U.S. Department of Housing and Urban Development

Office of Public and Indian

Special Attention: **Notice PIH 98- 65 (HA)**

Secretary's Representatives, Issued: 12/30/98

State Housing, Public Housing Expires: 12/31/99

Agencies Administering

Section 8 Programs Cross References:

Subject: **Renewal of Expiring Contracts in the Section 8 Tenant-Based
Program During Federal Fiscal Year 1999**

1.  **[PURPOSE]{.underline}:** This Notice implements Section 556 of the
    Quality Housing and Work Responsibility Act (QHWRA) of 1998 which
    directs HUD to establish an allocation baseline amount of assistance
    and apply an inflation factor based on local or regional factors to
    the baseline. HUD will use the following methodology to allocate the
    amount of funding for renewal of contracts in the tenant-based
    Section 8 program.

2.  **[BACKGROUND]{.underline}:** Section 556(b) of the QHWRA requires
    HUD to implement section 8(dd) of the Housing Act of 1937 through
    notice not later than December 31, 1998, and to issue final
    regulations on this subject that are developed through the
    negotiated rulemaking process no later than October 21, 1999.

3.  **[APPLICABILITY]{.underline}:** This Notice will be in effect for
    the allocation of Federal Fiscal Year 1999 assistance used to renew
    funding increments expiring between January 1, 1999 and December
    31, 1999. HUD will develop a final rule implementing the
    requirements of Section 8(dd) through a negotiated rulemaking
    process in accordance with the statutory requirements of
    section 556. Calendar Year 2000 funding will be allocated in
    accordance with the negotiated rule to be effectuated.

4.  **[ELIGIBLE PROJECTS]{.underline}:** This Notice applies to the
    renewal of all expiring rental certificate and voucher funding
    increments administered by Public Housing Agencies (PHAs). This
    Notice does not apply to the renewal of expiring Mod Rehab funding
    increments or Housing Assistance Payment Contracts where contracts
    are extended 12 months or to Offices of Native American Programs and
    expiring Section 8 contracts administered by Tribally Designated
    Housing Entities.

5.  **[DETERMINING THE BASELINE UNITS]{.underline}:** The Department
    will determine the number of units leased on October 1, 1997 through
    information obtained from the administrative fee supporting
    documentation submitted by PHAs with the Form HUD-52681, Section 8
    Voucher for Payment of Annual Contributions and Operating Statement.
    Based on this information, HUD will compare the number of units
    leased to the number of units reserved for the funding increments
    under Annual Contributions Contract (ACC), on October 1, 1997. The
    number of units under ACC will be determined as follows: a query of
    HUDCAPS, the Department's automated accounting system, will provide
    the number of units under ACC as of October 1, 1997. HUD will add to
    that number, the additional authorized units as a result of HUD's
    review of leasing in excess of contract levels conducted in Federal
    Fiscal Year 1998 in accordance with letters sent to each affected
    PHA (see PIH Notice 98-22, Issued April 10, 1998). In establishing
    the baseline number of units to be renewed, HUD will use the higher
    of the number of ACC units or leased units, as of October 1, 1997.
    HUD will also add any additional units***,*** placed under ACC,
    which were awarded to PHAs from funding available during Federal
    Fiscal Year 1998, including incremental funding as well as
    non-incremental funding such as that awarded to sustain assistance
    to families pursuant to the conversion of project-based assistance
    to tenant-based assistance. HUD will also add the number of
    tenant-based units placed under ACC as replacements for expiring
    Moderate Rehabilitation Housing Assistance Payment Contracts.

6.  **[DETERMINING ANNUAL COST PER UNIT]{.underline}:** HUD will
    determine an actual per unit cost from the last year end statement
    that it has received from each PHA by dividing the total annual
    contributions earned by the unit months leased. HUD will apply the
    FY 1999 Section 8 Housing Assistance Payments Program Contract Rent
    Annual Adjustment Factors from Table 2, published in the [Federal
    Register]{.underline} on September 24, 1998, to inflate the per unit
    cost from 1998 to 1999. If the last closed year end is prior to
    1998, a factor of 2.5 percent will be used to inflate the per unit
    cost per year to 1998. The inflated, monthly per unit cost will be
    rounded and multiplied by 12 months. In addition, HUD will add \$5
    per unit to fund an estimated increase in the administrative fee
    authorized in the QHWRA.

7.  **[DETERMINING THE BUDGET AUTHORITY TO BE ALLOCATED]{.underline}:**
    The Department will take the number of units for each PHA which are
    expiring during Calendar Year 1999 and multiply them by the cost per
    unit determined in accordance with paragraph 2. Renewal funding
    sufficient to cover a 12 month term will be assigned quarterly for
    units expiring within each quarter (e.g., the fund assignment for
    the first quarter of CY 1999 will fund all units expiring from
    January 1, 1999 through March 31, 1999). In addition, the Department
    will fund the difference based on the comparison between the units
    under ACC, as noted in paragraph 1, and leased units as of October
    1, 1997 using the per unit cost in accordance with paragraph 2.

8.  **[RENEWAL FUNDING AVAILABLE]{.underline}:** The budget authority
    that will be allocated is subject to the availability of
    appropriations. HUD anticipates that sufficient funding is available
    to fully fund each PHA in accordance with this notice.

[/s/ Cheryl A. Teninga for]{.underline}

Harold Lucas, Assistant Secretary for

Public and Indian Housing