Capital Fund Rule – §905.400 (Subpart D)

1. Capital Fund Rule – §905.400 (Subpart D) PART 400 §905.400 Capital Fund Formula (Including RHF, DDTF )

2. § 905.400 Capital Fund Formula Reconfiguration of Units Capital Fund Rule – §905.400 (Subpart D) • Reconfiguration (conversion of units) causes the PHA’s formula share to be calculated based on the count of existing units after the reconfiguration • The purpose of this provision is to clarify HUD’s policy as it has consistently been implemented • It was never the intent of the formula calculation to fund the modernization needs or administrative costs of units that no longer exist as a result of conversion

3. § 905.400 Capital Fund Formula Replacement Housing Factor (RHF) Capital Fund Rule – §905.400 (Subpart D) • Provides up to 10 years of funding for units removed from a PHA’s inventory due to demolition or disposition prior to September 30, 2013 • 2 five year increments of funding • Calculation: Capital Fund Formula share without the reduction of units due to demo/dispoless Capital Fund Formula share with the reduction of units due to demo/dispo

4. § 905.400 Capital Fund Formula Replacement Housing Factor (RHF) Capital Fund Rule – §905.400 (Subpart D) • RHF funding is awarded annually as a separate grant in addition to the Capital Fund formula grant • RHF grants can only be used to fund replacement housing in accordance with the PHA’s HUD Approved 5 year Plan • RHF Accumulation • Up to 5 consecutive years of first or second increment RHF funding can be accumulated with a HUD Approved RHF Plan

5. § 905.400 Capital Fund FormulaRHF Eligibility Capital Fund Rule – §905.400 (Subpart D) • PHAs that remove units on or before 6/30 of the previous FY are reviewed for RHF eligibility • Units ineligible for RHF • PHAs receive RHF funding for eligible units for up to 5 years of first increment. • After the fifth year of first increment funding, PHAs can receive an additional 5 years of funding for eligible units as second increment RHF grants, if the planning, leveraging, obligation, and expenditure requirements are met.

6. RHF Obligation and Expenditure Requirements Capital Fund Rule – §905.400 (Subpart D) • RHF grants must be 90 percent obligated within 24 months from the date the funds become available if there is no accumulation • Accumulated grants all have the same obligation end date. • The obligation end date can be set as late as 120 days plus 24 months after the funds became available for formula grants for the last year RHF is being accumulated • RHF grants must be expended within 48 months from the date the funds become available if there is no accumulation • 120 days plus 48 months for accumulated grants • If RHF funds are not obligated or expended within the established timeframes, the unobligated or unexpended balance will be recaptured.

7. Capital Fund Rule – §905.400 (Subpart D) § 905.400 Capital Fund Formula Demolition and Disposition Transitional Funding (DDTF) • Provides 5 years of funding for units removed from a PHA’s inventory due to demolition or disposition on or after 10/1/13 • PHAs that remove units due to demo/dispo are automatically eligible unless they reject the funding in writing.

8. Capital Fund Rule – §905.400 (Subpart D) § 905.400 Capital Fund Formula Demolition and Disposition Transitional Funding (DDTF) • The funding will be included in the PHA’s annual Capital Fund Formula Grant (not given as a separate grant) • As a result, PHAs will be unable to accumulate grants • Accumulation is no longer necessary as a result of the expansion of eligible activities • The PHA may use the funding for any eligible activities under the Capital Fund Program (905.200) • The funding must be obligated and expended in accordance with the requirements of the Capital Fund formula grant in which the funding has been included. • 24 months to obligate 90 percent • 48 months to expend 100 percent

9. Capital Fund Rule – §905.400 (Subpart D) § 905.400 Capital Fund Formula RHF vs DDTF - Major Changes

10. Capital Fund Rule – §905.400 (Subpart D) § 905.400 Capital Fund FormulaRHF Transition • PHAs that removed units from inventory on or after October 1, 2013 will receive 5 years of DDTF and will not receive any RHF funding for those units • PHAs that received years 1-4 of first increment RHF funds in FY 2013 will receive RHF grants for the remaining years of the first increment grants • PHAs that received years 6-9 of a Second Increment RHF Grant in FY 2013 will receive the remaining years of the Second Increment Grants.

11. Capital Fund Rule – §905.400 (Subpart D) • Clarification on payment of Capital Funds for Units after Reconfiguration • Creation of the Demolition and Disposition Transitional Funding (DDTF) • RHF Transition for PHAs that began receiving RHF in FY 2013 and prior MAJOR CHANGES PART 400 §905.400: Capital Fund Formula

12. Capital Fund Rule – §905.400 (Subpart D) • PART 400 • General Questions: • Q1 For asset-management PHAs, is it true that 10% of a Capital Fund grant can be used for administrative costs and 3% of a Replacement Housing Factor (RHF) grant can be used for administrative costs, and that the limit on RHF can be amended for up to 6%?

13. Capital Fund Rule – §905.400 (Subpart D) • PART 400 • General Questions: • Q2 For asset-management PHAs, are PHAs permitted to draw down the entire 10% of a Capital Fund grant that can be used for administrative costs and 3% for Replacement Housing Factor funds when they receive the budget?

14. Capital Fund Rule – §905.400 (Subpart D) • PART 400 • General Questions: • Q3 For asset-management PHAs, what are the exceptions for increasing the administrative costs up to 6% when RHF funds are involved?

15. Capital Fund Rule – §905.400 (Subpart D) • PART 400 • General Questions: • Q4 If you are applying for a RAD conversion, are the upfront costs allowable? If so, to which Capital Fund BLI should these expenses be charged? For example, some of the costs are for the application and some maybe for training of staff on a different platform. 

16. Capital Fund Rule – §905.400 (Subpart D) • PART 400 • General Questions: • Q5 How will DDTF be determined for PHAs that removed units in FY 2014?

17. Capital Fund Rule – §905.400 (Subpart D) § 905.400 Capital Fund Formula RHFTransition

18. Capital Fund Rule – §905.400 (Subpart D) • PART 400 • General Questions: • Q6 Will PHAs currently receiving RHF receive all 10 years of funding?

19. Capital Fund Rule – §905.400 (Subpart D) • PART 400 • General Questions: • Q7 Will the eligible activities of the RHF grants that currently exist be expanded once DDTF is implemented in FY 2014?

20. Capital Fund Rule – §905.400 (Subpart D) • PART 400 • General Questions: • Q8 Will PHAs be limited to using DDTF funding for modernization only?

21. Capital Fund Rule – §905.400 (Subpart D) • PART 400 • General Questions: • Q9 Will PHAs need to submit a plan similar to the RHF plan for DDTF grants?

22. Capital Fund Rule – §905.400 (Subpart D) • PART 400 • General Questions: • Q10 Does DDTF have to be included in the PHAs 5 year action plan?

23. Capital Fund Rule – §905.400 (Subpart D) • PART 400 • General Questions: • Q11 How should FOs handle 2nd increment plans submitted by PHAs requesting to accumulate FY 2014-2018?