendmenttothe5-YearActionPlan,thePHAmustfollowtherequirementsofChapter3regardingthesubmissionoftheSignificantAmendmenttoHUDforreviewandapproval.IftheBudgetrevisiondoesnotconstituteaSignificantAmendment,thePHAshallpreparetherevisedBudget,movingtherequiredunobligatedandunexpendedfundsfromotherBLIstoBLI1503and1504andidentifyingtheindividualRADconstructionorrehabilitationworkitems.TherevisedbudgetmustbesignedbytheExecutiveDirector.OncetheExecutiveDirectorhassignedtherevisedBudget,thePHAmustprovideacopyoftherevisedBudgettotheFieldOfficeforentryintoLOCCS.AfterentryinLOCCS,thePHAmaythendrawdownfundsfromBLI1503and1504forworkitemsassociatedwiththeRADconversionasbillsbecomedueandpayablefortheworkitemsinthebudget.

In a conversion where the PHA will not convert all of its public housing units, the PHA may decide to retain Capital Funds for the units that will remain in its inventory and may allocate a portiontotheRADconversion.ThePHAshouldsubmitabudgetrevisiontoHUDrequestingtransferoftheCapitalFundsthatitwishestousefortheRADUnitstoBLI1503and1504.ThePHAshouldretaintheremainingCapitalFundsintheappropriateBLIs.

Headquarters. Issuance of an executed RAD Use Agreement (currently Form HUD-52625) constitutesapprovalforthePHAtoexpendanyadditionalCapitalFundsconvertedtoSection8fundsasauthorizedfordevelopmentorrehabilitationactivitiesidentifiedintheRCC.

Financing Plan. TheFinancingPlanincludesdocumentationdemonstratingthatthecoveredProjectwillbesustainedphysicallyandfinanciallyforthetermoftheHAPcontractattherentlevelspermittedunderRAD,includingthemeansbywhichtheProject’simmediateandlong-termcapitalneeds,ifany,willbeaddressed.AtthepointaPHAhassubmitteditsFinancingPlan,thespecificdevelopmentsources,includingCapitalFunds,includingRHFfunds,areknown.Onceapproved,HUDissuesaRCCthatdescribesthetermsandconditionsoftheconversion.

Closing. Closing(andthustheconversion)typicallyoccurs1-3monthsafterissuanceoftheRCC.At closing:

• ThePHAcertifiesthatitwillremovethedesignatednumberofunitsfromIMS/PIC;

• TheHAPContractisexecutedby(1)theproject’sOwnerEntityandHUDforPBRAconversionsand(2)theproject’sOwnerEntityandvoucher-administeringPHAforPBVconversion;

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• HeadquartersreleasestheDeclarationofTrustastotheconvertingPublicHousing Property, and the PHA records the RAD Use Agreement on the covered property; and

• PHAandotherpartiesexecuteandrecordanydebtand/orequityfinancingdocuments.

(Note: At closing, any Capital Funds, including RHF funds, that are approved in the Financing Plan are considered obligated and expended.)

10.3. Moving to Work (MTW)

MTWisademonstrationprogramauthorizedbyCongressin1996forthepurposeofgivingPHAsandHUDtheflexibilitytodesignandtestvariousapproachesforprovidingandadministeringhousingassistancethat:(1)reducecostandachievegreatercosteffectivenessinfederalexpenditures;(2)giveworkincentivestofamiliestopromoteself-sufficiency;and(3)increasehousingchoicesforlow-incomefamilies.Toachievethesegoals,participatingPHAsareauthorizedtocombinecertainfundsfromHUD,asdescribedbelow.Inaddition,HUDmaywaiveprovisionsofthe1937Actandregulationsunderit,exceptfor(a)requirementsunderSection18ofthe1937Actrelatingtodemolitionanddispositionofpublichousingand(b)theprovisionsofSection12ofthe1937Actrelatingtolaborstandardsandcommunityservice.

MTW Agreements. EachMTWPHAentersintoanMTWAgreementwithHUD(consistingoftheStandardMTWAgreementandasetofattachments).TheMTWAgreementpermitsthePHAtocombineCapitalFundswithOperatingFundsandSection8voucherfundsforpurposesdescribedintheMTWAgreementandtheapprovedAnnualMTWPlan.AsdescribedinChapter2ofthisGuidebook,thosepurposessupersedetheeligibleactivitiesforCapitalFunds(includingRHFfunds)providedintheCFPFinalRuleandthisGuidebook.TheMTWAgreementalsoamendsandsupersedesthePHA’sunderlyingACC(s)withHUDandsetsforththewaiversandalternativerequirementswhichthePHAissubjecttoduringitsMTWparticipation.TheMTWAgreementincludesthefollowingattachments:

• AttachmentA, whichsetsforththefundingprovisionsforOperatingFunds,CapitalFunds,andSection8voucherfundsduringthedemonstration.Theseprovisions supersede and may alter the standard funding formulas as applied to theMTWPHA.

• AttachmentB,whichprovidestherequirementsforplanningandreportingtoHUDduringthedemonstration.

• AttachmentC, which describes the waivers from provisions of the 1937 Act and HUDregulationsduringthedemonstration.AttachmentCisthesameforallMTWPHAs.

• AttachmentD,whichdescribesthewaiversthatarespecifictoeachMTWPHAduringthedemonstration.

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Planning Requirements. Requirementsregardingplanning,annualsubmission,anddistributionoffundsforMTWPHAsaresetforthintheMTWStandardAgreementandrelatedguidanceissuedbyMTWprogramstaffwithintheOfficeofPublicHousingInvestments(OPHI)atHeadquarters.Theydifferfromtherequirementsapplicabletonon-MTWPHAs,asfurtherdescribedinSection3.12.

RHF and DDTF. SomeMTWPHAshaveamendmentstotheirMTWAgreementsregardingexpandedallowableusesofRHFfunds.MTWPHAswithRHFamendmentsinplacemaycontinuetoabidebythetermsofthoseamendments,asapprovedintheAnnualMTWPlan,for current First Increment RHF or Second Increment RHF grants. Upon receipt of DDTF funding byanMTWPHA,theRHFamendmentwillceasetobenecessarybecauseDDTFwillnotbeaseparategrantandwillinsteadtaketheformofCapitalFunds.AnMTWPHAwithfundingflexibilitythatexpendsFirstIncrementRHFfundsonactivitiesthatdonotmeettheRHFstandards,asfurtherdescribedinSection5.2ofthisGuidebook,willforegoeligibilityforSecondIncrementRHFfunds,unlessthePHAusestheFirstIncrementRHFfundsfortheconstructionofnewaffordablehousingunits(perOption3oftheRHFMTWAmendment).

Capital Fund Submission. InplaceoftheCapitalFundSubmissiondescribedinSection3.6,MTWPHAsmaketheirCapitalFundSubmissionsaspartoftheirMTWPlansannually,inaccordancewiththeStandardMTWAgreement.ThisdiffersfromthedecouplingoftheCapitalFundSubmissionsfromthePHA5-YearandAnnualPlansfornon-MTWPHAs.ForMTWPHAs,theCapitalFundSubmissionsremainpartoftheAnnualMTWPlan,withtheexceptionoftheACCAmendment(s),asfurtherdescribedinSection3.12ofthisGuidebook.[24CFR§905.300(b)(9)]

LOCCS and Disbursement of Funds. Special requirements and procedures regarding LOCCS and disbursementofCapitalFundsaredescribedinSection3.12.

Obligation and Expenditure Deadlines. MTWdoesnotwaivetheobligationenddateandexpenditureenddaterequirements,asfurtherdescribedinChapter7,andMTWPHAsmustcomplywiththeprovisionsofSection9(j)ofthe1937Actand24CFR§905.306.MTWPHAsthatfailtocomplywiththoserequirementswillincurthepenaltiesapplicabletonon-MTWPHAs,whicharedescribedinChapter7ofthisGuidebook.

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Chapter 11 Security Interests and Financing Activities

The development of public housing started with funding from Congress in the 1937 Act. As a part ofthedevelopmentprocessandasaconditionforreceivingfederalsubsidies,PHAsenterintoanACCthatprohibitstheencumbranceofpublichousingpropertywithoutpriorwrittenapprovalfromHUD.TheprocessalsorequiresaPHAtorecordaDeclarationofTrust(DOT)prohibitingtransferorencumbranceofpublichousingpropertywithoutpriorHUDapproval.RestrictionsintheACCandtheDOTeffectivelyprecludePHAsfromusingtherealestateascollateralforborrowed funds without HUD approval.

BecauseappropriationsfromCongresstosubsidizethecostofmaintenanceandcapitalimprovementsremaininadequatetomeetcurrentneeds,thenationhasasubstantialbacklogofunmetmodernizationorreplacementneeds.Duetolimitedfundingandthecapitalbacklog,PHAshave had to develop new strategies to fund needs as supplements to the basic annual CFP grant.

Section516ofQHWRAaddedSection30,onPublicHousingMortgagesandSecurityInterest,tothe 1937 Act, which authorizes PHAs to pledge or mortgage public housing or other PHA property, subjecttoHUDapproval.QHWRAalsoamendedSection9ofthe1937ActtopermittheCapitalFundFinancingProgram(CFFP)andOperatingFundFinancingProgram(OFFP).

ProceduresforimplementingandapprovingSection30transactionsthatinvolveCapitalorOperatingFundsareprovidedseparatelyfromtheSection30process,alsoknownasthePublicHousingMortgageProgram(PHMP).Likewise,anysecurityinterestormortgagesonmixed-financedevelopmentsareapprovedaspartoftheoverallapprovalofthosetransactions.Forapprovalofallothertransactionsthatresultinamortgageorsecurityinterest,thePHMPwasestablished.

TheportionoftheCFPfinalruleaddressingpublichousingdevelopment,includingmixed-finance,isdiscussedinChapter9.Thischapterdiscussesadditionalfundingstrategieswithanemphasison those that require HUD approvals and the related requirements to obtain those approvals.

There can be no mortgage or security interest on public housing without HUD approval as restricted by both the ACC and the DOT/DORC (which includes any asset acquired or improved withCFPassistance).Inadditiontomixed-financeencumbrances,CongressauthorizedseveralotherwaysforPHAstoencumberpublichousinginordertofinancecapitalimprovements,generallythroughtheQHWRA.

Foreachtypeoffinancing,PHAsdeterminewhetherthefinancingisconnectedtoanactivityrequiredtobeincludedinthePHAPlan(orAnnualMTWPlan,ifapplicable).Ifso,theapplicableplanisupdatedaccordingly.Oncethetypeoffinancing(otherthananunsecuredfinancing)isapproved,PHAsincludethefinancingproceedsinthe5-YearActionPlanasiftheywereCapitalFunds.Ifthefinancingproceedsareusedaspartofthedevelopmentofpublichousingunits,througheitherconventionaldevelopmentormixed-financedevelopment,thePHAsubmitsadevelopmentproposal.HUDwillissuetwoseparateapprovalletters,oneforthefinancingandanother for development.

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11.1. Capital Fund Financing Program (CFFP)(24 CFR Part 905, Subpart E)

UnderCFFP,aPHAborrowsprivatecapitaltofinancepublichousingdevelopmentormodernizationactivitiesusingaportionofitsCFPgrantfordebtservicepaymentsandusualandcustomaryfinancingcostsonthedebt.WithHUD’spriorwrittenapproval,aPHAsecuressuchpaymentsbygrantingtothelenderasecurityinterestinitsfutureannualCapitalFundgrants(subjecttoappropriations).

Submission requirements: ThePHAsubmitsrequestsforHUDapprovalofCFFPtransactionsto(1)Director,OfficeofCapitalImprovements,Room4146,U.S.DepartmentofHousingandUrbanDevelopment,4517thStreet,SW,WashingtonDC20410and(2)theFieldOffice.CFFPrequests include the following:

• TransmittallettersignedbythePHAExecutiveDirector(orChiefExecutiveOfficer,ifapplicable)requestingapprovaloftheCFFPsubmissionandbrieflydescribing:

▪ proposedfinancinganduseofCFFPProceeds;

▪ the percentage of Capital Funds to be used for debt service;

▪ thepercentageofthePHA’spublichousingunitsbenefitingfromthefinancing;

▪ theimpactofthefinancinguponthePHA’spublichousingportfolio;

▪ adescriptionofthetransactionbeingproposed;

▪ anyexistingfinancingorsimilarcommitmentsofPublicHousingCapitalAssistancetoanyofthePHA’sPublicHousingProjects;and

▪ significantfinancialorlegalprovisionsincludedintheCFFPProposal,suchasvariableinterestprovisions,andprovidingjustificationforsuch.

• Tableofcontentsthatidentifiesthematerialssubmittedaswellasanyomittedifthe CFFP Proposal is streamlined.

• Term sheet as prescribed by HUD which describes the basic terms of the transactionandfinancingstructure,includingtheproposedamountofthefinancing,theterm,interestrates,security,andreserverequirements.

• ContactInformationforalloftheparticipatingparties.

• Financing schedules that include a debt service schedule (currently Forms HUD-52846and52847),sourcesandusesschedule,andaportfolioschedule(includingprojectionsforRHF/DDTF,asappropriate)(currentlyFormHUD-52830),andanadequacy-of-Capital Funds schedule, in a HUD-prescribed format.

• CFFPBudgetintheformrequiredbyHUD.TheCFFPbudgetisomittedinCFFPproposalssubmittedinconjunctionwithmixed-financeactivities.

• Management assessment conducted by an independent third party, in a form andmannerprescribedbyHUDthatevidencesthePHA’scapacitytoundertake

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andadministerprivatefinancingandconstructionormodernizationofthesizeandtypecontemplatedintheCFFPProposal.ThisassessmentisomittedinStreamlined CFFP Proposals.

• FairnessOpinioninaformandmannerprescribedbyHUD,fromaqualified,independent,third-partyfinancialadvisorattestingthatthetermsandconditionsoftheproposedfinancingtransactionarereasonablegivencurrentmarketconditionswithrespecttosuchmattersasinterestrate,fees,costsofissuance,callprovisions,andreservefundrequirements.ThisopinionisomittedinStreamlined CFFP Proposals.

• Physical Needs Assessment (PNA) or green PNA if applicable following implementationofafinalrulethatwouldestablishstandardsforgreenPNAsthat:(1)coversthePHA’sentirepublichousingportfolioforthetermoftheproposedCFFPfinancing;(2)takesintoconsiderationexistingneedsandthelife-cyclerepairandreplacementofmajorbuildingcomponents;(3)identifiestheactivitytobefinancedasaneed;and(4)meetsanyotherrequirementssetbyHUD.ThePNAisomittedinCFFPProposalssubmittedinconjunctionwithMixed-FinanceDevelopmentorCFFPProposalsthatsizetheCFFPfinancingbasedonRHFfunds.Asofthedateofpublicationofthisguidebook,thecurrentform of PNA is Form HUD-52829.

• ConstructionmanagementandfinancialcontrolsdescribinghowthePHAwillensure that: (1) adequate controls are in place regarding the use of the CFFP Proceeds; and (2) the improvements will be developed and completed in a timelymannerconsistentwiththecontractdocuments.Suchplanshallcontainprotocolsandfinancialcontrolmechanismsthataddressthedesignoftheimprovements,constructioninspections,constructiondraws,andrequisitionapprovalchecksandbalances.ThisplanisomittedfromStreamlinedCFFPProposals. A PHA that is designated as “troubled” under PHAS, or other PHAs asdeterminedbyHUD,mayberequiredtoinstituteriskmitigationmeasurestoensure that the funds are used properly and for the purposes intended.

• Financing documents as a complete set of the legal documents that the PHA will executeinconnectionwiththeCFFPtransaction,whichdocumentscomplywithCFFPprogramrequirementsandthelegalrequirementsinSection11.3.G.HUDwillnotreviewpreliminarydocumentsthatarestillundernegotiation.Thelegaldocumentsaretobesubmittedonlyaftertheyhavebeennegotiatedandagreeduponbythepartiestothetransaction.AfterHUDapproval,thePHAmustsubmittoHeadquartersafinalclosingbinderafterthesefinancingdocumentshavebeenexecutedbytheparties,togetherwithacertificationthatthechangesrequestedbyHUDhavebeenmadeandthatnoothersubstantivechangestothesubmissions have been made since they were last approved by HUD.

• DOT/DORCrequirementsasevidencethatallofthePHA’spublichousingprojectshaveacurrentandeffectiveDOT(forpublichousing)orDORC(formixed-financedevelopment)recordedinfirstposition.SuchDeclarationsmustcoverthe

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termofCFFPfinancingforanypublichousingprojectstoreceiveCFFPProceedsandsuchDeclarationsmustbethefirstliensorencumbrancesontheproperty(declarationscannotbesecondaryrestrictions).

• Ifithasnotalreadydone,PHAsalsosubmitacertificationofPHAcounselthateachDOTorDORCisrecordedinfirstpositionandwillbeeffectiveforthetermoftheCFFPfinancing.IfthePHA’scounselisunwillingtooffersuchacertification,thePHAmaysubmitatitlereportdemonstratingthesame,alongwithacertificationfromthePHAthatsuchDeclarationsandthetitlereportcoverallpropertiesintheirpublichousingportfolio.

• IftheCFFPiscombinedwithmixed-financedevelopment,nosubmissionisrequired for the development project receiving CFFP proceeds. Note: The CFFP component will still have to have its own separate submission, which is distinct from the submission to OPHI for a mixed finance development.

• BoardresolutionbythePHABoardofCommissionersthatauthorizesthePHAtoundertaketheloanuptoaspecifiedamount,provideallSecurityInterestsrequired by the loan, and repay the loan with Capital Funds (including RHF/DDTF funds,whenapplicable)asrequiredbythefinancingdocuments;andauthorizestheExecutiveDirectororotherexecutivestafftonegotiateandenterintoalllegaldocumentsrequiredaspartofthetransaction.

• Counsel’sopiniontothePHAwhichopinesthatthePHAhastheauthoritytoenterintothetransactionandaffirmsthatthetransactioncomplieswithpublichousing requirements.

• General Depository Agreement (HUD 51999) and ACC (HUD 53012) that will cover the CFFP Proceeds.

• Other documents as required by HUD.

TherearetwotypesofstreamlinedCFFPproposals;basicandadditional.Tobeeligibleforbasicstreamlining,thePHAqualifiesbasedonPHASandborrowinglevels.Underthebasictype,thePHAqualifiesasastandardperformerandhasacumulativeCFFPborrowinglessthan$2millionorasahighperformerunderPHASwithacumulativeCFFPborrowinglessthan$20million.Toqualifyforthesecondtypewithadditionalstreamlining,thetwoallowabletransactionoptionsaretoproposeusingCFFPproceedsinamixed-financetransactionorproposetouseonlyRHFfunds for debt service.

Type 1 - Basic Streamlining:PHAsmeetingtheeligibilityforbasicstreamliningmayomitfromtheir CFFP Proposal the following documents:

1. A third-party management assessment;

2. A third-party fairness opinion;

3. AnassuranceoffinancialcontrolsandconstructionmanagementunderSection11.3.E.10.

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Type 2 - Additional Streamlining: CFFP Proposals that meet the criteria for basic streamlining anduseCFFPproceedsaspartofamixed-financeproposalorsizetheirfinancingbasedupononlyprojectedRHFgrantsmayomitthefollowingadditionalitemsfromtheirCFFPProposal:

1. PNA;

2. CFFPBudget;

3. ReportingtotheFieldOffice;and

4. DORC for the Mixed-Finance Project (Note: DOTs or DORCs are required for the remainderofthePHA’sportfolio.)

If HUD determines that interest or other costs do not appear to meet industry norms, or other aspectsoftheproposalpresentatypicalrisks,HUDretainsthediscretiontorequireadditionalassessments, opinions, or controls, or to return the proposal.

Thefinancingdocumentsincludethefollowing,asapplicable:

1. Legaldocumentsidentifyingthenatureandextentofanysecuritybeingprovided,aswellastherelativeprioritypositionofanysecurityinterest(e.g.,firstlienposition,secondlienposition).

2. AllfinancingdocumentsrelatedtofutureyearCFPamountswithastatementthatpledgingoffundsis“subjecttoannualCongressionalappropriations.”

3. Loantermsmaynotbemorethan20yearsandmustbefullyamortizinginthatperiod.Bridgeloansandothershort-termloansarepermitted.Variableinterestrateloansshallinclude an interest-rate cap, above which no public housing capital assistance may be used to pay debt service.

4. AccelerationrequiresHUDapproval.UnlessotherwiseapprovedbyHUD,thefinancingdocumentsstipulatethatHUDapprovalisrequiredbeforealendermayaccelerateaPHA’sdebtobligation,fordefaultorotherwise.

5. A PHA may not pledge any public housing property (other than the Capital Fund grants pledgedtoCFFPrepayment)unlessspecificallyapprovedinwritingbyHUD.TherearealsorestrictionsonthepledgeofSection8reservesbyaPHA.PHAsseekingapprovalofapledgeofpublichousingpropertysubmitdocumentationtoHUDthatdetailsthenatureandpriorityofthepledge.Twoadditionallegalstandardclausesare: “ThePHA’sindemnification[orguaranty]islimitedtoeligiblenon-publichousingassets(assetsnotsubjecttotheDeclarationofTrustandnotacquiredormergedwithassetsacquired with public housing funding under the United States Housing Act of 1937).” “ThePHAhasnoauthoritytofulfillguaranteesorindemnificationsinvolvingthepublichousingassets.Accordingly,theguaranteesandindemnificationsprovidedinthisAgreementexclude:(1)anypublichousingprojectofthePHA;(2)anyoperatingreceiptsofthePHA(astheterm“operatingreceipts”isdefinedintheACC);oranypublichousing

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operatingreserveofthePHAthatisreflectedinthePHA’sannualoperatingbudgetandrequired under the ACC. For the purposes of this provision, the term “ACC” means the ConsolidatedAnnualContributionContractbetweenHUDandthePHA,asamendedfromtimetotime,andasandtotheextentapplicabletotheProjectbyoperationoflaworbyspecificamendmentreferringthereto.”

6. CFFPtransactiondocumentscontainamandatoryredemption/prepaymentprovisionrequiring a party with legal authority over the proceeds (such as the trustee, issuer, or lender) to use unobligated proceeds to redeem/prepay the bonds/loan such that: 90% oftheCFFPproceedsareobligatedbeforetheendofthesecond(2nd)yearafterclosing;and 100% of the CFFP Proceeds are expended before the end of the fourth (4th) year afterclosing.

7. AnylegaldocumententeredintobythePHAaspartofaCFFPtransactioncontainsaconflictsclause.Asuggestedmodelis:“TotheextentthatanyoftheforegoingisinconflictwiththerequirementsoftheUnitedStatesHousingActof1937,asamended,Federalregulations,andtheAnnualContributionsContract,asamended,(“Federalpublic housing requirements”), such Federal public housing requirements shall control andgoverninsuchinstancesofconflict.”

PriortosubmissionoftheCFFPProposal,thePHAincludesactivitiestobefundedbyCFFPProceedsinthePHAPlanand5-YearActionPlan(orAnnualMTWPlan,ifapplicable);andthensubmits the CFFP Proposal or, if applicable, the Streamlined CFFP Proposal.

TheFieldOfficereviewstheapprovedPHAPlan(orAnnualMTWPlan,asapplicable)toensureactivitiestobefundedbyCFFPproceedsareincluded,requiringanamendmentoftheplanifactivitiesarenotidentified.Thefieldreviewensuresthateachpublichousingprojectormixed-financeprojectinthePHAportfolioissubjecttoanappropriateDOTorDORC.

IfaPNAisrequiredfortheCFFPsubmission,thefieldconfirmsthattheworkfinancedwithCFFPproceedsanddescribedintheCFFPbudgetissupportedbythePNA;workitemsarelistedspecifically(e.g.,roofreplacement,windowreplacement,accessibilitymodifications)andbydevelopmentifmorethanonedevelopmentbenefitsfromtheCFFPproceeds;thePNAincludesthe expected useful life of all major building systems of the Public Housing Project(s) to receive CFFPProceedsandthepotentiallife-cyclereplacementofthesesystemsduringthetermoftheCFFPfinancing;andthesubmissiondoesnotcontainineligibleCapitalFunditems,suchasJacuzzisorpools.

HeadquartersprogramandlegalstaffreviewcompletedCFFPproposalsforcompliancewithproceduralrequirementsandthesubstantiverequirementsof24CFRPart905,SubpartE.InHUD’sdiscretion,thePHAmodifiesanyofthesubmittedCFFPdocumentsorHUDrequiresthePHAtoresubmitalloranyportionoftheCFFPproposaltocorrectanyidentifieddeficiency.Headquarterscoordinatesasnecessarywiththefieldoffice.Upondeterminingthataproposalcomplieswithallapplicablerequirements,HUDissuesCFFPapprovalletterandapprovestheCFFPACCAmendment.ApprovallettersfortransactionsthatinvolvedevelopmentproposalsareconditionedonapprovalofthedevelopmenttransactionandtheexecutionofimplementingdocumentsbetweenthePHAandthirdparties,asapplicable.Thesecouldincludeloan

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agreements,constructioncontracts.

FollowingreceiptofHeadquartersapprovaloftheCFFPtransaction,thePHAsubmitsclosingdocumentsasdirectedbyHUDwithinthetimeperiodstatedintheCFFPApprovalLetter,butinnocaselaterthan120days.IfHUDsetsconditionsonitsapproval,thePHAsubmitsclosingdocumentswithin60daysofthedatethatthePHAsatisfiessuchconditions(asevidencedbydocumentationretainedinthePHA’sfileandavailabletoHUDuponrequest).OneexamplewouldbearequirementforapprovalofaDevelopmentProposalinaCFFPtransactionthatusesCFFPproceedstofinanceadevelopment.FailuretoprovidetherequireddocumentstoHUDwithinthetimeframerequiredmayresultinHUDrescindingitsapproval.

PHAsmustobtaintheFieldOffice’swrittenapprovalofchangesintheCFFPProposal,includingachangeinthetypeofactivitybeingfinanced(forexample,iftheapprovedCFPfinancingbudgetcontemplatedtheCFFPproceedsbeingusedformodernization,butaftertheproposalis approved, the PHA decides instead to pursue development); a change in the project being modernizedordevelopedwiththeCFFPproceeds;areductionof20%ormoreinthenumberof public housing units being modernized; or an increase of 20% or more of the cost of non-dwelling space.

ThePHAsubmitsaP&EReportonaquarterlybasis,exceptthatnoreportingisnecessaryforpendingCFFPProposals.APHAthat(1)usesCFFPProceedsaspartofamixed-financetransactionor(2)usestheCFFPfinancingbasedonlyonRHF,isexemptfromthisrequirement.ThePHAincludesCFFPproceedsandtheactivitiestobefundedwiththeminanypost-closing5-YearActionPlanasiftheywereCapitalFunds.CFFPproceedsmaybeusedfordevelopmentorrehabilitationofpublichousing,ThePHAperformsfiscalcloseoutontheCFFPfinancinginthesame manner as for a Capital Fund grant closeout, as described in Chapter 7.

TheFieldOfficeannuallyreviewsthebudgettoensureCapitalFundsapprovedforuseasrepaymentoftheCFFPfinancingareallocatedcorrectly.Ifapplicable,thefieldreviewsP&EReportstoensureCFFPproceedsareexpendedoneligibleusesandwithintheobligationandexpendituredeadlines.ConstructionismonitoredforcompliancewithPNA,theplanforfinancialcontrolsandconstructionmanagement,andanyworkitemsdescribedinthe5-YearActionPlan.Ifanyamendmentsareapproved,copiesaretransmittedtoHeadquarters.FieldperformfiscalcloseoutontheCFFPfinancinginthesamemannerasforaCapitalFundgrantcloseout,retainingalldocumentationrelatedtotheDOTorDORC.

Headquarters,inturn,makesdebtservicepaymentsfromCapitalFundsinLOCCSdirectlytothelenderorbondtrustee,asapplicable,inaccordancewiththeCFFPapprovalletterandtheACC amendment, and reviews the post approval document submission as required by the CFFP approvalletter.

11.2. Operating Fund Financing Program (OFFP)

OFFPappliestoanyfinancinginwhichaPHAusesaportionofitsoperatingfundreservebalancestocollateralizeandpaydebtserviceandcustomaryfinancingcostswherethefinancingisusedforpublichousingdevelopmentormodernizationactivities(includingmixed-financedevelopment)under24CFRPart905.Whilethe1937ActauthorizestheuseofOperating

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Fundsfortherepaymentofdebtservicegenerally,onlyapledgeofoperatingreservesispermittedundertheOFFPprogram.Also,therearerestrictionsonthepledgeofSection8reservesbyaPHA.Ifthepublichousingprojectismortgagedinconnectionwithdevelopmentactivities,twoapprovalsarerequired;oneforOFFPfinancingandanotherfordevelopment.

As an OFFP example, a PHA requests approval of a third-party loan in order to modernize or developpublichousing.ThePHAcollateralizesthethird-partyloanwiththeOperatingFundreserves.Atthecompletionofconstructionorrehabilitation,thePHAusestheOperatingFundreservestopaytheprincipalandinterestontheloan.OFFPisauthorizedunderSection9(e)(1)(I) of the 1937 Act and 24 CFR Part 990 via 24 CFR §905.600(d)(8). HUD implements OFFP on a case-by-casebasis;notonthebasisofaformulaorcompetitiveaward.

OFFPproposalsrequirethePHAtosubmitacoverletteraddressingtheproposedfinancingandthe intended use of OFFP proceeds that outlines:

1. AmountoftheOperatingFundReservesavailable,alongwithexplanationofsubstantialfluctuationsinreservelevels,ifany;

2. AmountoftheOperatingFundReservesplannedfordebtservicepayments(principaland interest);

3. DescriptionofanySecurityInterestorotherencumbrancebeingprovidedaswellastherecourse the lender will have in the event of a default, if any; and

4. DescriptionofanyotherOFFPfinancingundertakeninconnectionwithitspublichousingprogram, including details itemized below.

Inadditiontothecoverletter,theOFFPsubmissionincludesinformationdemonstratingtheavailabilityoftheOperatingFundreserveamountstobeusedbasedonthePHA’smostrecentauditedorunauditedfinancialstatements,usingthecalculationofOperatingFundreservesasrequiredbyHUD.Theaccrualmethodofaccountingisoftenused.

Additionalinformationtobesubmittedisbaseduponthemostrecent2yearsofapprovedfinancialassessmentsubmissions/PHA(FASPHA)inordertoassessanyfluctuationsinreservelevels.HUD’sreviewinvolvespreparingthesamespreadsheetbasedonFASPHAdatafromthemostrecent2years.PHAsincludethemostrecentyear-to-datefinancialdocumentsavailablethatsupporttheOFFPfinancinglimitspreadsheet,alongwith:

1. Debt service schedule;

2. Name of the lender;

3. Termofthefinancing;

4. Principal amount of loan;

5. Interest rate;

6. BudgetandP&EReportshowingplannedandactualuseoftheOFFPproceedsinthesame manner as the PHA budgets Capital Funds;

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7. DisclosureofoutstandingOFFPfinancingbythePHA,togetherwith;

8. Schedule detailing the terms (original principal amount, current principal outstanding, interest rate, debt service payment schedule, amount of debt service payments, source ofdebtservicepayments,SecurityInterestprovided,anddescriptionofhowproceedswere used); and

9. IfaPHAhasnoexistingOFFPfinancing,itshouldincludeastatementtothateffect.

OFFPproposalscombinedwithMixed-FinanceTransactionsaresubmittedto(1)Director,OfficeofUrbanRevitalization,Room4138,U.S.DepartmentofHousingandUrbanDevelopment,451SeventhStreet,SW,WashingtonDC20410and(2)theFieldOffice.AllotherOFFPproposalsaresubmittedto:(1)Director,FinancialManagementDivision(FMD),Room4204,U.S.DepartmentofHousingandUrbanDevelopment,451SeventhStreet,SW,WashingtonDC20410and(2)theFieldOffice.

FollowingHUD’sreviewoftheinitialsubmission,thePHAsubmitsthefollowingadditionaldocumentationtocompletetheapplicationpackage:

1. PHABoardresolutionauthorizingthePHAtoborrowuptoaspecifiedamount;provideallSecurityInterestsrequiredbytheloan;andrepaytheloanwithitsOperatingFundReservesasrequiredbythefinancingdocuments;andtheExecutiveDirectororotherexecutivestafftonegotiateandenterintoalllegaldocumentsrequiredaspartofthetransaction.

2. PHAcounsel’sopinion,intheformatrequiredbyHUD,statingthatPHAhastheauthoritytoenterintothetransactionandthatthetransactionconformstoPublicHousingRequirements. The opinion must also include a statement that any public housing property that is mortgaged or otherwise encumbered as part of the OFFP has a DOT orDORCthatisrecordedprior(bothintimeandposition)totheencumbrancestoberecordedpursuanttotheOFFPtransaction,andthatsuchDOTsorDORCsremaincurrentandeffectiveforthetermofthefinancing.However,ifPHAcounselisunwillingtooffersuchanopinion,thePHAmaysubmitatitlereport,alongwithacertificationthattheDOTsandthetitlereportcoverallofpublichousingpropertiessubjectedtothesecurityinterest or encumbrance related to the OFFP or that will receive OFFP proceeds.

3. GeneralDepositoryAgreementsthatcover:(1)proceedsoftheOFFPtransactionheldbythePHA;and(2)OperatingFundReservescollateralizingtheloan.(GeneralDepositoryAgreement Form HUD-51999)

4. Fairness opinion issued by an independent third party, if requested by Headquarters.

5. DOT/DORCdocumentationevidencingthatHUD’sDeclarationhasfirstpriority.IfthePHA is providing a security interest or other encumbrance in a public housing project as part of its OFFP, the PHA provides evidence the property is covered by a DOT (if ownedbythePHA)oraDORC(ifmixed-finance).Includeapro-formatitleshowingthataneffectiveDOTorDORCwillbefiledinfirstpositionforanypublichousingprojectreceivingOFFPproceeds.ForOFFPtransactionsthatarepartofamixed-financeproject,

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thePHAdoesnotneedtoprovideevidencethatHUD’sDeclarationaspartoftheOFFPproposal.Instead,HUD’sreviewofdeclarationsoccursunderthemixed-financeproposal,includingcounsel’sopinion.

6. DOTsorDORCsontheremainderofthePHA’sportfolioissubmittedaspartoftheOFFPapproval process.

ThePHAcontactsHeadquarterswhentheplantodoanOFFPtransactionfirstarisestoconfirmprogrameligibility.Earlyandconsistentcommunicationisimportant.TheHUD-recommendedoperatingreserveforlargePHAsisthegreaterof4monthsofformulaexpensesor$100,000(abovetheamountproposedaspartofanOFFPtransaction)andforsmallPHAsatleast6months’worthofoperatingreservesneedstobeavailable.

HeadquartersreviewstheOFFPproposalandsupplementalsubmissionsandprovidesfeedbacktothePHA.Anapprovalletterisissued(whichisseparatefromanapprovalletterneededfordevelopmentactivities)alongwithanOFFPamendmenttotheACCtobeexecutedbythePHAandtheFieldOffice.

ThefieldofficeconfirmsthattheOFFPactivityisidentifiedinthePHAPlan.FieldCounselreviewsandapprovesthatthereareDOT(s)onallofthePHA’spublichousingproperty,followingsubmissionofacounsel’sopinionorowner’sproformatitlepolicyandtitlereportshowingcleanandmarketabletitleunderthestandardsoftheAmericanLandTitleAssociation(ALTA).IftheOFFPtransactionisconductedinconnectionwithmixed-financedevelopment,theDOT is replaced by DORC. Upon receipt of two signed copies of the OFFP ACC Amendment from thePHA,thefieldofficecountersignsboth,retainsoneoriginal,andreturnstheotheroriginalto the PHA.

Onceconstructionbegins,thefieldmonitorsandreviewsP&Ereports.Afterclosing,thefieldconfirmsthatOFFPproceedsaredocumentedin5-YearActionPlanandcompletesfiscalcloseout in the same manner as a Capital Fund grant.

Ifdevelopmentactivitiesareplanned,thePHAsubmitsadevelopmentproposaltoHeadquartersinaccordancewith24CFR§905.600andChapter9.ThePHAmakesanynecessaryrevisionsanddocumentsubmissionsrequestedbyheadquarterorthefieldoffice.EvidencethataDOTorDORCisinfirstplaceforallpublichousingprojectsinthePHA’sportfolioisrequired.UponreceiptoftheapprovalletterandOFFPACCAmendment,thePHAssigns3originalsandsendsallthreetothefieldoffice.

Afterclosing,thePHAprovidesheadquartersandthefieldwithexecutedcopiesofOFFP-relatedtransactionaldocuments,ifrequested.ThePHAincludesexpendituresofOFFPproceeds(asdebtservicepayments)inanyfuture5-YearActionPlansasiftheOFFPproceedswereCapitalFunds.Onceconstructionbegins(ifapplicable),thePHAsubmitsP&EReportsdetailingtheobligationandexpenditureofOFFPproceedstothefielduntilallborrowedfundsareexpendedandincludedintheauditedyear-endfinancialstatementandtheninitiatefiscalcloseoutinthesame manner as a CFP grant.

The PHA submits loan documents as part of the OFFP proposal. Sample OPTIONAL language by which a PHA can comply with the OFFP ACC Amendment follows:

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1. Non-Recourse.“Thisfinancingisnon-recoursetoanyPublicHousingProperty(realorpersonalpropertyincludingallpublichousingassetsorincome),ordispositionproceedsapprovedpursuanttoSection18oftheUnitedStatesHousingActof1937(unlessexplicitlypermittedbyHUDintheSection18approvalletter).”(Note:ModifythislanguageasneededtoprovidelendersrecoursetoOperatingFundReservefundspledgedaspartoftheOFFPtransaction.)

2. Indemnification.“ThePHA’sindemnificationislimitedtoeligiblenon-publichousingassets(assetsnotsubjecttotheDeclarationofTrustandnotacquiredormergedwithassets acquired with public housing funding under the United States Housing Act of 1937).”

3. HUDNotLiable.“LoansandbondsconnectedwiththefinancingactivitiesareobligationsofthePHAandarenotguaranteedorinsuredbyHUDortheU.S.Government.”

11.3. Public Housing Mortgage Program (PHMP or Section 30)

ThisprogramappliestoanytransactioninwhichaPHAprovidessecurityforaloanfromathird party through a mortgage on, or other security interest in, public housing property. The statutoryauthorityforPHMPisfoundinsection30ofthe1937Act.

HUDapprovalisrequiredbeforeexecutingamortgageorsecurityinterest.Thisrequirementdoesnotapplytoapropertymortgagedthroughthemixed-financeprogram.Ifthepublichousingprojectisbeingmortgagedinconnectionwithdevelopment,notasmixed-finance,thePHA obtains both a PHMP approval through Headquarters and development approval through thefieldoffice.

AnexampleofaPHMPtransactioniswhenaPHAreceivesaloanofaffordablehousingprogramfundsfromaFederalHomeLoanBankforapublichousingprojectthatrequiresamortgageonthatproject.Themortgagerequiresrepaymentonlyifuserestrictionsareviolated,sonodebt service is paid from public housing capital assistance. A second example is when a PHA undertakesanEPCfinancinginwhichtheenergyservicescompanytakesalienonequipmentfixedtoapublichousingproject(e.g.,aboilerorairconditioner).ThereareadditionalrequirementsrelatedtoEPCfinancing.See24CFR990.185. ThePHAsubmitsaPHMPproposalintherequiredformattoheadquartersandthefieldofficeDirectorofPublicHousing.APHMPproposalmustincludethefollowinginformation:

1. Amountoffinancing;

2. Name of lender(s);

3. Interest rate(s);

4. Termoffinancing;

5. Securityand/orcollateral(pleaseindicatewhichfinancingissecuredbywhichcollateral,andanycross-collateralization);

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6. Recourseterms(includingrecoursetoanycashfloworreserves);

7. Incomerestrictions(totalnumberofunitstowhichitisapplicableandtotalnumberofpublic housing units to which it is applicable);

8. Paymenttermsasoneormoreofthefollowingoptionswithdescriptionsasneeded:scheduleddebtservicepayments,repaymentonlyifindefault,availablecashflow,forgivable under the terms (recoverable grant/forgivable loan), or none;

9. Cost of issuance (fees and expenses directly associated with issuing the loan);

10. Capitalized interest (if any);

11. Debt service reserves;

12. Specialprovisions,includingunusualloantermsorexplanationsofthedeal’sstructure;and

13. AnyadditionalinformationordocumentationthatisnecessaryandrequestedbyHUD.

ThePHAidentifiestheactivityfundedbythePHMPinitsPHAPlan(orAnnualMTWPlan,ifapplicable),ifrequiredby24CFRPart903.Onceaproposalisapproved,thePHAidentifiestheactivityfundedbytheOFFPProceedsin5-YearActionPlanifCapitalFundsareusedforrepayment.AnyuseofCapitalFundsforrepaymentisidentifiedonthe5-YearActionPlanunder debt service payment. PHAs are encouraged to contact HUD as early in the planning process as feasible.

Alongwiththeproposal,evidentiariesaresubmittedconsistingofanynecessarydocumentsrequestedbyheadquartersandadraftDOT,owner’sproformatitlepolicyandfull-sizeALTAsurveytothefieldcounsel,copyingHeadquarters.OncethePHAreceivesanapprovalletter,anauthorized signatory for the PHA executes three original ACC Amendments and returns them to thefieldofficeforcountersignature.ThePHAreceives2originalsoncefullyexecuted.

ThePHAsubmitsapost-closingpackagetoHeadquartersconsistingofexecutedevidentiarydocuments(includingtheACCAmendment)intheformatrequiredintheapprovalletterandacertifiedstatementthatnochangeshavebeenmadetothedocumentssinceHUD’sinitialreviewandapprovalor,ifchangeshavebeenmade,identifyingthosechanges.Afterclosing,theP&EreportsidentifyuseofPHMPproceedsoneligibleactivities.ForMTWPHAs,thisisincludedintheAnnualMTWReport.ThePHAperformsfiscalcloseoutonthePHMPfinancinginthesame manner as for a CFP grant closeout.

ThefieldofficeconfirmsthatactivitiesareidentifiedintheapprovedPHAPlan(orAnnualMTWPlanasapplicable)orrequiresanamendment,ifnecessary.ThefieldconfirmsiftheproposedactivityfallswithinthePHA’sdefinitionofsignificantamendment.Thefieldcontinuestoconsultandadviseheadquartersuponrequest;fieldcounselreviewsandapproves,whenacceptable,theDOT,anowner’sproformatitlepolicyandALTA.AftertheACCamendmentisissuedbyHeadquarters and signed by the PHA, the Director of Public Housing countersigns each original andretainsoneoriginal.ThefieldofficeprovidesthedateandnumberoftheACC,reservingtheamendmentnumber.ACCAmendmentsamendthe1995versionoftheACC.Thefieldoffice

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workswiththePHAifa1995versionisnotalreadyinplace.APHAmusthaveexecutedthe1995 ACC prior to closing.

Afterclosing,thefieldreviewsfinancingdocumentsaspartofmonitoringprocess;reviewsthePHA’sP&EreportsregardingexpenditureofPHMPproceedsoneligibleexpenses;andconductsremaining monitoring and closeout procedures in accordance with standard Capital Fund procedures.

HeadquartersreviewstheproposalandprovidesfeedbacktothePHA,thenreviewsanyresubmittedoradditionalinformationprovidedbythePHAapplicant.Headquartersdecideswhethertoconveneaprojectreviewpaneltoprovidecomments,requestadditionalsubmissionsandapproveswhenacceptable,thePHA’sPHMPsubmission.Afteridentifyingthe required legal documents, typically an ACC Amendment, DOT, loan documents, and a legal opinion, Headquarters issues an approval authorizing: (1) the PHA to execute and record, ifrequired,alllegaldocumentsinthetransactionand(2)attachinganACCAmendment.Headquartersreviewsthefinalexecutedevidentiarydocumentsandissuesapost-closingapproval.

Energy Performance Contracts (EPCs)

IfanEPCtransactionrequiresaSecurityInterestorotherencumbranceonPublicHousingProperty,anEPCSection30approvalisalsorequired.TheEPCSection30reviewandapprovalisseparatefromandinadditiontoHUDapprovalofEPCsandassociatedenergyservicesagreements.

EPCproposalsaresubmittedtotheFieldOfficeandtheEnergyCenter.TheEnergyCentermaybecontactedbymailat465MainStreet,Buffalo,NY14203;[email protected]; or by phone at (716) 551-5755.

EPCSection30proposalsaresubmittedtotheFieldOfficeandtoDeputyAssistantSecretaryforFieldOperations,Room4112,U.S.DepartmentofHousingandUrbanDevelopment,4517thStreet,SW,WashingtonDC20410.

ThePHAwillreceiveseparateapprovallettersfortheEPCtransactionandforEPCSection30.

ThefollowingflowchartdepictstheHUDreviewprocessforSection30transactionsandEPCs

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Step 1.PHASubmitsEPCandSection30PackagetoHUDPIHFieldOffice(FO)andEnergyCenter.

Step 2.FOandEnergyCenterForwardSection30DocumentstoHQOfficeofFieldOperations(OFO-HQ)

Step 3A. OFO-HQ • ConductsSection30CompletenessReview.• ForwardsSection30DocumentstoField

Counsel.

Step 3B. FO and Energy Center • Completes EPC Review.• PreparesEPC/Section30ApprovalPackage.

Step 4. Field Counsel • WorkswithPHACounseltoResolveanyIssues.• Completes Field Counsel Review. • SendsApprovalConfirmationtoOFO-HQ.

Step 5. OFO-HQ • ReceivesEmailConfirmationfromField

Counsel. • Provides HQ Concurrence. • DevelopsSection30ApprovalLanguage.• ForwardsCompleteSection30PackagetoFO

and Energy Center.

Step 6. FO and Energy Center • ReceivesSection30PackagefromOFO-HQ• PreparesEPCandSection30ApprovalPackage.• FODirectorSignsandSendsApprovalPackageto

PHA.

Step 7. PHA Signs EPC ACC Amendments and Returns to FO.

Step 8.FOSendsCopyofApprovalLetterandACCAmendment to Energy Center and OFO-HQ.

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11.4. Capital Fund Education and Training Community Facilities (CFCF) Program

Currently,thisprogramisnotbeingfundedthroughannualappropriations.Programinformationfor2010and2011maybefoundinthenoticesoffundingavailability:

• HUDFiscalYear(FY)2010NoticeofFundingAvailability(NOFA)fortheCapitalFundEducationandTrainingCommunityFacilities(CFCF)Program,DocketNo.FR-5415-N-21.

• HUDFiscalYear(FY)2011NoticeofFundingAvailability(NOFA)fortheCapitalFundEducationandTrainingCommunityFacilities(CFCF)Program,DocketNo.FR-5500-N-05.

PHAsreceivingCFCFgrantswererequiredtoidentifythefundedactivityinPHAPlan(orAnnualMTWPlan,ifapplicable),ifrequiredby24CFRPart903;includeanyCapitalFundstobeusedinconnectionwithCFCFfundsin5-YearActionPlanunder24CFRPart905;submitanowner’sproformatitlepolicy,ALTAsurvey,andadraftDOTorDORCtotheFieldOfficeforreviewbyFieldCounsel;andprovidecopyoftherecordedDOTtoFieldOffice.

TheFieldOfficewasresponsibleforconfirmingthatactivitywasdisclosedinthePHAPlan(orAnnualMTWPlan,ifapplicable),andinthe5-YearActionPlanifanyCapitalFundstobeusedinconnectionwithCFCF;reviewing,andapprovingwhenacceptable,aDOTorDORC,anowner’sproformatitlepolicy,andALTA;andafterclosing,collectcopyofDOTandreviewfinancingdocuments as part of monitoring process.

11.5. Capital Financing Not Secured By Public Housing Property

ThissectionappliestoanyfinancingthatisnotsecuredbyPublicHousingProperty,includingwhenproceedsareusedforeithermodernizationordevelopmentofpublichousing(UnsecuredFinancing).

Examples:

• Financing secured by non-Public Housing Property. A PHA borrows funds to improve a Public Housing Project and mortgages non-Public Housing Property to secure the loan. Debt service is paid from the income of that non-Public Housing Property. No debt service is paid from Public Housing Capital Assistance; therefore, no HUD approval is required.

• Financing Pledges of non-Public Housing Property. A PHA borrows funds to purchase new cabinets for two Public Housing Projects and pledges repayment from the revenue of a project that is not public housing. No debt service is paid from Public Housing Capital Assistance; therefore, no HUD approval is required.

• Unsecured Financing. A PHA borrows funds to develop or modernize public housing, and provides no collateral to the loan.

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Intheexamplesabove,noHUDapprovalisrequiredunderSection30ofthe1937ActorunderSection7oftheACC.Therefore,HUDhasalsodeterminedthatnoHUDapprovalisrequiredadministrativelyeither.

AllfinancingdocumentsinanUnsecuredFinancingshallincludethefollowingnon-recourselanguage:

• “Thisfinancingisnon-recoursetoanypublichousingproperty(realorpersonalpropertyincludingallpublichousingassetsorincome),ordispositionproceedsapprovedpursuanttoSection18oftheUnitedStatesHousingActof1937(unlessexplicitlypermittedbyHUDintheSection18approvalletter).”

A PHA may also include the statement: “For the purposes of this Agreement, the term Public Housing Property means any public housing assets and income, including among other things, anyPublicHousingProject(astheterm“Project”isdefinedintheACCbetweenthePHAandHUD),anyOperatingReceipts(astheterm“OperatingreceiptsandOperatingexpenditures”isdefinedintheACC),PublicHousingCapitalFundsorOperatingFunds,HOPEVIorotherdevelopment grants and other grants to the PHA from HUD under the 1937 Act.”

AllrelevantfinancingdocumentsshallincludeaconflictsprovisionstatingthatintheeventofaconflictbetweenthefinancingdocumentsandPublicHousingRequirements,thePublicHousingRequirements prevail.

Theconflictsandnon-recourseprovisionsidentifiedinthissectionareintendedtohelpPHAsmaintain compliance with Public Housing Requirements and other HUD requirements, but do not guarantee compliance. PHAs must conduct their own reviews to determine such compliance.

Fee-for-service amounts charged to Asset Management Projects (AMPs) or programs such as theCapitalFundProgram,andearnedbyaCentralOfficeCostCenter,arenotprotectedbyHUD-mandated non-recourse language, since such amounts are not considered Public Housing Property.PHAsmaywishtonegotiatebroadernon-recourseprovisionstoprotectsuchPublicHousing Property.

PHAsareresponsiblefordeterminingwhethertheplannedfinancingissecuredbyPublicHousingProperty.TheyshouldincludeactivitiesfundedbytheunsecuredfinancinginthePHAAnnualPlan,or5-YearPlan.Suchactivitiesinclude,butarenotlimitedto,demolitionanddisposition,homeownershipprograms,andproject-basedvouchers.QualifiedPHAsneedonlyprovide the disclosure in the 5-Year Plan.

PHAsmayuseCapitalFundsandOperatingFundstopaydebtserviceonanunsecuredfinancingonlyiftheproceedsoftheloanwereforEligiblePurposesofCapitalFundsorOperatingFundsas described below and if the following disclosures are made:

• CapitalFundsmustbeincludedinthe5-YearActionPlan,andinthePHAAnnualPlan,orifCapitalFundsareusedforrepaymentofunsecuredfinancingforCapitalFundeligibleactivities.

• Show expenditures as the debt service; and

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• OperatingFundsmustbeincludedinabudgetpursuantto24CFRPart990,andthePHA’sAnnualPlan(or5-YearPlanforQualifiedPHAs)andOperatingFundsmaybeusedforrepaymentofunsecuredfinancingforOperatingFundeligibleactivities.

OtherthandisclosuresrequiredinthePHAAnnualPlan,or5-YearPlanforQualifiedPHAs,under24CFRPart903orthe5-YearActionPlanunder24CFRPart905,thePHAhasnoobligationtonotifyHUDorseekHUDapproval.

PHAs should use “Language for Financing Documents” in any Mortgage, deed of trust, security agreement,orotherdocumentsecuringaloan;retaincopiesofallfinancingandsupportingdocumentation;andreporttheunsecuredfinancingstotheirindependentpublicaccountantforthepurposeofcompletingtheirannualauditunder2CFRPart200,SubpartF(codifyingOMBA-133) or other audit, as applicable.

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Exhibit 11.1. HUD Review Checklist for Section 30 Proposals Related to EPC Transactions

Whereanyfinancingtransactioninvolvesasecurityinterestorotherencumbranceinpublichousingproperty,PHAsarerequiredtoobtainwrittenapprovalfromHUDofthesecurityinterestorencumbrancepursuanttoSection30oftheU.S.HousingActof1937(1937Act).HUD approval of Energy Performance Contracts (“EPCs”) and associated Environmental Site Assessments(“ESAs”)doesnotconstituteapprovalofthesecurityinterestunlessanapprovalofasecurityinterestisspecificallyenumeratedintheEPCapprovalletter.

Undersomelease-purchaseagreements(otherwiseknownasmunicipalleases,thetypicalfinancingstructureforanEPC),ownershipoftheequipmentmayresidewiththethirdparty(e.g.,abankorESCO).Underthisscenario,wheretheownershipresideswithathirdparty,aSection30approvalisnot required.WhereownershipoftheequipmentresideswiththePHAand a lien or other encumbrance exists on the equipment, or a security interest or encumbrance providedtootherpublichousingproperty(realorpersonal),aSection30approvalis required. HUD’sSection30reviewfocusesnarrowlyuponthesecurityinterestorencumbrance,anddoesnotevaluateorapprovethefinancing.PHAsarerequiredtosendaSection30request(“Request”)tothePublicHousingFieldOfficeaspartoftheEPCSubmission.ThePublicHousingFieldOfficestaffandFieldOfficeCounselreviewtheRequestand,ifapprovable,includetheEPCSection30approvalintheEPCapprovalletter,andensurethattheEPCACCAmendmenttotheConsolidatedAnnualContributionsContractisexecutedbythePHAandPublicHousingFieldOfficeDirector.

Thischecklistisdividedintothreeparts:aPublicHousingFieldOfficereviewforcompletenessofthePHAsubmissionpackage,aFieldOfficeCounselreviewofthesubmitteddocumentationtoensureitmeetstherequirementsoftheSection30reviewguidance,andPublicHousingFieldOfficeDirectorreviewandapprovaloftheapprovalletterandEPCACCamendment.HUDPublicHousingstaffwillworkwithlocalFieldOfficeCounseltocompletetheSection30reviewand approval process.

PublicHousingFieldOfficestaffandFieldOfficelegalcounselresponsibilitiesrelatedtothereviewaredetailedbelowinthechecklist.

A. Public Housing Field Office Review:

DocumentationcompletenesscheckpriortosubmissiontoFieldOfficeCounsel

1. RequiredDocumentation:

i. CurrentandeffectiveModernizationDeclarationsofTrust(FormHUD-52190-B)forNon-MixedFinancepublichousingpropertieswhichareincludedinthe EPC; OR CurrentandeffectiveDeclarationsofRestrictiveCovenants(DORCs)formixedfinancepublichousingpropertieswhichareincludedintheEPC.

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ii. PHASection30Requestdescribingthefinancingandsecurityinterest,andrequestingHUD’sapprovalofthesecurityinterest.TheRequestwillincludethefollowinginformation(includingattachments):

a. PHA’sLegalCounselOpinionthatstatesthatthePHAhastheauthoritytoenterintothetransactionandprovidetheassociatedsecurityinterest,andthatthetransactioncomplieswiththerequirementsofthe1937Act,asamended,federalregulations,andtheACC,asamended.ThePHAwillenterintoanEPCACCAmendmentaspartoftheEPCSection30approval.PHAcounsel’sopinionmaynotbeconditionedwithoutHUDHQOGCapproval,andshouldbeclearonthe face of it without reference to other documents.

b. EvidenceofaPHABoardresolutionthatauthorizesthePHAtoundertakethesubjectEPCfinancingandprovideallsecurityinterestsassociatedwiththeEPCfinancing.TheBoardresolutionmustalsoprovideauthorizationfortheExecutiveDirectororotherexecutivestafftonegotiateandenterintoalllegaldocumentsrequiredaspartofthetransaction.

c. Amatrixthatprovidesthefollowinginformationforeachprojectonwhichasecurity interest is granted.

I. Identificationofthepropertythatisbeingprovidedassecurity.Forinstance,thenarrativecouldstate“Theequipmentshallinclude: (and then list the types and numbers of equipment being secured, such as - 23 toilets, 36 HVAC units, 34 boilers, 200 windows.).”

II. DescriptionoftheSecurityInterestbeingprovided

III. Identificationofhow/whenthesecurityinterestisbeingreleased.

AND ONE OF THE FOLLOWING OPTIONS

i. CertificationfromPHAlegalcounselthatthattheDOTsprovidedrepresentallofthenon-mixedfinancepublichousingpropertiesthatwillbesubjecttothe security interest or other encumbrance related to the EPC and that in each instancetheModernizationDOTsarerecordedpriortoanysecurityinterestorother encumbrance including those that will be recorded pursuant to the EPC, andthattheywillbeeffectiveforthetermofthefinancing. OR

CertificationfromPHAlegalcounselthattheDORCsprovidedrepresentallofthemixedfinancepublichousingpropertiesthatwillbesubjecttothesecurityinterest or other encumbrance related to the EPC and that in each instance the DORCs are recorded prior to any security interest or other encumbrance including those that will be recorded pursuant to the EPC, and they will be effectiveforthetermofthefinancing.

ii. IfthePHACounselisunwillingtoofferthecertificationdescribediniiioriv

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above, the PHA may submit a Title Report showing that the DOTs or DORCs are infirstpositionastoallencumbrancesandwithacertificationfromthePHAthattheDOTsorDORCsandtitlereportcoverallpublichousingproperties,both real and personal property, that will be subject to the security interest or encumbrance related to the EPC.

B. Field Office Counsel Review

1. PublicHousingFieldOfficestaffhasforwardedPHA’sSection30RequesttoFieldOfficeCounsel,requestingitsreviewofthedocumentationinaccordancewithprogramguidance.FOCounselshouldcontactHQCounselwithanyquestions.

2. FieldOfficeCounselhasreviewedthenarrativedescriptionoftherealorpersonalproperty upon which a security interest or other encumbrance will be provided and thenatureofthesecurityinterestorotherencumbrances.Permittedencumbrancesinclude:

a. The equipment being installed as part of the EPC, as well as any revenues realized from that equipment;

b. Payments to the PHA from the ESCO;

c. TheenergyincentivesreceivedbythePHAfromHUDpursuanttothisEPCapproval.

3. FieldOfficeCounselhasreviewedthePHAcounsellegalopiniontoconfirmthatitcomplies with the Energy Performance Contract ACC Amendment to the Consolidated AnnualContributionsContract.

4. FieldOfficeCounselhasissuedamemotothePublicHousingOfficeDirectoropiningthatthedocumentationprovidedestablishesthatthereisaneffectiveDOTorDORCrecorded prior to any security interest or encumbrance including those associated with theEPConeachpublichousing(includingmixedfinancepublichousingpropertyifapplicable) property that will be subject to the EPC security interest or encumbrance.

C. Public Housing Field Office Review

1. PublicHousingFieldOfficestaffhasreviewedtheEPCSection30proposaltoensurethatit is complete and consistent with the EPC.

2. PublicHousingFieldOfficeprogramstaffhasreviewedthenarrativedescriptionofthesecurityinterestandencumbrancesprovidedbyFieldOfficecounselandconfirmedthatitincludesonlythosesecurityinterestsandencumbrancestheFieldOfficeintendstoapprove as part of the EPC. Security interests and encumbrances that may be approved aspartofanEPCincludeonly(programstaffshouldcontactOPHVPiftheEPCinvolvessecurity interests beyond that described below):

a. The equipment being installed as part of the EPC, as well as any revenues

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realized from that equipment;

b. Payments to the PHA from the ESCO;

c. TheenergyincentivesreceivedbythePHAfromHUDpursuanttotheEPCapproval.

D. Public Housing Field Office Approval

1. PublicHousingFieldOfficestaffhasincorporatedtheappropriateEPCSection30languageintheEPCapprovalletter.Thelanguageshouldapproveonlythosesecurityinterests requested by the PHA and intended to be approved by the Public Housing Field OfficeDirector.

2. PublicHousingFieldOfficestaffhascompletedthetemplateapprovalletterandthetemplate EPC ACC amendment.

3. PublicHousingDirectorhassignedtheapprovalletterandforwardedittoPHAwithtwounsignedcopiesoftheEPCACCamendmentfortheExecutiveDirector’ssignature.

4. PHAhasreturnedbothACCamendmentswiththeExecutiveDirector’ssignature.

5. Public Housing Director has signed the ACC amendments on behalf of HUD. One fully executed ACC amendment has been returned to the PHA, the other has been placed inthePHA’sACCamendmentfile.PublicHousingFieldOfficestaffshallretainalldocumentsassociatedwiththePHA’sSection30reviewandapproval.

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Chapter 12 Compliance, Penalties and SanctionsPHAs,owner/managemententitiesandtheirpartnersmustcomplywithallapplicableprovisionsoftheCFPfinalrule.Thisincludespartiesinvolvedwithmixed-financeprojects,aspublichousingunitsownedbythirdpartiesareregulatedinthesamemanneraspublichousingunitsownedandoperatedbyPHAs.ExecutionofanACCamendmentbythePHA,completionofallsubmissionrequirements,andtakingpossessionofCFPgrantsfromHUDareindividuallyandcollectivelydeemedtobethePHA’scertificationthatitisincompliancewiththeCFPfinalrule and all other public housing program requirements. Noncompliance may subject the PHA and/oritspartnerstosanctions.

TheCFPfinalruleidentifiestwoareasofparticularfocusforpossiblesanctions:submissionrequirements and development requirements. For the annual Capital Fund submissions describedinChapter3,aPHAisrequiredtoreviseorcorrectinformationthatisnotincompliancewiththeCFPfinalrule.HUDhastheauthoritytoimposeadministrativesanctionsuntiltheappropriaterevisionsaremade.However,someadministrativesanctions,suchasdebarment,limiteddenialofparticipation,andcivilmoneypenaltiescannotorshouldnotbelifteduponcorrection.HUDwillidentifythesanctionsthatitimposesforsubmissionofincorrectinformation.

Subsequent to approval of submissions, the PHA is required to comply with the requirements of 24 CFR Part 905, Subpart F regarding development of public housing; failure to comply with theserequirementsmaysubjectthePHA,itspartnersand/ortheownerentitytosanctionscontainedin905.804.HUDmayalsoimposesanctionsforotherformsofnoncompliance.SpecificinstancesinwhichaccesstoCapitalFundsmaybesubjecttothesanctionsof905.804untilthePHAcomesintocomplianceinclude:

1. UntimelycertificationofIMS/PICdata;

2. InactiveDUNSNumber;

3. FailuretoenactorsubmitaBoardresolutionapproving5-YearActionPlan;

4. Late Capital Fund Submissions;

5. Incomplete environmental review; and

6. Noncompliance with applicable procurement requirements.

TheFieldOfficereviewsaPHA’sperformanceincompletingworkinaccordancewithits5-YearActionPlan,thisguidebookandtheCFPfinalrule.TheFieldOfficemayundertakeotherreviewsasitdeterminesnecessary.Whenconductingareview,theFieldOfficedetermines,atminimum,whetherthePHAhascarriedoutitsactivitiesinatimelymannerandinaccordancewithrequirements.TheFieldOfficeconfirmsthatthePHAhasnotexpendedCapitalFundsonitemsthatwerenotincludedinanapproved5-YearactionplanandthatthePHAhascompletedCapitalFundsubmissionsinaccordancewiththefundingtimelineestablishedeachfiscalyear.TheFieldOfficechecksthatthePHAiswithinthepropercostlimitationsofbudgetlineitemsthathavecostlimits(i.e.BLI1406,1408,and1410).

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TheFieldOfficeoverseestheprocesstoascertainifthepartiesdisplayacontinuingcapacitytocarryoutCapitalFundactivitiesandthatthePHAisontracktomeetobligationandexpendituredeadlinesandaccuratelyreportsinatimelymannerwithlegitimateobligatingdocuments.Further,thefieldconfirmsthePHA’sdisbursedfundsfromLOCCSalignwiththeexpenditurepercentage reported and reports in LOCCS for each grant monthly and on the OED and EED.

ReviewsassurethatrequiredbuildingandunitdataareaccuratelyreportedforthecalculationoftheCapitalFundformula,andthatIMS/PICdatacertificationcompletedduringtherequiredtimeframe.AnysecuredfinancingasdescribedinChapteris11andanydevelopmentoracquisitionproposalasdescribedinChapter9arereviewedforcompliance.EachchapterofthisguidebookdescribesmonitoringandapprovalresponsibilitiesofboththeFieldOfficeandHeadquarters.Guidebookusersshouldreferencethespecifictopictodetermineapplicablerequirements.

Ifatanytime,HUDfindsthataPHAhasfailedtosubstantiallycomplywithanyprovisionoftheCFPfinalrule,HUDmayimposeoneoracombinationofsanctions,asitdeterminesisnecessary.SanctionsassociatedwithfailuretoobligateorexpendinatimelymannerarespecifiedinChapter7(i.e.imposingapenaltyof1/12thforeachmonththePHAwasinnoncompliancewiththeOEDonafutureCapitalFundgrant).AdditionalHUDsanctionsforPHAnoncompliance,whetherornotrelatedtoobligationandexpenditure,mayincludethefollowing:

1. IssuingacorrectiveactionorderthatnotifiesaPHAofthespecificprogramrequirementsthatthePHAhasviolatedandspecifyingcorrectiveactions.AnycorrectiveactionorderedbyHUDthenbecomesaconditionoftheCFACCAmendment;

2. Requiring reimbursement from non-Federal sources;

3. Limiting,withholding,reducing,recapturing,orterminatingCapitalFundorOperatingFund assistance, e.g., RHF grants that fail to meet the OED or formula grants that fail to meet the EED will have the remaining balance recaptured;

4. IssuingalimiteddenialofparticipationordebarringresponsiblePHAofficialspursuantto 2 CFR Parts 180 and 2424;

5. WithholdingassistancetothePHAunderSection8ofthe1937Act;

6. DeclaringasubstantialdefaultoftheACC(see24CFRPart907)withrespecttosomeorallofthePHA’sfunctionsrelatedtotheCapitalFund;and

7. Takinganyotheravailablecorrectiveactionorsanction,asHUDdeemsnecessary.

Beforetakinganyoftheremediesdescribedaboveorwhichareotherwiseavailable,theFieldOfficenotifiesthePHAinwritingofthenatureofitsnoncompliancewithCFPrequirementsandtheremediesHUDproposestotake.ThisnotificationallowsthePHA,withinastatedperiodoftime,totakecorrectiveactionortosubmitadditionalfactsanddatatodemonstratethatthenoncompliancedoesnotexist.AfterreviewofanyinformationsubmittedbythePHA,theFieldOfficemayresolveallareasofnoncompliance,resolvesomeareasofnoncompliancebutupholdothers,upholdallareasofnoncompliance,changetheproposedremedies,ormake

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otherappropriatedeterminations.IfnoresponseisreceivedfromthePHA,theFieldOfficewillproceedwiththeproposedremedieswithoutfurthernotice.

IfthePHA’sresponseresolvesallareasofnoncompliance,theFieldOfficewillnotifythePHAinwritingofthatdetermination.IfthePHA’sresponsedoesnotresolveallareasofnoncompliance,theFieldOfficewillnotifythePHAinwritingofitsdetermination,thereasonsforitsdetermination,andtheremediesitintendstoimpose.ThisnoticewillincludetheopportunitytosubmittotheAssistantSecretaryforPIHadditionalinformationanddataconcerningthenoncompliancesidentifiedbytheFieldOffice.Thisinformationshouldbesubmittedwithin30daysofthePHA’sreceiptoftheFieldOffice’sdetermination.TheAssistantSecretaryoradesigneewillreviewthePHA’ssubmissionand,aftercompletionofthereview,willnotifythePHAinwritingofHUD’sfinaldetermination.Thenotificationoffinaldeterminationwillcontainanitem-by-itemresponsetothePHA’ssubmission,anexplanationofthebasisforthedetermination,detailsofthesanctionsHUDwillimpose,andadescriptionofanyactionsthatthePHAmusttake.

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Appendix 1. Definitions:Thefollowingdefinitionsapply to this guidebook:

1937 Act The United States Housing Act of 1937 (42 U.S.C. §1437 et seq.)

ACC TheAnnualContributionsContractbetweenHUDandaPHAcoveringaPublicHousingProjectormultiplePublicHousingProjects.

ACC Amendment

AnamendmenttotheACCtoreflectspecificchangesmadetoaPHA’spublichousinginventory or funding. An ACC Amendment may be a CF ACC Amendment, a Mixed-Finance ACC Amendment, a Capital Fund Financing ACC Amendment, or another form ofamendmentspecifiedbyHUD.

Accessible

Whenusedwithrespecttothedesign,construction,oralterationofafacilityoraportionofafacilityotherthananindividualdwellingunit,meansthatthefacilityorportionofthefacilitywhendesigned,constructed,oraltered,canbeapproached,entered, and used by individuals with physical handicaps and visual and hearing impairments. The phrase “accessible to and usable by “ is synonymous with accessible.Whenusedwithrespecttothedesign,construction,oralterationofanindividualdwelling unit, means that the unit is located on an accessible route and when designed, constructed, altered, or adapted can be approached, entered, and used by individuals with physical handicaps. A unit that is on an accessible route and is adaptable and otherwise in compliance with the standards set forth in 24 CFR §8.32 is accessible withinthemeaningofthisGuidebook.Whenaunitinanexistingfacilitywhichisbeingmadeaccessibleasaresultofalterationsisintendedforusebyaspecificqualifiedindividual with handicaps (e.g., a current occupant of such unit or of another unit under thecontrolofthesamerecipient,oranapplicantonawaitinglist),theunitwillbedeemed accessible if it meets the requirements of applicable standards that address the particulardisabilityorimpairmentofsuchperson.

AcquisitionDevelopment

Thedevelopmentmethodthatinvolvesapurchaseofexistingpropertythatrequiressubstantial,moderate,ornorepairinordertobringthepropertyunderanACC.Anyneededrepairworkiscompletedafteracquisition;eitherbythePHAcontractingtohavetheworkdoneorbyhavingthestaffofthePHAperformthework.[24CFRSection905.600]

AdditionalProjectCosts

The sum of the following HUD-approved costs related to the development of a Public HousingProject,whicharenotincludedinthecalculationoftheTDClimit,butareincludedinthemaximumprojectcost.Additionalprojectcostsincludethefollowing:Costsforthedemolitionorremediationofenvironmentalhazardsassociatedwithpublic housing units that will not be rebuilt on the original site; Extraordinarysitecoststhathavebeenverifiedbyanindependentstate-registered,licensedengineer(e.g.,removalofundergroundutilitysystems;replacementofoff-siteundergroundutilitysystems;extensiverockand/orsoilremovalandreplacement;andameliorationofunusualsiteconditionssuchasunusualslopes,terraces,watercatchments,lakes);andCosteffectiveenergy-efficiencymeasuresinexcessofstandardbuildingcodes.

AdministrativeCostsAnyadministrativecosts,includingsalariesandemployeebenefitcontributions,otherthantheCapitalFundProgramFee,mustberelatedtoaspecificpublichousingdevelopmentormodernizationprojectanddetailedinthe5-YearActionPlan.

AlternativeManagementEntity

Areceiver,privatecontractor,privatemanager,oranyotherentitythatisundercontract with a PHA, under a management agreement with a PHA, or that is otherwise dulyappointedorcontracted(e.g.,bycourtorderoragencyaction),tomanageallorpartofaPHA’soperations.

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Asset Management Handbook

TheApril2007documententitled“ChangesinFinancialManagementandReportingRequirementsforPublicHousingAgenciesundertheNewOperatingFundRule”thatsupplementsthecancelled,butretained,HUDHandbook7475.1REV,CHG-1,assuchHandbookmaybeamendedfromtimetotime.

Asset Management Project (AMP)

ThecombinationformanagementpurposesofexistingpublichousingprojectsasoriginallyidentifiedinthePHA’sACC,intoanewgroupingthatfacilitatesefficientandeffectivemanagementoftheunitsasawholeundertheprinciplesofassetmanagement. The regrouping may involve combining two or more projects together orbreakingaprojectorprojectsintosmallerprojectsasthePHAdeterminesisappropriate.TheresultinggroupingiscalledanAMPandisassignedanewAMPnumber in HUD data systems.

Capital Fund (CFP) ThefundestablishedunderSection9(d)ofthe1937Act(42U.S.C.§1437g(d)).

Capital Fund Annual ContributionsContractAmendment (CF ACC

Amendment)

AnamendmenttotheAnnualContributionsContract(ACC)underthe1937ActbetweenHUDandthePHAcontainingthetermsandconditionsunderwhichtheDepartment assists the PHA in providing decent, safe, and sanitary housing for low-income families. The CF ACC Amendment must be in a form prescribed by HUD, underwhichHUDagreestoprovideassistanceinthedevelopment,modernization,and/oroperationofalow-incomehousingprojectunderthe1937ActandthePHAagrees to modernize and operate the project in compliance with all Public Housing Requirements.

Capital Fund Financing Program (CFFP)

AprogramthatenablesaPHAtoborrowprivatecapitaltomakeimprovementsandpledge,subjecttoHUD’swrittenapprovalandtheavailabilityofappropriations,aportionofitsfutureyearannualCapitalFundsorPublicHousingPropertyassecurityforeitherabondorconventionalbankloantransactioninaccordancewith24CFR§905, Subpart E.

Program5-YearActionPlan(5-YearActionPlan)

The5-YearActionPlanmustdescribethecapitalimprovementsidentifiedinthePHA’sPhysicalNeedsAssessmentand/orEnergyAuditthatarenecessarytoensurelong-termphysicalandsocialviabilityofthePHA’spublichousingdevelopments,includingthecapitalimprovementstobeundertakenwithinthe5-yearperiod,theirestimatedcosts,statusofenvironmentalreview,andanyotherinformationrequiredforparticipationintheCapitalFundProgramasprescribedbyHUD.InordertobeentitledtoFungibility,PHAsmusthaveanapproved5-YearActionPlan.ExceptforEmergencyWork,aPHAshallnotspendCapitalFundsonanyworkthatisnotincludedinanapproved5-YearActionPlananditsamendments.The5-YearActionPlanmustcontainadetailedbudgetforeachFYcontainedinthe5-YearActionPlan.Thebudgetportionofthe5-yearactionplanshouldbeupdatedannually.

Capital Fund Program Fee (CFP Fee)

A fee that may be charged to a Capital Fund grant by the PHA to cover costs associated with oversight and management of the Capital Fund Program by the PHA CentralOfficeCostCenter(COCC).Thesecostsincludedutiesrelatedtogeneralcapital planning, preparing of the Annual Plan, processing of the Line of Credit Control System(LOCCS),preparingofreports,drawingoffundsbudgeting,accounting,andprocurementofconstructionandothermiscellaneouscontracts.TheCFPFeeistheadministrativecostformanagingaCapitalFundgrantforaPHAsubjecttoassetmanagement.

Capital Fund Submission The annual submission to HUD of the CF ACC Amendment, budget documents, and otheritems,allasspecifiedinChapter3

Choice Neighborhoods Initiative(CNI)

This program, a successor to HOPE VI, supports locally driven strategies to address struggling neighborhoods with distressed public or HUD-assisted housing through a comprehensiveapproachtoneighborhoodtransformation.

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Community Renewal Costs -

The sum of the following HUD-approved costs related to the development of a PublicHousingProject:planning(includingproposalpreparation),administration,siteacquisition,relocation,demolitionof,andsiteremediationofenvironmentalhazards associated with, public housing units that will be replaced on the Project site, interestandcarryingcharges,off-sitefacilities,communitybuildingsandnon-dwellingfacilities,contingencyallowance,insurancepremiums,anyinitialoperatingdeficit,onsitestreets,onsiteutilities,andothercostsnecessarytodeveloptheProjectthatare not covered under the HCC. Public Housing Capital Assistance may be used to pay forCommunityRenewalCostsinanamountequivalenttothedifferencebetweentheHousingConstructionCosts(HCCs)paidforwithPublicHousingCapitalAssistanceandthe TDC limit.

ConventionalDevelopment

ThedevelopmentmethodunderwhichaPHAisresponsibleforselectingasiteorpropertyanddesigningtheproject.ThePHAadvertisesforcompetitivebidstobuildorrehabilitatethedevelopmentonthePHA-ownedsiteandawardsaconstructioncontract in accordance with 2 CFR Part 200, Subpart D. The contractor receives progresspaymentsfromthePHAduringconstructionorrehabilitationandafinalpaymentuponcompletionoftheProjectinaccordancewiththeconstructioncontract.TheConventionalDevelopmentmethodmaybeusedforeithernewconstructionorrehabilitation.

CooperationAgreement

An agreement, in a form prescribed by HUD, between a PHA and the applicable local governingbodyorbodiesthatassuresexemptionfromrealandpersonalpropertytaxes,providesforlocalsupportandservicesforthedevelopmentandoperationofpublichousing,andprovidesforthePHAtomakepaymentsinlieuoftaxes(PILOT).

Cross-CuttingFederalRequirements

A term describing non-Capital Fund requirements which nonetheless apply, including Davis-Bacon,procurement,UniformRelocationAssistanceandRealPropertyAcquisitionPolicies(URA)Act,fairhousing.

Date of Full Availability (DOFA)

Thelastdayofthemonthinwhichsubstantiallyall(95%ormore)oftheunitsinaPublic Housing Project are available for occupancy.

Data Universal Numbering System

(DUNS) Number

Anine-digitnumberissuedbyDun&Bradstreetthatidentifiesbusinessentitiesonalocation-specificbasis.AsfurtherdescribedinChapter3,aneffectiveDUNSNumberis required for a complete Capital Fund Submission.

DeclarationofRestrictiveCovenants

(DORC)

AlegalinstrumentthatrequiresaPHAandtheOwnerEntitytodevelopaMixed-Finance Project in compliance with Public Housing Requirements and restricts dispositionoftheproperty,includingtransferring,conveying,assigning,leasing,mortgaging, pledging, or otherwise encumbering the property.

DeclarationofTrust(DOT)

A legal instrument that grants HUD an interest in a Public Housing Project owned by aPHAthatisnotaMixed-FinanceProject.Itprovidespublicnoticethatthepropertymust be operated in accordance with Public Housing Requirements, including the requirement not to convey or otherwise encumber the property unless expressly authorized by federal law and/or HUD.

DemolitionandDispositionTransitional

Funding (DDTF)

AdditionalfundingincludedinaPHA’sCapitalFundgrantfora5-yearperiodtooffsetthereductioninfundingaPHAwouldreceivefromremovingunitsfrominventory.DDTFisnotaseparategrant,butratheranadd-ontotheexistingCapitalFundformula grant.

Development

ActivitiesandrelatedcoststoaddunitstoaPHA’spublichousinginventory,including,butnotlimitedto,constructionandacquisitionwithorwithoutrehabilitation;anyandallundertakingsnecessaryforplanning,design,financing,landacquisition,demolition,construction,orequipment,includingdevelopmentofpublichousingunits,andbuildings,facilities,and/orrelatedappurtenances(i.e.,non-dwellingfacilities/spaces).

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Disbursement End Date (DED)

ThefinaldatethataPHAmaysubmitavoucherfordisbursementofCapitalFunds.(Contrast with Expenditure End Date (EED), the last day on which a PHA may pay third partieswithfundsdrawnfromLOCCS).

DispositionApproval

ThedemolitionanddispositionofpublichousingisauthorizedunderSection18ofthe1937Act,asamended.HUDhaspromulgatedaregulation,24CFRPart970,detailingtheadministrativestepsrequiredtoperformdemolition/dispositionactivityinaccordancewiththe1937Act.TheapprovalprocessfordemolitionordispositionofpublichousingiscurrentlymanagedbytheSpecialApplicationsCenter.

DispositionProceeds ProceedsreceivedbyaPHAresultingfromthedispositionofPHA-ownedlandorimprovements from the public housing program.

EligibleActivities

Thedevelopment,financing,andmodernizationofPublicHousingProjects,includingtheredesign,reconstruction,andReconfigurationofpublichousingsitesandbuildings(includingcompliancewiththeaccessibledesignandconstructionrequirementscontained in 24 CFR §8.32, 24 CFR Part 40, 24 CFR Part 100, 28 CFR §35.151, and 28 CFR Part 36, as applicable) and the development of Mixed-Finance Projects.

Emergency An unforeseen or unpreventable event or occurrence that poses an immediate threat to the health and safety of the residents that must be corrected within one year of funding.

Emergency and Non-PresidentiallyDeclaredNatural Disaster Grants

GrantsfundedfromtheEmergencyandNon-PresidentiallyDeclaredNaturalDisasterSet-AsidetocovercapitalneedsarisingfromEmergenciesandNon-PresidentiallyDeclared Natural Disasters occurring in the same FFY.

Emergency and Non-PresidentiallyDeclared

Natural Disaster Set-Aside

ACongressionally-mandatedset-asidewithintheCapitalFundannualappropriationtocreateareserveforEmergenciesandNon-PresidentiallyDeclaredNaturalDisasters.

EmergencyWork

CapitalFund-relatedphysicalworkitemsthat,ifnotdone,poseanimmediatethreatto the health or safety of residents, and which must be completed within one year offunding.ManagementImprovementsarenoteligibleasEmergencyWorkandthereforemustbecoveredbythe5-YearActionPlanbeforethePHAmaycarrythemout.

Energy Audit Asystematicreviewoftheenergyrequirementsandconsumptionforpropertywiththeintenttoidentifypotentialopportunitiesforenergyandwatersavingsthroughimprovedoperationalefficiencyormoreefficientcomponents.

Energy Performance Contract (EPC)

AninnovativefinancingtechniquethatusescostsavingsfromreducedenergyconsumptiontorepaythecostofinstallingenergyconservationmeasuresinaccordancewithSection9(e)ofthe1937Actand24CFR990.185.

EvidentiaryDocumentsorEvidentiaries

InMixed-FinanceDevelopmenttransactions(discussedinChapter9)andsecurityinterestsandfinancingtransactions(discussedinChapter11),thepackageoflegaldocuments,opinions,certifications,andduediligencedocumentsthataresubmittedafteraproposalhasbeenreviewedand,atleastpreliminarily,approved.

Expenditure

CapitalFundsdisbursedbythePHAtopayforobligationsincurredinconnectionwithworkincludedina5-YearActionPlanthathasbeenapprovedbythePHA’sBoardofCommissioners and HUD. Total funds expended means cash actually disbursed and does not include retainage.

Expenditure End Date (EED)

ThefinaldatethataPHAmayexpend(payout)fundsdrawndownfromLOCCS.(ContrastwiththeDisbursementEndDate(DED),thefinaldatethataPHAmaysubmit vouchers for disbursement of Capital Funds).

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Faircloth Limit

TheFairclothAmendmentstatesthatHUDcannotfundtheconstructionoroperationofnewpublichousingunitswithCapitalFundsorOperatingFundsiftheconstructionof those units would result in a net increase over the number of public housing units the PHA owned, assisted, or operated as of October 1, 1999, subject to certain exceptions.[Section9(g)(3)ofthe1937Act]

Federal Fiscal Year (FFY) The Federal Fiscal Year begins each year on October 1 and ends on September 30 of the following year.

Federal Housing Administration(FHA)

TheentitywithinHUDthatprovidesmortgageinsuranceonloansmadebyFHA-approved lenders throughout the United States and its territories. FHA insures mortgagesonsingle-familyandmultifamilyhomes,includingmanufacturedhomesand hospitals.

Field Counsel HUDattorneyswhoworkinindividualFieldOffices.

FieldOffice AlocalofficeofHUD;eachFieldOfficeismanagedbyoneoftenregionalofficesofHUD.

First Increment RHF

ForunitsdemolishedordisposedofonorbeforeJune30,2012,aPHAautomaticallyreceives5yearsofRHFfundingtheyearafterunitsapprovedfordemolitionordispositionhavebeenremovedfromthepublichousinginventoryandthePHAreports the removal in IMS/PIC.

Force Account Labor Labor employed directly by the PHA on either a permanent or a temporary basis.Force Account Labor for

Development PublichousingdevelopmentthatusesPHAstafftocarryoutnewconstructionorrehabilitation.

Fungibility AsitrelatestotheCapitalFundProgram,fungibilityallowsthePHAtosubstituteCapitalFundworkitemsamongtheyearswithinthelatestapproved5-YearActionPlan without prior HUD approval.

HOPE VI

AuthorizedunderSection24ofthe1937Act,thisprogramreplacedseverelydistressed Public Housing Projects with redesigned mixed-income housing and provided housing vouchers to enable some of the original residents to rent apartmentsintheprivatemarket.ThefinalroundofHOPEVIgrantswasmadeinFY2010.

HousingConstructionCost (HCC)

The sum of the following HUD-approved costs related to the development of a Public HousingProject:dwellingunithardcosts(includingconstructionandequipment),builder’soverheadandprofit,thecostofextendingutilitiesfromthestreettothePublicHousingProject,finishlandscaping,andthepaymentofDavis-Baconwagerates.

Inventory Management System/Public Housing InformationCenter

(IMS/PIC)

PIH’scurrentsystemforrecordingdataconcerning:thepublichousinginventory,thecharacteristicsofpublichousingandHousingChoiceVoucherassistedfamilies,thecharacteristicsofPHAs,andperformancemeasurementofPHAsreceivingHousingChoice Voucher funding.

Large PHA A PHA with 250 or more federal public housing units.

Line of Credit Control System (LOCCS)

LOCCS is a HUD grant disbursement system. LOCCS currently provides disbursement controlsforover100HUDgrantprograms.LOCCS-WebisanintranetversionofLOCCSforHUDpersonnel.e-LOCCSistheInternetlinktoLOCCSdataforHUDbusiness partners.

Management Improvements

NoncapitalactivitiesthatareProject-specificorPHA-wideimprovementsneededtoupgradeorimprovetheoperationormaintenanceofthePHA’sProjects,topromoteenergyconservation,tosustainphysicalimprovementsatthoseProjects,ortocorrectmanagementdeficiencies

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Mixed-Finance Development

Thedevelopment(throughnewconstructionoracquisition,withorwithoutrehabilitation)ormodernizationofpublichousing,wherethepublichousingunitsareownedinwholeorinpartbyanentityotherthanaPHA.Ifthepublichousingunitsbeing developed are 100% owned by the PHA, the project is not a Mixed-Finance Project.

Mixed-Finance Modernization

UseoftheMixed-FinanceDevelopmentmethodtomakecapitalimprovementstomodernize Public Housing Projects.

Mixed-Finance Project A Public Housing Project developed by Mixed-Finance Development.Modernization Modernizationmeanstheactivitiesanditemsasfurtherdefinedin§905.200(b)(4-18)

Mortgage

Asecurityagreementbetweenalenderandaborrowerinwhichtheborrower’sinterest in real property is collateral for the loan. The mortgage creates a lien on the property that secures the promise to repay the loan. It also gives the lender the right toforecloseonthepropertyiftheloanobligationsarenotmet.Dependingonthestate,thistypeofsecurityagreementmayhaveadifferenttitle,includingDeedofTrustorSecurityDeed,butforthepurposesofthisGuidebook,thetermMortgageincludesanysecurityagreementthatmeetsthisdefinition.

MovingtoWork(MTW)

AdemonstrationprogramthatprovidesparticipatingPHAstheopportunitytodesignandtestinnovative,locally-designedstrategiesthatusefederaldollarsmoreefficiently,helpresidentsfindemploymentandbecomeself-sufficient,andincreasehousingchoicesforlow-incomefamilies.MTWgivesPHAsexemptionsfrommanyexistingpublichousingandvoucherrulesandmoreflexibilitywithhowtheyusetheirfederal funds.

Non-PresidentiallyDeclared natural

Disaster

Anextraordinaryevent,suchasanearthquake,flood,orhurricane,affectingthePublicHousingPropertyownedandmanagedbyaPHA,butexcludingpresidentiallydeclaredemergenciesandmajordisastersundertheRobertT.StaffordDisasterReliefand Emergency Assistance Act (42 U.S.C. §5121 et seq.).

Non-QualifiedPHA APHAthatdoesnotmeettherequirementsforaQualifiedPHA.

Non-routineMaintenance

Workitemsthatordinarilywouldbeperformedonaregularbasisinthecourseofmaintenanceofproperty,butwhichhavebecomesubstantialinscopebecausetheyhave been postponed and involve expenditures that would otherwise materially distorttheleveltrendofmaintenanceexpenses.Theseactivitiesalsoincludethereplacementofobsoleteutilitysystemsanddwellingequipment.

Obligation

Abindingagreementforworkorfinancingthatwillresultinoutlays,immediatelyorinthefuture.Allobligationsmustbeincorporatedwithinthe5-YearActionPlanthathasbeenapprovedbythePHABoardofCommissionersandHUD.ThisincludesfundsobligatedbythePHAforworktobeperformedbycontractlabor(i.e.,contractaward),orbyforceaccountlabor(i.e.,workactuallystartedbyPHAemployees).CapitalFundsidentifiedinthePHA’s5-YearActionPlantobetransferredtooperationsare obligated by the PHA once the funds have been budgeted and drawn down by the PHA. Once these funds are drawn down they are subject to the requirements of 24 CFR Part 990.

ObligationEndDate(OED)

Thedate,2yearsaftertheHUD’sexecutionofaparticularCFACCAmendment,onwhich a PHA must have obligated at least 90% of such Capital Fund grant.

OfficeofCapitalImprovements (OCI)

ThedivisionoftheOfficeofPublicHousingInvestments(OPHI),withintheOfficeofPublic and Indian Housing ,that administers the Capital Fund Program.

Open Grant Anygrantforwhichacostcertificatehasnotbeensubmittedandhasnotreachedfiscalcloseout.

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OperatingFundAssistanceprovidedunder24CFRPart990pursuanttoSection9(e)ofthe1937Act(42U.S.C.§1437g(e))forthepurposeofoperationandmanagementofpublichousing.

OperatingFundFinancing Program

(OFFP)

AprogramthatenablesaPHAtouseaportionofitsOperatingFundreservebalancestocollateralizefinancingandtopaydebtserviceandcustomaryfinancingcostswherethefinancingisusedforpublichousingdevelopmentormodernization(includingpublic-housingmixed-financedevelopments).

OperatingReserve

OperatingreservemeansthosefundsremainingfromtheoperationofpublichousingforanyfiscalyearaftereligibleOperatingFundexpensesaredeductedfromOperatingFunds,tenantrents,andother“operatingreceipts”assuchtermisdefinedinSection2 of the ACC.

OwnerEntity

Anentitythatownspublichousingunits.InMixed-FinanceDevelopment,theOwnerEntitymaybethePHA,maybeanentityinwhichthePHAownsapartialinterest,ormaybeanentityinwhichthePHAhasnoownershipinterest.TheOwnerEntityissubjecttotheapplicablerequirementsofthisGuidebook.

Partner

Athird-partyentitywithwhichthePHAhasenteredintoapartnershiporothercontractual arrangement to provide for the Mixed-Finance Development of public housing units. Generally, the Partner has primary responsibility with the PHA for thedevelopmentand/oroperationofthepublichousingunitsandissubjecttotheapplicablerequirementsofthisGuidebook.

Performance &EvaluationReport

(P&E)

AnannualreportpreparedbythePHAandsubmittedtoHUDthatdetailstheactualcostofdevelopmentactivitiesascomparedtotheestimatedcosts.

Personal Property Anypropertythatisnotrealpropertyorattachedtorealproperty(e.g.,fixtures,bankaccounts, cars and equipment)

PHAAffiliate

Anentity,otherthananinstrumentality,formedbyaPHAinwhichaPHAhasafinancialorownershipinterestorparticipatesinitsgovernance.ThePHAhassomemeasureofcontrolovertheassets,operations,ormanagementoftheaffiliatedentitybutsuchcontroldoesnotrisetothelevelofcontroltoqualifytheentityasaPHAInstrumentality.

PHA Instrumentality

AnentityrelatedtothePHAwhoseassets,operations,andmanagementarelegallyandeffectivelycontrolledbythePHA,andthroughwhichPHAfunctionsorpoliciesareimplemented,andwhichutilizesPublicHousingFundsorPublicHousingPropertyforthepurposeofcarryingoutpublichousingdevelopmentfunctionsofthePHA.APHA Instrumentality assumes the role of the PHA and is the PHA under the Public HousingRequirementsforpurposesofimplementingPublicHousingdevelopmentactivitiesandprograms,andmustabidebythePublicHousingRequirements.PHAInstrumentalitiesmustbeauthorizedtoactforandtoassumesuchresponsibilities.For purposes of development, ownership of public housing units by a PHA Instrumentality would be considered Mixed-Finance Development.

Physical Needs Assessment (PNA)

AsystematicreviewofallthemajorphysicalcomponentsofPublicHousingPropertytoresultinalong-termscheduleforreplacementofeachcomponentandestimatedcapital costs required to meet the replacement need.

Public Housing or Public Housing Unit

Low-income housing, and all necessary appurtenances thereto, assisted under the 1937Act,otherthanSection8,includingdwellingunitsinaMixed-FinanceProjectthat are assisted by a PHA with Public Housing Funds. [42 U.S.C. 1437a]

Public Housing Agency (PHA)

Anystate,county,municipality,orothergovernmentalentityorpublicbodyoragencyorinstrumentalityoftheseentitiesthatisauthorizedtoengageorassistinthedevelopmentoroperationofpublichousing.

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Public Housing Assessment System

(PHAS)

Theassessmentsystemunder24CFRPart902formeasuringthepropertiesandPHAmanagementperformanceinessentialhousingoperations,includingrewardsforPHAsrated as high performers and consequences for poor performers.

Public Housing Capital Assistance

AssistanceprovidedbyHUDunderthe1937Actinconnectionwiththedevelopmentandmodernizationofpublichousing,includingCapitalFundassistanceprovidedunderSection9(d)ofthe1937Act,publichousingdevelopmentassistanceprovidedunderSection5ofthe1937Act(priortoQHWRA),OperatingFundassistanceusedforcapitalpurposesunderSection9(g)(2)or9(e)(1)(I)(withHUD’sapprovalofsuchfinancingofrehabilitationanddevelopmentofpublichousingunits)ofthe1937Act, and HOPE VI grant assistance, as well as other funds deemed to be Capital Fund assistanceinthefutureunderapplicablestatutes,regulations,ornotices.

Public Housing Funds

Any funds provided through the Capital Fund or other public housing development sources, such as HOPE VI, CNI, public housing development funds, Public Housing OperatingFundsunderSection9(e)ofthe1937Act,DispositionProceedsthataPHAmayrealizeunderSection18(butsubjecttoandtotheextentconsistentwithSection18andtheregulationsat24CFRPart970),oranyotherfundsappropriatedbyCongressspecificallyforpublichousing.

Public Housing Project Whenusedinreferencetopublichousing,theterm“Project”meanshousingdeveloped, acquired, or assisted by a PHA under the 1937 Act, and the improvement of any such housing.

Public Housing Property

Any public housing assets and income, including among other things, any Public HousingProject(astheterm“Project”isdefinedintheACCbetweenthePHAandHUD),anyOperatingReceipts(astheterm“OperatingreceiptsandOperatingexpenditures”isdefinedintheACC),PublicHousingCapitalFundsorOperatingFunds,HOPE VI or other development grants and other grants to the PHA from HUD under the 1937 Act.

Public Housing Requirements

All requirements applicable to public housing including, but not limited to, the 1937Act;HUDregulations;theACC,includingamendments;HUDnotices;andallapplicablefederalstatutes,executiveorders,andregulatoryrequirements,astheserequirementsmaybeamendedfromtimetotime.

QualifiedPHA

A PHA that meets the following requirements: (1) The sum of the number of public housing dwelling units administered by the PHA, and the number of vouchers under Section8(o)ofthe1937ActadministeredbythePHA,is550orfewer;and(2)thePHAis not designated under 42 U.S.C. §1437d(j)(2) as a troubled public housing agency, anddoesnothaveafailingscoreundertheSection8ManagementAssessmentProgram during the prior 12 months. [24 CFR §903.3(c)]

Reasonable Cost

Anamounttorehabilitateormodernizeanexistingstructurethatisnotgreaterthan 90% of the TDC for a new development of the same structure type, number, andsizeofunitsinthesamemarketarea.ReasonableCostsarealsodeterminedwithconsiderationofHUDregulations,including2CFRPart200and2CFRPart225(codifyingOMBCircularA-87).

Reconfiguration The altering of the interior space of buildings (e.g., moving or removing interior walls to change the design, sizes, or number of units).

Rental Assistance Demonstration(RAD)

AdemonstrationprogramthatpermitspublichousingandotherHUD-assistedpropertiestoborrowlong-termfinancingthroughconversionsofpublichousingunitstolong-term,project-basedSection8rentalassistance.

Replacement Housing Factor (RHF)

Capital Fund grants that are awarded to PHAs that have removed units from inventory for the sole purpose of developing new public housing units.

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ReportingDateThe deadline that HUD establishes each Federal Fiscal Year by which any new Capital Fund units and those units reaching DOFA must be reported in order to be counted for Capital Fund formula purposes in that Federal Fiscal Year.

RoutineMaintenance Workitemsthatdonotmeetthedefinitionofnon-routinemaintenance.Safety and Security

Emergency - Drugand/orcriminalactivitythatthreatensresidentsafetyandsecurityandmustbecorrected within one year of funding.

System for Award Management (SAM)

Anonlinegovernment-wideapplicationthatcollects,validates,storesanddisseminatesbusinessinformationaboutthefederalgovernment’stradingpartnersinsupport of the contract award, grants and the electronic payment processes.

Safety and Security Grants

GrantsfundedatHUD’sdiscretionfromtheEmergencyandNon-PresidentiallyDeclaredNaturalDisasterSet-AsidetoassistPHAswithfundingone-timeadditionalmeasuresnecessarytoaddresscrimeanddrug-relatedactivity.

Second Increment RHF A second 5-year grant of RHF funding that is only available to PHAs that have met theplanning,obligation,andexpenditurerequirementsfortheirFirstIncrementRHFgrants and otherwise meet the criteria for Second Increment RHF.

Section104(d)

Section104(d)oftheHousingandCommunityDevelopmentActof1974(42U.S.C.§5304(d))andtheimplementingregulationsfoundat24CFRPart42subpartC,Section104(d)relocation,andone-for-onereplacementhousingrequirementsmayapplywhenCommunityDevelopmentBlockGrant(CDBG),UrbanDevelopmentActionGrant(UDAG),andHOMEInvestmentPartnerships(HOME)fundsareusedinconnectionwiththedemolitionorconversionoflower-incomedwellingunits.Note: UDAG is not an active program and no funds have been appropriated since 1998.

Security Interest

A lien on personal property that secures the promise to repay a loan. A security agreement between a lender and a buyer or borrower in which the personal property is collateral for the loan. The security interest gives the lender the right to collect paymentontheloanandtoattachthepersonalpropertyiftheloanobligationsarenot met.

SignificantAmendmentorModification

AsdeterminedbythePHAaccordingtothecriteriasetforthinits5-YearActionPlaninaccordance with 24 CFR §905.300(b)(1)(iii).

Small PHA A PHA with less than 250 federal public housing units.

Total Development Cost (TDC)

Section6(b)ofthe1937ActrequiresHUDtoestablishTDClimits,whichrepresenttheper-unitconstructioncostguidelinesforaProject.TheTDClimitappliestothecostsof developing public housing that may be paid from Public Housing Capital Assistance. Specificsarefoundin24CFR§905.314(b)-(g).

TurnkeyDevelopment

ThePHAadvertisesforandcompetitivelyselectsadeveloperwhowilldeveloppublichousing units on a site owned or to be owned by the developer. Following HUD approval of the development proposal, the PHA and the developer execute a contract of sale and the developer builds the project. Once the project is complete, the developer sells it to the PHA.

Uniform Federal Accessibility Standards

(UFAS) Asdefinedin24CFR§8.32;seealso24CFRPart40.

Uniform Physical ConditionStandards

(UPCS)

PhysicalconditionsstandardsforpublichousingandothertypesofHUD-assistedhousing as set forth in 24 CFR Part 5, Subpart G, and 24 CFR Part 200, Subpart P.

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UniformRelocationAct(URA)

TheUniformRelocationAssistanceandRealPropertyAcquisitionPoliciesActof1970(URA)-TheUniformRelocationAssistanceandRealPropertyAcquisitionPoliciesActof 1970, as amended (Pub. L. 91-646, 42 U.S.C. §4601 et seq.), and the government-wideimplementingregulationsfoundat49CFRPart24.TheURAprovidestheminimumFederalrequirementsfortheacquisitionofrealpropertyandrelocationofpersonsfromtheirhomes,businesses,andfarmsasadirectresultofacquisition,rehabilitation,ordemolitionforFederalandFederally-assistedprogramsandprojects.

Unlessotherwisenoted,thesedefinitionsmaybefoundat24CFR§905.108.

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Appendix 2. Eligible Activities Chart

Type Activity ExamplesDevelopment Constructionandacquisitionwithor

withoutrehabilitationProperty PurchaseAppraisalSurveyMapLegal CostsRecording Costs

Development of Mixed-Finance Projects

Providing funds for eligible uses by loanProviding funds for eligible uses by grantProviding funds for eligible uses by leaseProviding funds for eligible uses by other legal document

ResidentconsultationandmeetingsEnvironmental reviewConsultants or contractors necessary for the project

Grant writersStrategic plannersArchitectsEngineersAttorneysAccountantsFinancial consultantsAbatement consultantsSection3consultants

DuringtheInitialOperatingPeriod,operatingexpensesofaPublic Housing Project (or public housing units in a Mixed-Finance Development)

Frominitiallease-upuntilOperatingFunds are received from HUD for the project Priortoinitialoccupancy,salariesofpersonsresponsibleforselectingtenants and/or handling tenant accounts,costofstationery,forms,andofficesuppliesusedinoperationofaproject;

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Type Activity ExamplesDevelopment (Ctnd.) Predevelopment and planning costs Marketstudy,survey,title

Applicationsforfundingandassociated feesArchitectural and engineering feesConsultingfeesPermit feesInspectioncostsCostsofsubmittingfundingapplications(includingconsultantssuch as grant writers),Housing surveys

Contractors, as well as their fees andtheunderlyingwork

Abatement contractorsRemediationcontractorsDemolitioncontractorsConstructioncontractorsSite and infrastructure contractorsDemolitionGrading Sanitary sewers & storm sewersWaterdistributionsystemsGasdistributionsystemsElectricaldistributionsystems

CostsassociatedwithundertakingacostcertificationFinancing costs associated with the DevelopmentactivitiesStructures,fixtures,andassociatedamenities

ParkinglotsCommunity buildingsComputer centersSocial services space

AdministrativecostsattributabletoaspecificDevelopmentproject,as long as they fall within the cost limitsandthePHAisnotalsotakinganAdministrationFeeCostsassociatedwithundertakingaPhysical Needs Assessment (PNA).

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Type Activity ExamplesFinancing Preparingapplicationsforfunding

whether or not the funding is awarded

Such as for a Choice Neighborhoods grantTaxcreditallocation

Legal services Lenders Investors

ConstructionperiodinterestDue diligence Marketstudy

EnvironmentaltestingTitle, and survey

Fairness opinionOther Development and Modernizationactivitiesnecessarytoobtainfinancing.

ModernizationDemolitionandReconfiguration

Reconfigurationcoststoreconfigureexistingdwellingunitstounitswithdifferentbedroomsizesortoanondwelling use.Planning Costs related to a Public Housing Project

Architectural and engineering fees(suchascostsofinspection,materials tests, and soil tests)Permit feesInspectioncostsCostsofsubmittingfundingapplications(includingconsultantssuch as grant writers)SurveysBoringsandsoiltestpitsPhotographsBlueprintsSpecifications

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Type Activity ExamplesModernizationDemolitionandReconfiguration(Ctnd.)

SiteAcquisitioncostsrelatedtoaPublic Housing Project

AmountspaidforlandandexistingimprovementsAny amounts disbursed for prior-year taxes and deducted from the purchase price,Amounts disbursed for current taxes proratedtothedateofacquisitionThe cost of boundary, property line, topographical,andutilitysurveys,including maps and perimeter descriptionsThe cost of monuments and landmarksThecostofallblueprintsandworkproduct furnished by the surveyorAppraisalsLegalservicesfortitleinformationTitlecertificatesTitle commitments and policiesLegalcostsincludingthoserelatingtocondemnationproceedings

Site Improvement costs related to a Public Housing Project: Grading

Stripping top soilThecutting,filling,backfilling,and grading necessary to bring the entireareaoutsideofthebuildingsto the subgrade levels of paved, surfaced, and planted areas.

Site Improvement costs related to a Public Housing Project: Sanitary Sewers

NormalexcavationBackfillingPipingManholesCleanoutsSewage pumpingDisposalfacilitiesBranchesandconnectionsuptobutoutside of building wallsCarryingbranchesandconnectionsthrough buildings en route to other buildings

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Site Improvement costs related to a Public Housing Project: Storm Sewers

NormalexcavationandbackfillPipingManholesStreet catch basins and inletsYard catch basins and inletsCleanouts

Site Improvement costs related to aPublicHousingProject:WaterDistributionSystem

NormalexcavationandbackfillPipingValves and boxesHydrantsCurbcocksandboxesYarddrinkingfountainsManholesMastermeterinstallation

Site Improvement costs related to a Public Housing Project: Gas DistributionSystem

NormalexcavationandbackfillPipingValves and boxesCurbcocksandboxesDrip potsRegulatorsMastermeterinstallations

Site Improvement costs related to a Public Housing Project: Electric DistributionSystem

Normalexcavation&backfillOverhead lines and polesUnderground linesTransformersTransformer vaultsYard lightsMastermeterinstallationsBranchesandconnectionsuptobutoutside of building wallsThe cost of carrying such branches andconnectionsthroughbuildingsen route to other buildingsStreetlightingFire and police alarm systems

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Site Improvement costs related to a PublicHousingProject:CorrectionofAbnormalSubsoilConditions

Abnormalexcavationresultingconditions,suchasrock,muck,water,quicksandAbnormalexcavationoverandabove the cost for normal rough gradingandexcavationwork

Site Improvement costs related to a Public Housing Project: Excess Dwelling and Non-dwelling Foundations

Excessfoundationworkinconnectionwithbuildings,utilities,and other site improvements Excessfoundationworkwheretheunusual character of the subsoil or site topography requires piling, caissons, underpinnings, or very unusualdepthoffootings

Site Improvement costs related to a Public Housing Project: Paved Areas

Cost of streets and alleys SubgradingPavingCurbsGuttersThecostofwalksConstructingdrivewaysParkingareasPlaygroundsOther similar surfaced areas

Site Improvement costs related to a Public Housing Project: Finished Grading,Lawns,andPlanting

SubgradepreparationTop soilingSeedingSoddingPlantingtreesandscrubsOther landscaping

Site Improvement costs related to a Public Housing Project: Miscellaneous

BuildingretainingwallsandbulkheadsStructuralplaygroundfacilities(suchas spray-pools)Project signageFencesGarbagestationsBenchesClotheslinesFlag poles

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Demolition Demolishingandclearingexistingstructures and other improvementsDisconnectingutilitiesClearing the site

Reconfiguration Costsincurredinconnectionwiththeexpansionofexistingdwellingspace to enlarge room sizes, providestorage,oraddadditionalbedrooms.

Modernization-DwellingStructurecosts related to a Public Housing Project

Thecostofnormalexcavationandbackfill,normalfoundationsandother structural costs of dwelling buildings and spaces.

IncineratorsLaundryfacilitiesCloset spacesHallsCorridorsEntrance lobbiesEquipment spacesPerambulator and other tenant storage spacesFixed cabinets, cupboards, shelvingOtherbuilt-infacilities

The cost of all interior plumbing, gas,anddomestichotandcoldwaterinstallationswithindwellingbuilding walls

PipingFixturesBathroomaccessoriesDomestichotwaterheatersCirculatingpumpsIndividual gas and water meters

Thecostofallheatinginstallationswithin dwelling building walls or in group or central plants

Piping, ductsRadiatorsVentsGrillsFansFixedheatingunits(suchasfloorfurnaces, panel type wall heaters, orotherheatingunitsbuiltintothestructure) and all accessoriesEntirecostofplantstructureCost of equipmentHeatingmainsDomestichotwatermainsPipe tunnels

183 | 4/1/16

Type Activity ExamplesModernization-DwellingStructurecosts related to a Public Housing Project (Ctnd.)

The cost of interior dwelling electricalinstallation(fromservicedrops)

conduitswiring devicesboxesreceptaclesmaster meterindividual meter switchesfinishedelectricalhardwarecircuitbreakerslightsfixturesother appurtenances

Modernization-DwellingEquipment costs

the cost of items that are not connected to ducts or pipes for thedistributionofheat,shades,screens, and other similar equipment

rangesrefrigerators

Modernization-NondwellingStructure costs

costsforadministrationbuildingsandspacesforadministrationbuildings, community buildings, or related spaces

structuresplumbingheatingmainsventilatingelectricalinstallation

Modernization-NondwellingEquipment costs

officefurnitureandequipment,maintenance, community space, or computers

central processing, and peripheral equipment input and output machinesdatapreparationmachinesdata storage machinesmajor components that “upgrade” the processing of computers and/or peripheral equipment

Modernization-PurchaseorLeasingof Vehicles

Non-Passenger Vehicle Vehicles needed to carry out physical improvements and with Force Account Labor onlyVehicles needed to carry out Management Improvements Truck/Snowplow

4/1/16 | 184

Type Activity ExamplesModernization-PurchaseorLeasingof Vehicles (Ctnd.)

Passenger Vehicles Vehiclesusedonafull-timebasistocarry out the Capital Fund Program. A car or van needed by the Capital Fund coordinator or in-house architectonafull-timebasistovisitworksitesvehicles used to travel to resident meetingsrelatedtoCapitalFundActivities

Modernization-EmergencyActivities

CapitalFund-relatedactivitiesidentifiedasEmergencyWork.

Modernization-EnergyEfficiency Activitiesdesignedtopromoteenergyconservationandefficiencymeasures

New or updated Energy Audits, to the extent that Public Housing OperatingFundsarenotavailableand the audit is part of a Capital Fund programImplementationofanyenergyandwaterconservationmeasureidentifiedintheEnergyAuditIntegratedutilitymanagementandcapital planningInstallationoffixturesorfittingsto increase energy and water-use efficiencyInstallationanduseofEnergyStarappliances as part of a replacement programandinacost-effectivemannerAutomationofutilityandenergymanagement systems, including changing from master metering to individual meters as part of a Capital Fund program

Modernization-Non-routineMaintenance

Workitemsthatordinarilywouldbe performed on a regular basis but havebecomesubstantialinscopebecause they have been postponed and involve expenditures that would otherwise materially distort the level trend of maintenance expenses.

Thereplacementofobsoleteutilitysystems and dwelling equipment.

185 | 4/1/16

Type Activity ExamplesModernization-PlannedCodeCompliance

Buildingcodecomplianceincludesdesign and physical improvement costs associated with code compliance

Compliance with local building code ortheUniformPhysicalConditionStandards (UPCS) under PHAS, Compliancewithanationalbuildingcode, such as those developed bytheInternationalCodeCouncilortheNationalFireProtectionAssociationCompliance with the 2009 internationalenergyconservationcode (iecc), or ashrae standard 90.1-2010, “Energy standard for buildingsexceptlow-riseresidentialbuildings,”formultifamilyhigh-rises (four stories or higher), or a successor energy code or standard that hud adopts for new construction.

Modernization-VacancyReduction Physical improvements to reduce the number of vacant public housing units, but excluding costs forroutinevacantunitturnaround.VacancyreductionactivitiesmustremedyadefinedvacancyproblemasdetailedinavacancyreductionprograminthePHA’s5-YearActionPlan.

EconomicSelf-Sufficiency Capital expenditures to facilitate

programs to improve the empowerment and economic self-sufficiencyofpublichousingresidents

Costs for resident job trainingDevelopment of resident-owned businessesActivitiestoenableresidentsandtheir businesses to carry out Capital Fund-assistedactivities

Management Improvements Noncapitalactivities,whichcanbeProject-specificorPHA-wide improvements during the implementationperiodofthephysical improvements, unless a longer period is clearly necessary to achieve performance targets.

UpgradeorimprovetheoperationormanagementofthePHA’sPublicHousing ProjectsPromoteenergyconservationSustain physical improvements at those projectsCorrectmanagementdeficiencies,identifiedbyhud,anaudit,orthepha itself. These management deficienciesmaybeidentifiedbythe pha, hud, or a pha auditor

4/1/16 | 186

Type Activity Examples Management Improvements (Cotnd.)

Training for PHA personnel in operationsandprocedures,

ResidentselectiontrainingRentcollectiontrainingEvictiontraining

ImprovementstothePHA’smanagement,financial,andaccountingcontrolsystems;Technical assistance to a Resident Council or Resident ManagementCorporation(RMC)to assess feasibility of carrying out managementfunctionsforaspecificproject or projects;Trainingresidentsinskillsdirectlyrelatedtotheoperationandmanagement of the development(s) forpotentialemploymentbytheRMC;ImprovementstothePHA’smanagement,financial,andaccountingcontrolsystems;Technical assistance to a Resident Council or Resident ManagementCorporation(RMC)to assess feasibility of carrying out managementfunctionsforaspecificproject or projects;Trainingresidentsinskillsdirectlyrelatedtotheoperationandmanagement of the development(s) forpotentialemploymentbytheRMC;Training RMC board members Communityorganizationtraining

BoarddevelopmenttrainingLeadership training

Costsassociatedwiththeformationof an RMCCoststopromotemoreeffectiveresidentparticipationintheoperationofthePHA’sCapitalFundactivities

CostsforstaffsupportOutreachTrainingMeetingandofficespaceChildcareTransportationAccess to computers that are modest and reasonable

187 | 4/1/16

Type Activity Examples Management Improvements (Ctnd.)

Developmentandimplementationof improved applicant screening procedures.

ResidentRelocationandMobilityCounseling Due to Capital Fund Activity

RelocationandotherassistanceasmayberequiredorpermittedbyPublic Housing Requirements for permanentortemporaryrelocation,asadirectresultofmodernization,development,rehabilitation,demolition,disposition,reconfiguration,acquisition,anemergency,orNon-PresidentiallyDeclared natural disaster

Reimbursementtoaffectedresidents of reasonable out-of-pocketexpensesincurredinconnectionwithtemporaryrelocationThe cost of moving to and from temporary housing Anyincreaseinmonthlyrent/utilitycosts

Public Housing Residents Moving expenses and direct losses of propertyadditionalrelocationpaymentsto assist such persons to acquire decent, safe, and sanitary dwellings

ResidentRelocationandMobilityCounseling Due to Capital Fund Activity(Ctnd.)

Direct expenses for the cost of servicesincidenttotherelocationof public housing residents

Thesalariesofadministrativepersonnelassignedfull-timedutiesrelatedtotherelocationofpublichousing residents

Settlementcoststodisplacedoccupants for reasonable and necessary expenses incurred in connectionwithPHAacquisitionorredevelopment of property

Recording feesTransfer taxProrataportionofrealpropertytaxesMortgageprepaymentpenalties

Replacement Housing Payments for an owner-occupant of a single or two-family dwelling acquired by the PHA.

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Type Activity ExamplesHomeownership Activitiesassociatedwithpublic

housing homeownershipDevelopmentactivitiesandfinancingusesinserviceofapublichousing homeownership programModernizationofexistingpublichousingunitsforsaletoqualifiedhomebuyersFeasibility study for conversion of rental units to homeownershipPreparationcostsforapplicationto convert rental units to homeownershipConstructionoracquisitionofunitsDemolitiontomakewayfornewconstructionAbatement of environmentally hazardous materialsSite improvementsConstructionorpermanentfinancing,suchaswrite-downsfornewconstructionAcquisitioncostswithorwithoutrehabilitationHomebuyer assistanceRelocationassistanceandmobilitycounselingHomeownership counselingAdministrativeandmarketingcostsDown payment assistanceClosing cost assistanceSubordinate Mortgage loans

189 | 4/1/16

Appendix 3. Guide for Registration in SAM

4/1/16 | 190

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RE

E

Ste

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Yo

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Click S

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191 | 4/1/16

4/1/16 | 192