HUD Meeting Updates and Clarifications

Updates and clarifications discussed at a recent HUD meeting include changes to specifications and MAT guide regarding LIHTC and RAD programs, adjustments in assistance calculations, and procedures for handling negative assistance scenarios. Specific examples and calculations were provided to illustrate the impact on tenants and subsidy payments.

• HUD
• Meeting
• Updates
• Clarifications
• LIHTC

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1. Lanier Hylton; HUD Alisa Costello; HUD Danielle Garcia; HUD Jed Graef; HDS Mary Ross; RBD

2. Agenda Opening Remarks Clarifications Received TRACS 203A Error Messages Meeting Date

3. Opening Remarks Lanier Hylton Department of Housing & Urban Development Headquarters

4. Update & Review of Clarifications

5. Changes to Spec and MAT Guide RAD New Notice: H-2017-03, REV-3, PIH-2012-32 (HA): 1/12/2017 Clarifies when LIHTC and RAD are combined, a tenant whose assistance is 0 or negative pays the lesser of applicable LIHTC rent or RAD rent (this is the normal rule when there is no assistance) Requested clarification from HUD on the mechanism for calculating TTP/AP in the case where LIHTC rent is the lesser value Treated as a rent override situation

6. Changes to Spec and MAT Guide Answer: If the LIHTC rent is lower, we force the TR to equal the LIHTC Rent (Max Rent less UA) and adjust the TTP such that TTP UA = TR as we do when forcing a PRAC tenant to operating rent for failure to recertify However, since HUD will not pay subsidy in this situation (if the resulting subsidy is positive) we cap subsidy at the lesser of calculated assistance and 0 In other words, if assistance calculates as positive, reduce it to 0 If assistance calculates as negative, leave it alone Zero stays zero

7. Changes to Spec and MAT Guide Assistance starts negative and ends negative Normal Calculations 600 650 30 Force TR to LIHTC Rent Gross Rent TTP UA 600 605TTP = TR + UA 30 TR 620TTP - UA 575LIHTC Rent Assistance -50GR - TTP -5GR - TTP -5Cap at 0 TTP is calculated to be in accord with TR LIHTC Rent Less UA Assistance changes from -50 to -5 605 575

8. Changes to Spec and MAT Guide Assistance starts negative and ends positive Normal Calculations 600 650 30 Force TR to LIHTC Rent Gross Rent TTP UA 600 550TTP = TR + UA 30 TR 620TTP - UA 520LIHTC Rent Assistance -50GR - TTP 50GR - TTP 0Cap at 0 LIHTC Rent Less UA 550 520 TTP is calculated to be in accord with TR Assistance changes from -50 to 0

9. Changes to Spec and MAT Guide RAD New Notice: H-2017-03, REV-3, PIH-2012-32 (HA): 1/12/2017 Changes the rent phase-in percentages 3-year from 33, 66, 100 to 33, 50, 100 5-year from 20, 40, 60, 80, 100 to 20, 25, 33, 50, 100

10. Changes to Spec and MAT Guide RAD New Notice: H-2017-03, REV-3, PIH-2012-32 (HA): 1/12/2017 Notice implies that rules applicable to a RAD contract depend on the Notice in effect at the time of the RAD closing Requested clarification as to whether the Notice date controls the phase in or not

11. Changes to Spec and MAT Guide Answer: The phase-in percentages to use are those based on the notice in effect at RAD closing If closing was prior to 1/12/17 then use the old percentages (33, 66, 100 or 20, 40, 60, 80, 100) If closing is on or after 1/12/17 then use the new ones

12. Changes to Spec and MAT Guide RAD Corrections to ICs Is the Phase-In decision re-determined if the IC is corrected? Yes only if OA is correcting an original IC and not a corrected IC done to implement an AR or IR previously scheduled for the conversion date If there were a corrected IC done to implement a previously scheduled AR or IR for that date, it too might need to be corrected depending on the reason for the correction to the original IC but that IC is not involved in a decision concerning phase-in

13. Changes to Spec and MAT Guide RAD Corrections to ICs We will publish a new spreadsheet giving examples of phase-in determinations and cert corrections

14. Changes to Spec and MAT Guide Typical Cases Cert Sequence Do Phase-In? Phase-In Calcs 1/1/2017 Yes 2/1/2017 2/1/2018 2/1/2019 1 Conversion Cert 2 3 4 IC AR AR AR Yes Yes Yes Cert Sequence Do Phase-In? Phase-In Calcs 1/1/2017 No 2/1/2017 2/1/2018 2/1/2019 1 Conversion Cert 2 3 4 IC AR AR AR No No No

15. Changes to Spec and MAT Guide Less Typical Cases Cert Sequence Do Phase-In? Phase-In Calcs 1/1/2017 No 1/1/2017 Yes 2/1/2017 2/1/2018 1 Conversion Cert 2 3 4 IC IC* AR AR Yes Yes Cert Sequence Do Phase-In? Phase-In Calcs 1/1/2017 Yes 1/1/2017 No 2/1/2017 2/1/2018 1 Conversion Cert 2 3 4 IC IC* AR AR No No

16. Changes to Spec and MAT Guide Very Rare Cases The AR/IR effective on the same date is never used to determine phase-in Cert Sequence 1 Conversion Cert IC 2 IC* 3 IC* 4 IC* Do Phase-In? Phase-In Calcs 1/1/2017 Yes 1/1/2017 1/1/2017 Yes 1/1/2017 Yes Yes Cert Sequence Do Phase-In? Phase-In Calcs 1/1/2017 No 1/1/2017 1/1/2017 No 1/1/2017 1 Conversion Cert 2 3 4 IC IC* IC* IC* No No

17. Errors have been modified

18. New Errors MAT Error 25 is applied to Social Security Numbers in the Member record and the MAT40, 65 and 70 records: if all 0s or 1s or 2s or 3s or 4s or 5s or 6s or 7s or 8s Message = TRANSMISSION REJECTED: INVALID SSN SUBMITTED FOR A HOUSEHOLD MEMBER

19. New Errors MAT Error 26 is applied to the Extremely Low Income Limit field (MAT10, Section 2, field 42): Message = TRANSMISSION REJECTED: EXTREMELY LOW INCOME LIMIT NEEDED FOR SUBSIDY 1 or 6

20. New Errors MAT Error 27. If any of the new ethnicity, and race sub-category fields are not blank AND the main category (Ethnicity, Race Asian, Race Native Hawaiian or Other Pacific Islander) is blank then trigger the error. Message = TRANSMISSION REJECTED: RACE/ETH. SUB-TYPE SUBMITTED WITHOUT RACE/ETH. CODE

21. Modified Errors MAT Error A1: Applies to the Contract Number field in the TENHR and VCHHR. If blank or spaces and subsidy type is 1 , 6 , 7 , 8 , 9 Message = TRANSMISSION REJECTED: CONTRACT NUMBER REQUIRED FOR SUBSIDY TYPE

22. Modified Errors MAT Error 17: Applies to Owner DUNS Number in the TENHR and VCHHR records. If blank or spaces and subsidy type is 1 , 2 , 3 , 6 , 7 , 8 , 9 Message = TRANSMISSION REJECTED: DUNS NUMBER MUST NOT BE SPACE FILLED

23. Modified Errors MAT Error 21: Applies to Parent Company DUNS Number in the TENHR and VCHHR records. If blank or spaces and subsidy type is 1 , 2 , 3 , 6 , 7 , 8 , 9 and Parent Company TIN number is populated Message = TRANSMISSION REJECTED: PARENT DUNS NUMBER MUST NOT BE SPACE FILLED

24. TRACS Errors MAT Errors vs TRACS Errors Certification and Voucher Edits (Compliance)

25. No Error 999-99-0000 Workaround No New Edit

26. Still Visiting Hard edits on use of a T numbers when the SSN Exception is used Reducing the Fatal Error to a Discrepancy with an action code of 1 for multiple subsidy Complies with current HUD guidance Reduces risk of improper payment

27. Next Step (Lanier in or out?) Action Items Outstanding Issues Next Step Next Meeting D.C. 2/7/2017 all day 2/8/2017 half day