HUD Issues Guidance on Small PHA Flexible Use of Capital and Operating Funds

Housing and Urban DevelopementHUD’s Office of Public and Indian Housing (PIH) issued Notice PIH 2016-18 providing guidance regarding the ability of small public housing agencies (PHAs) to use capital funds and operating resources in a flexible manner for any activities eligible under the Capital Fund Program (CFP) and Operating Fund Program (OFP), regardless of which fund the money comes from. Eligible small PHAs are those that own or operate fewer than 250 public housing units and that are not considered “troubled.”

Eligible small PHAs may use any amount of their capital fund grant for operating fund activities if the PHA does not have debt service payments, significant capital needs, or emergency needs. Debt service payments include any annual contributions pledged for payment of bonds or notes through the Capital Fund Financing Program (CFFP). Significant capital needs include replacing a roof, HVAC, plumbing, sewerage, and kitchen or bathroom fixtures. Emergency needs include work that requires a significant investment of capital funds which, if deferred, is likely to result in an emergency situation. Eligible small PHAs may also use any amount of their operating fund grant for eligible capital fund activities.

A PHA is designated as “Overall Troubled” if it has an overall Public Housing Assessment System (PHAS) score of less than 60%. A PHA is designated “Capital Fund Troubled” if it has a CFP indicator PHAS score of less than 50%. Either designation renders a small PHA ineligible to use its capital or operating funds in a flexible manner. However, if a small PHA has an overall Section Eight Management Assessment Program (SEMAP) score less than 60%, it may use its capital and operating funds in a flexible fashion because SEMAP applies only to a PHA’s Housing Choice Voucher program.

Notice PIH 2016-18 is at: