Once a PHA has determined to pursue a CFFP, they should either include in their next PHA Plan submittal, or amend their existing PHA Plan, to include the requisite Annual Statement(s) (with a separate Annual Statement including the use of proceeds) and 5 year action plans. The PNA should also be submitted to the FO as part of the PHA Plan.
When reviewing a PHA Plan which includes Annual Statements and 5-Year Action Plans indicating an intent to pursue a CFFP, the Field Office review should confirm that:
- If used for modernization, the use of the proceeds as shown in the annual statement should be reflected as a need in the PNA;
- If the PHA is planning to develop non-dwelling space - the FO should advise the PHA that they will have to submit a development proposal to the Field Office. The Field Office should assess if this is something that would be approvable (HQ will also evaluate this when the CFFP Proposal is submitted as well);
- The life cycle of the proposed improvements and the term of the financing should be of roughly the same time frame. (e.g. Roof replacements for a 20 year term loan. Would not restripe a parking lot with a 20 year financing).
Please note that the approval of a PHA Plan showing the use of CF for financing does not constitute the pledging of public housing assets. PHAs must obtain separate written approval from HUD HQ for the pledging of PH assets. Field Offices may include a statement to that effect in their PHA Plan Approval letter.
- Physical Needs Assessment Review
- In reviewing the PNA that is submitted as part of the PHA Plan, the FO should review should address the following:
- Is there a PNA form included for all projects in the PHAs inventory including PHA wide nondwelling spaces?
- Are all areas of the form properly filled out?
- Was there a representative sample of units inspected in accordance with the Modernization Handbook?
- Does the PNA cover all major building systems and components?
- Does the PNA include the expected useful life of all major building systems and the potential life- cycle replacement of these systems during the term of the loan? Do the life cycle replacement periods appear reasonable.
- Does the PNA contain items that are not eligible under the CFP? Luxury items such as Jacuzzis,
- Are the items in the PNA consistent with the proposed activities in the CFFP Annual Statement?
All PHAs should submit a copy of the CFFP Proposal to the Field Office (FO) when they transmit their formal proposal to HUD headquarters (HQ). The Proposal should be submitted to the FO with a cover memo identifying:
- Whether or not the copy of the Annual Statements and Five Year Action Plan information submitted with the Proposal are included in the most recent approved Annual Plan. An approved PHA Plan incorporating the above elements should be in place no later than 30 days after the submittal of a CFFP Proposal. HUD reserves the right to return CFFP Proposals if the PHA Plan requirements are not met within 30 days of submittal of the CFFP Proposal.
- If the above information is not included in the Plan, the cover memo should indicate the status of any needed amendment of an existing plan (indicating whether or not the amendment constitutes a significant amendment or modification as defined in 24 CFR 903.7(4)(2)) or submittal of a new Plan.
Role of the Field Office Prior to CFFP Proposal Approval
As part of the review process for CFFP proposals, HUD HQ, through the Office of Capital Improvements (OCI) will request certain reviews and certifications from the FO. OCIs request to the FO should occur upon receipt of a CFFP Proposal. These are as follows:
- Proposal Confirmation: the FO should confirm that it
received a copy of the CFFP Proposal.
Timing: The FO should respond to this immediately upon receipt of OCIs request for a FO review related to a CFFP proposal.
and Review of the Declaration of Trust (DOT) and/or Declaration of Restrictive
Covenant (DORC): confirmation that an effective Declaration(s) of Trust is
recorded in first position on all the Public Housing properties in the PHA?s portfolio
and the DOTs will be effective for the term of the financing. Upon receipt of
the CFFP Proposal, the Field's Public Housing Office should provide copies of
the DOT's to Field Office Counsel and request that they review the DOTs and coordinate
their review with Headquarter's Counsel. Headquarters Counsel looks to the Field
Office Counsel to review the DOT related material and provide the above noted
confirmation. The Field's Public Housing Office should continue to coordinate
with their Counsel until Field Office Counsel is satisfied that acceptable DOTs
are in place and provides appropriate confirmation to Headquarter's Counsel.
Timing: The PHA should submit copies of required documents as part of their CFFP Proposal. After submittal, the PHA Counsel, FO Counsel and HQ Counsel should work together towards satisfaction of this requirement.
Document Retention: The Field Office shall retain all documents associated with Declarations of Trust.
Note: If the CFFP proposal involves Mixed Finance development, the DORC will be reviewed by the field office as part of the Mixed Finance Proposal Review process.
Review of the Annual Statement and Five Year Action Plan: confirmation
that the use of bond proceeds and the use of CFP for the payment of debt service
are in an Annual Statement and Five Year Action Plan that are included in an approved
PHA Plan. If the PHA is planning for HUD to automatically make direct debt service
payments to the trustee/lender from LOCCS, the PHA should show use of CFP funds
for debt service in budget line item 9000 in its Five Year Action Plan (and in
its Annual Statement(s) if it plans to use any current grants for the payment
of debt service). If the PHA will make debt service payments manually using normal
drawdown procedures, then they should use BLI 1501. The PHA should also submit
a separate Annual Statement on the use CFFP financing proceeds. The FO should
review the CFFP financing proceeds Annual Statement in accordance with the same
procedure normally applicable to the review of such documents.
The The Physical Needs Assessment (PNA) must be included in the PHA Plan submittal to the Field Office. As part of its review of the PHA Plan, the Field Office shall ensure that the PNA was completed in accordance with 24 CFR 968.315, the Modernization Handbook, and the Comp Grant Guidebook, but additionally covered the entire term of the financing and took into consideration the lifecycle replacement of major building components (as identified in the Uniform Physical Condition Standards at 24 CFR 5). The Field Office shall further ensure that the use of the CFFP proceeds as shown on the Annual Statement is identified as a need in the PNA.
Annual Statement/Performance and Evaluation Report -form HUD 50075.1 (MS-Word) Physical Needs Assessment - form HUD-52829 (MS-Excel) Five-Year Action Plan - form HUD-50075.2 (MS-Word)
These documents should be included in the PHA?s most recent approved Annual Plan. If these documents are included in the PHA Plan, the FO?s letter approving the PHA Plan may be used to confirm the FO review of these documents. If these documents are not included in the most recent approved PHA Plan, the FO should review the documents as an amendment to the PHA?s most current PHA Plan, and then email OCI confirming that they have been incorporated into the approved PHA Plan.
Timing: Ideally the approved PHA Annual Plan should incorporate an Annual Statement(s) and Five Year Action Plan at the time of CFFP Proposal submission, but in no case should this occur later than 30 days after CFFP Proposal submission. Please note that approval of the PHA Plan showing the use of Capital Funds (to include RHF funds) for the payment of debt service does not constitute approval of a secured loan. Any such transaction requires separate written approval (of a CFFP Proposal) from a duly designated HUD official.
- TDC Requirements:
confirmation that each project funded with CFFP proceeds meets TDC requirements.
The FO should only confirm TDC when CFFP proceeds are used for modernization.
The FO does not need to confirm TDC for CFFP proceeds are used for new development
as part of its review of the PHA Plan, because TDC analysis is part of the review
process for Development Proposals.
Timing: This should occur in tandem with the FOs review of the PHA Agency Plan as noted above.
PIH Notice 2008-47 (HA) - Total Development Cost (TDC) Limits TDC Form and Instructions (MS-Excel)
Statement of PHA Capacity: confirmation that the FO concurs that the PHA
has the management capacity to carry out the transaction and to meet the schedule
for the use of funds. Please advise of any recent audits (e.g. IG, IPA) or similar
reviews (such as Field Office monitoring reviews) and the nature of any deficiencies
found as well as resolution.
Timing: This should occur within 30 days after the FOs receipt of the CFFP Proposal.
- PHA CFP
Compliance: Confirm that the PHA's obligation/expenditure levels comply with
the rules and are not subject to recapture, and that, to the best of your knowledge,
there are not any other activities or issues (e.g. demolition, disposition, lease/purchase,
litigation, consent decrees, voluntary compliance agreements, etc.), other than
those identified by the PHA in its CFFP Proposal, that would negatively impact
CFP funds available to the PHA.
Timing: The FO should respond within 30 days upon receipt of OCI?s request for a FO review related to a CFFP proposal.
- FO Support: Confirmation as to whether or not the FO supports
the proposed transaction.
Field Offices may conduct site visits at their discretion.
Timing: This should occur within 30 days after the FOs receipt of the CFFP Proposal.
***If the FO becomes aware of any material changes to the PHAs status on the above confirmations after it has issued its confirmations, but before the CFFP Proposal is approved, immediately notify OCI***
- ACC Information: the date and number of the Consolidated
Annual Contributions Contract (ACC), and reserve an amendment number for the CFF
Amendment. The CFF Amendment amends the 1995 version of the ACC. The FO should
work with the PHA if a 1995 version is not in already in place.
Timing: This information will be requested in the final stages of the OCI approval process. If a PHA has an on file a pre-1995 ACC, the FO should work with the PHA to have a 1995 version of the ACC should be in place prior to CFFP Proposal approval.
Role of the Field Office Post-Approval
- ACC Execution: The housing
authority will sign three copies of the Capital Fund Finance ACC amendment when
it receives its approval package. It will forward them to the field office Public
Housing Director who will sign all three copies. The field office will retain
one copy and send the other two executed copies back to the housing authority.
a. PHAs submit Performance and Evaluation Reports reflecting the use of the CFFP proceeds to Field Office on a quarterly basis. PHAs that utilize their CFFP proceeds as part of a mixed-finance transaction, and PHAs that size their financing based upon RHF in their CFFP transactions, are not required to submit quarterly reports.
b. PHAs submit Performance and Evaluation Report, reflecting the use of the CFFP proceeds, as part of their PHA Plan. Additionally, the Annual Statement and 5 year plans should reflect the debt service payments in BLI 9000. The field office will review and approve the PHA Plan and the annual Capital Fund ACC Amendments in a timely manner so that debt service payments will continue to be made on time per the approved final debt service schedule.
c. Field Offices review Performance and Evaluation Reports to ensure that PHAs are obligating and expending CFFP proceeds on schedule. If so, no action is required. If not, the Field Office determines the reasons for the delay and consults with the Office of Capital Improvements.
d. Close-out of Grant - A CFFP transaction is subject to the same requirements as a CFP grant, including the preparation of an Actual Modernization Cost Certificate (AMCC) or Actual Development Cost Certificate (ADCC), if applicable a final quarterly report, and a final Performance and Evaluation Report which is among the documents to be provided to the PHA's auditor.
- HUD Approvals
a. Changes in the scope of work for which the proceeds are being used that are below the Additional HUD Approval Threshold are addressed via the normal PHA Plan process (according to the same requirements as CFP grants), whereby PHAs revise existing Plans or submit new Plans to the Field Office.
b. Additional HUD Approval Threshold - if the changes made by the PHA fall into any of the categories listed below, the PHA must obtain additional written approval from the Field Office, which must be separate from the Field Office?s review and approval of the PHA Plan. The field office should send a copy of the approval letter and PHA request of changes above the threshold to the Office of Capital Improvements - Attention Kevin Gallagher.
i. A change in the type of activity being financed (e.g. if the approved CFFP Proposal contemplated the proceeds being used for modernization, but after approval the PHA decides to pursue development instead),
ii. A change in the Project being modernized/developed with the proceeds,
iii. A reduction of 20% or more in the number of public housing units being modernized/developed (PHAs must at all times comply with TDC requirements),
iv. An increase of 20% or more of the cost of non-dwelling space.