7485.3 G

CHAPTER 8. HUD RESPONSIBILITY: FUND RESERVATION AND

OBLIGATION

8-1. OBJECTIVE. The objective of this Chapter is to provide

instructions to HUD field staff on grant approval and fund

reservation and obligation. \[Sec.14(b)\]

8-2. HUD PREPARATION OF GRANT APPROVAL DOCUMENTS. Within 65 calendar

days of the date of HUD\'s receipt of the Comprehensive Plan or

Annual Submission for review, where the grant is being approved,

the FO shall prepare the following documents:

A. Approval Letter to HA, transmitting documents and, where

necessary, providing any non-binding advice and explaining

any notice of deficiency or corrective action order (see

paragraph 12-9). The letter also shall indicate whether HUD

or the responsible entity has complied with the

environmental requirements of 24 CFR Part 50 or, if not,

what activities the HA may not expend funds on until HUD has

notified the HA of compliance. See Appendix 5-2 for sample

FO approval letter.

B. Form HUD-52840 or Form HUD-52840A, Comprehensive Grant

Program Amendment. Prepare one Amendment for each grant

being funded; i.e., one Amendment for the current year

annual grant and another Amendment for any funding from the

\$75 million reserve for disasters and emergencies. The FO

Office of Public Housing (OPH)/Office of Native American

Programs (ONAP) shall prepare the Amendment, including

obtaining the Amendment number from HUD Counsel, who shall

concur in the Amendment. Refer to paragraph 8-3.

C. Form HUD-52540 (5/95), Project Accounting Data (PAD).

Prepare one PAD for each grant being funded; i.e., one PAD

for the current year annual grant and another PAD for any

funding from the \$75 million reserve for disasters and

emergencies. A sample Form HUD-52540 (5/95) is contained in

Appendix 8-1.

D. HUD Notification. Prepare one HUD Notification for each

grant, using the most recently issued format and

instructions from the Office of Congressional and

Intergovernmental Relations (OCIR).

8-3. COMPREHENSIVE GRANT PROGRAM AMENDMENT TO ACC. Form HUD-52840 or

HUD-52840A, Comprehensive Grant Program Amendment, requires low-

income use of the housing for not less than 20 years from the

date of the Amendment (subject to sale of homeownership units in

accordance with

8-1

7485.3 G

the terms of the ACC). It also includes by general reference an

developments eligible for CGP funding within the HA\'s inventory

and amends all consolidated ACCs of the HA. This coverage allows

the HA to shift funds among developments, including those under

different ACCS, during program implementation and negates the

need for a subsequent Amendment when adding or deleting

developments to or from the Annual Statement. The ACC Amendment

sets forth the amount of the annual grant and whether the HA\'s

use of the annual grant is subject to any corrective action

order. Form HUD-52840 (1/95) is used where the revised

Consolidated ACC has not been executed (see Appendix 8-2 for a

sample form). Form HUD-52840A (8/95) is used where the revised

Consolidated ACC has been executed (see Appendix 8-3 for a sample

form). \[\'968.3250) or \'950.656(i)\]

8-4. HUD GRANT APPROVAL AND FUND RESERVATION.

A. Assembly of Documents. Within 65 calendar days of the date

of HUD\'s acceptance of the Comprehensive Plan/Annual

Submission for review (assuming the Plan/Submission is

approvable), the FO shall prepare, assemble and route the

following documents to the OPH Director/ONAP Administrator

for approval:

1\. Original and two copies of the approval letter to the

HA;

2\. Original and three copies of the CGP Amendment;

3\. Original and one copy of the PAD;

4\. Original and one copy of the HUD Notification; and

5\. Original and one copy of the Annual Statement and the

Five-Year Action Plan.

B. Reservation Procedures. Reservation procedures differ

during the first eleven months of the FFY and the last month

of the FFY, with regard to the establishment of the

Notification Date.

1\. First Eleven Months of the FFY Procedures. During this

period, the Notification Date is the date the

transaction is recorded in the Program Accounting

System (PAS).

a\. FO. After the OPH Director/ONAP Administrator

signs the PAD, the FO shall forward the signed

PAD, together with a signed copy of the undated

approval letter, to the Field Accounting Division

(FAD).

8-2

7485.3 G

b\. FAD. The FAD shall ensure that funds for the

grant are reserved within 72 hours from the date

the reservation documents are received from the

FO. After reviewing the reservation documents for

correctness, the FAD (assuming the documents are

correct) enters the data into PAS. The FAD enters

the transaction entry date (the date data are

being keyed \-- month/day/year) as the transaction

effective date. After the date has been entered

into PAS, the FAD will review the computer-generated

transaction listing. If the grant

reservation has been accepted by PAS, the FAD will

then insert the effective date displayed on the

transaction listing on the PAD.

2\. Last Month of the FFY Procedures. During this period,

the effective date is the date the OPH Director/ONAP

Administrator signs the approval letter.

a\. FO. The procedures are the same as subparagraph

B1a, except that the approval letter is dated when

the OPH Director/ONAP Administrator signs it, and

the FO inserts that date on the PAD.

b\. FAD. The procedures are the same as subparagraph

B1b, except that the FAD enters the effective date

into PAS from the PAD and the FAD ensures that the

date on the PAD and the effective date on the

transaction listing are the same.

3\. FAD Confirmation. The FAD shall provide the FO with

confirmation of fund reservation through telephone,

electronic mail or a copy of the Acceptance Report,

generated by PAS.

8-5. HUD TRANSMITTAL OF HUD NOTIFICATION.

A. Upon notification from the FAD that the fund reservation has

been accepted by PAS, the FO shall transmit the HUD

Notification to OCIR by facsimile machine. The FO shall

note the actual date and time of transmission.

B. The FO shall announce the grant approval only after OCIR has

provided a release date. Where the FO has not been provided

a release date within three working days, the FO shall

contact OCIR to determine the status.

8-3

7485.3 G

8-6. HUD DISTRIBUTION OF APPROVED DOCUMENTS.

A. Grant Approval Documents. Immediately following receipt of

the release date, the FO shall arrange for the following

distribution:

1\. To the HA, the original of the approval letter, one

copy of the approved Annual Statement and Five-Year

Action Plan, and the original and three copies of the

CGP Amendment. Where the HA does not have access to

the Line of Credit Control System/Voice Response System

(LOCCS/VRS), the Departmental system for fund

requisitions, the FO also shall forward to the HA the

following forms necessary for access:

a\. Form HUD-27054, LOCCS/VRS Access Authorization,

for each new user. The HA shall send this form to

the FO for review. If correct, the FO shall

forward the form to: Department of HUD, Attention:

LOCCS Security Officer, P.O. Box 23774,

Washington, DC 20026-3774.

b\. SF-1199A, Direct Deposit Sign-Up Form, where the

HA wishes to change its bank account or where the

HA is currently receiving no grant funds from HUD.

The HA shall send this form to the FO for

verification. If correct, the FO shall forward

the form to: Department of HUD, Chief Financial

Officer, Office of Cash Management, Attention:

ACH, P.O. Box 44816, Washington, DC 20026-4816.

2\. To the FO program files, the original of all documents

submitted by the HA, including the approved Annual

Statement and Five-Year Action Plan, and one copy each

of the approval letter, the PAD, and the HUD

Notification for records purposes.

B. HA Action on CGP Amendment. The HA shall enter its tax

identification number (TIN) directly on the CGP Amendment

which will allow the CGP grant to be linked with established

banking information already in LOCCS. Where permitted by

State/tribal law and the HA\'s own by-laws, the HA Executive

Director may sign and return the original and three copies

of the CGP Amendment without Board Resolution; where not

permitted, the Board of Commissioners shall authorize,

through Board Resolution, the Board Chairman or the

Executive Director to sign the CGP Amendment.

8-4

7485.3 G

C. CGP Amendment. Immediately upon receipt of the signed CGP

Amendment from the HA, the OPH Director/ONAP Administrator

shall execute the CGP Amendment and arrange for the

following distribution:

1\. To the FAD, the original of the executed CGP Amendment

for purposes of entering the fund obligation into PAS.

After the FAD has entered the fund obligation into PAS

and linked to LOCCS and the FO has spread the grant in

LOCCS, the HA may draw down funds, when needed.

2\. To HUD Counsel\'s files, one copy of the executed CGP

Amendment for official Departmental records purposes.

3\. To the FO program files, one copy of the executed CGP

Amendment for records purposes.

4\. To the HA, one copy of the executed CGP Amendment for

records purposes.

8-7. DECLARATION OF TRUST. \[\'968.325(k) or \'950.656(k)\]

A. Promptly after grant approval, HUD Counsel shall ensure that

Form HUD-52190B, Declaration of Trust (non-Indian grants),

or Form HUD-52190C, Declaration of Trust (Indian grants),

covering all of the developments in the HA\'s inventory, is

in place or is current. As provided under the ACC, the

Declaration of Trust protects the rights and interests of

HUD throughout the 20-year period during which the HA is

obligated to operate its developments in accordance with the

ACC, the Act, and HUD regulations.

B. If a Declaration of Trust is not in place or is not current,

HUD Counsel shall advise the HA to execute and file for

record the Declaration of Trust and to provide HUD Counsel

with a copy as soon as it has been recorded. The

Declaration of Trust is updated only where there has been a

change, such as adding land through purchase, subtracting

land through disposition, restricting the property through

an easement, or, in rare cases, receiving a lien on the

property through HUD approval of additional debt.

C. HUD has determined that its interest in Mutual Help units is

sufficiently protected without the further requirement of a

Declaration of Trust. Therefore, a Declaration of Trust is

not required for Mutual Help units.

8-5

7485.3 G

8.8. SPECIAL REQUIREMENTS FOR HOMEOWNERSHIP DEVELOPMENTS. Refer to

paragraph 2-4.

8-9. SPECIAL REQUIREMENTS FOR SECTION 23 LEASED HOUSING BOND-FINANCED

PROJECTS. A Section 23 Leased Housing Bond-Financed project

(BFP) is eligible for modernization only ff the PHA determines

that the BFP has met all of the following conditions:

\[\'968.101(b)(3)\]

A. Bond Financing. The BFP was financed by the issuance of

bonds.

B. Clear Title. Clear title to the BFP will be conveyed to or

vested in the PHA at the end of the Section 23 lease term.

The Lease Agreement and Trust Indenture must provide that

title to the property will pass to the PHA at that time.

Based on title evidence, the PHA\'s attorney shall determine

whether the PHA is assured of obtaining good title under the

legal arrangements for the BFP and whether there are any

hens or encumbrances against the property junior to the bond

indenture.

C. No Initial Obstacles. Based upon a full review of the legal

documentation for the BFP, the PHA\'s attorney shall

determine that there are no legal obstacles affecting the

PHA\'s use of the property as public housing during the 20-year

period following the modernization. This review would

include any known pending or threatened litigation affecting

the BFP.

D. Useful Life. After completion of the modernization, the BFP

will have a remaining useful life of at least 20 years,

assuming timely maintenance and replacements, and it is in

the financial interest of the Federal Government to improve

the BFP.

E. Cooperation Agreement. The BFP is covered by a Cooperation

Agreement between the PHA and the local governing body

during the 20-year period of the modernization, assuring tax

exemption and provision of municipal services as in the case

of PHA-owned developments.

1\. If the BFP is not already covered by a sufficient

Cooperation Agreement, the PHA shall enter into a

Cooperation Agreement with the local government. In

such case, the Cooperation Agreement shall specifically

designate the BFP to which the exemption applies in a

manner that clearly indicates the real property covered

by the exemption (generally in the same manner used to

designate properties for local tax billing). If any

tax lien has been or may be

8-6

7485.3 G

attached to the property before execution of the ACC

Amendment, but covering taxes for any period subsequent

to execution of the ACC Amendment, the PHA\'s attorney

shall ensure (by specific provision in the Cooperation

Agreement or otherwise) that the lien of and liability

for the tax is released before execution of the ACC

Amendment.

2\. If the BFP is already exempt from real and personal

property taxes under State law, or under a Cooperation

Agreement that does not provide for Payments in Lieu of

Taxes (PILOT), the Cooperation Agreement shall not

include any provision for PILOT. If the BFP is already

exempt from taxation under a Cooperation Agreement that

provides for PILOT, the Cooperation Agreement may

include provision for PILOT, but not to exceed the

amounts required under Section 6(d) of the Act.

8-7