NAHRO Provides Supplementary Instructions to Help PHAs’ 2012 NRA Offsets

On Friday, January 13, 2012, HUD’s Financial Management Division (FMD) sent an e-mail to PHAs titled, “Impact of Over-Leasing on Net Restricted Assets (NRA) Balances!”  HUD’s e-mail only pertains to PHAs that were over-leased in CY 2010 and/or CY 2011. 

For the purpose of HUD’s guidance, the term “over-leasing” means unit months leased (UMLs) that exceed a PHA’s authorized unit months available (UMAs) under ACC over twelve months of a given calendar year.  For PHAs that were over-leased in CY 2010 and/or CY 2011, HUD’s e-mail provided the steps PHAs must take by Close of Business on Friday, January 20, 2012. NAHRO’s detailed step-by-step instructions to assist PHAs in utilizing eligible non-Federal funds for zero HAPs and negligible HAPs to remedy over-leasing in CY 2011 and CY 2010 is available at:  http://www.nahro.org/remedy-phas-projected-over-leasing-cy-2011

HUD FMC’s e-mail states, “PHAs are prohibited from using budget authority provided for HCVP housing assistance payments (HAP), and any resulting NRA, to over-lease as described above.  As a result, any costs associated with over-leased unit months that have been paid from HAP funds are disallowed and deducted from the PHA’s total HAP costs, thereby increasing the calculated NRA balance.  HUD calculates the disallowed costs on the basis of the PHA’s actual average per unit cost (PUC) for the period.” 

In response to HUD’s recent letter advising PHAs of their projected NRA balances and CY 2012 offsets / cuts for the Housing Choice Voucher Program (based only on data through September 2011), several PHAs contacted the Department concerning the treatment of over-leasing costs in HUD’s calculation of the NRA balances.  Some PHAs requested that the reduced UMLs and corresponding zero HAPs and negligible HAPs paid from other eligible non-Federal sources for CY 2010 and/or CY 2011 be considered in HUD’s final calculations of NRA as of 12/31/11, rather than the average HAP cost of all vouchers as is currently the case.  To this end, HUD provided another opportunity for PHAs to avail themselves of the opportunity (as described in NAHRO’s supplementary instructions above) and to report this information to the FMD via e-mail by Close of Business on Friday, January 20, 2012 as stipulated in HUD’s January 13^th e-mail message.  Reporting this information to HUD via e-mail is still necessary, even if a PHA had already previously reported this over-leasing information and use of eligible non-Federal funds to HUD via VMS for CY 2010 and CY 2011.

Repeated in several sections of HUD’s e-mail, PHAs that undertake the remedy of over-leased UMLs in CY 2010 and/or CY 2011 and report it to HUD FMD via e-mail by Close of Business on Friday, January 20, 2012, will result in a change to their NRA balance as of 12/31/11 that will be used in HUD in their calculation of the agency’s CY 2012 NRA offset / cut.  However, it will not affect HUD’s calculation of PHAs’ CY 2012 HAP renewal eligibility.  Nevertheless, for PHAs that were over-leased in CY 2010 and/or CY 2011, reducing the amount of “excess” NRA that would otherwise have been unnecessarily offset / cut from them in 2012, will have a significant impact on the overall funding available to serve their communities in 2012 and beyond. 

If you have any questions about this matter, HUD encourages PHAs to contact their assigned Financial Analyst at the Financial Management Center.   NAHRO members with questions may e-mail Jonathan Zimmerman at jzimmerman@nahro.orgor call him at 877-866-2476 ext. 7213.