[Code of Federal Regulations]

[Title 24, Volume 4]

[Revised as of April 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 24CFR905.10]



[Page 348-353]

 

                 TITLE 24--HOUSING AND URBAN DEVELOPMENT

 

CHAPTER IX--OFFICE OF ASSISTANT SECRETARY FOR PUBLIC AND INDIAN HOUSING, 

               DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

 

PART 905_THE PUBLIC HOUSING CAPITAL FUND PROGRAM--Table of Contents

 

Sec.  905.10  Capital Fund formula (CFF).









Sec.

905.10 Capital Fund formula (CFF).

905.120 Penalties for slow obligation or expenditure of CFP assistance.



    Authority: 42 U.S.C. 1437g and 3535(d).



    Source: 65 FR 14426, March 16, 2000, unless otherwise noted.





    (a) General. This section describes the formula for allocation of 

capital funds to PHAs. The formula is referred to as the Capital Fund 

formula (CFF).

    (b) Emergency reserve and use of amounts. (1) In each Federal fiscal 

year after Federal Fiscal Year (FFY) 1999, from amounts approved in the 

appropriation act for funding under this part, HUD:

    (i) Shall reserve an amount not to exceed that authorized by 42 

U.S.C. 1437g(k) for--

    (A) Use for assistance in connection with emergencies and other 

disasters, and

    (B) Housing needs resulting from any settlement of litigation; and

    (ii) May reserve such other amounts for other purposes authorized by 

42 U.S.C. 1437g(k).

    (2) Amounts set aside under paragraph (b) of this section may be 

used for assistance for any eligible use under the Capital Fund, 

Operating Fund, or tenant-based assistance in accordance with section 8 

of the U.S. Housing Act of 1937 (42 U.S.C. 1437f).

    (3) The use of any amounts as provided under paragraph (b) of this 

section relating to emergencies (other than disasters and housing needs 

resulting from settlement of litigation) shall be announced subsequently 

through Federal Register notice.

    (c) Formula allocation based on relative needs. After determining 

the amounts to be reserved under paragraph (b) of this section, HUD 

shall allocate the amount remaining in accordance with the CFF. The CFF 

measures the existing modernization needs and accrual needs of PHAs.

    (d) Allocation for existing modernization needs under the CFF. HUD 

shall allocate one-half of the available Capital Fund amount based on 

the relative existing modernization needs of PHAs, determined in 

accordance with this paragraph (d) of this section.

    (1) For PHAs greater than or equal to 250 or more units in FFY 1999, 

except the New York City and Chicago Housing Authorities, estimates of 

the existing modernization need will be based on the following:

    (i) Objective measurable data concerning the following PHA, 

community and development characteristics applied to each development:

    (A) The average number of bedrooms in the units in a development. 

(Equation co-efficient: 4604.7);

    (B) The total number of units in a development as of FFY 1999. 

(Equation co-efficient: 10.17);

    (C) The proportion of units, as of FFY 1998, in a development in 

buildings completed in 1978 or earlier. In the case of acquired 

developments, HUD will use the Date of Full Availability (DOFA) date 

unless the PHA provides HUD with the actual date of construction. When 

provided with the actual date of construction, HUD will use this date 

(or, for scattered sites, the average dates of construction of all the 

buildings), subject to a 50-year cap. (Equation co-efficient: 4965.4);

    (D) The cost index of rehabilitating property in the area as of FFY 

1999. (Equation co-efficient: -10608);

    (E) The extent to which the units of a development were in a non-

metropolitan area as defined by the Census Bureau during FFY 1996. 

(Equation co-efficient: 2703.9);

    (F) The PHA is located in the southern census region, as defined by 

the Census Bureau. (Equation co-efficient: -269.4);

    (G) The PHA is located in the western census region, as defined by 

the Census Bureau. (Equation co-efficient: -1709.5);

    (H) The PHA is located in the midwest census region as defined by 

the Census Bureau. (Equation co-efficient: 246.2)

    (ii) An equation constant of 13851.

    (A) Newly constructed units. Units with a DOFA date of October 1, 

1991, or thereafter, will be considered to have a zero existing 

modernization need.

    (B) Acquired developments. Developments acquired by a PHA with a 

DOFA



[[Page 349]]



date of October 1, 1991, or thereafter, will be considered by HUD to 

have a zero existing modernization need.

    (2) For New York City and Chicago Housing Authorities, based on a 

large sample of direct inspections. For purposes of this formula, prior 

to the cost calibration in paragraph (d)(4) of this section, the number 

used for the existing modernization need of family developments is 

$16,680 in New York, and $24,286 in Chicago, and the number for elderly 

developments is $14,622 in New York, and $16,912 in Chicago.

    (i) Newly constructed units. Units with a DOFA date of October 1, 

1991, or thereafter, will be considered to have a zero existing 

modernization need.

    (ii) Acquired developments. Developments acquired by a PHA with a 

DOFA date of October 1, 1991, or thereafter, will be considered by HUD 

to have a zero existing modernization need.

    (3) For PHAs with fewer than 250 units in FFY 1999, estimates of the 

existing modernization need will be based on the following:

    (i) Objective measurable data concerning the following PHA, 

community and development characteristics applied to each development:

    (A) The average number of bedrooms in the units in a development. 

(Equation co-efficient: 1427.1);

    (B) The total number of units in a development as of FFY 1999. 

(Equation co-efficient: 24.3);

    (C) The proportion of units, as of FFY 1998, in a development in 

buildings completed in 1978 or earlier. In the case of acquired 

developments, HUD will use the DOFA date unless the PHA provides HUD 

with the actual date of construction, in which case HUD will use the 

actual date of construction (or, for scattered sites, the average dates 

of construction of all the buildings), subject to a 50-year cap. 

(Equation co-efficient: -1389.7);

    (D) The cost index of rehabilitating property in the area, as of FFY 

1999. (Equation co-efficient: -20163);

    (E) The extent to which the units of a development were in a non-

metropolitan area as defined by the Census Bureau during FFY 1996. 

(Equation co-efficient: 6157.7);

    (F) The PHA is located in the southern census region, as defined by 

the Census Bureau. (Equation co-efficient: 4379.2);

    (G) The PHA is located in the western census region, as defined by 

the Census Bureau. (Equation co-efficient: 3747.7);

    (H) The PHA is located in the midwest census region as defined by 

the Census Bureau. (Equation co-efficient: -2073.5)

    (ii) An equation constant of 24762.

    (A) Newly constructed units. Units with a DOFA date of October 1, 

1991, or thereafter, will be considered to have a zero existing 

modernization need.

    (B) Acquired developments. Developments acquired by a PHA with a 

DOFA date of October 1, 1991, or thereafter, will be considered by HUD 

to have a zero existing modernization need.

    (4) Calibration of existing modernization need for cost index of 

rehabilitating property in the area. The estimated existing 

modernization need, as determined under paragraphs (d)(1), (d)(2) or 

(d)(3) of this section, shall be adjusted by the values of the cost 

index of rehabilitating property in the area.

    (e) Allocation for accrual needs under the CFF. HUD shall allocate 

the other half of the remaining Capital Fund amount based on the 

relative accrual needs of PHAs, determined in accordance with paragraph 

(e) of this section.

    (1) For PHAs greater than or equal to 250 or more units, except the 

New York City and Chicago Housing Authorities, estimates of the accrual 

need will be based on the following:

    (i) Objective measurable data concerning the following PHA, 

community and development characteristics applied to each development:

    (A) The average number of bedrooms in the units in a development. 

(Equation co-efficient: 324.0);

    (B) The extent to which the buildings in a development average fewer 

than 5 units. (Equation co-efficient: 93.3);

    (C) The age of a development as of FFY 1998, as determined by the 

DOFA date. In the case of acquired developments, HUD will use the DOFA 

date unless the PHA provides HUD with the actual date of construction, 

in which case HUD will use the actual date of construction (or, for 

scattered sites, the average dates of construction of all



[[Page 350]]



the buildings), subject to a 50-year cap. (Equation co-efficient: -7.8);

    (D) Whether the development is a family development. (Equation co-

efficient: 184.5);

    (E) The cost index of rehabilitating property in the area, as of FFY 

1999. (Equation co-efficient: -252.8);

    (F) The extent to which the units of a development were in a non-

metropolitan area as defined by the Census Bureau during FFY 1996. 

(Equation co-efficient: -121.3);

    (G) PHA size of 6600 or more units in FFY 1999. (Equation co-

efficient: -150.7);

    (H) The PHA is located in the southern census region, as defined by 

the Census Bureau. (Equation co-efficient: 28.4);

    (I) The PHA is located in the western census region, as defined by 

the Census Bureau. (Equation co-efficient: -116.9);

    (J) The PHA is located in the midwest census region as defined by 

the Census Bureau. (Equation co-efficient: 60.7)

    (ii) An equation constant of 1371.9,

    (2) For New York City and Chicago Housing Authorities, based on a 

large sample of direct inspections. For purposes of this formula, prior 

to the cost calibration in paragraph (e)(4) of this section the number 

used for the accrual need of family developments is $1,395 in New York, 

and $1,251 in Chicago, and the number for elderly developments is $734 

in New York, and $864 in Chicago.

    (3) For PHAs with fewer than 250 units, estimates of the accrual 

need will be based on the following:

    (i) Objective measurable data concerning the following PHA, 

community and development characteristics applied to each development:

    (A) The average number of bedrooms in the units in a development. 

(Equation co-efficient: 325.5);

    (B) The extent to which the buildings in a development average fewer 

than 5 units. (Equation co-efficient: 179.8);

    (C) The age of a development as of FFY 1998, as determined by the 

DOFA date. In the case of acquired developments, HUD will use the DOFA 

date unless the PHA provides HUD with the actual date of construction. 

When provided with the actual date of construction, HUD will use this 

date (or, for scattered sites, the average dates of construction of all 

the buildings), subject to a 50-year cap. (Equation co-efficient: -9.0);

    (D) Whether the development is a family development. (Equation co-

efficient: 59.3);

    (E) The cost index of rehabilitating property in the area, as of FFY 

1999. (Equation co-efficient: -1570.5);

    (F) The extent to which the units of a development were in a non-

metropolitan area as defined by the Census Bureau during FFY 1996. 

(Equation co-efficient: -122.9);

    (G) The PHA is located in the southern census region, as defined by 

the Census Bureau. (Equation co-efficient: -564.0);

    (H) The PHA is located in the western census region, as defined by 

the Census Bureau. (Equation co-efficient: -29.6);

    (I) The PHA is located in the midwest census region as defined by 

the Census Bureau. (Equation co-efficient: -418.3)

    (ii) An equation constant of 3193.6.

    (4) Calibration of accrual need for the cost index of rehabilitating 

property in the area. The estimated accrual need, as determined under 

either paragraph (e)(2) or (e)(3) of this section, shall be adjusted by 

the values of the cost index of rehabilitation.

    (f) Calculation of number of units--(1) General. For purposes of 

determining the number of a PHA's public housing units, and the relative 

modernization needs of PHAs:

    (i) HUD shall count as one unit:

    (A) Each public housing and section 23 bond-financed unit under the 

ACC, except that it shall count as one-fourth of a unit each existing 

unit under Turnkey III program. Units receiving operating subsidy only 

shall not be counted.

    (B) Each existing unit under the Mutual Help program.

    (ii) HUD shall add to the overall unit count units that are added to 

a PHA's inventory so long as the units are under ACC amendment and have 

reached DOFA by the date that HUD establishes for the Federal Fiscal 

Year in which the CFF is being run (hereafter called the ``reporting 

date''). Any such increase in units shall result in an



[[Page 351]]



adjustment upwards in the number of units under the CFF. New units 

reaching DOFA after the reporting date will be counted for CFF purposes 

as of the following Federal Fiscal Year.

    (2) Replacement units. Replacement units newly constructed as of and 

after October 1, 1998 that replace units in a development funded in FFY 

1999 by the Comprehensive Grant formula system or the Comprehensive 

Improvement Assistance Program (CIAP) formula system will be given a new 

ACC number as a separate development and will be treated as a newly 

constructed development.

    (3) Conversion of units. The total estimated need (total units times 

need per unit) of the development is unchanged by conversion of unit 

sizes within buildings.

    (4) Reduction of units. For developments losing units as a result of 

demolition and disposition, the number of units on which capital funding 

is based will be the number of units reported as eligible for capital 

funding as of the reporting date. Units are eligible for funding until 

they are removed due to demolition and disposition in accordance with a 

schedule approved by HUD.

    (g) Computation of formula shares under the CFF--(1) Total estimated 

existing modernization need. The total estimated existing modernization 

need of a PHA under the CFF is the result of multiplying for each 

development the PHA's total number of formula units by its estimated 

existing modernization need per unit, as determined by paragraph (d) of 

this section, and calculating the sum of these estimated development 

needs.

    (2) Total accrual need. The total accrual need of a PHA under the 

CFF is the result of multiplying for each development the PHA's total 

number of formula units by its estimated accrual need per unit, as 

determined by paragraph (e) of this section, and calculating the sum of 

these estimated accrual needs.

    (3) PHA's formula share of existing modernization need. A PHA's 

formula share of existing modernization need under the CFF is the PHA's 

total estimated existing modernization need divided by the total 

existing modernization need of all PHAs.

    (4) PHA's formula share of accrual need. A PHA's formula share of 

accrual need under the CFF is the PHA's total estimated accrual need 

divided by the total existing accrual need of all PHAs.

    (5) PHA's formula share of capital need. A PHA's formula share of 

capital need under the CFF is the average of the PHA's share of existing 

modernization need and its share of accrual need (by which method each 

share is weighted 50%).

    (h) CFF capping. (1) For units that are eligible for funding under 

the CFF (including replacement housing units discussed below) a PHA's 

CFF share will be its share of capital need, as determined under the 

CFF, subject to the condition that no PHA's CFF share for units funded 

under CFF can be less than 94% of its formula share had the FFY 1999 

formula system been applied to these CFF eligible units. The FFY 1999 

formula system is based upon the FFY 1999 Comprehensive Grant formula 

system for PHAs with 250 or more units in FFY 1999 and upon the FFY 1999 

Comprehensive Improvement Assistance Program (CIAP) formula system for 

PHAs with fewer than 250 units in FFY 1999.

    (2) For a Moving to Work PHA whose agreement provides that its 

capital formula share is to be calculated in accordance with the 

previously existing formula, the PHA's CFF share, during the term of the 

agreement, may be approximately the formula share that the PHA would 

have received had the FFY 1999 formula funding system been applied to 

the CFF eligible units.

    (i) Replacement housing factor to reflect formula need for 

developments with demolition and disposition occurring on or after 

October 1, 1998--(1) Replacement housing factor generally. PHAs that 

have a reduction in units attributable to demolition and disposition of 

units during the period (reflected in data maintained by HUD) that 

lowers the formula unit count for the CFF calculations qualify for 

application of a replacement housing factor, subject to satisfaction of 

criteria stated in paragraph (i)(5) of this section.

    (2) When applied. The replacement housing factor will be added, 

where applicable:



[[Page 352]]



    (i) For the first 5 years after the reduction in units described in 

paragraph (i)(1) of this section, and

    (ii) For an additional 5 years if the planning, leveraging, 

obligation and expenditure requirements are met. As a prior condition of 

a PHA's receipt of additional funds for replacement housing provided for 

the second 5-year period or any portion thereof, a PHA must obtain a 

firm commitment of substantial additional funds other than public 

housing funds for replacement housing, as determined by HUD.

    (3) Computation of replacement housing factor. The replacement 

housing factor consists of the difference between the CFF share without 

the CFF share reduction of units attributable to demolition and 

disposition, and the CFF share that resulted after the reduction of 

units attributable to demolition and disposition.

    (4) Replacement housing funding in FFY 1998 and 1999. Units that 

received replacement housing funding in FFY 1998 will be treated as if 

they had received two years of replacement housing funding by FFY 2000. 

Units that received replacement housing funding in FFY 1999 will be 

treated as if they had received one year of replacement housing funding 

as of FFY 2000.

    (5) PHA eligibility for replacement housing factor. A PHA is 

eligible for application of this factor only if the PHA satisfies the 

following criteria:

    (i) The PHA requests the application of the replacement factor;

    (ii) The PHA will use the funding in question only for replacement 

housing;

    (iii) The PHA will use the restored funding that results from the 

use of the replacement factor to provide replacement housing in 

accordance with the PHA's five-year PHA plan, as approved by HUD under 

part 903 of this chapter;

    (iv) The PHA has not received funding for public housing units that 

will replace the lost units under the public housing development, Major 

Reconstruction of Obsolete Public Housing, HOPE VI programs, or programs 

that otherwise provide for replacement with public housing units;

    (v) The PHA, if designated troubled by HUD and not already under the 

direction of HUD or a court-appointed receiver, in accordance with part 

902 of this chapter, uses an Alternative Management Entity as defined in 

part 902 of this chapter for development of replacement housing and 

complies with any applicable provisions of its Memorandum of Agreement 

executed with HUD under that part; and

    (vi) The PHA undertakes any development of replacement housing in 

accordance with applicable HUD requirements and regulations.

    (6) Failure to provide replacement housing in a timely fashion. (i) 

A PHA will be subject to the actions described in paragraph (i)(7)(ii) 

of this section if the PHA does not:

    (A) Use the restored funding that results from the use of the 

replacement housing factor to provide replacement housing in a timely 

fashion, as provided in paragraph (i)(7)(i) of this section and in 

accordance with applicable HUD requirements and regulations; and

    (B) Make reasonable progress on such use of the funding, in 

accordance with HUD requirements and regulations.

    (ii) If a PHA fails to act as described in paragraph (i)(6)(i), HUD 

will require appropriate corrective action under these regulations; may 

recapture and reallocate the funds; or may take other appropriate 

action.

    (7) Requirement to obligate and expend replacement housing factor 

funds within specified period. (i) In addition to the requirements 

otherwise applicable to obligation and expenditure of funds, PHAs are 

required to obligate assistance received as a result of the replacement 

housing factor within:

    (A) 24 months from the date that funds become available to the PHA; 

or

    (B) With specific HUD approval, 24 months from the date that the PHA 

accumulates adequate funds to undertake replacement housing.

    (ii) To the extent the PHA has not obligated any funds provided as a 

result of the replacement housing factor within the times required by 

this paragraph, or expended such funds within a reasonable time, HUD 

shall reduce the amount of funds to be provided to the PHA as a result 

of the application of the second 5 years of the replacement housing 

factor.

    (j) Performance reward factor. (1) PHAs that are designated high 

performers



[[Page 353]]



under the Public Housing Assessment System (PHAS) for their most recent 

fiscal year can receive a performance bonus that is:

    (i) 3% above their base formula amount in the first five years these 

awards are given (for any year in this 5-year period in which the 

performance reward is earned); and

    (ii) 5% above their base formula amount in future years (for any 

year in which the performance reward is earned).

    (2) The performance bonus is subject only to the condition that no 

PHA will lose more than 5% of its base formula amount as a result of the 

redistribution of funding from non-high performers to high performers.

    (k) Eligible expenses. (1) Eligible expenses include the following:

    (i) Development, financing, and modernization of public housing 

projects, including the redesign, reconstruction, and reconfiguration of 

public housing sites and buildings (including accessibility 

improvements) and the development of mixed-finance projects;

    (ii) Vacancy reduction;

    (iii) Addressing deferred maintenance needs and the replacement of 

obsolete utility systems and dwelling equipment;

    (iv) Planned code compliance;

    (v) Management improvements;

    (vi) Demolition and replacement;

    (vii) Resident relocation;

    (viii) Capital expenditures to facilitate programs to improve the 

empowerment and economic self-sufficiency of public housing residents 

and to improve resident participation;

    (ix) Capital expenditures to improve the security and safety of 

residents; and

    (x) Homeownership activities, including programs under section 32 of 

the 1937 Act (42 U.S.C. 1437z-4).

    (2) Such assistance may involve the drawdown of funds on a schedule 

commensurate with construction draws for deposit into an interest 

earning escrow account to serve as collateral or credit enhancement for 

bonds issued by a public agency for the construction or rehabilitation 

of the development.



[65 FR 14426, March 16, 2000, as amended at 65 FR 25446, May 2, 2000]