Jed GraefMRI SoftwareJanuary, 2014

OverviewSpec Status4350.3 REV-1, Change 4

FostersTerminationsDeletions of material

Spec Changes Since MayNew & Changed DocumentsStatus of FostersTerminationsRAD Rent Phase InRAD/SPRAC/811 PRA Demo (PRAD)

Rent Overrides

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202D Spec StatusPer our agreed upon process, clarifications

can come at any time by requestWorking group conference calls will continue

before, during and after the 202D transition to deal with questions and differences in implementation

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Change 4-FostersMajor change in the status of foster children

and foster adults (fosters)Fosters are now considered family for all

purposesPreviously their income counted but they were

not included for income limit and other purposes

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Change 4-TerminationsLanguage has changed in paragraph 8-5.D

that potentially contradicts other handbook language and advice in the MAT Guide

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Change 4-Deletions of MaterialThe old Chapter 9 is gone and is now a new

Chapter 7 in the MAT Guide minus the sections on Special Claims and Excess Income Reports

The appendices related to Chapter 5 of the MAT Guide are gone

Appendix 8 on rounding is gone. Material from it has been added to MAT Guide Appendix H and a new spreadsheet (202DCertificationDataEntry.xls) added

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Spec Changes Since May

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Updated and New Documents202DAdjustmentCalculations.xls (Updated)202DCalculationsForRepayments.xls (Updated)202DNonCitizenRuleProration.xls (Updated)202DSpecialClaimsRounding.xls (Updated)202DRelationshipRules.xls (Updated)202DRADPhase-In.xls (New)MAT Guide Chapters 4-6 (Updated)MAT Guide Appendix H (Updated)—Includes old

handbook Appendix 8 information202DCertificationDataEntry.xls (New)MAT Guide Chapter 7 (New)—Old handbook

Chapter 98

Fosters Become FamilyMAT10-2, Field 26, Number of Family

Members (50059 field 53)Fosters are included here and for income limits

(LIHTC impact)MAT10-2, Field 27, Number of Non-Family

Members (50059 field 54)Remove fosters. This is now a count of L and N.

Number of Eligible Members (50059 field 56) (Not currently in the MAT)Include fosters with Citizen Codes of EC, EN,

PV—drives noncitizen rule proration

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Fosters Become FamilyMAT10-2, Field 50, Disability Expense (50059 field

101)Include disability assistance expenses incurred by fosters

MAT10-2, Field 51, Disability Deduction (50059 field 102)Include fosters

MAT10-2, Field 52, Medical Expense (50059 field 103)Include medical expenses of fosters when eligible

MAT10-2, Field 53, Medical Deduction (50059 field 104)Include fosters

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Fosters Become FamilyDeductions for child care expense are

unaffected by the change. They have previously been allowed for foster children.

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Fosters Become FamilyMAT10-2, Field 79, HH Citizenship

Eligibility (50059 field 96)Include fosters in determining the correct

code. Also impacts noncitizen rule prorationMAT10-2, Field 82, Family Addition

Foster Children (50059 field 59)Counts for Income Limit purposes

MAT10-2, Field 96-98, Mobility, Hearing, Vision Disability (50059 field 50-52)Include Fosters and Dependents in setting the

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Fosters Become FamilyIn addition the various income limit (cert

fields 87-89) and rent related fields (cert fields 108, 110-112) are also impacted

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Fosters Become FamilyMAT10-3, Field 7 Relationship Code (50059 field 37)

Updated field description mentioning fosters as family and counting for income limit purposes.

MAT10-3, Field 10 Special Status Code (50059 field 42)Include codes that may be applicable to fosters such as S

(full-time student), H(andicapped), M (US military vet) and P (temporarily housed as the result of a declared disaster).

Note: A foster adult who is a full-time student (S) and who has employment income is subject to the cap on earned income of $480 specified in the regulations. However such a person will not be listed on the 50059 as a dependent and will not receive a dependent allowance.

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Fosters Become FamilyMAT10-3, Field 12 Member Citizenship Code (50059 field

46) Include a valid code for fosters. Previously an XX (not

applicable) code was used for fosters. XX continues to be proper for Live-in Aides and None of the Above but is no longer valid for a foster.

MAT10-3, Field 15 Able To Work Care Code (50059 field 49) Include foster adults when assigning codes if the adult’s

employment income is enabled.MAT10-3, Field 25 Student Status (50059 field 43)

Fill this field for fosters but not for those with relation codes L or N.

Race and Ethnicity—no change—TRACS already stores the data

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Fosters Become FamilyThese rules are effective for new certifications

executed on or after the change in site software to 202D. Corrections to 202C certifications are subject to the old rules. Compliance in 202C would be difficult as there is no distinction between Live-in Aides and Foster Adults and TRACS is not programmed to treat income of fosters as valid.

“Additionally, owners/management agents have until March 1, 2014, to implement those changes requiring modifications to their TRACS software. If requested, HUD may permit an exception to the March 1, 2014, date if there are modifications that cannot be made by this date due to incompatibility with HUD’s TRACS software.”

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Terminations

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TerminationsParagraph 8-5.D—Old language*When assistance is terminated for a tenant with

more than one form of subsidy, the tenant must pay the market rent, full contract rent, or 110% of BMIR rent. For example, if a tenant resides in a Section 236 property and receives Section 8 assistance, the tenant would pay rent based on the Section 236 rent formula if his or her assistance were terminated.

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TerminationsParagraph 8-5.D—New language*When assistance is terminated for a tenant with

more than one form of subsidy, the tenant must pay the market rent, full contract rent, or 110% of BMIR rent. For example, if a tenant resides in a Section 236 property and receives Section 8 assistance, the tenant would pay *the full Section 8 contract rent if his or her assistance were terminated unless there is an eligible in-place Section 236 tenant or a vacant unit the Section 8 can be transferred to.*

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TerminationsParagraph 5-30.C.2Section 236/Section 8. A family with a Section 8

subsidy in a Section 236 property will pay the Section 8 tenant rent unless, at recertification, the family’s TTP equals or exceeds the Section 8 contract rent. Thereafter, the family will pay the tenant rent based on the Section 236 rent formula.

A family living in a Section 236 property receiving Rent Supplement assistance would also stop receiving Rent Supplement assistance at the point the family’s TTP increased to the level of the rent supplement contract rent. Thereafter the family will pay the tenant rent based on the Section 236 rent formula.

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TerminationsQuestions related to the new handbook languageDoes it apply only to the case of a failure to

transfer units as required?The note is indented under that specific example in

the handbookIf the new language is not a drafting error, how is

it to be reconciled with the language in handbook paragraph 5-30: Determining Tenant Contribution at Properties with Multiple Forms of Subsidy

No TRACS impact—only site software

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RAD Rent Phase InHUD notice PIH-2012-32 (HA), Rev-1 issued on July 2, 2013

clarifies the rules concerning rent phase-insPhase-ins, when applicable, will be for either a 3-year

or a 5-year term, with the percentage increases each year being equal (for a 3-year phase-in, 33% in year 1 and 66% in year 2; for a 5-year, 20%, 40%, 60%, 80% in years 1-4) and that the increase on any particular certification is calculated by applying the proper percentage increase to the difference between the TTP on the prior certification and that for the current certification. In the final year (the year-3 or year-5 annual) the calculated TTP is used as the phase-in is complete.

In addition tenants who are subject to the Public Housing Earned Income Disregard (EID) continue to be subject to EID after conversion.

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RAD Rent Phase InIt is not a TRACS 202D requirement for site software

to automate the calculation of the override TTP but that is certainly permitted. As before, site software needs only a mechanism for the user to perform the override when necessary. A new spreadsheet, 202DRADPhase-In.xls, has been added to the spec documents. The spreadsheet can be used to determine if phase-in applies and to determine the override TTP on any certification. There is also no requirement for site software to implement EID income phase-in calculations. Software users will simply enter the income amounts that are required under EID on each certification. Doing so will likely result in EIV discrepancies and the tenant file should be documented explaining that EID is the cause of the discrepancy.

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RAD Rent Phase InFor in-place tenants at the time of

conversion, if the current rent is lower than that calculated by the S8 formula by more than a specified amount (the greater of 10% or $25), there is either a 3 or 5 year phase in to full rent—similar concept to the old POA rollout.

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RAD Rent Phase InTTP at RAD ConversionUsed when phasing in rent for an in-place

tenant as part of a RAD Conversion from PIH to Multifamily Section 8

Defined as the TTP for the tenant immediately prior to the conversion to RAD. Becomes the TTP for the IC to RAD

Does not change from cert to cert during the phase in

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RAD Rent Phase InDuring RAD rent phase-in:

Rent Override = YTotal Tenant Payment = 85TTP Before Override = 100TTP at RAD Conversion = 80

At end of phase-in—The first cert with no override:Rent Override = blankTotal Tenant Payment = 45TTP Before Override =45TTP at RAD Conversion = 80

Subsequent certs fill only the Total Tenant Payment field

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RAD Rent Phase In

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Data entry in Green fields onlyDetermine if Phase-In is Required

TTP at RAD Conversion 900 Initial RAD TTP = last PHA TTPCalculated TTP at Conversion 990 90.0000 10 percent of TTP at Conversion

90 RoundIncrease 90 90 Amount that the increase must be greater than

No Phase-in Required

If a tenant’s monthly rent increases by more than the greater of 10 percent or $25 purely as a result of conversion, the rent increase will be phasedin over 3 or 5 years.

RAD Rent Phase In

If the difference is <= 0,

phase-in is over

Any effective date > the conversion date and < the Second AR date is counted as year 1

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Phase-In CalculatonsNew Cert Year

Conversion Date 3/12/2013Conversion Date +1 3/13/2013 1 NoSecond AR date 3/1/2015 2 YesThird AR Date 3/1/2016 3 NoFourth AR Date 3/1/2017 4 NoFifth AR Date 3/1/2018 5 No

New Cert Effective Date 3/1/2015TTP on the last Cert 100New TTP Calculation 300

Difference 200

RAD Rent Phase In

* Note: The increase is the amount to be added to the TTP on the prior cert given the phase-in year and the difference between the TTP as calculated on the new certification and the TTP on the prior certification

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Year Increase* Round Final TTP1 66.0000 66 1662 132.0000 132 2323 200.0000 200 300

3-Year

RAD Rent Phase In

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Year Increase* Round Final TTP1 40.0000 40 1402 80.0000 80 1803 120.0000 120 2204 160.0000 160 2605 200.0000 200 300

5-Year

RAD Rent Phase In

The rules can result in counter-intuitive results.A GR decrease can result in a rent increaseA corrected cert with no change in financial

information can result in a rent increaseAn IR adding a member with no income but

with deductions can result in a rent increase

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RAD/SPRAC/811 PRA Demo

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RAD/SPRAC/811 PRA DemoWaiting on HUD clarification on the rules

related to these new programsWhen available they will be published in the

MAT Guide, Appendix JThe next step will be to incorporate any

necessary references in the body of the MAT Guide

The current Appendix references various HUD web pages for those interested

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Rent Overrides

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Rent OverridesPrior to 202D, there was no way to indicate

that the TTP or TR had been overridden for a legitimate reason

The result when this happens is typically a cascade of cert calculation error messages

202D adds two override related fieldsRent Override—blank or YTTP Before Override—numericNote: there is no TR Before Override field for

use with 236 and BMIR

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Rent OverridesIf either TTP or TR is modified compared to

the normal calculations, the Rent Override field is set to “Y”

See 4350.3, paragraph 5-30: Determining Tenant Contribution at Properties with Multiple Forms of Subsidy

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Rent OverridesTTP Before OverrideWhen TTP calculations are different than normal as

a result of applying POA rules, RAD rent phase-in, PRAC failure to recertify or the requirements of another funding program, the Rent Override flag is set and the TTP Before Override field is filled with what the TTP would normally be.“Normal” includes noncitizen rule proration and

minimum rent—anything part of the usual rent calculations

Note that this field does not apply to overrides for Section 236 or BMIR as there is no TTP

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Rent Overrides and POAsPlan of Action projects have regulatory

agreements with rent calculations specified that differ from the standard ones

There are some general themes but, since the agreements were written locally without headquarters review, almost anything is possible

Rent calculations are usually tied to the unit typeVery Low IncomeLow IncomeModerate Income

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Rent Overrides and POAsSample TextVery Low Income Tenants: Current and

Future Tenants classified as occupying very low-income units under the tenant profile, including tenants receiving Section 8 assistance pursuant to Paragraph 9 of this Agreement, shall make a Total Tenant Payment that does not exceed the lesser of(1) 30 percent of the tenant's monthly Adjusted

Income or (2) 90 percent of the Project Specific Rent.

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Rent Overrides and POAsSample textLow Income Tenants: Current and Future Tenants

classified as occupying Low-Income units under the tenant profile, including tenants receiving Section 8 assistance pursuant to Paragraph 9 of the Agreement, shall make a Total Tenant Payment that does not exceed the lesser of 30 percent of the tenant's monthly Adjusted Income or 90 percent of the Project Specific Rent but may not be less than the lesser of 30 percent of 45 percent of median income for that area (as determined by HUD and adjusted for family size) or 90 percent of the Project specific Rent.

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Rent Overrides and POAsSample textLow Income Tenants who become Very Low

and are waiting for a VLI slot will pay 30% of monthly adjusted income

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Rent Overrides and POAsSample textModerate-Income Tenants: Current and

Future Tenants classified as occupying Moderate-Income units under the tenant profile shall make Total Tenant Payments that do not exceed the lesser of (1) 30 percent of the tenant's monthly

Adjusted Income or (2) 90 percent of the Project Specific Rent.

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Rent Overrides and POAsTenants shall be recertified annuallyAny tenant who refuses to certify or recertify

income shall make a Total Tenant Payment that is equal to 90 percent of the Project Specific Rent

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Thank You!Email: jed.graef@mrisoftware.comWork: 216.825.6640

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