NMA Blog

This week on the physical needs assessment (PNA) web page, HUD posted a report to Congress on the status of the PNA proposed rule. This week’s report, dated July 2015, follows HUD’s first PNA progress report issued in 2014. Congress directed HUD to expand upon the 2014 report to implement more detailed requirements for the PNA, specifically to:

• Assess how the specific aspects of the PNA tool compare to PNAs utilized by HUD’s Office of Multifamily Housing, and by unassisted housing managed by PHAs
• Review if all data sought by the proposed PNA are necessary or if simplification of the tool makes sense from an oversight and management perspective
• Reflect a department-wide effort to identify similar data collection requirements on PHAs to ensure no duplication or overlapping of requirements
• Determine if the objective of the PNA can be achieved by alternative means such as, but not limited to, collection as part of HUD’s Line of Credit Control System, or the acceptance of multiple formats.

The PNA proposed rule was published in July 2011. Due to funding constraints impacting PHAs, HUD has delayed implementation of the rule and publication of a final rule. Since its 2014 report, HUD has decided not to require small PHAs (those with fewer than 250 public housing units under management) to perform a PNA. HUD has also decided to delay implementation of the more detailed energy audit standards to integrate with the PNA activity. The report concludes:

As demonstrated in both this report and our earlier report submitted in June 2014, the Department is working diligently to develop a PNA tool that provides the greatest value and the least burden to PHAs. The proposed PNA requirements for large PHAs are consistent with those required for other types of HUD assisted housing but are much less stringent. HUD has performed a comprehensive review of PNA/CNA and energy audit standards across the Department and has concluded that it is appropriate for public housing to employ a less burdensome PNA process because of the non-transactional nature of its use. The proposed rule nevertheless preserves baseline asset management principles inherent in standard industry PNA practices.

To stay updated, follow the #PNA tag to keep up with all related blog posts, or subscribe to the PIH Alert and receive a daily email with breaking news and analysis for PHAs and housing professionals. Does your agency need assistance with PNA planning and energy audits? NMA can help. Contact sales@nanmckay.com for details.

Last Friday HUD announced that it has scheduled the first in a series of trainings on the capital fund guidebook. Issued October 24, 2013, the capital fund program final rule:

• Combines the capital fund requirements for modernization and development into a single regulation
• Updates and streamlines many of the capital fund and development requirements
• Incorporates recent energy requirements
• Directs more funding toward modernization

According to the announcement, the two-day training will provide a comprehensive review of the guidebook, which has been in development for some time and has not yet been published. The training will be held at the Philadelphia HUD field office on July 22 and 23, 2015.

PHA staff should register for the training class in their specific region. Registration will be limited to one staff member per PHA and to PHAs within the region. Based on space availability, the class may be opened to additional staff and/or PHAs as able. Click here for additional information and to register for the training.

NMA can assist your agency with Green Physical Needs Assessments (GPNAs) and energy audits. For further guidance, don't miss our upcoming class this July 7–8 in Columbia, SC. Contact sales@nanmckay.com for details.

Yesterday Congressman Hal Rogers (R-KY), chairman of the House Committee on Appropriations, introduced an omnibus bill (H.R. 83) to wrap up all of the unfinished appropriations business for federal fiscal year (FFY) 2015. You can read the text of the HUD portion of the bill here (see PDF pages 38 to 55) and the HUD portion of the explanatory statement here. In brief, the bill provides the following amounts for the Department of Housing and Urban Development (HUD):

• Public housing operating fund: $4.4 billion, $40 million over the 2014 amount
• Public housing capital fund: $1.9 billion, no change from the 2014 amount
• Section 8 tenant-based vouchers: $19.3 billion, $127 million over the 2014 amount (This total includes funding for voucher renewals, tenant protection vouchers, administrative fees, and new vouchers for homeless veterans, nonelderly disabled families, and the family unification program.)

If approved by both chambers of Congress, the bill will raise the cap on the number of public housing conversions allowed under the Rental Assistance Demonstration (RAD) from 60,000 to 185,000, relax the flat rent requirements that were mandated under the 2014 appropriations act, and increase the cap on fungibility between public housing capital and operating funds. The bill also includes the following language regarding physical needs assessments:

The agreement prohibits HUD from requiring or enforcing the physical needs assessment (PNA) in fiscal year 2015. HUD is not, however, prohibited from continuing to work on a PNA tool that will help PHAs assess the physical quality of their public housing stock in a way that is not overly burdensome. HUD is expected to continue to evaluate the PNA tool and update its 2014 report to the Committees on Appropriations, as specified in the Senate report accompanying this act, no later than March 2, 2015.

Currently, much of the federal government is being funded under a continuing resolution (CR). That resolution will expire tomorrow, so the House likely will pass a new CR to give the Senate time to approve the omnibus bill.

To receive updates and analysis on the latest PIH news, subscribe to NMA’s PIH Alert and receive a daily email with breaking news and other important information for PHAs and housing professionals. Save 10% on your subscription when you order before January 1 during the NMA year-end sale!

This week on the physical needs assessment (PNA) webpage, HUD posted a report to Congress on the status of the PNA proposed rule. As part of the fiscal year 2014 appropriations act, Congress directed HUD to “take every possible measure to ensure that any new reporting requirements associated with the PNA process do not increase administrative burden on PHAs.” HUD was also directed to report on measures taken to relieve such burdens.

The PNA proposed rule was published in July 2011. Due to funding constraints impacting PHAs, HUD has delayed implementation of the rule and publication of a final rule. This week’s report examines the challenges of implementing the rule for PHAs, and details steps HUD has taken to reduce the associated burden. The report also emphasizes that HUD considers the PNA a baseline management tool necessary for long-term strategic planning and preservation of the PHA inventory, while providing data required for HUD’s program oversight and risk management. The report concludes:

HUD shares Congress’s concern for the burdens PHAs face. HUD engaged PHAs directly regarding the PNA initiative and believes that every practical and reasonable step to reduce administrative burden on PHAs are incorporated. HUD believes its appropriate balancing of the burden with its responsibility for capital fund program oversight results in value to the taxpayer and to the PHAs. HUD believes it is necessary to implement the final PNA and energy audit rule to strengthen public housing. Further delay represents a significant lost opportunity.

To stay updated, follow the #PNA tag to keep up with all related blog posts, or subscribe to the PIH Alert and receive a daily email with breaking news and analysis for PHAs and housing professionals. Does your agency need assistance with PNA planning and energy audits? NMA can help. Contact sales@nanmckay.com for details.

Late last year, HUD published the much-anticipated capital fund final rule in the Federal Register. Effective November 25, 2013, the new regulation combined and streamlined former capital fund program (CFP) requirements for rehabilitation and development into one comprehensive regulation.

It goes without saying that while much has remained the same, some significant changes have occurred, and understanding these changes is crucial for efficient and uniform program implementation and management. We hope that this blog series will provide you not only with an overview of the final rule, but also the answers to some questions you many have, and that it will ultimately help you navigate these changes.

• Part I: Background, and where to find the regulation
• Part II: Who does the rule apply to, and what are some of the major changes?
• Part III: What can CFP funds be used for?
• Part IV: What do I need to know about changes to mixed-finance requirements and energy efficiency?

Who does the rule apply to?

The capital fund final rule provides financial assistance to PHAs and resident management corporations (RMCs) to make improvements to develop public housing. It applies to all PHAs that have public housing units under the annual contributions contract (ACC).

What are some of the major changes brought about by the rule?

The main purpose of the rule is to provide a better understanding of program requirements for PHAs and residents to more effectively use capital funds, but there are several other changes brought about by the final rule as well. These include:

• Decoupling (separating) capital fund submission requirements from the larger PHA plan requirements
• Directing more funds towards modernization and maintaining the PHA's physical inventory, given our limited fiscal environment
• Simplifying mixed-finance requirements
• Incorporating HUD's energy efficiency strategic goals, and allowing total development cost (TDC) exception for cost-saving energy initiatives

Given these changes, what is the new process for submitting capital fund requirements?

Because the capital fund final rule decouples capital fund forms from the larger PHA plan submission, PHAs now submit their capital fund requirements with the ACC amendment. The final rule eliminates requirements to submit a preliminary budget, so there's only one budget submission. Additionally, the final rule enables PHAs to hold only one public hearing. All PHAs must complete a physical needs assessment (PNA).

These submission requirements apply to both qualified and non-qualified PHAs. The definition of qualified PHAs found at 24 CFR 903.3 is now the one used for the purposes of the CFP as per the capital fund final rule. Qualified PHAs are PHAs that administer 550 or fewer units (the sum of public housing units and vouchers under Section 8(o)) that are not designated as a troubled PHA under SEMAP during the prior 12 months. PHAs that meet this definition are not required to file the PHA annual plan.

Next week, we'll discuss what the CFP funds can be used for.

Kaylene Holvenstot has been a technical writer at NMA since 2008. She contributes to and edits NMA Master Books, seminars, and model policies while researching and analyzing the latest HUD guidance to ensure that all course material is always up to date and fully accurate.

NMA’s Capital Fund Program seminar provides you with the information you need to understand and accurately apply the capital fund final rule. Don't miss the upcoming session in Cincinnati this October — save 10% when you register before August 30!