HUD Shutdown: Verifying Available Funds; Accessing Project Reserves

By Colleen Bloom, LeadingAge: As the HUD shutdown continues, some sites are only finding out their contracts were not renewed because they did not receive funds in their project accounts after the first of the month. But there are things owners can/should do to verify funding availability, and it is critical that owners obtain HUD permission before accessing reserves. 

During Shutdown, No PRAC Contracts Will Be Renewed 

In conversations with HUD staff, just prior to the shutdown, LeadingAge staff were assured that the “vast majority” of ongoing rental assistance contracts “should generally be paid on schedule” and/or could still be renewed through at least January. However, as the shutdown heads into its third week, HUD staff have informed LeadingAge that funding for Section 202 PRAC renewals will not occur during the shutdown and that over 200 contracts that expired in December have also been shut out. See HUD Says December/January Renewal Must Rely On Reserves  

LeadingAge is concerned that some Section 8 project-based contracts may run short in the future, particularly those that were renewed initially during the earlier Continuing Resolutions (during the months of October, November and December). 

Contracts renewed prior to October 1 are generally assumed to have a full 12 months worth of funding available to them and should experience no problems obtaining funds through the normal monthly voucher process. However, contracts renewed between October 1 and Dec 20 may have received a smaller portion of funding - or, to use HUD parlance, only a few months of funding may have been “obligated” to the contract -- because during a continuing resolution HUD was only receiving a portion of its expected annual budget. 

Property owners with Section 8 contracts who are uncertain about whether their recent renewals have been fully funded can check with their PBCA to inquire about remaining funds as currently obligated. HUD has told us that PBCA contracts are funded at this time, and they will continue their services as long as appropriated funds remain available. 

Property owners with PRAC contracts, however, normally depend on HUD staff, who are mostly on furlough without pay at this time. As PRAC owners have no one to ask who has access to systems that can verify funding availability, the only indicator about funding comes after submitting an actual voucher to TRACS. 

Because LeadingAge staff do not have access to the behind-the-scenes workings of the vouchering and payment processes, some respected HUD compliance and systems trainers have provided the following insights and suggestions about vouchering and payment level tracking.  

Mary Ross says that if there is insufficient funding under the contract, the status of the voucher will be P26, and suggests that every PRAC owner should check TRACS after submitting a voucher. To do this: 

• Log on to Secure Systems using your own unique M-ID and password. 

• Click on the menu option Tenant Rental Assistance Certification System 

• Click on Tenant/Voucher Queries 

• Click on Voucher Queries 

• Select the appropriate Contract Number from the Drop-Down List 

• View the Voucher Status 

Currently, February vouchers should have a P10 status, which means that payment is pending. This should change to P00 on January 31, meaning the voucher has been paid. If the contract is out of funds, or if the voucher cannot be paid because the contract is short of funds the status of the voucher will be P26. 

You may also see status code T41, which means that the contract is expired in TRACS. Any other status code should be investigated and the owner/agent should take appropriate action. 

Jenny DeSilva advises that, particularly for reasons like this shutdown situation, owners should monitor burn rates on allocations and HAP payments. When HUD renews a contract, she suggests that owners keep track of the allocated funds and then routinely deduct HAP payments from the balance. 

Checking voucher status after each submission to TRACS and tracking burn rates is good advice going forward for any who have not already adopted such practices. 

Projects with contracts not being paid may have the ability to continue to operate normally based on cash flow or operating reserves. However, others may need to submit a HUD Form 9250 to request an advance of funds from the reserve for replacements account. 

HUD shared these memos with several stakeholder and national groups on January 4 with expectations that they could get the word out. Direct communication from HUD to owners with known expired or expiring contracts supposedly happened on January 9 to ensure that they receive these same memos, and may have included additional information in a cover letter of some kind. Additional details on how to proceed may yet be forthcoming. In the meantime, here’s what we know. 

According to HUD, each Satellite Office has Excepted or Intermittent staff that can help with “emergency” situations. Generally, all of the Regional and Satellite Directors, and some select staff, should be available so reserve requests can be processed in the field. And HUD cautions that “Owners cannot draw down reserves without HUD approval.” 

To ensure your request is promptly processed during the shutdown period, owners should complete form HUD-9250 and submit them via email to the Asset Management Division Director of your assigned HUD field office, according to the list included below. The form must include the current balance in the account, a withdrawal amount, and the remaining balance. It should also include a statement confirming that the released funds will be reimbursed to the reserve for replacement account once HUD appropriations funding is restored. 

Owners that have submitted but not yet received a response to submission of their Form 9250 request for funds from Reserve for Replacements accounts, should contact Jen Larson in HUD Headquarters at Jennifer.L.Larson@hud.gov 

If you have any difficulty, please send copies to Colleen Bloom at LeadingAge. 

LeadingAge will share with HUD headquarters staff and prompt to facilitate a response by appropriately exempted and/or regional oversight staff. 

Additional Resources: 

• West Region contact during the shutdown: Janea Jackson, Janea.J.Jackson@hud.gov 

• The HUD 2018 Contingency Plan includes the office-by-office impact of a shutdown

• An extensive Frequently Asked Questions about specific HUD programs starts on page 62