**Fiscal Year 2007 Capital Fund Grants Processing Guidance**

**Overview.** This guidance provides public housing agencies (PHAs) and
HUD Field Offices with information and procedures for processing the
Fiscal Year (FY) 2007 Capital Fund Program grants. The Department will
not be funding the Public Housing Assessment System (PHAS) bonus reward
for High Performer in FY 2007. The PHAS Bonus that would have been
awarded in FY 2007 will be given out to PHAs in

FY 2008. The Department required for the first time that executive
directors of PHAs or an authorized subordinate staff person to certify
to the accuracy of the building and unit data in the Public and Indian
Housing Information Center (PIC) system used to calculate the formula
for allocating Capital Fund grants. PHAs can no longer accumulate
Capital Fund grants in a replacement reserve account, budget line item
(BLI) 1490. PHAs that have funds in BLI 1490, replacement reserve, must
move expediently to obligate and expend these funds.

-   [**FY 2007 Capital Fund Formula Calculation**](#calc1)

-   [**Certification of Accuracy of Data in the PIC**](#cert2)

-   [**High Performer Performance Reward**](#high3)

-   [**FY 2007 Capital Fund Distribution**](#dist4)

-   **[Consequences for Failure to Submit ACC Amendments](#fail5)**

-   [**Accumulation of Replacement Reserves Not Allowable**](#resr6)

-   [**Obligation and Expenditure Deadlines and Sanctions**](#obli7)

[]{#calc1 .anchor}FY 2007 Capital Fund Formula Calculation. The Capital
Fund formula was calculated in accordance with the regulation found at
24 CFR Section 905.10. It was computed based on data on buildings and
units as reported in the PIC system as of September 30^th^ of the prior
fiscal year which is "the reporting date" designated by HUD. PHAs are
required to maintain accurate PIC data. The Capital Fund will be
calculated using PIC data as of September 30th each year unless
otherwise directed.

[]{#cert2 .anchor}**Certification of Accuracy of Data in the PIC.** In
FY 2007, for the first time the Department required executive directors
of PHAs, or an authorized subordinate staff person, to certify to the
accuracy of the building and unit data for the PHA in PIC. The certified
data in PIC is the data the Department uses to calculate the formula for
allocating Capital Fund grants. For this year's funding, PHAs were
required to complete the data certification process. This process of
certifying building and unit data will be required annually in the
future. For more information see the HUD website and PIH Notice
2007-13(HA)).

[]{#high3 .anchor}**High Performer Performance Reward**. In FY 2007, the
Capital Fund grant(s) for PHAs that are High Performers will be
approximately 3 percent less than the amount received in FY 2006 since
the performance reward will not be included. In addition, there are
other factors that can affect the final grant amount such as the
location factor, and unit inventory changes. For PHAs that are Standard
Performers, the Capital Fund grant(s) will increase slightly. (To view a
copy of the Assistant Secretary's July 27, 2007 letter to executive
directors on this subject go to the HUD website.) For a more detailed
description on how and when bonuses will be funded see the executive
director's letter from Deputy Assistant Secretary Dominique Blom.

[]{#dist4 .anchor}**FY 2007 Capital Fund Distribution.** HUD prepares
the ACC Amendment(s) for each grant. As in prior years, the ACC
Amendments for the Capital Fund grants will be made available
[electronically]{.underline} on the HUD website, at:

**<http://www.hud.gov/offices/pih/programs/ph/capfund/index.cfm>[.]{.underline}**

We recommend that you bookmark this link for future reference. The
Department is also sending each PHA an email (based on PHA email
addresses in the PIC system) with the link to this website indicating
the date the ACC Amendments will be available. The website will have a
schedule of all actions PHAs and HUD Field Offices must take with regard
to FY 2007Annual Capital Fund grants.

In addition, the Department has posted a timeline on the HUD website,
which establishes the date [all]{.underline} ACC Amendments are to be
received by the local HUD Office and a single date for the local HUD
Office to execute [all]{.underline} ACC Amendments.

In some instances, a PHA may have as many as three grants and,
therefore, three ACC Amendments (e.g., an Amendment for the formula
grant, an Amendment for the first increment RHF grant, and an Amendment
for the second increment RHF grant). The above website also has a
listing of PHAs that are eligible to request a second increment of RHF
funding for tiers that begin second increment this year. An approved
second increment RHF plan including these tiers is required to receive
second increment RHF for the affected units.

[]{#fail5 .anchor}**Consequences for Failure to Submit ACC Amendments
On-time**. Since the Department obligates funding for all 3,138 PHAs
across the country at one time, it is imperative that all PHAs follow
the timeline provided by HUD. Therefore, it is critical for PHAs to be
responsible for (1) retrieving all the PHA's ACC Amendments from the
website, (2) signing and dating the ACC Amendments, and (3) ensuring
that the ACC Amendments are received in the local HUD Field Office by
the deadline date. The ACC Amendment must have an original signature and
date; therefore, fax copies of the ACC Amendment(s) s are not an
acceptable submission.

If the Field Office does not receive a PHA's ACC Amendments, [signed and
dated]{.underline} by the executive director or person designated to act
on behalf of the executive director by the deadline, the PHA will not be
able to receive their Capital Fund grant(s) immediately. PHAs whose
grants are submitted to the Field Office after the deadline will receive
funding at a later date, however, the obligation start and end dates
will remain the same.

[]{#resr6 .anchor}**Accumulation of Replacement Reserves Not
Allowable.** PHAs no longer have the statutory authority to accumulate
Capital Fund grants in a replacement reserve. Consequently, PHAs that
have funds in BLI 1490, replacement reserve, must move expediently to
obligate these funds. The PHA should have as its primary objective to
obligate and expend the funds for the intended purpose as previously
described in its PHA Plan. If the PHA is not able to use the funds
accumulated in the reserve for the purpose originally intended, the PHA
should revise its Annual PHA Plan and use the funds for other eligible
activities in the approved Five Year Action Plan.

[]{#obli7 .anchor}**Obligation and Expenditure Deadlines, Sanctions and
Penalties.** The Capital Fund obligation and expenditure requirements
are found at 24 CFR Section 905.120. Failure to comply with these
requirements will result in the imposition of sanctions as further
described in that section. PHAs are required to report their obligation
and expenditures in the LOCCS every month for each open grant or grants
that have not been audited.

The obligation deadline for a Capital Fund grant may be extended only
upon approval of the Secretary, Deputy Secretary or Assistant Secretary.
See the website for a discussion of the criteria for extensions of the
obligation deadline and the process for requesting such an extension.