PERFORMANCE BASED CONTRACT ADMINISTRATION
OHFA serves as the Contract Administrator for HUD’s PBCA program in Oklahoma. Each month OHFA helps provide housing assistance for nearly 13,000 Oklahoma families who live in 168 properties across the state.
PBCA Properties
Applicants to any Performance Based Contract Administration Section 8 property must contact the property directly to apply and qualify for residence.
OHFA'S PERFORMANCE BASED CONTRACT ADMINISTRATION RESPONSIBILITES
Through the Performance Based Contract Administration program, OHFA provides monitoring and payment services of assisted units to owners of project-based Section 8 properties for the U.S. Department of Housing and Urban Development in Oklahoma. OHFA is responsible for completing the following tasks.
- Conduct periodic Management and Occupancy Reviews (MOR)
- Process owner's Housing Assistance Payment (HAP) vouchers and special claims
- Renew PBCA HAP contracts
- Process terminations and opt-outs
- Process contract rent adjustments
- Handle and resolve tenant and community complaints and issues
- Follow up on physical inspections
- Provide HUD with all PBCA activities monthly and annually including OHFA financial audits.
PBCA OWNER AND MANAGER RESOURCES
Owners who participate in the Project Based Section 8 program have entered into Housing Assistance Payment (HAP) contracts with HUD and the PBCA.
Through the HAP contract, owners agree to provide housing assistance to eligible households and receive payment for their services after submission of their monthly HAP voucher. Depending upon the owner’s request, HAP contracts may vary in duration of one year to 20 years.
Upon expiration of the HAP contract, owners must submit timely contract renewal documentation to OHFA so that the HAP voucher payments can continue. The contract renewal documentation must be submitted in accordance with the HUD Section 8 Renewal Policy guidebook.
Owners may select from the following six contract renewal options:
- Option One: Mark-Up-To-Market
- Option Two: Renewal with existing rents adjusted by OCAF or on the basis of a budget when rents under the expiring contract are at or below market
- Option Three: Referral to OAHP for processing because the contract has rents greater than market and is subject to an FHA-insured or HUD-held mortgage
- Option Four: Renewal of contracts for “exception” projects, which are exempt from debt-restructuring pursuant to 514(h) of MAHRA or are not an “eligible multifamily housing project” as defined in section 512(2) of MAHRA.
- Option Five: Renewal of contracts for Portfolio Reengineering Demonstration or Preservation projects
- Option Six: Opt-out of the Section 8 contract
For detailed guidance and submission requirements, please refer to the HUD Section 8 Renewal Policy guidebook.
The HUD Enterprise Income Verification (EIV) System provides integrated income data from one source. Via the Internet, housing partners at various levels are required to use EIV for applicants and tenants to improve income verification and reduce improper HUD housing assistance payments.
EIV provides the following information:
- Monthly employer new hires
- Quarterly wages (including employer information); federal wages are available
- Quarterly unemployment compensation
- Monthly social security (SS) and supplement security income (SSI) benefits
Data in the EIV System is highly sensitive and confidential. HUD requires all users of the EIV System to maintain strict security measures to ensure the integrity of the data. Users must be certified by the EIV Coordinator twice a year.
Property owners/management agents must establish and implement policies and practices to demonstrate compliance with EIV reporting requirements. This includes setting up a Master File used to monitor tenant compliance and incorporate EIV reports for Move-in, Interim, and Annual Certification processes.
Updates and changes to the EIV system are communicated through the Rental Housing Integrity Improvement Project (RHIIP) Listserv.
The HUD Handbook 4350.3, REV-1, Change 4, Occupancy Requirements of Subsidized Multifamily Housing Programs, has been updated to include the EIV requirements. The EIV requirements can be found in Chapter 9 of the handbook.
March 8, 2013, HUD issued an EIV update, Housing Notice 2013-06, Enterprise Income Verification (EIV) System. This Notice supersedes Notices H 2011-21, H 2008-03, H 2009-20, and H 2010-10. The Notice is posted on HUDCLIPS.
Any questions related to EIV use in Project-Based Section 8 Housing should be directed to the Multifamily Help Desk at (888) 767-7588, (202) 401-7984 or [email protected].
HFA is committed to transmitting prompt, accurate payment of Housing Assistance Payment (HAP) Vouchers to each of our owners every month.
In order to receive monthly voucher payments, HUD regulations require owners to submit a HAP Voucher request to OHFA by the 10th day of the month prior to the month for which payment is requested. We require that each property submit an electronic version of the voucher, via the Tenant Rental Assistance Certification System (TRACS), supporting 50059 data, and a signed and dated paper copy of the voucher.
Vouchers submitted after the deadline risk late payment. We are not able to process voucher payments until all required documentation is received and reviewed for accuracy and eligibility. A monthly voucher submission is required even if the owner is requesting no payment for the billing month.
Generally, HAP Vouchers are paid electronically on the first business day following the end of each month. Late owner submission and other extenuating circumstances could cause HAP Voucher Payments to be delayed.
Tenant Rental Assistance Certification System (TRACS)
The Tenant Rental Assistance Certification System (TRACS) is a HUD computer system. The system was developed to help improve financial controls over assisted housing programs by automating manual procedures and incorporating automated controls. TRACS is used for electronic tenant data collection and HAP Voucher processing.
Integrated Multifamily Access Exchange (iMAX)
The Integrated Multifamily Access Exchange (iMAX) is a front-end subsystem to TRACS. It accepts data submitted from the Industry sites to HUD Headquarters in an electronic form and returns messages from HUD Headquarters to sender sites. Limited edits are performed on the data format before passing the pre-validated data to the TRACS system for further validation and processing. Data which fail the iMAX edits create error messages to the sender requesting data correction. The Industry partners are responsible for formatting their automated data to be accepted by the iMAX and TRACS systems.
The MAT User Guide for TRACS 202D contains technical submission instructions for using the most recent TRACS system, which went live August 1, 2014. All owner/agents must convert to TRACS 202D by January 31, 2015. TRACS will only accept transmissions in the 202D format after January 31, 2015.
OHFA highly recommends that all owner/agents either download or print the MAT User Guide for TRACS 202D.
HUD Handbook 4350.3, REV-1, Change 4 Occupancy Requirements of Subsidized Multifamily Housing Programs has been posted to HUDCLIPS. The handbook is updated to include information on use of the Enterprise Income Verification (EIV) system; Violence Against Women Act (VAWA) requirements; Supplemental Information to Application for Federally Assisted Housing; Rent Refinement of Income and Rent Determination Requirements in Public and Assisted Housing Programs; Final Rule, and requirements relating to admission of individuals subject to State lifetime sex offender registration requirements.
2015 Operating Cost Adjustment Factors (OCAFs) were published in the Federal Register on October 2, 2014. These factors are used for adjusting or establishing Section 8 rents under the Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA), as amended, for projects assisted with Section 8 Housing Assistance Payments. The factors are effective February 11, 2015.
Rental Housing Integrity Improvement Project (RHIIP) is HUD’s strategy to reduce errors in the administration of HUD’s rental housing assistance funds. The Multifamily Housing RHIIP Listserv was established to provide the latest RHIIP related news, occupancy tips and other items of information for the stakeholders of the various HUD subsidized multifamily programs. Subscribe to the Listserv.
Operating Cost Adjustment Factor (OCAF)
The Auto Operating Cost Adjustment Factor (OCAF) Rent Adjustment process is initiated by HUD or the Contract Administrator. Not all contracts are eligible for the Auto OCAF.
If the property is eligible for an Auto OCAF rent adjustment, OHFA will send the owner information each year. One hundred and fifty days prior to the property’s renewal anniversary, OHFA will send the owner a letter advising of the property’s new OCAF adjusted rents, a new Exhibit A, and a request for certification of the accuracy of the debt service and non-Section 8 rent potential amounts. To accept the Auto OCAF rent increase, the owner will need to return to OHFA the signed/dated certification and three copies of Form HUD-92458 Rent Schedule within 10 days so that the process can be completed.
If the property is not eligible for the Auto OCAF, the process will be initiated by the Owner each year. One hundred and twenty days prior to the property’s renewal anniversary, the owner must submit the completed OCAF Rent Adjustment request to OHFA. We will process the request under the original OCAF procedures.
OCAF Rent Adjustment Worksheet - HUD-9625 Form
Budget Based
Owners may request Budget Based rent adjustments for properties with HAP contracts that are eligible during the term of the contract or at contract renewal.
Submission to request a rent increase should include all of the materials listed below, plus any additional documents being used to support the request.
The checklist for initial submission is below. Submission to request a rent increase should include the materials listed on the checklist plus any additional documents being used to support the request.
- Cover Letter that summarizes why the rent increase is needed, the date the increase will be effective, a description of the physical condition of property and any improvements that have been budgeted for, identification of any proposed change in services, equipment, or charges, and the reasons for the change.
- Budget Worksheet HUD Form 92547-A, (Appendix 4 (d))
- Owner explanation of budget items, (Appendix 4(b))
- Copy of Notice to Tenants, (Only if required)
- Owner certification regarding purchasing practices and reasonableness of expenses, (Appendix 4(b))
- A signed request for an increase in the Reserve for Replacement if such an increase is contemplated as part of the rent increase request, (Appendix 6). [Send to the HUD Project Manager]
- Utility Allowance Analysis (if applicable)
Refer to the HUD Handbook 4350.1, REV-1, Multifamily Asset Management and Project Servicing, Chapter 7 for detailed guidance and owner submission requirements.
Some contract renewal options will require owners to submit a Rent Comparability Study (RCS). The purpose of the RCS is for a licensed appraiser, using his/her professional expertise, to estimate rents that a reasonable tenant, not receiving assistance, might pay in the subject property's market area. The RCS rents are a threshold for adjusting PBCA property rents during the contract renewal/rent adjustment process.
Beginning with the date that the RCS was initially used for a contract renewal/rent adjustment, the RCS has a maximum five-year “life cycle." HUD requires owners to obtain a new RCS every five years. PBCA property owners must contract with a state-certified licensed general appraiser for preparation of an RCS.
Because the owner must submit the contract renewal/rent adjustment request to OHFA at least 120 days before the contract anniversary date, we recommend that owners begin searching for an appraiser six months prior to their contract anniversary date.
Please be aware that OHFA cannot complete the processing of your contract renewal/rent adjustment request until all the requirements of the RCS are met.
NOTE: On May 18, 2012, HUD published changes to the Section 8 Renewal Policy. A RCS is now required for an Option 4 budget-based rent adjustment requests during the term of the contract.
This brings the RCS requirement to a group of properties that have never needed a RCS, including most 202s and 515s. To help you with this new requirement, please refer to the HUD Section 8 Renewal Policy Guidebook, Chapter 6, Section 6-3 and Chapter 9.
For detailed guidance and submission requirements, please refer to the HUD Section 8 Renewal Policy Guidebook, Chapter 9.
TIP: Included in Chapter 9 are two alternatives to the RCS (Section 9-5 & 9-6). Reviewing them may save you the cost of an RCS.
Owner Repayments
The Owner must reimburse HUD for all overpayments of assistance where such overpayments were due to the owner's error or the owner's failure to follow HUD's procedures.
The owner may reimburse HUD for these overpayments in one lump sum. However, if immediate repayment in full would jeopardize the financial condition of the property, HUD/Project Based Contract Administrator (PBCA) may permit the owner to remit repayments over a period of time.
All repayments must be submitted through TRACS as a reduction of the Housing Assistance Payment (HAP) Voucher.
Tenant Repayments
The Owner is not required to reimburse HUD immediately for overpayments of assistance where the overpayment was caused by the tenant's submission of incorrect information. Tenant repayments are required as tenants repay in accordance with an agreed-upon repayment plan.
The HUD Handbook 4350.3 REV-1, CHG 4, Chapter 8, 8-20, outlines the tenant's obligation to repay due to overpayment of housing assistance payments. Once the amount the tenant owes is determined, the owner/management agent (O/A) is required to reimburse HUD.
All repayments must be submitted through TRACS as a reduction of the Housing Assistance Payment (HAP) Vouchers.
Repayment Options for Tenants
Tenants can repay amounts due:
1. In a lump sum payment; or
2. By entering into a repayment agreement with the O/A; or
3. A combination of options 1 and 2 above
Tenant Repayment Agreement Requirements
The tenant and O/A must both agree on the terms of the repayment agreement. The tenant can consult with HUD’s Housing Counseling Agency in their area to assist them in working with the O/A to reach agreeable terms for the repayment agreement.
Monthly Payment Requirements
- The monthly payment plus the amount of rent the tenant/family pays at the time the repayment agreement is executed should not exceed 40% of the family’s monthly adjusted income
- No specific payment time period maximum is indicated in the HUD Notice
- The repayment agreement must be consistent with and reference lease whereby the tenant is in non-compliance and may be subject to termination of their lease
- The repayment agreement should contain a clause whereby the terms of the agreement can be renegotiated if there is a decrease or increase in the family’s income
- The repayment agreement must be signed and dated by the tenant and the O/A
- O/A must not apply a tenant’s monthly rent payment towards the repayment amount owed that would result in an accumulation of late rent payments.
- O/A must complete corrections to a prior certification(s) affected by the income change. O/A must not fail to correct the prior certification(s) in an attempt to avoid having large negative adjustments appear on the HAP Voucher.
Owner Reimbursement to HUD of Repayments Through the TRACS System
**These transactions are no longer submitted as OARQ miscellaneous accounting request**
The Owner must submit reimbursements for overpayments through the TRACS system on the 52670-A, Part 6 voucher form in accordance with the MAT30, Section 7 record. Refer to the 202D MAT Guide for detailed guidance.
O/A Fee Retained for Costs Incurred for Repayment Agreements
- O/A may retain a portion of the repayments they actually collect from the tenants who have improperly reported their income to help defray the cost of pursuing these cases (this is not limited to cases where O/A has determined fraud).
- O/A may retain an amount to cover their actual costs, which is the lesser of:
1. Their actual costs, or
2. 20% of the amount received from the tenant. - Amounts retained by O/A’s must be deposited in the project’s operating account.
Refer to the latest HUD Notice, Tenant Repayment of Unreported or Underreported Income – Section IX. C.
As part of its commitment to provide affordable housing, HUD recognizes that owners of affordable housing have a potential financial risk because of the limitation on security deposits and the need to adhere to waiting list requirements. Therefore, HUD permits owners to be reimbursed for a portion of their financial loss through the special claims process.
Owners may submit a Section 8 Special Claims request for reimbursement of vacancy loss during rent up, vacancy loss after rent up, tenant damages, unpaid tenant rent, and debt service on eligible units.
The Special Claims Processing Guide (effective August 1, 2006) provides the owner with step-by-step instructions and the required forms for submitting special claims.
Review and Approval, Rejection, or Adjustment of Special Claims Request
The owner’s Special Claims Request must be pre-approved by OHFA prior to the owner submitting it with their next monthly voucher. We will review and analyze the owner’s submission documentation and either approve, reject, or adjust the claims in accordance with HUD regulations and guidelines.
OHFA must review and return the executed claims to the owner within 30 days of receipt from the owner. Our written notification will include the approval decision and any explanations for rejection or adjustment of claims.
Special Claims Submission and Processing Timelines
- HUD only pays a maximum of 60 days for a vacancy loss claim
- Owner may only submit a vacancy claim the earlier of after 60 days or a new move-in
- Owner must submit claims within 180 days from Ready For Occupancy (RFO) date
- PBCA must return reviewed claims to owner 30 calendar days from date received
- Owner must include approved claims on HAP Voucher within 90 days
Most Common Mistakes Made With Special Claims Request
- No Signatures
- Move-ins, Move-outs, Unit transfers, not viewable in TRACS system
- Not listing all units in Special Claims Request on HUD 52670-A Part 2
- Security Deposit deducted twice
- Forfeited Security Deposit not deducted from claim
- Interest earned on Security Deposit not included
- New move-in is a Market or 236 tenant (please note on checklist and provide move-in 50059)
Refer to the Special Claims Processing Guide FAQs.
The Utility Allowance Analysis should represent the owner’s best estimate of the average monthly utility cost that an energy conscious tenant will incur for the year.
HUD requires owners of Project Based Section 8 properties with Utility Allowances to complete an analysis of each unit type’s current Utility Allowance. The documentation of this analysis must be submitted to OHFA with every rent adjustment request. The analysis must be project specific and must include all tenant paid utilities for each unit used in the analysis.
Example:
Unit #4 electricity average and gas average included in the analysis;
Unit #10 electricity average included in the analysis but there is no gas average;
Unit #10 cannot be used in the analysis because it does not represent the complete
utility usage in that unit.
In the event of a UA decrease, owners must notify tenants to advise them of their right to comment on the Utility Allowance decrease during a 30-day comment period.
The owner/management agent must follow the posting instructions contained in Chapter 7 of the HUD Handbook 4350.1.
At the end of the 30-day comment period, the owner/management agent must provide OHFA with the certification of compliance with the tenant comment procedures along with any resident comments that were received.
Refer to HUD Handbook 4350.1, REV-1, Chapter 7, 7-24 for complete guidance.
