Capital Fund Reference - Wisconsin Association of Housing

Report
Capital Fund Reference
April 2013
Larry Wood
Deanna Alfonso
U.S. Department of Housing & Urban Development
Milwaukee Field Office
WI Public Housing
Capital Fund Management
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Capital Funds follow 24 CFR 24.905
Capital Funds include Regular CFP Grants, ARRA Grants (Formula and
Competitive), RHF Grants, and Emergency CFP Grants.
It is the responsibility of the PHA to follow HUD regulations and use
funds appropriately.
HUD reserves the right to establish voucher thresholds depending on
PHA performance or other issues and concerns.
Timely update of the Obligation/Expenditure log in LOCCS is the PHA
responsibility.
Contracts and processes all need to follow 24 CFR 85.36
Fiscal responsibility is everybody’s job.
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Obligations
Obligations mean the cumulative amount of modernization commitments entered into
by the HA; i.e., contract execution for contract labor, materials or services; start and
continuation of physical work by force account labor; and start and continuation of
administrative work. Contract execution means execution of the contract by both the
HA and the contractor. For force account work, all funds for a group of sequentiallyrelated physical work items are considered obligated when the first work item is
started, such as kitchen cabinet replacement followed by kitchen floor replacement,
but only where funds continue to be expended at a reasonable rate. Where one force
account physical work item is started and is not sequentially related to other physical
work items, such as site improvements and kitchen remodeling, then only the funds
for the one physical work item started are considered obligated. - Notice PIH 96-90
A minimum of 90% of the funds must be obligated by the “Obligation End Date”.
Obligation End date is 2 years after the funds are made available. The term
“obligation” means that a PHA has an obligating document, such as a contract,
signed by two parties, or a purchase order.
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Expenditures
Where funds have been obligated, the HA is expected to show reasonable
progress through increasing fund expenditures each quarter at a rate
that would allow completion within the time frame set forth in the
implementation schedule. Expenditures mean the cumulative amount of
modernization funds distributed by the HA through written checks. The HA
shall requisition funds only when payment is due and after inspection and
acceptance of the work and shall distribute the funds within three working
days of receipt of the funds. - Notice PIH 96-90
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Capital Fund “DO’s”
 Use CFP grant funds to modernization and improve projects of units that
are under the Annual Contributions Contract (ACC), as defined in 24 CFR
5.403
 All of the activities must be approved by HUD (via the Annual and 5
year Action Plan)
 Fungibility of proposed work items is allowed. This means that the PHA
may use CFP funds for any activity addressed in the 5 year action plan, if it
so chooses, provided that the following items are satisfied:
(1) Such activity has been included in the environmental review;
otherwise, the ER has to be amended); and
(2) The PHA prepares and submits a budget revision (HUD FORM
50075.1, parts I, II), to HUD for approval, prior to the
implementation is the activity.
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Capital Fund “DO’s”
• Only expend funds after the Environmental Review (ER) has been
completed.
• PHAs must update the “Obligation-Expenditures” screen in LOCCS
(Monthly- No exception). This activity must be completed no later than 5
calendar days after the month ends.
• Note: All PHAs are required to have available their obligation/expenditure
documents, should any of these documents be requested by HUD.
• Follow all “Eligible Activities” regulations. Note:
Eligible activities are outlined in 24 CFR 968. This Code of Federal Regulations pre-dates the
Quality Housing and Work Responsibility Act (QHWRA) of 1995. However, it is the latest
document listing eligible activities, at this time. If you are unsure of eligibility of a certain
activity, please contact the Field Office for further guidance.
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1406
• A Maximum of 20% may be budgeted and expended for Operations (BLI
1406). This applies to large PHAs (250 units or more).
• Small PHAs , PHAs with less than 250 dwelling units, that are not
designated as a troubled PHA pursuant to section 6(j)(2) of the Act, and
that in the determination of the Secretary is operating and maintaining its
public housing in safe, clean and healthy condition, may transfer 100% of
its funds to operations
• BLI 1406 funds, once withdrawn, immediately follow the operating fund
rule - (24 CFR 990).
Note: Funds budgeted under the BLI 1406 are considered obligated and expended
when the PHA draws down the funds.
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1408
• A Maximum of 20% may be budgeted and expended for Management
Improvements (BLI 1408). BLI 1408 may be used for the following
activities (24 CFR 968.112- Eligible Activities):
– Management, financial, and accounting control systems of the PHA
– PHA staff training
– Provision of social services to residents, from local government or other public and
private entities
– Resident and development security (i.e., installation of security apparatus such as
cameras, key cards for individual residents, etc.). This does not include police and/or
security guards protection.
– Resident selection and eviction
– Occupancy, rent collection, maintenance (non-routine), and equal opportunity.
– Preventive Maintenance System costs to include the establishment of a maintenance
preventive system or improvement of an existing system:
– Regular inspection of building structures, systems, and units
– Drug elimination costs.
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1408
• Job training for residents and resident business development activities (for
purpose of carrying out activities related to a modernization project and
physical improvement). HUD encourages PHAs to hire residents as
trainees, apprentices, or employees to carry out the modernization
program.
• Lead-based paint costs such as insurance coverage and cleanup and
disposal.
• Resident Management Costs related to the following activities:
– Technical assistance to a resident council or resident management corporation (RMC)
– Training of RMC Board members in community organization, board development, and
leadership
– Assistance in the formation of the RMC
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1410
• Maximum of 10% may be used for Administration (BLI 1410). PHAs can
draw down the total amount authorized for BLI 1410 Administration at any
time or alternatively the PHA can simply withdraw a portion of that
amount from that BLI as they have need of the funds.
Treasury rules state: The PHA should not draw down funds unless the PHA has a bill
that is due and payable and those funds should be expended within 3 business days.
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1410
• BLI 1410 may be used for the following activities (24 CFR 968.112- Eligible
Costs):
– Planning, design, implementation and monitoring of the physical
management improvements
– Salaries/benefits of technical and non-technical personnel assigned to
a modernization project, where the scope and volume of the work are
beyond what could be reasonably expected to be accomplished as
part of the personnel’s non-modernization duties
– Preparation of the necessary CFP documents (preparation of budget
revisions, closeout packages, etc.)
– Resident participation costs associated with ensuring residents’
involvement in the annual PHA Plan process.
– Costs of administering telephone and facsimile machines
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Vehicles
• If a PHA chooses to use “force labor”, CFP funds may be used to purchase
a non-passenger vehicle, such as a truck or backhoe, under the nondwelling equipment BLI 1475; if and only if, it is needed to carry out
physical improvements, as set forth in the Physical Needs Assessment.
• CFP funds may be used to purchase non-passenger vehicles, such as a
truck or snowplow, under the non-dwelling equipment BLI 1475, if and
only if, it is needed to carry out management improvements, as set forth
in the Management Needs Assessment.
– For example: maintenance vehicles are an eligible cost only where new or replacement
vehicles are set forth on the Management Needs Assessment as needed to improve or
sustain maintenance operations. No proration is needed where the maintenance vehicle
will be used, exclusively, for public housing.
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Vehicles
• CFP funds may be used to purchase a new or replacement passenger
vehicle, under BLI 1475, only where the vehicle will be used, on a full-time
basis to carry out the modernization program.
• Eligible vehicle leasing costs (of the above) should be charged to
Administration (BLI 1410).
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Capital Fund “DON’Ts”
• Use CFP funds for everyday operations expenses, unless the funds are
under BLI 1406
• Use CFP funds to pay for police protection and security guards. These are
operating costs. Section 9(e) (1) (c) of the United States Housing Act of
1937, as amended.
• Pay the A/E for performing work outside of the
modernization/rehabilitation project
• Obligate funds (in LOCCS) for operations before funds are drawn down.
• Report the funds obligated in LOCCS before they are legally committed
through expenditure, a contract, or a purchase order.
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Capital Fund “DON’Ts”
• Demolish or dispose, from inventory, any ACC/DOT units, without prior to
written HUD approval. (See PIC Inventory Removal module)
• Use CFP funds (under any circumstances) to pay for costs related to
demolition/disposition/acquisition/or development of any non-ACC units.
• Pay for utilities, because utilities are operating costs.
• Co-mingle funds - This means that PHAs should not pay its
contractors/vendors from its general account (or any other account) and
later charge the CFP account and vice versa.
• Delay payments to your contractors/vendors more than 3 business days
after the payment has been released (disbursed) by HUD into the PHAdesignated financial institution.
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Capital Fund “DON’Ts”
• Ignore the obligation and expenditures end date. Obligation
end date cannot be extended, unless approved by the
Assistant Secretary of Public Housing (HQ). The expenditures
end date may be extended as a result of extending the
obligation end date.
Funds not obligated at a minimum of 90% by the obligation end date will be subject
to penalties and sanctions. The PHA will lose 1/12 for each month after the
obligation end date, from its next CFP grant, for each month that it is not in
compliance. Remember - One day into a month will constitute one full month in the
calculation of penalty.
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CFP Pre Audit
• When funds are fully expended:
– Submit AMCC (Form 53001) with the final Budget
form (Form 50075.1) to the FO.
– The FO will mark LOCCS as Pre-Audit, removing
any additional PHA responsibility for monthly
updates.
– A letter will be sent with a copy of the AMCC
– PHA Must Audit the grant on the next FY cycle.
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CFP Post Audit
• Provide the FO with an Audit Copy
– The FO will notify HUD Accounting to close the
grant.
– A FO letter will be provided with the final AMCC
form.
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Common Errors
• Obligating funds inappropriately; i.e. 100% without invoices.
• Not having a LOCCS backup person.
• Drawing funds without matching vouchers or contract
invoices. No voucher may be placed in LOCCS before the
appropriate invoice(s) has/have been submitted and
approved by the PHA.
• Not expending funds within 3 business days, after HUD
disburses the funds. (pay contractors/vendors)
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Common Errors
• Placing money in the wrong accounts. For example:
– All in 1406 when contract work is anticipated
– Not allocating according to the PHA plan
• Delayed close outs.
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Conclusion
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Update Obligation/Expenditure log monthly.
Only list obligations as incurred.
Draw money to match vouchers.
Submit the AMCC (Form 53001) & Budget (Form 50075.1)
when money is expended.
• Audit the expended grants annually.
• Annually plan for the EA requirement on Form 7015.15.
• Ensure there are at least two people approved for all HUD
systems.
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