HUD Publishes Notice on Operating Reserve Offset Hardship Adjustments

On June 8, HUD issued PIH 2012-27 announcing the availability of set-aside funds for PHAs that experienced a financial hardship to the public housing operating subsidy allocation adjustment.  The FY 2012 Consolidated Appropriations Act allowed the HUD Secretary to set aside up to $20 million from the Operating Fund appropriation “to provide assistance to any [PHA] who encounters hardship as a direct result of an excess reserve offset.”  In order to qualify for these funds, a PHA must have had their CY 2012 subsidy reduced as a result of the offset and HUD must determine that the PHA’s operating reserves are less than the minimum level of operating reserves, defined as the equivalent of six months’ worth of operating expenses for agencies with fewer than 250 public housing units or four months’ worth of expenses for PHAs with 250 or more units.  

 

To calculate reserve levels, HUD will use data from the most recent audited or unaudited FDS approved by FASS as of June 15, 2012.  These financial statements will be for FYEs between June 30, 2010 and December 31, 2011.  PHAs will not be allowed to revise previously approved statements.  HUD will subtract the amount offset, as well as any exclusion requests that were approved under the process laid out in PIH 2011-55, from reserve balances as stated on the FDS.  In other words, if the amount of the offset is greater than the amount of “excess” reserves held by the PHA, the PHA is eligible to apply for set-aside funding.  Moving to Work (MTW) agencies are not eligible for set-aside funding. 

 

The amount that a PHA may be eligible to receive from the set-aside is limited to the lesser of the amount of the subsidy allocation adjustment, or the amount below the minimum reserve level. Those PHAs whose reserve balance is calculated to be below zero will be classified as Priority 1.  If total eligibility for Priority 1 funding is greater than the amount of the $20 million set-aside, HUD will provide funding for Priority 1 needs on a prorated basis with each PHA receiving a share of the funds proportionate to their eligibility.  If funding remains after all Priority 1 requests have been fulfilled, HUD will provide funding to Priority 2 agencies, defined as those whose operating reserve amount is below the minimum reserve level but greater than zero.    

 

HUD will email all agencies with FASS-approved financial statements to notify them of their eligibility to receive set-aside funding.  In addition, a tool with calculations for all PHAs will be posted online at http://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_housing/programs/ph/am/of/opfnd2012/allocationadjustment.   Eligible PHAs must then send an email indicating that the PHA received an allocation adjustment and is experiencing financial hardship directly related to adjustment and provide a narrative description of that financial hardship to 2012setaside@hud.gov, with a copy to their local Field Office Director, by June 29.  The description should provide sufficient detail to establish that a hardship exists and that the hardship is directly related to the allocation adjustment that the PHA received.  Agencies that have been designated as troubled must follow additional procedures, as outlined in the notice. HUD will notify each applicant of their eligibility and award amount by July 13. 

 

For more information or questions regarding this item, contact Tamar Greenspan (x7234), NAHRO’s Policy Advisor.