HUD PIH Notice 2018-03 use of operating subsidy for capital fund activities

HUD issued HUD PIH Notice 2018-03 last week providing guidance to housing authorities on the use of calendar year 2018 operating subsidy for capital fund program (CFP) activities. HUD will publish the operating subsidy maximum for CFP activities towards the end of each funding year.

Highlights from the notice:

  • HUD is considering how to effectuate the use of 2016 and 2017 op sub, and will provide further guidance.
  • The amount of op sub to be used for CFP activities must remain in e-LOCCS.
  • PHAs must indicate their intent to use op sub for CFP activities in their Annual Plan.
  • Towards the end of each funding year, HUD will publish the total amount of operating subsidy obligated to each PHA and the op sub maximum allowed for CFP activities.
  • PHAs will estimate, for planning, the op sub amount to be used for CFP activities at both the PHA-wide and the project level.
  • This flexibility does not allow the PHA’s COCC to charge an additional/equivalent capital fund management fee on the op sub used for CFP activities. A capital fund management fee may only be charged to the PHA’s capital fund grant.
  • Once funds are transferred to BLI 1300, PHAs must adhere to CFP requirements related to drawdown and expenditure as detailed in 24 CFR 905.310, and other relevant HUD guidance for such funds (reference HUD’s 2016 Capital Fund Guidebook). PHAs may not spend op sub for CFP activities that are drawn from BLI 1000.
  • PHAs may not use this op sub flexibility as a mechanism to transfer op sub from one project to another, the use of BLI 1406 Operations when budgeting this op sub is not allowed.
  • General reporting requirements are listed on page 10 of the HUD notice Appendix A: Financial Data Schedule (FDS) Reporting.