Slide #1 © 2007 Nan McKay & Associates Hosted by Nan McKay RIM Review Issues and Legislative Update...

Slide #1©2007 Nan McKay & Associates

Hosted by

Nan McKay

RIM Review Issues and Legislative Update on SEVRA

©2007 Nan McKay & Associates


Today’s Topics

RIM Reviews SEVRA What else from HUD?


Learning Objectives

Learn how to proactively avoid RIM Review findings and loss of Admin Fees

Discover the specific in’s and out’s of SEVRA and what it will mean to you if it’s passed in the next session of Congress.


RIM Review Issues


Notice 2007-27

Notice is applicable for all on-site monitoring reviews, required PHA responses, and corrective actions that take place after the effective date of the Notice – August 24.


Notice 2007-27

Although there was substantial progress in reducing errors, the intent of the notice is to ensure that the downward trend in error reduction continues.

The concern is now the financial impact on the housing authority if the RIM review results in errors.


Notice 2007-27

Discusses 2 areas• Incentives for pursuing tenant fraud• HUD’s policy regarding the disallowed costs

over $2500 per program review uncovered during site monitoring that result in HUD overpayment of subsidy


Notice 2007-27 – Tenant Fraud

PHA options• Terminate assistance• Enter into a Repayment Agreement• Pursue litigation

These options will allow a PHA to retain an amount which will flow to the PHA’s Administrative Fees Net Restricted Assets.


Notice 2007-27 – Tenant Fraud

HUD regs regarding this area:• Where the PHA is the principal party initiating

or sustaining an action to recover amounts from tenants that are due as a result of fraud or abuse, the PHA may retain the greater of . .


Notice 2007-27 Tenant Fraud

A) 50% of the amount actually collected from a judgment, litigation (including settlement of a lawsuit) or an administrative repayment agreement pursuant to the PHA’s informal hearing procedures.



B) Reasonable and necessary costs that the PHA incurs related to the collection from a judgment, litigation (including settlement of a lawsuit) or an administrative repayment agreement. Reasonable and necessary costs include the costs of the investigation, legal fees, and collection agency fees.



Note that if HUD incurs costs on behalf of the PHA in obtaining the judgment, these costs will be deducted from the amount to be retained by the PHA.



Note that the remaining balance of the recovery proceeds that the PHA is not authorized to retain will flow to the HAP Net Restricted Assets.



The PHA may only use the amount of the recovery it is authorized to retain in support of the section 8 program in which the fraud occurred.

The remaining balance of the recovery efforts (whatever the PHA is NOT allowed to retain) must be applied as directed by HUD.



The PHA must retain records to allow HUD to audit these amounts including:• Amounts recovered on any judgment or repayment

agreement;• The nature of the judgment or repayment

agreement; and • The amount of legal fees and expenses incurred in

obtaining the judgment or repayment agreement and recovery.



If the PHA takes none of the actions noted, than all amounts that constitute an overpayment of HAP subsidy in excess of $2500 per review must be reimbursed to HAP Net Unrestricted Assets from Administrative Fees Net Unrestricted Assets or other non-federal funds.


Notice 2007-27 PHA Error

Overpayment of Subsidy• If the PHA overpaid HAP due to calculation or

other errors in excess of $2500 per review, 100% of that amount must be reimbursed to HAP Unrestricted Net Assets from the Administrative Fees Unrestricted Net Assets or other non-federal funds.



Overpayment of Subsidy • In addition, if such errors impacted any

funding baseline determinations, funding for the affected renewal periods will be adjusted.



Underpayment of subsidy• PHAs will not be reimbursed for

underpayment of subsidies. • PHAs are required to reimburse families for

overpayment of the total family share.



Underpayment of subsidy• Reimbursements of the tenant portion of the rent

can be made in current and future months through an increase in HAP to the landlord and a decrease in the family share until the family’s overpayment is fully compensated.

• A PHA may not use funds from its HAP account or HAP Net Restricted Assets to directly reimburse families for overpayment of the total family share.



Underpayment of subsidy• If the family did not receive the full amount of

utility reimbursement from the PHA, the PHA must reimburse the family.

• These reimbursements may be paid out of the PHA’s HAP account or HAP Net Restricted Assets.



Underpayment of subsidy• Note that a PHA cannot reimburse prior year

costs with current year funding.


REALITY!!!

RIM Review Results

Tracking Staff Errors

What to do about them?


Notice 2007-27 Sanctions

PHAs must identify and implement corrective actions or rectify errors in meeting program requirements uncovered during on-site monitoring reviews.

In the event that a PHA fails to comply with the requirements of the on-site monitoring reviews, HUD will impose sanctions for the voucher program by reducing the administrative fee.



The following shall result in sanctions: (1) failure to submit a Corrective Action Plan as directed by the field office within the timeframes outlined by the Field Office; and (2) failure to implement corrective actions pursuant to a field office approved Corrective Action Plan.



If, as a result of an on-site monitoring review, it is discovered that a PHA does not respond in writing to an on-site monitoring review report within 45 days, or does not implement its corrective actions within the timeframes approved by the field office, 10 percent of one-twelfth of its annual administrative fee amount will be withheld beginning the month the field office makes the sanction effective and lasting until the PHA has complied with the program requirements.



Thus, the withholding of the HCV program administrative fee is a temporary sanction.


Notice 2007-27 SEMAP

An on-site monitoring review may serve as a SEMAP confirmatory review of indicator three and other indicators if they are reviewed in depth during the on-site review.



In the event that a PHA’s self-certification of SEMAP Indicator three (Determination of Adjusted Income) is not supported by an on-site review, the field office must adjust the SEMAP score for that indicator, regardless of its impact on the PHA’s SEMAP performance designation (high, standard, troubled).



If, during the on-site review, it is discovered that other indicators are also not supported by file or other documentation, the SEMAP score for those indicators shall be adjusted as well.


Notice 2007-27 Self-Assessment

During FY 2007, HUD will be conducting additional on-site monitoring reviews of a PHA’s PH and HCV programs.

HUD strongly encourages PHAs to conduct self-assessment reviews to quality control and assure that the PHA’s income and rent determination process is in compliance with program requirements.


Notice 2007-27 Appeals

A PHA may appeal the imposition of sanctions, and/or disallowed costs to the HUD field office within 30 calendar days of imposition of adverse action(s) by submitting a written request to the HUD field office via certified mail.



SEMAP scores will use their own appeal process if the adjustment will be as a result of an on-site monitoring review.



The written request must provide material evidence or justification of any arguments or additional facts and data concerning the proposed adverse action.

The PHA may not request more than one appeal per adverse action (i.e., only one request for an appeal is allowed for the imposition of disallowed costs).



The field office will have 30 calendar days from receipt of a request for an appeal to approve or deny the appeal.

If the field office fails to approve or deny the appeal during this time, the appeal will be automatically granted to the PHA.



An appeal made to a field office (HUD Hub or program center) and denied, may be further appealed to the Assistant Secretary within 15 calendar days from the date of the denial.



The PHA shall submit the appeal via certified mail to the Office of the Assistant Secretary for Public and Indian Housing. Appeals submitted to HUD Headquarters that include material evidence not submitted with the initial appeal to the field office, or appeals made to HUD Headquarters directly, without first being submitted to the field office, will not be considered.


SEVRA


Introduction

Since this is all legislation or change in progress, the details will have to be fleshed out with final legislation and HUD regulations


SEVRA II Highlights

Section Eight Voucher Reform Act (SEVRA) Passed by House 7/14/07

• Minor amendments added Has not yet been addressed in the Senate

• If passed, would go to committee


SEVRA II Highlights

Slightly revised version of last year’s SEVRA bill

Makes many changes in the voucher program


Overview of SEVRA

Reform the Section 8 formula Revise the rent calculation process for BOTH

Section 8 and PH to “expand work incentives and reduce administrative costs”

Increase flexibility to use vouchers for homeownership


SEVRA Funding

Adopts the 2007 funding formula • Bases funding allocation on leasing and cost data

for 12 months• Provides that 12 month period would be the most

recent calendar year• Adjusted for inflation• Other adjustments (first-time renewal of enhanced

vouchers, set-aside for PBVs)


SEVRA Funding

Requires that HUD recapture any unused voucher funds at the end of the year in excess of one month reserve for 2007 (8.33% of annual funding)

Future years: would recapture anything over 5% of annual allocation

Recaptures to be used to help PHAs with FSS escrow and portability costs; balance reallocated to PHAs who are fully utilized


SEVRA Funding

PHAs required to absorb ported vouchers (fully funds cost differences – amendment)

PHAs with shortfalls could request an advance of next year’s funds (up to 2% of PHA allocation) which would reduce the following year’s allocation


SEVRA Funding

Admin fees based on the number of vouchers in use with an inflation adjuster

Includes new requirement to include calculation of an amount “for the cost of issuing vouchers to new participants”

HUD required to update fee annually All fees subject to appropriations


Income and Rent

Applies to HCV, PBV and PH


Income and Rent

Allowances and deductions• Child care eliminated• Increases dependent deduction to $500• Increases eld/dis HH deduction to $725

Both indexed for inflation in $25 increments• Medical/attendant care/auxiliary apparatus

expense threshold raised to 10%


Income and Rent

Work-related deductions• 10% of the first $10,000 of earnings of

employed individuals deducted from income ($1000)

• Eliminates EID


Income and Rent

Assets • Bill prohibits family from:

Having more than $100,000 in net assets • excluding retirement/education assets• FSS escrow, homeownership equity exempt


Income and Rent

Assets • Bill prohibits family from:

Having ownership in residence (with some exceptions)

• making a “good faith effort” to sell• Section 8 homeownership • victim of domestic violence


Income and Rent

Assets • PHA can accept family self-certification of

assets• For public housing, PHA may elect not to

enforce limits at recertification• Or may delay eviction/termination for up to 6

months


Income and Rent

Asset income• Imputed income from assets not included• Actual income from assets is included

Income exclusions• Not required to maintain a record of

miscellaneous income exclusions


Income and Rent

Annual Reexaminations• Families still reexamined annually

PHA must use prior year’s earned income and may use prior year’s unearned income

• Exclude 10% of the first $10,000 of earned income


Income and Rent

Annual Recertifications• Families on a fixed income (generally elderly

and disabled)90% of income from SS, SSI or similar sourceRecertifications required every 3 years Inflation factor used annuallyProbably will be an annual certification


Income and Rent

Interims• Families may request an interim if their annual

income falls by more than $1500 PHAs can set lower thresholdA $1500 reduction in income would result in a

rent decrease of approximately $38


Income and Rent

Interims• If unearned annual income is increased by more

than $1500, the PHA must conduct an interim No interim increases as a result of earnings unless

family has had a interim reduction during year• If a family gets a job, there is no interim

adjustment based on the increase until the annual reexam unless the family had an interim reduction in their income that went into effect during the same year


Income and Rent

Verification• Allows agencies to rely on determinations of

income conducted for other federal means-tested programs including TANF, Medicaid and Food StampsWill really help PHAs who are “on line” with

these agencies


Income Targeting

75% remains Based on the higher of 30% of area median

income or the federal poverty line, adjusted for family size (federal poverty line for family of 4 is about $20,500)


Continued Eligibility

The legislation imposes an initial and continuing income limit of 80% of median income• PHA may elect not to enforce for PH and PBV• Or may delay termination of assistance in a

unit for up to 6 months


General Changes - Voucher

Inspections• HQS still applies• Would allow initial subsidy payments if unit

doesn’t passFailure would have to be non-life-threatening

itemDefects corrected within 30 days for continued

payments


General Changes - Voucher

Inspections• Inspections required every 2 years• Inspection standard met by “a satisfactory

inspection of the unit under the rules of another housing assistance program that equals or exceeds the protections under HQS”REAC, Tax Credit, etc.


Homeownership

Adds a downpayment assistance grant in lieu of monthly payment • Up to $10,000• One-time grant• Already in the regulations but funds were not

appropriated


PHA Performance

HUD required to set standard to measure “periodically” (not necessarily annually)• Housing quality• Funding utilization• Financial condition of the agency• Timeliness and accuracy of reporting to HUD• Effectiveness of deconcentration of poverty policies


PHA Performance

New performance standards would replace SEMAP HUD would have to issue new regulations Bill does not establish consequences for different

levels of performance (regulatory)


Other Amendments

Can use vouchers for purchase of manufactured homes on leased land

Requires HUD to issue guidance to ensure that the 50,000+ vouchers created for non-elderly disabled families continue to be reserved for such persons


Other Amendments

Eliminates baseline cap More reliable funding source for FSS

Coordinators Requires HUD to establish smaller areas for

the purpose of calculating FMR levels and providing funding inflation adjustments to improve accuracy


Other Amendments

Housing Innovation Program (formerly MTW)• Expands # of PHAs who can participate

Expands by 20 2nd Category of 20 additional agencies under

expanded tenant protection including resident participation in demolishing public housing

• Lets agencies experiment with development, financing and work incentive proposals while adding substantial tenant protections to the program


Other Amendments

Authorize 20,000 new incremental vouchers in each of next 5 years

Strengthen protections for voucher families in units that fail to meet HQS

Strengthen voucher provisions to address areas when families face high rent burden


Other Amendments

Ensure that families seeking public and assisted housing are only screened on their ability to meet lease obligations

Exclude income from Coverdell and Section 529 education accounts from rent calculations

Increase voucher work incentives for severely disabled persons, in conjunction with State demonstration programs


Other Amendments

Authorize 15 year contract terms for vouchers used in tax credit projects to help facilitate financing for the projects

Protect “empty nesters” from eviction from certain buildings when their units are oversized (enhanced vouchers)


New Amendments to House Bill

Requirement that HIP (MtW) agencies must comply with VAWA

Requirement for all adult household members to provide “secure ID”


Other HUD Changes


What’s Expected from HUD?*

Reworking 982 – proposed reg out this year; final reg probably a year away

SEMAP changed


SEMAP Proposed Changes

Utilization of funds – using funds appropriated by Congress

Financial condition (clean audits) Decent, safe and sanitary housing not in

concentrated areas (BIG) Timely and accurate reporting – PIC/VMS


Learning Objectives

Learn how to proactively avoid RIM Review findings and loss of Admin Fees

Discover the specific in’s and out’s of SEVRA and what it will mean to you if it’s passed in the next session of Congress.


Summary

“The more things change, the more things stay the same.”


Upcoming Lunch ‘n’ Learns

Sep 28 Supervision for PH Managers Oct 5 Reducing FSS Program Costs Oct 19 Common Rent Calculation Errors

and How to Reduce Them Nov 9 Succession Planning Nov 29 FSS Case Management

Slide #1 © 2007 Nan McKay & Associates Hosted by Nan McKay RIM Review Issues and Legislative Update...

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