U.S. Department of Housing and Urban Development

H O U S I N G

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Special Attention of: Notice H 94-78 (HUD)

Regional Directors of Housing Issued: 9/29/94

Directors of Housing Development Expires: 9/30/95

Directors of Housing Management
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Chief Loan Management Officers Cross References:

HUD Handbook 4350.6

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Subject: Section 8 Rents that Exceed 120 percent of the Fair

Market Rents in Low Income Housing Preservation and

Resident Homeownership Act (LIHPRHA) Projects

This Notice sets forth amended processing instructions for

setting rents in Plans of Action for LIHPRHA projects.

In an August 15, 1994, memorandum, Monica H. Sussman, Deputy

General Counsel for Programs and Regulations, addressed the issue

of approving a LIHPRHA Plan of Action where the Gross rents are

under the Federal Cost Limit, but the Section 8 rents needed, on

a unit-by-unit basis, exceed 120 percent of the Section 8 Fair

Market Rents (FMRs). In view of the alternatives proposed in the

memorandum, it has been determined that the rents should be

calculated in accordance with the instructions published

January 7, 1993, in HUD Handbook 4350.6, Processing Plans of

Action under the LIHPRHA Act of 1990. This information is

located in Section VII E.3 of Appendix 8-1, Form HUD-50061,

Evaluation of Plans of Action for Incentives to Extend

Affordability, and should be used to make these rent

calculations. This decision is based on Section 219(a)(2)(A) and

\(B\) and related provisions of Title VI of the 1990 National

Affordable Housing Act.

Effective with this Notice, Field Office (FO) staff shall

consider any instructions received subsequent to January 7, 1993,

regarding calculation of rents exceeding 120 percent of FMRs as

inapplicable. Consequently, if a FO receives a LIHPRHA project

with unit rents above 120 percent of the FMRs, and the gross rent

potential is within the Federal Cost Limit, the FO has the

authority to approve such rents without the approval of

Headquarters.

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HMPPA : Distribution:
W-3-1,W-2(H),W-3(A)(H)(OGC)(ZAS),W-4(H),R-1,R-2,R-3,

R-3-1,R-3-2,R-3-3,R-6,R-6-1,R-6-2,R-7,R-7-1,

R-8-Special Distribution to Field Offices and State

Agencies

Previous Editions Are Obsolete HUD 21B (3-80)

GPO 871 902

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Please note that several revisions regarding other issues

are being made to the Form HUD-50061 and some will be published

with the revised Handbook 4350.6. If you have any questions,

please call Art Goldstein of the Preservation Branch in

Headquarters at (202) 708-1142.

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Nicolas P. Retsinas

Assistant Secretary for Housing

\- Federal Housing Commissioner

Housing Services Program\", replaces Chapters 2 and 4 of Handbook

4640.1, \"Monitoring and Technical Assistance Handbook for the

Congregate Housing Services Program\".

NOTE: HUD Headquarters recognizes that any instructions

referenced herein for the responsibilities of the

Field Accounting Division (FAD) and certain State

and Area Office responsibilities in processing

CHSP grants may have to be modified in Fiscal Year

1995, depending on the reorganization and the

manner in which the transition to the field

organization takes place. If necessary, there

will be appropriate modification to the procedures

stated in this Notice.

III\. DELEGATION OF CHSP GRANT PROCESSING TO HUD STATE

AND AREA OFFICES:

The administration of the CHSP grant process for HUD

and FmHA projects has been delegated to the State or Area Office

Director of Housing or Director of Multifamily, as appropriate,

with the assistance of the Directors of Public Housing/Native

American Programs Housing Management as needed.

The CHSP Grant Officer responsibility has been

delegated to the HUD Director of Housing or the Director of

Multifamily, as appropriate.

This responsibility is redelegable, if necessary, but

must remain within the Multifamily Division.

THE CHSP IS A HOUSING PROGRAM. THE CHSP GRANT OFFICER

RESPONSIBILITY MAY NOT BE DELEGATED TO THE OFFICES OF PUBLIC

HOUSING OR NATIVE AMERICAN PROGRAMS.

The CHSP Grant Officer ALSO may NOT serve as a

Government Technical Representative or Monitor (GTR/GTM).

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The following Grant Officer functions are CHSP

specific:

\- approving and executing all grant documents, and

any deviations therefrom and amendments thereto

for both HUD and FmHA grants; (negotiating budgets

may be delegated to CHSP GTRs).

\- Disseminating written instruction/information to

grantees; and,

\- the general administration of all grant awards

including monitoring the technical progress of the

grant with the HUD/FmHA GTR\'s assistance (see

Notice H-94-21 on CHSP monitoring requirements).

IV\. ANNUAL AND OTHER EXTENSIONS OF CHSP GRANTS:

A. GENERAL:

CHSP grants are normally extended indefinitely

under the same grant instrument and grant number. However, grant

extension processing procedures for grants funded under the CHSP

Act of 1978 may vary from those for grants initially funded under

Section 802 of the NAHA of 1993 because differences in the grant

extension periods necessitate different grantee submission

requirements.

CHSP grants are extended on a cost or no-cost

basis (or some combination thereof) for a specified period of

time, generally 12 months or longer. Cost extensions are for new

dollars when additional funding is required to meet the

associated grant costs; no-cost extensions utilize the grantee\'s

unexpended dollars from the prior grant period to meet associated

grant costs without the provision of additional new funding.

Cost/no-cost extensions use both leftover and new dollars. All

extensions will be in increments set by HUD Headquarters.

Grantees are normally instructed to request an

extension at the current operating level plus an inflationary

allowance. Additional funding above the inflation allowance may

be requested with appropriate justification.

B. PROCESS FOR ASSIGNING AND RESERVING EXTENSION

DOLLARS FOR PROJECTS FUNDED UNDER THE CHSP ACT OF

1978:

The GTR(s) must estimate the total amount of

dollars required to extend the grants in that office for each

year, based on currently approved grantee budgets. The base

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request is for continuation of the grants which will expire

during the calendar year, plus a HUD-approved inflationary amount

of approximately five percent (5%).

As CHSP is a Housing program, the Housing staff

must be responsible for submitting an aggregated fund assignment

request for both Housing and Public Housing/Native American CHSP

grants in that office to Headquarters.

The fund assignment process should proceed as

follows:

1\. Housing GTR(s) should jointly decide the

dollar estimate needed for the year by

totaling the annual dollar amounts of all of

his/her currently approved grantee budgets

and multiplying this sum times the

inflationary amount cited in the HUD annual

extension Notice.

2\. The Public Housing/Native American Programs

GTR(s) should provide this information as

appropriate to Housing.

3\. Housing will then prepare a memorandum from

the Director, Multifamily Housing Division to

the Services Branch, Office of Elderly and

Assisted Housing at Headquarters, to request

the Funds Reservation and Contract Authority

(HUD-185) for estimated dollars needed for

the extension of all CHSP grants in that

Field Office for the year. This memorandum

will list each grantee by name, grant number

and new dollars estimated.

4\. The Services Branch will request the

Headquarters Funding Control Division to

issue the appropriate HUD-185 assigning funds

to that State or Area Office within 30 days

of request.

5\. Housing staff must forward the HUD-185 to the

Field Accounting Division (FAD) to be filed.

NOTE: GTRs MUST complete this process

during the first quarter of the

fiscal year so that CHSP funds FOR

THE YEAR are assigned to offices

BEFORE individual grant extension

packages are scheduled for receipt

and processing.

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C. EXTENSION OF GRANTS FUNDED UNDER THE 1978 ACT:

1\. General:

Grants funded under the 1978 CHSP Act are

generally extended for one or more years at a

time. Each grantee must submit a complete

application for extension request to the GTR

for the continuance of funding for an

additional year; or, for multi-year

extensions, follow the instructions for

processing post-Fiscal Year 1993 grants in

Section D below.

2\. Grantee Actions for 12 Month Extensions:

Grantees must submit the extension package to

the HUD State or Area Office at least 60 days

before the expiration date of the current

grant period.

The grantee\'s extension request will contain

at least the following components, in such

form as HUD Headquarters may require in the

Field Notice for that year.

\- Transmittal Letter

\- Application For Federal Assistance (SF-424)

\- Budget Forms

\- Narrative documentation is also required

for major changes in the program service

levels or increases above the approvable

inflationary level.

\- Documentation Of Match For Next Funding

Period, if appropriate.

\- HUD-2880

\- Certifications, As Appropriate

\- Any Other Items Required

3\. Grantee Actions for Multi-year Extensions:

When multi-year grant extensions are in

place, grantees should not submit a complete

application for extension. They must only

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complete the processing in Section D below to

advise HUD whether the funds approved for the

coming year are sufficient or must be

modified.

4\. HUD State and Area Office Actions for 12

Month Extensions:

The HUD GTR must:

a\. Review the extension materials for

accuracy and consistency with Notice

instructions and request

corrections/resubmissions from grantees

as appropriate. Compare materials with

most recently submitted annual report

(HUD-90006) for consistency. Fourteen