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How does the capital fund final rule affect PHAs? Part II

Posted by BEMuser on Aug 27, 2014 10:05:07 AM

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.

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!

Topics: Capital Fund, Final Rule, PNA, SEMAP

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