# Presentation: 115035

## Housing Choice Voucher Program  Financial Update

**Housing Choice Voucher Program            **
**                      ****Forum**
**           ****November 1-2, 2007**

## Lengthy process, due to late receipt of supplemental requirements
Funding letters issued to all PHAs June 22 for renewal HAP and Fees
PHAs involved in ensuring HUD used accurate and complete data by reviewing or providing—
VMS data CY 2006		Transfer costs
Project-Based 		New Units

- Lengthy process, due to late receipt of supplemental requirements
- Funding letters issued to all PHAs June 22 for renewal HAP and Fees
- PHAs involved in ensuring HUD used accurate and complete data by reviewing or providing—
- VMS data CY 2006		Transfer costs
- Project-Based 		New Units

## 700+ PHAs responded to HUD’s invitation to review or provide data
All approved changes are reflected in final funding calculations; most were approved
Approved changes entered into VMS by HUD

- 700+ PHAs responded to HUD’s invitation to review or provide data
- All approved changes are reflected in final funding calculations; most were approved
- Approved changes entered into VMS by HUD

## Funding Process Concerns

- Too many changes – need stability
- Changes should not be retroactive to prior months
- Need appropriate reserve levels
- Ensure sufficient admin fees
- Allow spending without unit cap
- Timely notification

## HAP costs from CY 2006 (latest verifiable)
Mid-month costs added from PIC if PHA reported as of the first of each month
Additional eligibility ($$) added for the renewal of new increments, to ensure 12 months’ funding in 2007

- HAP costs from CY 2006 (latest verifiable)
- Mid-month costs added from PIC if PHA reported as of the first of each month
- Additional eligibility ($$) added for the renewal of new increments, to ensure 12 months’ funding in 2007

## HAP Funding Highlights

- Total actual leasing plus lease-up periods could not exceed total unit months available for 2006
- Beginning in an increment’s 4th month, leasing was assumed to be reported in VMS
- Additional months added to eligibility if lease-up period plus VMS period plus original funding term equaled less than 12 months in CY 2007

## Additional eligibility added to actual costs based on total units in new increment at higher of average 2006 PUC or originally funded amount
Eligibility added for vouchers withheld from leasing to meet a project-based commitment
Each PHA’s eligibility increased via applying the 2007 Annual Adjustment Factor

- Additional eligibility added to actual costs based on total units in new increment at higher of average 2006 PUC or originally funded amount
- Eligibility added for vouchers withheld from leasing to meet a project-based commitment
- Each PHA’s eligibility increased via applying the 2007 Annual Adjustment Factor

## Eligibility adjusted for transfers into or from the PHA’s inventory
Total eligibility calculated for each PHA and national total compared to available appropriation of $14,336,200,000, creating pro-ration factor of 105.017%, applied to all 
Remember these calculations are renewal only – many PHAs also have tenant protection funds covering some or all months of CY 2007

- Eligibility adjusted for transfers into or from the PHA’s inventory
- Total eligibility calculated for each PHA and national total compared to available appropriation of $14,336,200,000, creating pro-ration factor of 105.017%, applied to all
- Remember these calculations are renewal only – many PHAs also have tenant protection funds covering some or all months of CY 2007

## Supplemental Appropriation

- Provided alternate funding eligibility calculations for three groups of PHAs:
- Certain disaster-impacted agencies (plan) (34 total)
- PHAs in receivership or breech (plan) (5 total)
- PHAs with negative reserves (11 total)
- Eligibility calculation began with 2006 funded amount rather than 2006 VMS data; all other adjustments, AAF and pro-ration factor applied:

## Admin fee policy unchanged from 2006
Base was CY 2006 eligibility
Adjusted for new units, to ensure 12 months of funding
Adjusted for transfers in or out
Total compared to appropriation of $1,251,000,000 to yield pro-ration factor of 101.528%, applied to all HAs

- Admin fee policy unchanged from 2006
- Base was CY 2006 eligibility
- Adjusted for new units, to ensure 12 months of funding
- Adjusted for transfers in or out
- Total compared to appropriation of $1,251,000,000 to yield pro-ration factor of 101.528%, applied to all HAs

## Admin Fee Funding Highlights

- Admin fees have now been recouped from HAs for failing to meet PIC reporting threshold – fees were offset beginning December 2006
- These fees are being re-distributed to all HAs on the basis of each one’s share of the 2007 renewal fees

## Admin Fee Funding Highlights

- Notice to be issued concerning special admin fees from 2007 appropriation, to be used for:
- HAs that require program-specific audits for FY 2007 – up to $1,000,000
- One-time $5000 fee for first homeownership closing – up to $500,000
- HAs who increased leasing since the fee base was established – up to $6,500,000

## HAP and Fees disbursed through June on basis of 2006 rules and funding level
HUD calculated amount each PHA was due through June under 2007 funding rules
Shortages were paid in July 1 payment
Reduction for excess disbursements are spread across remaining months – July to December

- HAP and Fees disbursed through June on basis of 2006 rules and funding level
- HUD calculated amount each PHA was due through June under 2007 funding rules
- Shortages were paid in July 1 payment
- Reduction for excess disbursements are spread across remaining months – July to December

## Eligibility and processing of $100 million set-aside from renewal account
2 categories of eligibility:
	(1) HAs who had experienced a significant increase in renewal costs, more than 3%, due to unforeseen circumstances or portability
		HAs must document the circumstance and 
		calculate the funding needed, or provide 	data for HUD to do so

- Eligibility and processing of $100 million set-aside from renewal account
- 2 categories of eligibility:
- 	(1) HAs who had experienced a significant increase in renewal costs, more than 3%, due to unforeseen circumstances or portability
- 		HAs must document the circumstance and
- 		calculate the funding needed, or provide 	data for HUD to do so

## 	(2) PHAs who would experience a decrease in funding and loss of vouchers due to re-benchmarking –
3% threshold 
Higher of Dec 2006 or average Oct to Dec 2006 leasing and per-unit-cost compared to leasing the 2007 funding award will support 
If funds support 3% fewer vouchers or less, PHA was eligible 

- 	(2) PHAs who would experience a decrease in funding and loss of vouchers due to re-benchmarking –
- 3% threshold
- Higher of Dec 2006 or average Oct to Dec 2006 leasing and per-unit-cost compared to leasing the 2007 funding award will support
- If funds support 3% fewer vouchers or less, PHA was eligible

## For second category, HUD calculated apparent eligibility and posted list of PHAs on HCV website; advisory only
For both categories, PHAs had to apply, using the Notice attachment
Ultimately there were two request periods
HAs were advised that, based on eligible requests, available funds might be pro-rated; this was not needed

- For second category, HUD calculated apparent eligibility and posted list of PHAs on HCV website; advisory only
- For both categories, PHAs had to apply, using the Notice attachment
- Ultimately there were two request periods
- HAs were advised that, based on eligible requests, available funds might be pro-rated; this was not needed

## $100 Million Renewal Set-Aside

- Eligible requests only required approximately $23.4 million to fund
- Remaining $76.6 million is being distributed to all HAs on the basis of each one’s percentage of the total renewal eligibility - .5% of eligibility
- Each HA’s share of the total will be added to eligibility for 2008 funding purposes, unless we re-benchmark again
- These funds may be used for HAP purposes only; unused at FYE will accrue to Net Restricted Assets

## $100 Million Renewal Set-Aside

- Portability and Re-benchmarking approvals were based solely on formulae
- if an HA was eligible and applied, the HA was funded
- HAs were eligible for portability funds on the basis of portable vouchers administered by other HAs – if receiving HA did not enter data into PIC, the initial HA was not funded under this category

## $100 Million Renewal Set-Aside

- Unforeseen circumstances requests depended on HA submittal
- Most common problem was that HA did not identify an unforeseen circumstance, but just a normal occurrence or HA decision  --
- Re-benchmarking
- Desire to lease to baseline
- HA decided to raise payment standards or utility allowances

## No over-leasing may be supported using appropriated funds, including current year and excess HAP from prior years
Quality Assurance reviews continue – funding subject to reduction if PHA knowingly provided false data; HAs were reduced in the initial funding calculations and additional ones are being reduced now, affecting Nov and Dec payments

- No over-leasing may be supported using appropriated funds, including current year and excess HAP from prior years
- Quality Assurance reviews continue – funding subject to reduction if PHA knowingly provided false data; HAs were reduced in the initial funding calculations and additional ones are being reduced now, affecting Nov and Dec payments

## Implementation Notice 2007-14

- FY 2007 HAP renewal funds recouped through this process will be redistributed to all HAs
- HAP funds and HAP equity may be used for HAP purposes only, even though held at PHA
- May not be used for administrative costs
- May not be used for Public Housing program costs

## 2008 Proposed Funding

- Renewals:
- 	House:		$14,744,506,000
- 	Senate:		$14,936,200,000
- 	2007 Enacted:	$14,436,200,000
- Tenant Protection:
- 	House:		$     150,000,000
- 	Senate:		$     150,000,000
- 	2007 Enacted:	$     150,000,000

## 2008 Proposed Funding

- Family Self-Sufficiency:
- 	House:		$      48,000,000
- 	Senate:		$      50,000,000
- 	2007 Enacted:	$      47,500,000
- Administrative Fees:
- 	House:		$  1,351,000,000
- 	Senate:		$  1,351,000,000
- 	2007 Enacted:	$  1,281,100,000

## 2008 Proposed Funding

- Other:
-     House:
-        Incremental Vouchers         $30,000,000
- 		(non-elderly disabled and homeless vets)
-     Senate:
-        VASH                                  $75,000,000
-        Family Unification               $30,000,000

## 2008 Proposed Funding

- House:
- Budget-based approach – PHAs’ 2008 renewal eligibility would be based on 2007 funding
- $75,000,000 set-aside
- Administrative fees paid on the basis of units leased
- Leasing limited to baseline unit months

## 2008 Proposed Funding

- Senate:
- Re-benchmarking approach – PHAs’ 2008 renewal eligibility would be based on actual HAP expenditures for most recent 12 months of verifiable data
- 3 categories of PHAs to be funded based on 2007 funding:  PHAs in receivership, disaster PHAs, PHAs spending more than funds available
- $100,000,000 set-aside
- Administrative fees paid on the basis of units leased
- Leasing limited to baseline unit months

## 2008 Proposed Funding

- HUD has estimated all HAs’ funding under 4 scenarios: budget-based and re-benchmarking, for both House and Senate funding amounts
- Result was pro-ration factors of 101% to 104%
- Point: If HA leasing is generally stable, 2008 funding will not vary significantly from 2007 funding – HAs can lease with confidence before receiving final funding amounts

## Administrative Fee Changes

- Due to proposed payment of fees on the basis of leasing, HUD will develop and issue new fee tables (last updated for FY 2003)
- HUD is also contracting for a major study to determine the appropriate level of fees for a well-run agency, for use in establishing future fee rates

## High pro-ration factor in 2007 was due to under-utilization in 2006
Some under-utilization due to statutory leasing cap; some not
Due to program size, small percentage of unused funds equates to major dollar amount
Cumulative effect from 1/1/05 forward is critical

- High pro-ration factor in 2007 was due to under-utilization in 2006
- Some under-utilization due to statutory leasing cap; some not
- Due to program size, small percentage of unused funds equates to major dollar amount
- Cumulative effect from 1/1/05 forward is critical

## Utilization

- As of June 30, 2007, calculated excess HAP (NRA) totaled $2.121 Billion – 6.07% of all BA for the period 1/1/2005 thru 6/30/2007
- As of 12/31/2006:
- 	Useable:		$802,000,000
- 		Additional unit months that could have been  assisted:   1,516,000
- 	Unuseable:	$407,000,000

## Utilization

- Voucher Unit Months Assisted:
- 2005:				23,804,827
- 2006:				23,351,498
- 2007 (6 months):		11,669,704
- New Tenant Protection Units Awarded:
- 2006:				       22,638
- 2007:				       25,350

## Voucher Management System

- PHA reporting rates improved significantly, but
- too many HAs are still not reporting unless reminded
- HAs must remember to enter corrections that they provide during validation process
- Data integrity is critical
- Funding (Congressionally-mandated)
- Congressional reporting
- Determination of NRA
- Decision-making

## Voucher Management System

- Modifications underway, for release for January reporting –
- Many unneeded data items and sections deleted
- Few new items added
- Form re-organized for clarity
- Update procedure for locked quarters
- Revised user instructions

## 2003 Admin Fees Adjustments

- Appropriations required –
- reduction of fees if 1/31/03 admin fee reserve > 105% of 2002 fees earned
- recapture of fees if 2003 excess fees would generate a reserve > 5% of 2003 fees
- Some offsets initially done when YESTs were closed
- HUD developed calculations, notified HAs of outcomes, paid HAs who had excess funds offset and began collecting amounts due via offset in 12/06

## 2003 Admin Fees Adjustments

- Decision by federal court modified slightly the time periods used for the reduction calculations
- Offsets were suspended pending ruling and final calculations
- In immediate future, HAs will be notified of new calculations; repayments and offsets will resume

## SEMAP Issue

- Leasing indicator based on higher percentage of UMLs/UMAs or HAP expenses/HAP BA
- Formula uses BA attributable to each month
- Jan to June 2007 BA attributable did not generally equal BA disbursed, affecting 23% of June 30 PHA leasing scores
- Re-scoring that indicator