HUD webcast and Notice
address 2005 Section 8 Funding

Agencies will be provided
2005 renewal amount by December 17

In a webcast and in PIH Notice 2005-1, HUD explained how it plans to implement the 2005 Appropriations Act's Housing Choice Voucher provisions. Renewal funding will be based on the average per unit cost and the average number of units leased during the May/June/July, 2004 period times the annual adjustment factor with additional amounts made available for enhanced or tenant protection vouchers.

Agencies will be provided with this renewal funding amount, and an explanation of how it was calculated, by email from the Department on or about December 17, 2004. HAs will then be given 10 calendar days to review HUD's calculations and provide documentation for any corrections they believe are justified. The January allocation will be based on this original calculation. On or about January 21, 2005, agencies will be provided with a final renewal funding amount taking into account any alterations approved by the Department.

If the 2005 appropriation is inadequate to fund the nationwide amount derived through this formula, each agency's allocation will be prorated down. Similarly, if there is additional money available after each agency has been provided its renewal amount, it will be distributed nationally on a prorate basis.

The 2005 funding will be monitored on a calendar year basis. Thus, regardless of their fiscal years, agencies will account for 2005 funding based on the calendar year from January 1, 2005-December 31, 2005. Agencies must be careful, then, to monitor their Section 8 spending in the context of this calendar year period.

Overleasing is prohibited once again in the 2005 appropriations act, and it appears that whether or not an agency overleases will also be evaluated using this 12 month period. HUD announced that it would soon issue another notice which will explain how to handle accounting issues which may arise for agencies whose fiscal years do not correspond with the January 1, 2005-December 31, 2005 period.

HUD officials made very clear that the final renewal funding amount agencies are notified of January 21, 2005 will be the total amount of funding they will receive for the 2005 calendar year. There will be no central fund available for additional leased units as there was in 2004, nor will there be an appeal process available to request a greater inflation factor than the annual adjustment factor. There will be no replenishment of reserves. According to HUD, agencies will be expected to manage their program for that amount regardless of their individual circumstances. Should they need more than 1/12th of their annual funding during the first few months, however, HUD will be flexible in permitting a larger drawdown at first to help agencies deal with costs which may exceed funding as they prepare to reduce their expenses.

Reserves will be reduced to the one-week level in order to help pay for the $1.5 billion rescission in the bill. Although the Department did not give a specific date when it would recapture these reserves, it did announce that it could do so at any time.

Administrative fees will be distributed on a pro rata system based on each agency's eligibility in 2004. An additional $25 million will be available for extra costs, such as hard to house fees, homeownership costs and lead paint testing and assessment.

The complete notice can be accessed via the PHADA website. PHADA will also report further on this matter in the next Advocate.

PHADA FRONT