On November 14, HUD Issued Notice PIH 2016-18 titled Guidance on Full Flexibility for Eligible Small PHAs. The notice provides guidance on the full flexibility of capital funds and operating funds for public housing agencies (PHAs) which own or operate less than 250 public housing units small PHAs and are not designated as a troubled PHA (eligible small PHAs).
Eligible small PHAs are allowed to use up to 100% of a Capital Fund Program (CFP) grant for Operating Fund Program (OFP) activities if the PHA does not have debt service payments, significant capital needs or emergency needs. Regulations require eligible small PHAs to plan and budget for significant CFP needs prior to using capital funds for operating fund expenditures. Eligible small PHAs seeking to exercise full flexibility must have an approved CFP 5-Year Action Plan that indicates the amount of each grant they intend to use for operating fund expenditures. In addition, eligible small PHAs seeking to exercise full flexibility must submit a capital fund budget for each year. Eligible small PHAs must complete a thorough assessment of their capital needs prior to completing the 5-Year Action Plan and accurately reflect those needs in the capital fund submission.
Eligible small PHAs may exercise full flexibility to use operating funds for eligible CFP activities included in an approved CFP 5-Year Action Plan and budget submitted to HUD. HUD anticipates shifting from paper submission of CFP 5-Year Action Plans and budgets to an automated submission through the upcoming Energy Performance and Information Center (EPIC). In order to account for capital expenditures funded with operating funds and operating reserves (including excess cash), PHAs must enter the project’s annual financial report into the Financial Assessment Subsystem (FASS).
Eligible small PHAs that elect to fully use their operating funds for capital fund expenditures must continue to follow statutory and regulatory requirements, including those related to the conduct of public hearings, Resident Advisory Board consultation, consideration of comments, board approval, and environmental reviews.