7400.10

CHAPTER 8. RESERVATION PROCEDURES

8-1. GENERAL. The following two Department-wide automated accounting

systems are used to officially record the reservation and recapture

of program funds:

A. Assisted Housing Accounting System (AHAS)

The reservation and deobligation of program funds within the

Department\'s Assisted Housing Accounting System (AHAS) are

accomplished on the Assisted Housing Project Accounting Data

(PAD), form
[HUD-52540](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/52540.pdf)
(see Appendix 3). The PAD must be

completed for each action relating to the reservation, or

deobligation of units and/or contract and budget authority for a

project. The PAD is signed by the Regional Administrator or

Field Office Manager and, along with supporting documentation, is

transmitted to the Regional Accounting Division (RAD) in

accordance with Handbook procedures for the appropriate program.

Signature authority may be delegated to the level of the Housing

Development Division Director and the Housing Management Division

Director. This delegation of authority applies to signature of

the PAD only and should not be delegated below the level stated

here. The applicable Amendment Type and Subprogram

Identification codes to be used in preparing the PAD are included

with this Handbook (see Appendices 3.1 and 3.2). These codes,

however, may change each fiscal year. Therefore, the

Identification Codes included in the current fund reservation

notice on policies and procedures for the reservation of assisted

housing funds should be used. The remaining codes are listed in

the instructions for the PAD, form HUD-52540-A, Appendix 3.3.

The applicable codes on the PAD must be entered only in the boxes

provided for that purpose.

Reservation procedures differ during the first eleven months of

the fiscal year and the last month of the fiscal year, primarily

with regard to the establishment of the Notification Date of the

Notification Letter. (See paragraph 8-2 below)

B. Program Accounting System (PAS)

The reservation and recapture of Section 202 Loan Authority (for

the Elderly as well as the Non-Elderly Handicapped programs) is

recorded in the PAS by means of an approved form
[HUD-718](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/718.pdf)
(See

Appendix 6). The reservation of Section 202 Inspection Fees is

recorded in PAS from the approved HUD-185.1 and the reservation

of Section 202 Advertising Expenses is recorded from an approved

Advertising Order, SF-1143. The reservation and recapture of

Contract Renewals (Housing Vouchers, Existing Certificates, Loan

Management Extensions) and Moderate Rehabilitation - Single Room

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Occupancy (SRO) funding categories are accomplished in the PAS using

the modified PAD). The modified PAD complete with instructions and

the applicable codes for reservations in PAS are listed in Appendices

4, 4-1, and 4-2.

8-2. FIRST ELEVEN MONTHS OF THE FISCAL YEAR. During this period, the

Notification Date to be entered in Block 10 of the PAD is the date

the transaction(s) is recorded in the AHAS or the PAS, other than the

exception stated in paragraph A. below.

A. Date the Letter of Notification or Reservation Document was

Signed (Block 10 of the PAD). Block 10 of all PADs are completed

in accordance with outstanding PAD instructions provided in page

2 of 1 of the form HUD-52540-A, with the exception only to

termination actions in the AHAS for expiring funding increments

for Housing Vouchers, Existing Certificates and Loan Management

Extensions. In these situations, Field Offices should refer to

paragraph 8-4-A.2. of this Handbook.

B. Field Office (input to RAD). Upon determination that an

application or proposal is approvable, the Housing Development or

Housing Management Division Director, as appropriate, shall

complete the PAD and forward it to the Regional Administrator or

Field Office Manager for signature, as appropriate. The

originally signed PAD, together with a signed copy of the undated

Notification Letter, shall be transmitted to the RAD.

Reservation. The RAD shall ensure that funds for a project are

reserved within 24 hours from the date reservation documents are

received from the Field Office as follows:

1\. After reviewing, for correctness, the reservation documents

received from the Regional/Field Office, the RAD (assuming

the documents are correct) enters the data into AHAS and/or

PAS. The transaction entry date, the date data are being

keyed into the systems (month/day/year), is the Notification

Date. The RAD should return all incorrectly prepared

reservation documents (PADs and forms
[HUD-718](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/718.pdf))
to the

originator(s) for correction prior to processing.

2\. After the data has been entered into AHAS and/or PAS, the RAD

will review the computer-generated transactions listing. If

the project has been accepted by the AHAS or the PAS, the RAD

will then insert the Notification Date displayed on the

transaction listing into Block 10 (Date letter of

Notification Signed) of the PAD, except for deviations

covered in 8-4.A.1. and 8-4.A.2.

3\. For reservations accepted by AHAS and/or PAS, official RAD

confirmation to the Regional/Field Office of the reservation

and notification date is the field office Section 8 MIS/AHAS

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Interface report (FO5AOX) and the PAS/MIS Daily Update Interface

Report (FO5POX). These reports are produced daily by the

Section 8 Management Information System (MIS).

D. Congressional Notification. Upon receipt of RAD confirmation of

funds reserved for all Section 8 unit increases for Housing

Vouchers, Existing Certificates and Moderate Rehabilitation :

Regular, an approval memorandum must be prepared by the

appropriate Field Office staff. Headquarters will prepare an

approval memorandum for those new units for which it has final

selection approval (Section 202 for the Elderly and Handicapped,

Loan Management Set-Aside, Moderate Rehabilitation (SRO),

Flexible Subsidy). Contract Renewals, Vouchers Opt-outs,

Existing Certificates Opt-Outs, Public Housing Demolition

Certificates, Section 23 Conversions, Property Disposition and

all Amendments do not require Congressional Notification. A

sample format of the approval memorandum is contained in Appendix

5\. This approval memorandum, addressed to the Under Secretary,

is to be immediately telefaxed to the Office of Congressional

Relations, FAX number 458-1350. The Congressional Liaison

Officer assigned to the State in which the funds are being

provided will furnish a release date and, only then is the

Regional Office/Field Office permitted to release the information

to the public.

E. Mailing of the Notification Letter. Once a release date has been

received from the Office of Congressional Relations (paragraph D.

above), the Housing Development or Housing Management Division

will date the Notification Letter with the Notification Date in

the Section 8 MIS/AHAS or MIS/PAS Interface report, as

applicable, and mail the Notification Letter to the Public

Housing Agency (PHA) or Private Owner. (For Section 202/8

letters, the Notification Date is also the date in the Interface

reports mentioned in paragraph 8-2.C. of this chapter. The

Regional/Field Office will be notified by telegram from

Headquarters when the Section 202/8 Notification Letter may be

released).

8-3. LAST MONTH OF THE FISCAL YEAR PROCEDURES. In the last month of the

fiscal year, the Notification Date is the date the Regional

Administrator or the Field Office Manager signs the Notification

Letter.

A. Field Office (Input to RAD). The procedures are the same as

paragraph 8-2.B., except that the Notification Letter is dated

when the Regional Administrator or Field Office Manager signs it.

Regional/Field Office Housing staff inserts that date in Block 10

of the PAD before transmitting it to the RAD.

B. Reservation. The procedures are the same as paragraph 8-2.C.,

except that the RAD enters the Notification Date into AHAS from

Block 10 of the PAD and the RAD ensures that the date in Block 10

of the PAD and the Notification Date on the Transaction listing

are the same.

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C. Congressional Notification. The procedures are the same as

paragraph 8-2.D.

D. Mailing of Notification Letter. Once a release date has been

received from the Office of Congressional Relations as in

Paragraph 8.2.E., the Housing Development or Housing Management

Division Director, as appropriate, mails the already-dated

Notification Letter to the PHA or Private Owner. Prior to

mailing, the Regional/Field Office Housing staff must ensure that

the Notification Date in the Section 8 MIS/AHAS or MIS/PAS

Interface Report, as applicable, is the same as the date of the

Notification Letter.

8-4. ADDITIONAL GUIDANCE FOR SELECTED PROGRAMS

A. Housing Vouchers Contract Renewals, Existing Certificate Contract

Renewals, Loan Management Extensions and Moderate

Rehabilitation-Single Room Occupancy (SRO) Programs. The

reservation of funding for these program categories is

accomplished in the PAS using the modified PAD (Appendix 4). The

applicable codes for reservations in the PAS are listed in the

Table of Applicable Codes (See Appendix 4-2). Field Office staff

should carefully follow the changes provided in the instructions

for reservations in the PAS because additional blocks are

included in the modified version of the PAD.

1\. Reservation Procedures. Except for Loan Management

Extensions, the reservations procedures for Housing Vouchers

Renewals, Existing Certificates Renewals, and Moderate

Rehabilitation (SRO) funding categories are basically the

same as procedures for AHAS reservations, as described in

paragraph 8-2. above.

For reservation and reporting purposes, the Vouchers

Renewals, Certificates Renewals and Moderate Rehabilitation

(SRO) program categories are considered as new reservation

actions and must be reserved accordingly. The execution of

an entirely new contract, subsequent to entering into fund

reservations for these programs, is required.

For Loan Management Extensions, these renewals are also

considered new reservation actions although the actual

extensions are executed as amendments to the current Housing

Assistance Payments (HAP) Contracts. The amended HAP

Contracts will be renewed for a 5-year contract term.

To simplify the reservation process and to accommodate a

separate identity for these Loan Management Extension

contract renewals, a new project number must be established

in the Section 8 MIS and the PAS. The initial Section 8

project

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number will continue to reside as a terminated project in the

AHAS, while a new project number is established in PAS with

an alphanumeric identity, \"M100\", beginning in the fifth

position. For example:

AHAS Project Number PAS Project Number

OH12-M000-001 OH12-M100-001

2\. Termination of Expiring Funding Increments. When a PAD is

prepared for a new contract renewal In the PAS (Section 8) for

Vouchers, Certificates and Loan Management Extension, another

PAD must be prepared for the termination of the expiring

project (funding increment) in the AHAS. These terminations

may be accomplished by following the instructions provided in

Instructions for the PAD, form HUD-52540-A with the exception

of Block 10 of the PAD. The change in procedure for Block 10

of the PAD deviates from PAD instructions provided in page 1

of 2 of form HUD-52540-A, and is applicable only to

termination actions for expiring funding increments for

Housing Vouchers, Certificates and Loan Management Extensions.

In these situations, Field Offices should enter the applicable

date as follows:

a\. Vouchers and Certificates. Enter the date immediately

following the \"Last Date of Term\". For example: if the

\"Last Date of Term\" is February 27, 1990, the date

entered in Block 10 of the PAD should be February 28,

1990\. Field Offices must then recapture the remaining

contract authority only for housing voucher and/or

certificate funding increments as the Annual

Contributions Contract (ACC) term for each funding

increment ends. The budget authority for the expiring

funding increment is not to be recaptured. However,

where all of the funding increments For a PHA are

expiring, any undisbursed budget authority will be

recaptured after the Financial statement review is

completed by the RAD.

b\. Loan Management Extensions. In Block 10 of the PAD,

enter the same date following the expiration date of the

expiring HAP Contract. For example:

Date of Terminated

Expiration Date of HAP Reservation AHAS

Contract AHAS Project Project

07-31-1990 08-01-1990

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Field Offices must recapture all contract authority and

undisbursed budget authority for the terminated project

in the AHAS. All new funding should then be disbursed

for the newly-created Section 8 project number in the

PAS.

B. Section 202 Programs for the Elderly and the Handicapped People.

Loan Authority for the Section 202 Elderly and Handicapped People

Programs is provided by Headquarters via the Regional Fund and

Loan Authority Assignment for the Section 202 Housing Programs,

form HUD-185, and is recorded in the PAS rather than in the AHAS.

The reservation of funds is accomplished by using the
[HUD-718](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/718.pdf)

which is prepared by the Field Office Multifamily Housing

Representative ) see Appendices 6, 6-1, 6-2 and 6-2 for a copy of

the
[HUD-718](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/718.pdf)
and instructions). After the
[HUD-718](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/718.pdf)
has been

prepared and signed by the Source Officer, it is forwarded, along

with the Notification Letter and PAD (if Section 8 funds are

assigned), to the Housing Director for surname and signature.

The Housing Director will forward all documents to the Regional

Administrator/Field Office Manager for signature. After the

Regional Administrator/Field Office Manager signs the documents,

they are transmitted to the RAD. The RAD validates the
[HUD-718](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/718.pdf)

and returns it to the Regional/Field Office within 24 hours. The

Section 202 Notification Letter is not to be released until the

validated
[HUD-718](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/718.pdf)
is received.

The Section 8 authority for these programs is to be reserved the

same as for other Section 8 Programs as outlined in Sections 8-2

and 8-3.

C. Requests for and the Assignment of Section 8 and Section 202

Amendment Funds for the Existing Housing, Moderate

Rehabilitation, Project Reserve and Section 202 Programs

1\. Regular Amendment Funds: Amendment funds are requested and

assigned on a quarterly basis for the Existing Housing,

Moderate Rehabilitation, Project Reserve and Section 202

programs. The following steps are taken to request and

assign amendment funds for these programs.

\- The Field Office will analyze its amendment needs on a

quarterly basis by using the current request format (PHA

specific for Existing Housing and Project Specific for

Project Reserves, Moderate Rehabilitation, and Section

202). The amendment needs will be analyzed by use of

the automated SURVEY Program for the Existing Housing

and Moderate Rehabilitation programs. The request format

is then forwarded to the Regional Office.

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\- The Regional Office will evaluate the Field Office

request and provide the quarterly projected PHA/Project

Specific needs to the appropriate headquarters Program

Office. The Regional Office is to request amendment

needs for the Existing Housing and Moderate

Rehabilitation programs in accordance with SURVEY

instructions.

\- Headquarters Program staff will evaluate all requests

for amendment needs in accordance with current

procedures.

\- Based on the requests, funds will be assigned quarterly

to cover the needs projected.

D. Housing Counseling Grant Program

Regional assignment of Housing Counseling Grant funds will be

issued by Headquarters via the Regional Fund Assignment for

Housing Counseling Assistance, form HUD-185. The Regional

Government Technical Representative (GTR) for Housing Counseling

is responsible for the preparation of the reservation documents

and the RAD is responsible for validating fund availability for

the reservation. The Regional Contracting Officer (RCO) is

responsible for the issuance of the Housing Counseling Grants.

The Regional Government Technical Representative for the Housing

Counseling Grant Program will prepare a single Form
[HUD-718](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/718.pdf),

Funds Reservation and Contract Authority, to reserve the total

amount of Housing Counseling Grant Funds approved. The total

amount of grants approved should never exceed the total amount of

Grant funds assigned. The Form
[HUD-718](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/718.pdf)
will include an attached

list containing the name of each Grantee, the city and state, the

grant amount and the grant number.

Each Form
[HUD-718](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/718.pdf)
will be signed as follows:

Source Officer - the Regional Government Technical Representative

for Housing Counseling;

Recommending Official - the Director, Office of Housing; and

Authorizing Official - the Regional Administrator.

After signature, the original of the
[HUD-718](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/718.pdf)
is to be forwarded

to the RCO who will assign a Grant Number to each Grantee shown

on the list and forward the
[HUD-718](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/718.pdf)
to the RAD for recordation of

the reservation in the PAS. When funds are reserved, a copy of

the
[HUD-718](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/718.pdf)
and the attached list are forwarded to the RCO for

preparation

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and execution of the Housing Counseling Grants. The RCO and the

Government Technical Representative will monitor the performance

of each HUD-approved Housing Counseling Grantee which receives a

grant.

E. Flexible Subsidy Program

The Flexible Subsidy Program provides assistance to: 1) restore

or maintain the financial and physical soundness of privately

owned HUD-assisted housing projects; (2) improve the on-site

management of these projects; and 3) maintain the low to moderate

income nature of the projects. Program funding is dependent upon

appropriations or collections made available for transfer from

the Section 236(f)(3)(g) Rental Housing Assistance Fund, as

indicated by appropriation language.

The Headquarters Funding Control Division prepares Regional Fund

arid Contract Authority Assignments (Forms HUD-185) for flexible

subsidy and OFA validates fund availability of the assignment.

Upon receipt

of the HUD-185, the Regional Office prepares the corresponding

Regional Fund and Contract Authority Subassignments (forms

HUD-185.1), obtains RAD\'s validation of fund availability, and

transmits them to the appropriate Field Office. The amount

subassigned is entered into the PAS by the RAD.

After the Field Office receives the HUD-185.1, the Housing

Management staff prepares the Reservation of Flexible Subsidy

Funds Form HUD-9823) for each individual project that is to be

funded. A sample HUD-9823 and instructions are included as

Appendices 7 and 7-1. Once the HUD-9823 has been prepared, the

Director, Housing Management Division certifies in block 7 and

then forwards it to the Field Office Manager or the Regional

Administrator for signature and date. The signed form is then

transmitted to the RAD for prompt recordation in the PAS. After

the RAD processing of the form, and block 8 is completed, an

executed copy is returned to the Field Office for obligation of

the funds.

8-5. SECTION 203(a) EXCEPTION AUTHORITY

Section 203(a) of the housing and Community Development Act of 1980,

which amended Sec. 8(c)(1) of the U. S. Housing Act of 1937, places a

limit on all Section 8 new construction/substantial rehabilitation

contract authority assigned and reserved for Section 202/8 projects

during the fiscal year for projects with rents in excess of 110

percent of the Fair Market Rent. This includes amounts for cost and

unit amendments. The Section 203(a) limitation does not apply to

authority assigned and reserved daring the fiscal year for project

reserve amendments for projects in management.

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If it has been determined that a reservation for a project must be

counted against Section 203(a) authority, calculation of the amounts

of Section 203(a) authority to be reserved is required. The Section

203(a) authority must be equal to the amount of the Section 8

contract authority reservation. The Section 8 contract authority

already reserved for the project in a prior fiscal year does not

require Section 203(a) authority. Section 203(a) authority is

reserved on the PAD at the same time Section 8 contract and budget

authority is reserved for a project. The Section 203(a) amount is

entered in Block 12.g (Loan/203A Authority) of the PAD, and should

equal the amount in the \"Contract Authority\" block (12.E) on the same

line. All Section 203(a) authority reservations are subject to the

availability of authority assigned and subassigned for that Purpose.

8-6. SECTION 8 MANAGEMENT INFORMATION SYSTEM (MIS) PROJECT FILE

The Section 8 MIS includes an interface edit with both the AHAS and

the PAS. PAS will be used by the Office of Finance and Accounting

for the Voucher Renewals, Certificate Renewals, Loan Management

Extensions and Moderate Rehabilitation (SRO) Programs. AHAS serves

all other Section 8 funding actions. The MIS produces a Project File

containing the project numbers of all project records in the systems.

When the RAD enters a reservation transaction into the AHAS/PAS, the

project number entered is matched (on-line) with the Project File.

The on-line interface for funding transactions will be rejected in

AHAS or PAS if any of the following data fields fail to match with

the corresponding data in the MIS: project number; program code;

subprogram code; region (PAS only); and metro/nonmetro designation.

In the event that such rejections occur, the RAD will contact the

appropriate Field Office Housing staff to determine the problem and

correct the data in AHAS/PAS, as needed. The Management Information

Division (MID) will make any corrections required in the Section 8

MIS. The entry of new Section 8 project numbers into the MIS must be

accomplished 24 hours prior to the reservation of funds For these

projects. Further, should the MIS need correcting, the RAD will have

to wait until the following day to reenter the transaction into the

AHAS or the PAS. The delay is necessary due to the overnight update

batch mode in the MIS.

From the MIS comes the MIS/AHAS Interface Report and the PAS/MIS

Daily Update Interface Report. These reports are used to 1) verify

fund reservations; and 2) determine whether funds are available for

contracting.

8-7. CORRECTIONS. The difference between a Correction and an Amendment

must be kept in mind. An amendment is a normal program action to

increase or decrease the funding authority reserved. A correction is

an action to correct an error made in processing (e.g. typing, data

entry, etc.) the reservation.

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A. Prior Fiscal Year Transactions Reserved in the AHAS. All fund

authority increases or decreases to projects already reserved in

a prior year will be processed as an amendment, regardless of the

reason for the change or when the project was reserved. Changes

to all other reservation data to correct an error In processing

(e.g.: categories, names, dates, etc.) are to processed as a

correction. This includes increases or decreases to units only.

If the unit increase or decrease requires an increase or decrease

of funds, the transaction should be processed as an amendment.

Corrective actions pertaining to transactions entered into the

AHAS in a prior fiscal year will be processed according to the

two categories shown below. Each Field Office will send

corrective actions to its Regional Office of Housing for review

and concurrence and, when required as directed below, that Office

will forward the request to Headquarters under a cover

memorandum. In those cases requiring Headquarters approval, the

request should be directed to the Deputy Assistant Secretary for

Operations, Attention: Funding Control Division.

1\. Corrections Requiring Headquarters Approval but Regional Data

Correction. The following data elements in the AHAS and/or

PAS which, when requiring corrective action, must be approved

by Headquarters prior to being corrected by the Regional

Office.

Block 3. Program Type

Block 5. Subprogram Identification (not applicable

in the PAS)

Block 7. Project Number

Block 8. PHA/Private Owner Name

The Regional Office will be informed of Headquarters\'

approval by memorandum. For Blocks 3, 5, and 7 the Regional

Section 8 MIS Coordinator will then assure that the approved

change is made to the MIS before the RAD makes the changes in

the AHAS or the PAS. Guidance on corrections to the Project

Number element is in HUD Handbook 4050.5, paragraph 1-9 (How

to Change Identification Numbers).

Regional Corrections. The following data elements do not

require Headquarters approval:

Block 6. Area

Block 9. Date the Prior Letter of Notification or

Reservation Document was signed (not

applicable in the PAS)

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Block 10. Date the Letter of Notification or

Reservation document was signed.

Block 11. Term

Block 12. Units

Corrective actions pertaining to Blocks 6, 9, 10 (in the

AHAS only), 11, and 12 (except funds) will be authorized

and corrected by the Regional Office. For Block 6, the

Regional Section 8 MIS Coordinator must assure that the

approved change is made to the MIS before the RAD makes

the changes in the AHAS or the PAS. Correction PADs

should be sent to the RAD to enter the corrections in the

AHAS or the PAS.

B. Current Fiscal Year Transactions (AHAS or PAS). Any corrective

action applicable to current fiscal year transactions will

continue to be authorized in the Region and the RAD will process

the corrective actions in the AHAS or the PAS.

C. Section 8 MIS Interface. In most cases, corrections entered into

the AHAS or the PAS pertaining to the Section 8 programs will be

automatically transferred to the Section 8 HIS. For the

disposition of the exceptions, Regional/Field Office staff should

refer to HUD Handbook 4050.5, paragraph 1-5.C.

8-8. TRANSFERS. The provisions of this Handbook only permit, with

Headquarters approval, certain transfers of authority which do not

constitute recapture. Where provided in the appropriation,

recaptured Section 8 authority is rescinded, and is therefore not

available for use.

The transfer of authority contractually committed by HUD requires

assignment, termination or amendment of the contractual instrument

(ACC, HAP Agreement of HAP Contract) in order to release the

authority for transfer. The procedures and legal instruments used to

accomplish the assignment, termination or amendment must be reviewed

by HUD Field Counsel. All approved transfers do not constitute

recapture actions and are, therefore, not subject to the rescission

of recaptures. The net effect of all transfer actions must not

result in the recapture or reuse of contract and/or budget authority.

In all cases, the transfer must net to zero.

All transfers of prior year authority must have the written approval

of the Deputy Assistant Secretary for Operations before the transfer

action is taken. All requests for these transfer actions must be

submitted to the Deputy Assistant Secretary for Operations,

Attention: Funding Control Division. The requests should include

the project number; private owner name (if non-PHA); the amount of

funds being transferred from and to; name/jurisdiction of the

affected public housing agency(s); and the justification for the

transfer.

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