HUD’s Office of Public and Indian Housing (PIH) posted Notice PIH-2020-16 implementing the FY20 Appropriations Act $25 million set-aside of Public Housing Operating Funds to assist public housing agencies (PHAs) experiencing financial insolvency. The notice complies with the Senate Appropriations Committee Report (S. 116-109) requiring the set-aside funds to be allocated first to PHAs with 249 or fewer public housing units that have less than one month of reserves.
For the purposes of the notice, PIH defines a PHA that has less than the equivalent of one month of operating expenses held in reserve as experiencing current insolvency, while a PHA with one month or more but less than two months of reserves as experiencing near insolvency. Any PHA that has fewer than two months of operating expenses held in reserve (Months of Operating Reserve, or MOR) will be eligible to receive Shortfall funding. The notice has a link to an Operating Shortfall Funding webpage that includes a list of PHAs eligible for Shortfall funding and the amount they are eligible to receive. The site also has a list of ineligible PHAs.
Because only $25 million is available, PIH has established two tiers of eligible PHAs, Tier I PHAs have a MOR less than zero and Tier 2 PHAs have a MOR less than 2. Tier 2 PHAs are sub-divided into three cohorts based on the number of units they have: Very Small PHAs (0-49 units), Small PHAs (50-249 units), and Non-Small PHAs (over 249 units). Very Small and Small PHAs have higher priority. Tier 1 PHAs will be fully funded first, and 50% of available Tier 2 funding will be provided to Tier 2 PHAs. Subsequently, Tier 2 PHAs with immediate needs that have an MOR of no less than 1 will receive funding.
To ensure PHAs that receive Shortfall funding take appropriate steps toward long-term financial solvency, the award letter for PHAs will contain the following list of improvements that PIH has historically recommended to insolvent PHAs:
- Reduce costs/increase revenue
- Increase program rent revenue by improving occupancy and evaluating rent collection policies and actions
- Consider selling property/assets in accordance with PIH’s disposition regulations
- Convert properties through the Rental Assistance Demonstration (RAD), possibly with Low-Income Housing Tax Credits
- Reposition capital assets that are beyond their useful life
- Seek additional financing (e.g., debt, equity, cash flow, forgiveness) through a municipality, finance authority, and housing trust fund
- Renegotiate contracts with PHA workforce and/or vendors
- Restructure the PHA’s organization and staff
- Consider implementing energy conservation measures and agreements to reduce energy costs
PHAs that receive Shortfall funding will be required to collaborate with PIH Field Offices to identify specific issues at the PHA and develop a plan identifying actions that the PHA can take to improve their financial performance. The Field Office will document a PHA’s efforts to improve based on the PHA’s implementation plan. Shortfall funding will be recaptured from PHAs that do not sufficiently collaborate with their Field Office to develop an improvement plan.
Notice PIH-2020-16 is at: https://bit.ly/2XaxvUO
The list of PHAs eligible for Shortfall funding is at: https://bit.ly/3hSeKgT
More information about public housing is on page 4-30 of NLIHC’s 2020 Advocates’ Guide.