Financial Tools to Modernize or Construct Elderly Public Housing

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Capital Fund

PIH administers the Capital Fund program, which provides funds annually via a formula to approximately 3,200 public housing agencies (PHAs) across the country. PHAs may use Capital Fund grants for development, financing, modernization, and management improvements. The Office provides technical assistance to PHAs as well as, to HUD Field Offices relating to development, financing, modernization, and management improvements of public housing developments. It prepares quarterly reports to Congress on the status of the obligation and expenditure of Capital Fund grants and implements the statutory sanctions for PHAs that are in noncompliance with the statutory deadlines.

The Office is also responsible for the development of the Total Development Cost (TDC) limits and issuing a TDC Notice. The TDC provides the standard cost limits for developing public housing projects of various sizes, and types. The TDC limits also serve as a limit on the amount of money a PHA can spend to modernize their existing public housing.

Captial Fund Financing Transactions

The Quality Housing and Work Responsibility Act of 1998 ("QHWRA") includes a number of amendments to the U.S. Housing Act of 1937 (the "1937 Act") that allow PHAs to use their public housing assets more flexibly to access private capital. Section 519 of QHWRA amended Section 9(d)(1) of the 1937 Act to establish the public housing Capital Fund Program (CFP) and to permit CFP funds to be used for financing activities. Section 516 of QHWRA added a new Section 30 to the 1937 Act that permits HUD to authorize, upon such terms and conditions as HUD may prescribe, a PHA to grant a security interest in its property.

More specifically, under Section 9(d)(1)(A) of the 1937 Act, CFP assistance may be used for financing activities, such as debt service payments and usual and customary financing costs for the development and modernization of public housing (including public housing in mixed-finance developments). A PHA undertaking such financing activities may pledge and grant a security interest in its future annual allocations of CFP assistance, subject to the appropriation of those funds. Section 30 also provides that no action taken by a PHA or other parties to such a financing transaction shall result in any liability to the federal government.

Operating Fund

Operating Fund Add-On - Elderly/Disabled Service Coordinator Program

Beginning in Fiscal Year 2004, the Elderly/Disabled Service Coordinator Program will be funded through an Operating Subsidy add-on.

PHAs currently funded with ROSS grants for Elderly/Disabled Service Coordinators may be funded through Operating Subsidy at the same level (adjusted for inflation) as their existing ROSS program.

The amount requested for the Elderly/Disabled Services Coordinator Program should be entered on Part D, Line 3 of the form HUD-52723, Calculation of Operating Subsidy.

PHAs must provide support of the amount on Part D. Line 3 in Section 3, Remarks, of the 52723 or as an attachment. This must include a breakdown of costs between salary and fringe benefits for each Coordinator.

Public Housing's Housing Choice Vouchers in Assisted Living Facilities

Housing Choice Vouchers cannot be used to rent a public housing unit. The family would have to apply to the waiting list for public housing in order to obtain such a unit. However, Housing Choice Vouchers can be used in assisted living facilities. The rent portion has to be broken out from the full monthly costs that usually include the cost of services. The rent portion must be determined reasonable based on the PHA's methodology for determining rent reasonableness.