2017 HCV Funding and Offset Methodology

August 2017

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PIH Notice 2017-10 provides information regarding the implementation of the federal pro year (FFY) 2017 funding provisions for the Housing Choice Voucher (HCV) program. The notice is grouped into two sections. Sections 3 through 13 of the notice describes the funding made available under the 2017 Act and HUD’s implementation of the provisions related to the allocation of that funding. Sections 14 through 19 of the notice provide other important information regarding the administration of the public housing authority’s (PHA) HCV program.
In order to meet the national proration level of 97% and at least $20 million is made available for shortfall funding, HUD took approximately 14% of excess reserves. The methodology for the offset this year was released in funding letters based from the 2017 Appropriations. The letters included Appendix I that explained how excess reserves were protected from offset.
Once HUD determined 12/31/16 program reserves [restricted net position (RNP) & HUD held reserves (HHR)], HUD granted the protections for these funds, as listed below, to be protected from the offset of reserves. Then HUD took a proration of excess reserves to meet the requirements for funding.
1. Amounts required to self-fund the difference between the PHA’s eligibility and the prorated eligibility.
2. Amounts needed to fully lease VASH units under CACC for Calendar Year 2016.  These amounts are limited to providing the PHA funding for all CY 2016 unit months available.
3. If the PHA’s leasing for December, 2016, is higher than the average leasing for CY 2016, amounts sufficient to fund the difference between 12 months of the December 2016 leasing and CY 2016 leasing.  These amounts are limited to providing the PHA funding for all CY 2016 unit months available.
4. Amounts equal to ½ of CY 2016 new incremental BA (RAD1 CPT units, RAD 2, TP and VASH) effective after February 1, 2016, in order for the PHA to have the opportunity to fully lease these new units in CY 2017. 
5. For PHAs that received 2016 set-aside awards (other than Shortfall) protect ½ of their set-aside eligibility amount (not the award amount).
6. A portion of CY 2017 eligibility for increasing costs and continued operation of the PHA in the amounts of 4% for PHAs with 500 or more units under ACC, 6% for PHAs with 250 to 499 units under ACC, and 12% for PHAs with fewer than 250 units under ACC.

Example of Calculation 

A CY 2016 End of Program Reserves   $10,73B8,274
B Difference between the PHA's Eligibility and Prorated Eligibility $2,613,475  
C CY 2016 Amounts needed to fully lease VASH units  $159,151  
Difference between higher of December 2016 UMLs x 12 months or CY 2016 UMLs up to baseline on units under ACC $546,223  
CY 2016 New incremental BA - 1/2 of Eligibility $58,302  
CY 2016 Set Aside Protection - 1/2 of Eligibility $0  
Portion of CY 2017 Renewal Eligibility (Based on units under ACC): $3,484,633  
Total funds available for offset   $3,876,490
I   Offset amount   $566,006

A. Total amount of reserves as of 12/31/2016 [RNP +HHR]
B. The difference of HAP funding at full eligibility versus
  • HAP funding at 97% of eligibility 
C. Funding to maximize VASH leasing
D. Providing the higher leasing for the units leased in December for 12 months or the unit months leased for the calendar year
E. New funding increments that were received in 2016
F. PHAs that received set-aside funds in 2016; these awards 
were typically issued mid calendar year
G. Percentage of reserves that would be protect based on renewal eligibility
  • 4% - 500 units or more
  • 6% - 250-499 units
  • 12% - Less than 250 units
For example, this PHA has more than 500 units and the renewal eligibility is $87,115,820. Renewal eligibility is total funding at 100% proration multiplied by 4%.
H. Line A minus the protected reserve amounts on Lines (B through G)
I. The national proration for offset at 14.601%  multiplied by 
Line H

Check out the full notice for more details. 

If you have questions regarding matters discussed above, please contact Brian Alten.

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