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

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.

What do I need to know about changes to mixed-finance requirements?

The capital fund final rule requires submission of evidentiary documents for mixed-finance projects at HUD's discretion. It also eliminates the requirement for a separate waiver to use identity of interest approvals as part of the development process. Separate waivers are no longer required.

And energy efficiency?

The rule puts into regulation that Energy Star appliances are eligible capital fund costs. It also implements the 009 Energy Conservation Code (IEDD) or ASHRAE standard 90-1-2010 for multifamily highrises (four stories or higher, which is consistent with the standard used in over 40 states throughout the U.S.). Accordingly, all modernization projects must be designed and constructed with cost-effective energy conservation measures identified in the PHA's most recently updated energy audit. PHAs must purchase appliances that are Federal Energy Management Program (FEMP) or Energy Star-designed products, although exceptions will be given if the purchase of these appliances is not cost-effective.

While public housing funds may not be used to pay for housing construction costs (HCCs) and community renewal costs in excess of the total development cost (TDC) limit, under the final rule, PHAs may request a TDC exception for integrated utility management, capital planning, and other capital and management activities that promote energy conservation and efficiency.


We hope that this summary helps to make the capital fund final rule more understandable. For more information about the provisions of the final rule, our Capital Fund Program seminar provides an in-depth look. You can also access the final rule in the Federal Register here.

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.

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