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

HUD’s Office of Public and Indian Housing (PIH) recently issued Notice PIH 2016-18 providing guidance regarding the ability of small public housing agencies to use capital funds and operating resources in a flexible manner for any activities eligible under the capital fund program and operating fund program, 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.” A PHA is designated as “Overall Troubled” if it has an overall Public Housing Assessment System (PHAS) score of less than 60 percent. A PHA is designated “Capital Fund Troubled” if it has a CFP indicator PHAS score of less than 50 percent.

Eligible small PHAs may use any amount of their capital fund grant for operating fund activities if the PHA doesn’t 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.