What
are Replacement Housing Factor (RHF) Fund Grants?
They are Capital
Fund Grants that are awarded to PHAs that have removed units from inventory for
the sole purpose of developing new public housing units. The Capital Fund formula
rule at 24 CFR 905.10(i) provides that a PHA may receive RHF grants for public
housing units demolished or sold for a period of up to five years. A PHA
may only be given RHF funding for public housing units that have not already been
funded for replacement public housing units under public housing development,
Major Reconstruction of Obsolete Public Housing (MROP), HOPE VI, or any other
programs that would otherwise provide replacement housing. A PHA must report
the units as removed from inventory in the PIC system before it will receive RHF
funding.
What are the eligible uses of RHF funds?
A
PHA may
only develop or acquire public housing rental units with RHF funds.
All replacement housing must be undertaken in accordance with public housing development
regulations found at 24 CFR Part 941, which includes requirements for mixed-finance
development.
How many years of RHF funding is a PHA eligible
to receive?
First Increment Funding: A PHA automatically receives five
years of first increment RHF funding the
year after units approved for
demolition or disposition have been removed from the public housing inventory
and the PHA reports the removal in PIC. If a PHA does not wish to receive RHF
funding, it must reject the first increment RHF grant, in writing, every year
that it does not wish to accept the funds.
Second Increment Funding:
A PHA is eligible for another five years of second increment RHF funding, but
the funding is not automatic. In order to receive an additional (or second) five
years of RHF funding, the PHA must apply every time it is eligible for another
"tier". If the PHA does not apply for this second increment funding or fails to
meet the requirements for second increment RHF funding, than it becomes ineligible
for the entire five years of second increment RHF funding associated with that
tier.
A list of PHAs eligible for one or more new tiers of second increment
RHF funding is posted annually on the Capital Fund home page, along with a deadline
for submission of a second increment RHF Plan (or revision if applicable) and
any other submission instructions.How are RHF Grants
Calculated?
RHF grants are calculated as part of the Capital Fund Formula
for units that have been removed from the PIC/IMS in the prior Federal Fiscal
Year and are otherwise eligible in accordance with RHF requirements. The amount
of RHF funding a PHA receives each year is based on a number of factors including,
but not limited to the:
- number of units removed from the inventory;
- project(s)
associated with the removed units;
- number of years the PHA has been receiving
RHF funding.
Some units that have been removed from PIC/IMS do not receive
RHF funding. In these instances, the PHA is ineligible for RHF funding for the
removed units. Some common reasons include:
- Units planned for replacement
are being funded by Hope VI, MROP and other sources
- Units removed by sales
to home ownership
- Units removed because of eminent domain
- Units
that have been added to the PHA inventory since 10/1/1999 that are not attributed
to HOPE VI ( The ineligible units are removed using first in first out scenario
so the units that first entered RHF are made ineligible as new units are added
to inventory)
- Conversion, or units removed as a result of reconfiguration.
Additionally,
removing units from multiple projects in the inventory over time adds layers to
the calculation. The RHF Matrix summarizes the RHF funding awarded to a PHA by
project (with the approved demolition or disposition). An RHF Matrix for each
PHA receiving RHF funding can be found at the Capital Fund webpage.
Additionally,
removing units from multiple projects in the inventory over time adds layers to
the calculation. The RHF Matrix summarizes the RHF funding awarded to a PHA by
project (with the approved demolition or disposition). An RHF Matrix for each
PHA receiving RHF funding can be found at the Capital Fund webpage.
The
following is a table giving an example for a hypothetical PHA receiving RHF. The
Matrix shows project distribution on an annual basis. In the Matrix, "1-1" signifies
that the project is receiving the first year of 1st increment funding; "1-2" signifies
that the project is receiving funding for the second year of the first increment
and so on.
RHF Funding (by Project) First Increment Only
Project
Name | 1998 | 1999 | 2000 | 2001 | 2002 |
Project
A | 1-1 | 1-2 | 1-3 | 1-4 | 1-5 |
Project
B | | 1-1 | 1-2 | 1-3 | 1-4 |
Project
C | | | 1-1 | 1-2 | 1-3 |
In
the Matrix above, as of FY 2002 Project A has received 5 years of first increment
RHF funding (1-5); Project B has received 4 years of first increment funding (1-4);
and Project C has received 3 years of first increment funding (1-3). Using the
Matrix, the first increment RHF grant for the PHA in Fiscal Year 2002 was a combined
total of RHF funds for the three developments, Projects A+ Project B+ Project
C as identified in the last column.
RHF
Funding-Multiple Tiers by Project for AJAX PHA First and Second Increment
Project
Name | 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 |
Project
D | 1-1
$500 | 1-2
$500 | 1-3
$ 525 | 1-4
$550 | 1-5
$580 | 2-1
$500 | 2-2
$500 | 2-3
$525 |
Project
E | | 1-1
$200 | 1-2
$210 | 1-3
$240 | 1-4
$300 | 1-5
$375 | 2-1
$200 | 2-2
$205 |
Project
F | | | 1-1
$100 | 1-2
$110 | 1-3
$125 | 1-4
$225 | 1-5
$100 | |
Subtotal
- 1st Increment Grant | $500 | $700 | $835 | $900 | $1,005 | $600 | $100 | $0 |
Subtotal
- 2nd Increment Grant | 0 | 0 | 0 | 0 | 0 | $500 | $700 | $730 |
Total
RHF Funding | | | | | | $1100 | $800 | $730 |
This
Matrix shows the combined effect of both first and second increments. Project
D qualifies for second increment funding in FY 2003 and Project E qualifies for
second increment funding in FY 2004. Project F was not approved for second increment
funding. Also note that in FY 2003 and FY 2004 the PHA could be receiving two
RHF grants, a first increment grant of $600 for Projects E and F and a second
increment grant of $500 for Project D. In FY 2005, the second increment grant
will be $730; a combination of the RHF amounts for Projects D and E. The PHA will
not have a first increment grant in FY 2005.
The shaded portion of the
Matrix identifies all of the PHA's first increment grants. These should be included
in the PHA's RHF Plan for the first increment. In the example below, as the result
of having multiple projects receiving RHF funding in different years the first
increment spans from FYs 1998 -2004. The non-shaded portion of the Matrix FY 2003-2005
is all of the PHA's second increment grants that should be included in the RHF
Plan for the second increment.
What amount of RHF funds
does a PHA receive? How can RHF funding be estimated for planning purposes?
A
PHA receives approximately the same amount of RHF for the units it has removed
from its inventory that it would have received in formula funding when the units
were standing. (There is an adjustment based on certain "off-sets" or units removed
from inventory that are not eligible for RHF funding.)
For planning purposes,
a good way to estimate this amount (Notwithstanding annual Appropriations, variations
in the capital fund calculation, etc) is to take the number of units reported
as removed, and multiply it by the per unit funding the PHA received for the particular
development in the prior year. The per unit funding report for all PHAs receiving
Capital Funds can be found at the Capital Fund webpage. The information is updated
annually.
When does a PHA need to submit a first increment
RHF Plan?
A PHA must submit an RHF Plan whenever it wishes to accumulate one
or more years of RHF funds prior to starting to use them for development. A first
increment RHF Plan is submitted to the HUD Field Office for approval. Once approved,
obligation and expenditure end dates can be reset based on an accumulation of
funds. PHAs can accumulate 2, 3, 4 or 5 consecutive years of RHF first increment
funding.
What happens if a PHA does not submit an RHF Plan?
Without
an RHF Plan, the PHA has no authority to accumulate funding. If a PHA fails to
submit a first increment RHF Plan the obligation start date of the RHF grant(s)
will automatically be 24 months from the date that the funds became available
for each year of RHF funding (the same date as the respective modernization (formula)
grants. However, if the RHF Plan is submitted and approved, then the obligation
and expenditure start dates will be established based on the accumulation in the
approved first increment RHF plan.
What must a first increment
RHF Plan include?
The first increment RHF plan must include information addressing:
- That
the PHA intends to accumulate its RHF grants for several years and delay the obligation
start date and the reason (s) why it needs to do so.
- The number of years
of grants is the PHA accumulating (up to five years).
- The grants, by fiscal
year (and grant number if known) the PHA accumulating, including any future years
of funding.
- The total amount of the grants being accumulated.
- That
the PHA is using the funds consistent with the terms of RHF -- the development
or acquisition for the purpose of developing Public Housing ACC units in accordance
with 24 CFR Part 941.
- That the PHA will revise its RHF Plan if any one
of the many factors that affect its RHF funding cause RHF to end earlier that
anticipated. (This will affect the obligation end date because not as many years
of funding will be accumulated.)
A further description of these requirements
can be found under the section on RHF Plan Submissions.
When
does a PHA need to submit a second increment RHF Plan?
A PHA must submit a
second increment RHF plan to receive second increment RHF grants. The PHA must
meet additional criteria and indicate whether or not it plans to accumulate funds
prior to undertaking development activity.
A PHA must submit separate
first and second increment RHF Plans to cover up to five years of each type of
RHF.
Note: because of the continuing nature of both first and second increment
grants there may be the need for multiple first and second increment plans to
cover the entire period of funding for each type of RHF grant.What
criteria must a PHA meet in order to receive second increment RHF funding?
As
mentioned above, after a PHA receives RHF funding for five years, it may be eligible
funding for an additional five years. In order to be awarded second increment
funding, a PHA must submit a second increment RHF Plan. In addition to the criteria
included in a first increment RHF Plan, the PHA must also demonstrate that it
has: 1) leveraged substantial additional funding from sources other than public
housing funds, 2) received approval for all required PHA Plans, 3) complied with
statutory obligation and expenditure deadlines AND 4) made substantial progress
on its first increment RHF Plan. A further description of these requirements can
be found under the section on RHF Plan Submissions.
Note: If the
PHA requests an additional five years of funding, it must proceed with the development
of the first five-year increment and submit a second, discrete, RHF Plan based
on the funding provided in years 6 - 10. In no case should the development or
developments planned with first increment RHF funding be planned in such a way
that completion of that development or developments relies on HUD funding of the
second increment of RHF.
Do obligation and expenditure
deadlines apply to RHF grants?
Yes. Section 905.10(i)(7) provides that RHF
funds must be obligated either within 24 months from the date that the funds become
available;
or with specific HUD approval, 24 months from the date the PHA
accumulates adequate funds (up to five years) to undertake replacement housing.
A PHA MUST submit an RHF Plan for HUD approval in order to establish alternate
obligation and expenditure deadlines. A PHA may accumulate adequate -- up to five
years -- of RHF funds to undertake replacement housing activities. It is important
to note that a PHA may accumulate ANY five consecutive years of first increment
RHF Funds OR of second increment RHF Funds; this is a change from prior RHF policy.
Additionally,
for PHAs requesting a second increment of RHF funding, the previous requirement
that as a condition for receiving grants in years 6-10 that all funding (increments
one and two) be fully expended by the end of the 10th year of funding
No Longer
is Applicable. Like first increment RHF grants, second increment RHF grants
must be expended within forty-eight months after the obligation start date.
Do
obligation and expenditure deadlines apply when the PHA is not accumulating RHF
grants?
A PHA may proceed to use its RHF grants WITHOUT with submitting an
RHF Plan. In this case, the PHA will submit a development proposal to HUD, obligate
90 percent of a single RHF grant within 24 months from the date the funds were
made available and expend 100 percent of the RHF grant within 48 months from when
the funds were made available. An RHF grant is similar to a typical Capital Fund
Grant in this instance.
How are obligation and expenditure
deadlines established in instances where a PHA wishes to accumulate its RHF prior
to undertaking development?
As stated above, a PHA may accumulate up to five
years of RHF funds prior to starting development activities. The obligation deadlines
are set as follows:
For both first and second increment RHF funds awarded
through FY 2008: The obligation deadline is set 120 days after receipt of
funds in the last year of funds to be accumulated. So, if a PHA is accumulating
funds from FY 2003- FY 2007, the obligation start date for all five grants is
1/2008. The obligation end date is 24 months after that and the expenditure deadline
48 months from the obligation start date.
For RHF funds awarded FY 2009
and after: The obligation deadline is set to 10/30 in the last year of funds
being accumulated. Again, the obligation end date is 24 months after that and
the expenditure deadline 48 months from the obligation start date.
The
Chart Below shows the latest possible obligation end dates for RHF grants that
are being accumulated.
Chart
of Obligation and Expenditure end dates |
Last
Year of Accumulation | Obligation
End Date | Disbursement
End Date |
2003 | 1/13/2006 | 1/13/2008 |
2004 | 1/10/2007 | 1/10/2009 |
2005 | 12/14/2007 | 12/14/2009 |
2006 | 11/13/2008 | 11/13/2010 |
2007 | 1/9/2010 | 1/9/2012 |
2008 | 10/12/2010 | 10/12/2012 |
2009 | 10/29/2011 | 10/29/2013 |
2010 | 10/29/2012 | 10/29/2014 |
2011 |
10/29/2013 |
10/29/2015 |
2012 | 10/29/2014 | 10/29/2016 |
2013 | 10/29/2015 | 10/29/2017 |
2014 | 10/29/2016 | 10/29/2018 |
2015 | 10/29/2017 | 10/29/2019 |
Once
a PHA has submitted an RHF Plan and the local HUD office has approved it, the
information is entered into the RHF Data Collection Tool, and the obligation and
expenditure deadlines are reset in LOCCS.
What is
the relationship between the submission of a development proposal and establishment
of obligation and expenditure deadlines - does one still exist?
Previously,
when a PHA decided to accumulate RHF funds, HUD guidance explained that the latest
date that the PHA could submit a development proposal for its first five years
of RHF funding was 90 days after execution of the RHF ACC by the HUD Field Office
for the fifth year of RHF funding. A PHA could submit a development proposal earlier
than that date, however, if it submitted the development proposal after that time,
the obligation start date was still established as if the PHA had submitted the
proposal by the latest possible permissible date.
Now, the establishment
of alternate obligation and expenditure deadlines is based solely on a PHA's intent
to accumulate funds. The PHA is responsible for proceeding with development activities,
including but not limited to the submission of a development proposal, in a timely
fashion that complies with the obligation deadlines.