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HUD Guidance for the Use of Residual Receipts to Offset HAPs for New Regulation Project-Based Section 8 Properties

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HUD published Notice H 2012-14, the “Use of “New Regulation” Section 8 Housing Assistance Payments (HAP) Contracts Residual Receipts to Offset Project-Based Section 8 Housing Assistance Payments.”

The Notice sets forth the policy and procedures for the Department’s use of new regulation Residual Receipts to offset housing assistance payments (HAP) for projects subject to a new regulation Project-Based Section 8 HAP contract and outlines the obligations and duties of Owners and the responsibilities of HUD Field staff in processing and monitoring the use of this project resource.

A copy of the Notice may be found here: http://www.nahma.org/member/New%20HUD%20Docs/Housing%20Notice%20H%202012-14%20-%20Published%208-8-2012%20.pdf

NAHMA is currently reviewing the Notice in conjunction with our Regulatory Affairs Committee.

HUD will also be hosting a conference call to discuss the implementation of this policy and to answer questions on Friday August 10 at 2 PM EST.  The call-in information is as follows:

Conference Dial in Number: 1-877-873-8018

Access Number: 9149191

Summary of Notice H 2012-14

The new regulation and/or the various HAP contract forms used for new regulation projects explicitly permit HUD to use Residual Receipts to reduce housing assistance payments. (See 24 CFR §§ 880.205(e), 881.205(e), and 883.306(e)).

To the extent that Residual Receipts are available at a new regulation project, Owners are allowed an initial reserve (“Retained Balance”) in an amount equivalent to $250 per unit to use for project purposes.  HUD will consider approving requests for releases from the account in accordance with the outstanding procedures found in the HUD Asset Management Handbook 4350.1.

To the extent that Residual Receipts are available at a new regulation project, Residual Receipts funds in excess of the Retained Balance may be used to fund a Service Coordinator Program prior to offsetting Section 8 HAP payments.

Residual Receipts account balances in excess of $250 per unit must be applied on a monthly basis to offset Section 8 HAP payments up to the full amount of the monthly subsidy request, depending upon the amount of Residual Receipts available for the offset. Monthly offsets must continue until the Residual Receipts account reaches the Retained Balance level of $250 per unit.

Owners of projects with Residual Receipts account balances at or below the Retained Balance shall voucher for full monthly HAP payments through the Tenant Rental Assistance Certification System (TRACS) in accordance with existing procedures.

At the end of the project’s fiscal year, all surplus cash remaining after payment of  any permissible distributions must be deposited into the project’s Residual  Receipts account.

If, after all Residual Receipts have been applied to offset Section 8 HAP payments and the Residual Receipts account balance again exceeds the Retained Balance level of $250 per unit due to an annual deposit of surplus cash, offsets of Section 8 HAP payments must be re-initiated.

In order to accomplish the Offset Process, project Owners must submit a miscellaneous payment request through the Contract Administrator along with their electronic monthly HAP voucher.  The request must include :  (a) the amount of the offset, expressed as a negative amount and (b) the text phrase “RR OFFSET” in the comment field, along with the actual offset amount inserted. When making the miscellaneous payment request, Owners must simultaneously submit form HUD-9250, Funds Authorizations for Use of Reserve for Replacement or Residual Receipts, to the HUD Field Office as  documentation of the offset.

Prior to the first required offset of Residual Receipts, the Hub/PC shall notify the PBCA or TCA at least 45 days in advance of the proposed effective date of the offset

Please note that additional instructions to owners, PBCAs, TCAs, Field Offices, and HUD HQ for the Residual Receipts offset process for new regulation properties are included in the Notice.

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