Designing Operation and Finances

Budgeting For the Center

Once center programs have been designed, determine funding and other resources. To develop a sustainable center and programs, you should:

	Identify and review potential sources of funding.
	Create budgets for the center's startup and first 3 years of operation. Implement goals, activities, and outcomes for a fundraising plan for the center.

Funding Options Requiring HUD Approval

Depending on the type of property, and with HUD approval, owners and managers may use funds from the following accounts to establish and maintain Neighborhood Networks centers:

	Residual receipts account. Funds from this account may be used to finance a center should HUD determine that these funds are not required to maintain the habitability of units or to meet other building needs.
	Owner's equity. The owner of limited-distribution property can increase the amount of the initial equity investment (and, in turn, the yield on distribution) by investing nonrepayable funds in the center. A rent increase, however, will not be approved to provide additional yield.
	Funds borrowed from the Reserve for Replacement Account. Funds from the Reserve for Replacement Account may be used to finance a center, as long as HUD determines that these funds are not required to meet anticipated repair and replacement needs of the property. (If this source of funding is selected, then a scheduled repayment plan also must be submitted.)
	Rent increase. The owner of a property where rents are set under the budgeted rent increase process may request an increase to cover the costs of a center. These increases may be approved at HUD's discretion.
	Requesting a special rent adjustment. Under certain limited conditions established by HUD, the maximum monthly rent for units under a Section 8 contract may be increased to meet the costs of the center.
	Excess income. For properties that generate excess income, HUD Notice 00-17 creates the ability to retain excess income to assist in support and development of a Neighborhood Networks center.