U.S. Department of Housing and Urban Development

PUBLIC AND INDIAN HOUSING

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Special Attention of: Notice PIH 95-39 (HUD)

Public Housing Office Directors,

Native Americans Programs Office Issued: June 15, 1995

Directors, Public Housing Agencies Expires: June 30, 1996

and Indian Housing Authorities

Administering Section 8 Programs
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Cross References:

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Subject: Elimination of Selections from the Waiting List by

Unit Size in the Section 8 Rental Certificate and

Voucher Programs and Elimination of the

Specification of the Number of Units and Unit Sizes

in the Certificate Annual Contributions Contract

1\. Background and Purpose. Revised admission regulations

(24 CFR Part 982, Subpart E) for the Section 8 Rental

Certificate and Voucher program were published in the

Federal Register on July 18, 1994 and were effective on

October 18, 1994. The regulations provide that the

public housing agency or Indian housing authority (HA)

may not select a family from the waiting list based upon

the unit size for which the family qualifies.

In addition, HUD has issued a new consolidated

certificate and voucher Annual Contributions Contract

(ACC) which specifies the funding committed for each

increment of units. The total number of units and the

bedroom distribution are no longer specified in the

certificate ACC. All HAs will execute the new ACC the

first time funding is added or deleted from the ACC after

the date HUD Headquarters gives the HUD field office

authority to generate ACCs from CFS or HUDCAPS data.

Notice PIH 94-29 (HUD) dated May 29, 1994 provides

information on the new ACC.

This notice provides instructions on several areas that

have been affected by these revisions in the regulations

on admissions and the ACC.

2\. Selection of Families from the Waiting List and Issuance

of Certificates and Vouchers; Changing the Number of

Units and Bedroom Sizes Reserved by HUD. As previously

noted, the ACC will not reflect the number of units nor

the bedroom distribution for funding increments.

Instead, the number of certificates and vouchers that can

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PH : Distribution: W-3-1, W-2(H), R-6, R-7, R-9, 138-2, 138-3, 138-7

be issued by an HA will be determined by the amount of

funding that is available.

The Department is revising the financial management system (FMS)

software used in the Voucher Program so an HA can monitor its issuance

and usage of certificates and vouchers. The FMS will consider factors

that influence the amount of the certificate and voucher expenses such

as rent costs, payment standards, administrative fees, occupancy

rates, and amount of tenant contributions.

Until the FMS is revised, HAs should use the provisions outlined in

Notice PIH 94-50 (HA), dated August 1, 1994, in determining whether

sufficient funds are available to support the issuance of additional

certificates or vouchers. Approval from HUD is no longer necessary

for HAs to deviate from the number of certificate units and bedroom

sizes reserved by HUD and formerly designated in the certificate ACC.

3\. Budget Preparation. In completing lines 4 through 14 (total number
of

units and number of units by bedroom size) of form HUD-52672,

Supporting Data for Annual Contributions Estimates, HAs would consider

the family unit sizes currently under Housing Assistance Payments

(HAP) contract, the family unit sizes of outstanding certificates and

vouchers, the family unit sizes expected to be placed under HAP

contract from the waiting list, and the unit sizes of any

project-based certificate (PBC) units. (Family unit size is defined

as the appropriate number of bedrooms for the family based on the HA

subsidy standards (occupancy standards). In making this analysis, the

HA should consider the family unit size, not the actual unit size

leased which may be smaller or larger than the bedroom size upon which

the subsidy payment is based.)

It is very important that HAs carefully project a realistic unit count

by bedroom size since the budgeted number of units (total number of

units and units by bedroom size) will be used to assess program

performance, calculate certificate exception rent maximums and for a

number of other operational purposes. Field offices must carefully

review the HA estimate of total units and number of units by bedroom

size to ensure plausible projections based on the actual number of

units reported under lease/HAP contract and the actual number of unit

months on the HUD-approved year-end financial statements (lines 10 and

11 of form HUD-52681) and the projected lease-up based on the HA\'s

waiting list.

4\. Administrative Fees. Administrative fees will continue to be earned

on all units that are under a HAP Contract on the first day of each

month in the HA\'s fiscal year.

5\. Program Utilization Reporting. HAs submit form HUD-52683, Report on

Program Utilization, semi-annually to provide occupancy related

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information regarding the certificate and voucher

programs. HAs should enter the number of budgeted units from line 4

of the latest HUD-approved forms HUD-52672 for the certificate and

voucher programs on Line 1 of Parts II and III (number of units

authorized by ACC) of form HUD-52683.

6.Certificate HA-Approved 110% Fair Market Rent Exceptions. Chapter 7

of Handbook 7420.3 provides that HAs may approve initial gross rents

on a unit-by-unit basis that exceed the FMRs by up to 10 percent.

This authority has been limited to 20 percent of the units authorized

by the ACC. Field offices may authorize HA-approved 110 percent

exceptions for an additional 10 percent of the units, extending the

limit to 30 percent of the units authorized by the ACC. With the ACC

change, the 20 and 30 percent limitations will be applied to the

number of budgeted units on line 4 of the latest HUD approved form

HUD-52672 for the certificate program.

7.Application for and Approvals of New Units. HAs will continue to

apply for new units by submitting form HUD-52515, Application for

Section 8 Existing Housing. HAs should complete Section B, Proposed

Assisted Dwelling Units, based on the unit sizes required by the

families at the top of the waiting list using the HA\'s system of

Federal and local preferences or, if applicable, the unit sizes of

applicants likely to be selected from the waiting list based on the

nature of a set-aside. For example, families selected for a set-aside

for homeless veterans with severe psychiatric or substance abuse

disorders, homeless persons with disabilities, or the Hope for Elderly

Independence demonstration are likely to need efficiency or

one-bedroom units. Field offices will continue to approve and reserve

a specific number of units by bedroom size. The field office

notification of application approval must include the total number of

units reserved by bedroom size.

8.Renewal of Expired Funding Increments. Previously, the Department has

renewed funding for expiring certificate funding increments on a

unit-for-unit basis. Funding needs were calculated by field office

staff based on the total units and bedroom distributions of the

expiring funding increments. Beginning in Federal Fiscal Year 1995

(October 1, 1994), renewal needs for both expiring certificate and

voucher funding increments are based on the number of units initially

reserved and the proportion of budgeted units by bedroom size listed

on lines 6 through 14 of the most recent HUD-approved form HUD-52672.

Notice PIH 94-69 (HA), Processing Section 8 Renewal Projects - Fiscal

Year 1995, dated September 30, 1994 explains this process in detail.

9.Minimum Size for the Family Self-Sufficiency (FSS) Program. The

minimum size of an HA\'s FSS program will be based on the number of new

units reserved from

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allocations beginning in Fiscal Year 1993 and subsequent years and, if

applicable, from the Fiscal Years 1991 and 1992 FSS Incentive Awards.

The number of units reserved is contained in the HUD approval letter

for the application and in CFS and HUDCAPS. Units for renewals of

expiring funding increments are excluded from the FSS minimum program

size. An HA may also request an exemption to the FSS minimum program

size in accordance with Notice 93-57 (HA), dated October 29, 1993.

10.Project-Based Certificate (PBC) Program. Regulations provide that HAs

may choose to provide project-based assistance for up to 15 percent of

the Section 8 assistance under the certificate program. The current

regulations (24 CFR 882.702) state that this limitation applies to the

total number of units under the certificate ACC. Since the total

number of units is no longer specified in the ACC, the 15 percent

limitation now applies to 15 percent of the number of budgeted units

on line 4 of the latest HUD approved form HUD-52672 for the

certificate program.

It is recognized that the number of budgeted units may vary each year

and will decrease if the HA issues turnover certificates to larger

size families. Therefore, an HA may exceed the 15 percent PBC limit

when implementing the PBC program authorized by the HUD field office

because the number of currently budgeted units is smaller than the

number of budgeted units when the HA received authorization to

implement the project-based assistance. In such cases, the HA may

continue to execute Agreements for the HUD authorized number of PBC

units. However, requests for additional PBC units will not be

authorized by HUD until the number of PBC units previously authorized

falls below 15 percent of the currently budgeted units (the 15 percent

limit).

The current PBC regulations prohibit HAs from committing PBC

assistance for unit sizes and HAP contract terms inconsistent with the

ACC funding source. It is anticipated that the unit size limitation

soon will be eliminated from the PBC regulations and that HUD will no

longer review for (1) consistency between the PBC unit sizes and the

funding source unit sizes, nor (2) consistency between the PBC HAP

contract term and the funding source ACC term. Instead, when

approving the HAP contract term for PBC units, the HA must ensure that

the contract authority for the funding source exceeds the estimated

annual housing assistance payments for all tenant-based and

project-based HAP contracts funded from the funding source. It is

noted that Exhibit A of the new ACC form specifies the ACC term for

each certificate funding increment.

11.Summary of Substitutions for Number of Units or Bedroom Sizes in the

ACC.

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ITEM SUBSTITUTE FOR \# UNITS OR BR SIZES IN

ACC

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Certificate/Voucher Use Notice PIH 94-50 procedure until

Issuance FMS is revised

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Budget, Form HUD-52672, \# units under lease and \# unit months

Lines 4 - 14 on Lines 10 & 11 of the year-end

financial statement, form HUD-52681,

plus projected leaseup

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Program Utilization \# budgeted units on form HUD-52672,

Report, Lines 1 of Line 4

Parts II & III

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Certificate 110% FMR \# budgeted units on form HUD-52672,

Exceptions Limit Line 4

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Application for BR sizes at the top of waiting list

Units, Section B or BR size appropriate for set-aside

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Renewals \# units reserved plus the proportion

of budgeted BR sizes on form

HUD-52672, Lines 6 - 14

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FSS Program Size \# units (except renewals) reserved

since 10/92 plus any FY 91 and 92 FSS

incentive awards

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PBC 15% Limit \# budgeted units on form HUD-52672,

Line 4

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Joseph Shuldiner, Assistant

Secretary for Public and Indian

Housing

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\*U.S. Government Printing Office: 1995 \-- 387-734/20139