HUD explains 2005
Section 8 funding notification

HAP amount does not use actual AAFs; administrative fee reductions reflect additional demands on appropriated funding

In a conference call with PHADA and other industry groups, HUD staff answered questions concerning the December 17 letter sent by David Vargas, Director of the Housing Voucher Program, to Executive Directors describing how HUD intends to calculate the 2005 housing assistance payment (HAP) contract renewals and administrative fees.

HAP Contract Renewals
HUD explained that the December 17 letter is not intended to provide agencies with an exact amount of their 2005 HAP, but rather to show agencies the data the Department uses to calculate this HAP amount. HUD declared it would post this clarification on its website and possibly send a confirming fax.

For most agencies, this data will be their voucher utilization and expenses during the May/June/July 2004 period. If agencies find discrepancies in these numbers in comparison with their own data, they must send a letter using overnight mail to HUD with documentation by close of business Monday, December 27. PHADA and other groups requested that HUD extend the deadline, but HUD responded that it had little latitude under the statute.

The HAP amount in the letter is not 100 percent accurate, according to HUD staff, because the Department used a weighted annual adjustment factor (AAF) rather than the actual AAFs which it has posted on its website.

In addition, the Department has applied a proration, lowering an agency's HAP. The industry groups were not provided an exact proration number, but were told it was between 97.5 and 98.6 percent.

Without knowing the exact AAF and the exact proration, it is impossible for agencies to tie the HAP amount provided by the Department with its May/June/July data. At present, the Department provided number is only a projection which according HUD should not change more than 2 percent one way or another when the final calculation is provided authorities January 21.

If the voucher utilization and cost information supplied by the Department in the December 17 letter is incomplete or inaccurate, though, agencies should submit a request for a data adjustment by close of business December 27.

Administrative Fees
Many agencies are concerned by the amount their administrative fee payment has decreased. The reduction is larger than was anticipated when the 2005 appropriation was approved. HUD stated that there were two reasons explaining why there is less money overall, leading to administrative fee declines larger than anticipated.

The first is that several Moving To Work (MTW) agencies whose administrative fees were paid out of the HAP allocation in 2004 have to be paid out of the administrative fee allocation in 2005 because of changes to their contracts. Secondly, HUD has held back approximately 3 percent of the administrative fee appropriation to take care of possible adjustments. If these adjustments prove unnecessary, the 3 percent will be distributed pro rata to all housing authorities in the January 21 funding announcement. Thus, it appears possible that HAs will see at least a slight increase in their administrative fee funding at the time of this notice.

PHADA FRONT