24 CFR Part 905 — The Public Housing Capital Fund Program

PART 905—THE PUBLIC HOUSING CAPITAL FUND PROGRAM Authority: 42 U.S.C. 1437g, 42 U.S.C. 1437z-2, 42 U.S.C. 1437z-7, and 3535(d). Source: 65 FR 14426, Mar. 16, 2000, unless otherwise noted. Subpart A—General Source: 78 FR 63770, Oct. 24, 2013, unless otherwise noted. § 905.100 Purpose, general description, and other requirements. (a) Purpose. (b) General description. (1) Validate project-level information in HUD's data systems, as prescribed by HUD; (2) Have an approved CFP 5-Year Action Plan; (3) Enter into a Capital Fund Annual Contributions Contract (CF ACC) Amendment to the PHA's Annual Contributions Contract (as defined in 24 CFR 5.403) with HUD; and (4) Provide a written certification and counsel's opinion that all property receiving Capital Fund assistance is under a currently effective Declaration of Trust (DOT) and is in compliance with the CF ACC and the Act. (c) Informational requirements. (d) Eligible activities. (e) Obligation and expenditure requirements. (f) Financing and development. (g) Protections for Victims of Domestic Violence, Dating Violence, Sexual Assault and Stalking. [78 FR 63770, Oct. 24, 2013, as amended at 80 FR 75942, Dec. 7, 2015; 81 FR 80815, Nov. 16, 2016] § 905.102 Applicability. All PHAs that have public housing units under an Annual Contributions Contract (ACC), as described in 24 CFR 5.403, are eligible to receive Capital Funds. § 905.104 HUD approvals. All HUD approvals required in this part must be in writing and from an official designated to grant such approval. § 905.106 Compliance. PHAs or owner/management entities or their partners are required to comply with all applicable provisions of this part. Execution of the CF ACC Amendment, submissions required by this part, and disbursement of Capital Fund grants from HUD are individually and collectively deemed to be the PHA's certification that it is in compliance with the provisions of this part and all other Public Housing Program Requirements. Noncompliance with any provision of this part or other applicable requirements may subject the PHA and/or its partners to sanctions contained in § 905.804 of this part. § 905.108 Definitions. The following definitions apply to this part: 1937 Act. Accessible. ACC. ACC Amendment. Additional Project Costs. (1) Costs for the demolition or remediation of environmental hazards associated with public housing units that will not be rebuilt on the original site; and (2) Extraordinary site costs that have been verified by an independent state-registered, licensed engineer (e.g., removal of underground utility systems; replacement of off-site underground utility systems; extensive rock and/or soil removal and replacement; and amelioration of unusual site conditions, such as unusual slopes, terraces, water catchments, lakes, etc.); and (3) Cost effective energy-efficiency measures in excess of standard building codes. Capital Fund Capital Fund Annual Contributions Contract Amendment (CF ACC). Capital Fund Program Fee. Community Renewal Costs. Cooperation agreement. Date of Full Availability (DOFA). Declaration of Restrictive Covenant. Declaration of Trust (DOT). Development. Emergency work. Energy audit. Expenditure. Federal Fiscal Year (FFY). Force account labor. Fungibility. HCC. Line of Credit Control System (LOCCS). Mixed-finance modernization. Modernization. Natural disaster. et seq Obligation. i.e. i.e. Open grant. Operating fund. Owner entity. Partner. Physical Needs Assessment (PNA). PIH Information Center (PIC). Public Housing Agency (PHA). Public Housing Assessment System (PHAS). Public housing capital assistance. Public housing funds. Public housing project. Public housing requirements. Reasonable cost. Reconfiguration. Uniform Federal Accessibility Standards (UFAS). [78 FR 63770, Oct. 24, 2013, as amended at 80 FR 75942, Dec. 7, 2015] § 905.110 Incorporation by reference. (a) Certain material is incorporated by reference into this part, with the approval of the Director of the Federal Register, under 5 U.S.C. 552(a) and 1 CFR part 51. To enforce any edition other than that specified in this section, HUD must publish notice of change in the Federal Register http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html. (b) American Society of Heating, Refrigerating, and Air-Conditioning Engineers, Inc., 1791 Tulle Circle NE., Atlanta, GA 30329 ( http://www.ashrae.org/standards-research-technology/standards-guidelines (1) ASHRAE 90.1-2010, “Energy Standard for Buildings Except Low-Rise Residential Buildings,” copyright 2010, IBR approved for §§ 905.200(b) and 905.312(b) of this part. (2) [Reserved] (c) International Code Council, 500 New Jersey Avenue NW., 6th Floor, Washington, DC 20001. (1) International Energy Conservation Code (IECC), January 2009, IBR approved for §§ 905.200(b) and 905.312(b). (2) [Reserved] Subpart B—Eligible Activities Source: 78 FR 63773, Oct. 24, 2013, unless otherwise noted. § 905.200 Eligible activities. (a) General. (b) Eligible activities. (1) Modernization. (2) Development. i.e. (3) Financing. (i) Mixed finance as described in § 905.604 of this part; (ii) The Capital Fund Financing Program (CFFP) as described in § 905.500 of this part; and (iii) Any other use authorized by the Secretary under section 30 of the 1937 Act (42 U.S.C. 1437). (4) Vacancy reduction. (5) Nonroutine maintenance. (6) Planned code compliance. (i) Correcting violations of local building code or the Uniform Physical Condition Standards (UPCS) under the Public Housing Assessment System (PHAS), and (ii) A national building code, such as those developed by the International Code Council or the National Fire Protection Association; and the IECC or ASHRAE 90.1-2010 (both incorporated by reference, see, § 905.110 of this part), for multifamily high-rises (four stories or higher), or a successor energy code or standard that has been adopted by HUD for new construction pursuant to section 109 of the Cranston-Gonzales National Affordable Housing Act, Public Law 101-625, codified at 42 U.S.C. 12709, or other relevant authority. (7) Management improvements. (i) Training for PHA personnel in operations and procedures, including resident selection, rent collection and eviction; (ii) Improvements to management, financial, and accounting control systems of the PHA; (iii) Improvement of resident and project security; (iv) Activities that assure or foster equal opportunity; and (v) Activities needed in conjunction with capital expenditures to facilitate programs to improve the empowerment and economic self-sufficiency of public housing residents, including the costs for resident job training and resident business development activities to enable residents and their businesses to carry out Capital Fund-assisted activities. (vi) Resident management costs not covered by the Operating Fund include: (A) The cost of technical assistance to a resident council or RMC to assess feasibility of carrying out management functions for a specific development or developments; (B) The cost to train residents in skills directly related to the operation and management of the development(s) for potential employment by the RMC; (C) The cost to train RMC board members in community organization, board development, and leadership; (D) The cost of the formation of an RMC; and (E) Resident participation costs that promote more effective resident participation in the operation of the PHA in its Capital Fund activities, including costs for staff support, outreach, training, meeting and office space, childcare, transportation, and access to computers that are modest and reasonable. (8) Economic self-sufficiency. (9) Demolition and reconfiguration. (ii) The costs to develop dwelling units or nondwelling facilities approved by HUD, where required, and other related costs for activities such as relocation, clearing and grading the site prior to development. (iii) The costs to reconfigure existing dwelling units to units with different bedroom sizes or to a nondwelling use. (10) Resident relocation and mobility counseling. (11) Security and safety. (12) Homeownership. (i) The cost of a study to assess the feasibility of converting rental units to homeownership units and the preparation of an application for the conversion to homeownership or for the sale of units; (ii) Construction or acquisition of units; (iii) Downpayment assistance; (iv) Closing cost assistance; (v) Subordinate mortgage loans; (vi) Construction or permanent financing such as write downs for new construction, or acquisition with or without rehabilitation; and (vii) Other activities in support of the primary homeownership activities above, including but not limited to: (A) Demolition to make way for new construction; (B) Abatement of environmentally hazardous materials; (C) Relocation assistance and mobility counseling; (D) Homeownership counseling; (E) Site improvements; and (F) Administrative and marketing costs. (13) Capital Fund-related legal costs (14) Energy efficiency. (i) Energy audit or updated energy audits to the extent Operating Funds are not available and the energy audit is included within a modernization program. (ii) Integrated utility management and capital planning to promote energy conservation and efficiency measures. (iii) Energy and water conservation measures identified in a PHA's most recently updated energy audit. (iv) Improvement of energy and water-use efficiency by installing fixtures and fittings that conform to the American Society of Mechanical Engineers/American National Standards Institute standards A112.19.2-1998 and A112.18.1-2000, or any revision thereto, applicable at the time of installation, and by increasing energy efficiency and water conservation by such other means as the Secretary determines are appropriate. (v) The installation and use of Energy Star appliances whenever energy systems, devices, and appliances are replaced, unless it is not cost-effective to do so, in accordance with Section 152 of the Energy Policy Act of 2005, 42 U.S.C. 15841. (vi) Utility and energy management system automation, and metering activities, including changing mastermeter systems to individually metered systems if installed as a part of a modernization activity to upgrade utility systems; for example, electric, water, or gas systems of the PHA consistent with the requirements of 24 CFR part 965. (15) Administrative costs. (16) Audit. (17) Capital Fund Program Fee. (18) Emergency activities. § 905.202 Ineligible activities and costs. The following are ineligible activities and costs for the CFP: (a) Costs not associated with a public housing project or development, as defined in § 905.604(b)(1); (b) Activities and costs not included in the PHA's CFP 5-Year Action Plan, with the exception that expenditures for emergencies and disasters, as defined in § 905.204 of this subpart, that are not identified in the 5-year Action Plan because of their emergent nature are eligible costs; (c) Improvements or purchases that are not modest in design and cost because they include amenities, materials, and design in excess of what is customary for the locality. Air conditioning is an eligible modest amenity; (d) Any costs not authorized as outlined in 2 CFR part 200, subpart E, including, but not limited to, indirect administrative costs and indemnification; (e) Public housing operating assistance, except as provided in § 905.314(l) of this part; (f) Direct provision of social services through either force account or contract labor. Examples of ineligible direct social services include, but are not limited to, salaries for social workers or GED teachers; (g) Eligible costs that are in excess of the amount directly attributable to the public housing units when the physical or management improvements, including salaries and employee benefits and contributions, will benefit programs other than public housing, such as section 8 Housing Choice Voucher or local revitalization programs; (h) Ineligible management improvements include: (1) Costs for security guards or ongoing security services (Capital Funds may only be used for the initial capital (e.g., fencing, lights, and cameras) or noncapital (e.g., training of in-house security staff) management improvements but may not be used for the ongoing costs, such as security guards after the end of the implementation period of the physical improvements); (2) General remedial education; and (3) Job counseling, job development and placement, supportive services during training, and the hiring of a resident coordinator. No continued Capital Funds will be provided after the end of the implementation period of the management improvements. The PHA shall be responsible for finding other funding sources, reducing its ongoing management costs, or terminating the management activities; (i) Eligible cost that is funded by another source and would result in duplicate funding; and (j) Any other activities and costs that HUD may determine on a case-by-case basis. [78 FR 63770, Oct. 24, 2013, as amended at 80 FR 75942, Dec. 7, 2015] § 905.204 Emergencies and natural disasters. (a) General. (b) Emergencies and natural disasters. (c) Procedure to request emergency or natural disaster funds. (d) Procedure to request preliminary natural disaster grant for immediate preservation. (e) Procedure for an emergency or a final request for natural disaster funds. (1) Identify the public housing project(s) with the emergency or natural disaster condition(s). (2) Identify and provide the date of the conditions that present an unforeseen or unpreventable threat to the health, life, or safety of residents, in the case of emergency; or Natural disaster (e.g., hurricane, tornado, etc.). (3) Describe the activities that will be undertaken to correct the emergency or the conditions caused by the natural disaster and the estimated cost. (4) Provide an independent assessment of the extent of and the cost to correct the condition. The assessment must be specific as to the damage and costs associated with the emergency or natural disaster. An independent estimate of damage and repair cost is required as a part of the final natural disaster application. For natural disasters, the assessment must identify damage specifically caused by the natural disaster. The set-aside can be used only to pay costs to repair or replace a public housing project damaged as a result of the natural disaster, not for nonroutine maintenance or other improvements. (5) Provide a copy of a currently effective DOT covering the property and an opinion of counsel that there are no preexisting liens or other encumbrances on the property. (6) Demonstrate that without the requested funds from the set-aside, the PHA does not have adequate funds available to correct the emergency condition(s). (7) Identify all other sources of available funds (e.g., insurance proceeds, FEMA). (8) Any other material required by HUD. (f) HUD Action. (g) Submission of the CF ACC. Subpart C—General Program Requirements Source: 78 FR 63773, Oct. 24, 2013, unless otherwise noted. § 905.300 Capital fund submission requirements. (a) General. (1) Applicability. Federal Register. (2) [Reserved] (b) Capital Fund program submission requirements. (1) CFP 5-Year Action Plan. Content. (ii) Budget. (A) Where a PHA has an approved Capital Fund Financing Program (CFFP) loan, debt service payments for the grants from which the payments are scheduled; (B) Where a PHA has an approved CFFP loan, the PHA shall also include all work and costs, including debt service payments, in the CFP 5-Year Action Plan. Work associated with the use of financing proceeds will be reported separately in a form and manner prescribed by HUD; or (C) Work affecting health and safety and compliance with regulatory requirements such as section 504 of the Rehabilitation Act of 1973 and HUD's implementing regulations at 24 CFR part 8, and the lead-based paint poisoning prevention standards at 24 CFR part 35, before major systems (e.g., heating, roof, etc.) and other costs of lower priority. (iii) PHA Criteria for Significant Amendment or Modification. The PHA must include in the basic criteria that the PHA will use for determining a significant amendment or modification to the CFP 5-Year Action Plan. In addition to the criteria established by the PHA, for the purpose of the CFP, a proposed demolition, disposition, homeownership, Capital Fund financing, development, or mixed-finance proposal are considered significant amendments to the CFP 5-Year Action Plan. (iv) Submission. (v) Significant amendments or modification to the CFP 5 Year Action Plan. PHAs making significant amendments or modifications to the CFP 5-Year Action Plan, as defined in paragraph (b)(1)(iii) of this section, must follow the requirements of this section. (A) A PHA after submitting its 5-Year Action Plan may amend or modify the plan. If the amendment or modification is a significant amendment or modification, as defined in paragraph (b)(1)(iii) of this section, the PHA: (1) May not adopt the amendment or modification until the PHA has duly called a meeting of its Board of Commissioners (or similar governing body) and the meeting at which the amendment or modification is adopted, is open to the public; and (2) May not implement the amendment or modification until notification of the amendment or modifications are provided to HUD and approved by HUD in accordance with HUD's plan review procedures, as provided in paragraph (b)(6) of this section. (B) Each significant amendment or modification to a plan submitted to HUD is subject to the requirement of paragraph (b)(3) of this section. (2) Certifications required for receipt of Capital Fund grants. (i) Certification of PIC Data; (ii) Standard Form—Disclosure of Lobbying Activities; (iii) Civil Rights Compliance, in a form prescribed by HUD; and (iv) Certification of Compliance with Public Hearing Requirements. (3) Conduct of public hearing and Resident Advisory Board Consultation. (i) Not later than 45 days before the public hearing is to take place, the PHA must: (A) Make the Capital Fund submission along with the material required under this paragraph (b) available to the residents and the RAB; and (B) Publish a notice informing the public that the information is available for review and inspection; that a public hearing will take place on the plan; and of the date, time, and location of the hearing. (C) PHAs shall conduct reasonable outreach activities to encourage broad public participation in the review of the Capital Fund submission. (4) Public and RAB comments. (5) Consistency with Consolidated Plan. (6) HUD review and approval. (i) All of the information that is required to be submitted is included; (ii) The information is consistent with the needs identified in the PNA and data available to HUD; and (iii) There are any issues of compliance with applicable laws, regulations, or contract requirements that have not been addressed with the proposed use of the Capital Fund. (7) Time frame for submission of CFP requirements. (8) Performance and Evaluation Report. (ii) PHAs that are designated as troubled performers under PHAS (24 CFR part 902) or as troubled under the Section 8 Management Assessment Program (SEMAP) (24 CFR part 985), and/or were identified as noncompliant with section 9(j) obligation and expenditure requirements during the fiscal year, shall submit their CFP Annual Statement/Performance and Evaluation Reports to HUD for review and approval. (iii) All other PHAs, that are not designated as troubled performers under PHAS and are not designated as troubled under SEMAP, and that were in compliance with section 9(j) obligation and expenditure requirements during the fiscal year, shall prepare a CFP Annual Statement/Performance and Evaluation report for all open grants and shall retain the report(s) on file at the PHA, to be available to HUD upon request. (9) Moving to Work (MTW) PHAs. (c)-(d) [Reserved] § 905.302 Timely submission of the CF ACC amendment by the PHA. Upon being provided with a CF ACC Amendment from HUD, the PHA must sign and date the CF ACC Amendment and return it to HUD by the date established. HUD will execute the signed and dated CF ACC Amendment submitted by the PHA. If HUD does not receive the signed and dated Amendment by the submission deadline, the PHA will receive the Capital Fund grant for that year; however, it will have less than 24 months to obligate 90 percent of the Capital Fund grant and less than 48 months to expend these funds because the PHA's obligation start date and disbursement end date for these grants will remain as previously established by HUD. § 905.304 CF ACC term and covenant to operate. (a) Period of obligation to operate as public housing. (1) Development activities. (2) Modernization activities. (3) Operating Fund. (b) Mortgage or security interests. any mortgage “This financing is non-recourse to any public housing property (real or personal property including all public housing assets or income), or disposition proceeds approved pursuant to Section 18 of the United States Housing Act of 1937 (unless explicitly permitted by HUD in the Section 18 approval letter).” (c) Applicability of latest expiration date. § 905.306 Obligation and expenditure of Capital Fund grants. (a) Obligation. (b) Items and costs. (c) Extension to obligation requirement. (1) The size of the PHA; (2) The complexity of the CFP of the PHA; (3) Any limitation on the ability of the PHA to obligate the amounts allocated for the PHA from the Capital Fund in a timely manner as a result of state or local law; or (4) Any other factors that HUD determines to be relevant. (d) HUD extension for other reasons. (1) Litigation; (2) Delay in obtaining approvals from the Federal Government or a state or local government that is not the fault of the PHA; (3) Compliance with environmental assessment and abatement requirements; (4) Relocating residents; (5) An event beyond the control of the PHA; or (6) Any other reason established by HUD by notice in the Federal Register. (e) Failure to obligate. (i) Requesting in writing that HUD recapture the unobligated balance of the grant; or (ii) Continuing to obligate funds for the grant in noncompliance until the noncompliance is cured. (2) After the PHA has cured the noncompliance, HUD will release the withheld Capital Fund grant(s) minus a penalty of one-twelfth of the grant for each month of noncompliance. (f) Expenditure. § 905.308 Federal requirements applicable to all Capital Fund activities. (a) The PHA shall comply with the requirements of 24 CFR part 5 (General HUD Program Requirements; Waivers), 2 CFR part 200, and this part. (b) The PHA shall also comply with the following program requirements. (1) Nondiscrimination and equal opportunity. et seq. (2) Environmental requirements. et seq. (3) Wage rates. (ii) HUD-determined wage rates. For all operations work and contracts, including routine and nonroutine maintenance work (as defined in § 905.200(b)(5) of this part), all laborers and mechanics employed shall be paid not less than the wages prevailing in the locality, as determined or adopted by HUD pursuant to section 12(a) of the 1937 Act, 42 U.S.C. 1437j(a). (iii) State wage rates. (iv) Volunteers. (4) Technical wage rates. (5) Lead-based paint poisoning prevention. et seq. et seq. (6) Fire safety. (7) Flood insurance and floodplain requirements. (i) The requirements of 24 CFR part 55, Floodplain Management, have been met, including a determination by a responsible entity under 24 CFR part 58 or by HUD under 24 CFR part 50 that there is no practicable alternative to locating in an area of special flood hazards and the minimization of unavoidable adverse impacts; (ii) Flood insurance on the building is obtained in compliance with the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001 et seq. (iii) The community in which the area is situated is participating in the National Flood Insurance Program in accordance with 44 CFR parts 59 through 79, or less than one year has passed since FEMA notification regarding flood hazards. (8) Coastal barriers. et seq. (9) Displacement, relocation, and real property acquisition. (10) Procurement and contract requirement. [78 FR 63770, Oct. 24, 2013, as amended at 80 FR 75942, Dec. 7, 2015; 85 FR 61568, Sept. 29, 2020] § 905.310 Disbursements from HUD. (a) The PHA shall initiate a fund requisition from HUD only when funds are due and payable, unless HUD approves another payment schedule as authorized by 2 CFR 200.305. (b) The PHA shall maintain detailed disbursement records to document eligible expenditures (e.g., contracts or other applicable documents), in a form and manner prescribed by HUD. [78 FR 63770, Oct. 24, 2013, as amended at 80 FR 75942, Dec. 7, 2015] § 905.312 Design and construction. The PHA shall meet the following design and construction standards, as applicable, for all development and modernization. (a) Physical structures shall be designed, constructed, and equipped to be consistent with the neighborhoods they occupy; meet contemporary standards of modest design, comfort, and livability (see also § 905.202(c) of this part); promote security; promote energy conservation; and be attractive so as to harmonize with the community. (b) All development projects shall be designed and constructed in compliance with: (1) A national building code, such as those developed by the International Code Council or the National Fire Protection Association; and the IECC or ASHRAE 90.1-2010 (both incorporated by reference, see § 905.110 of this part), for multifamily high-rises (four stories or higher), or a successor energy code or standard that has been adopted by HUD pursuant to 42 U.S.C. 12709 or other relevant authority; (2) Applicable state and local laws, codes, ordinances, and regulations; (3) Other federal requirements, including fire protection and safety standards implemented under section 31 of the Fire Administration Authorization Act of 1992, 15 U.S.C. 2227 and HUD minimum property standards (e.g., 24 CFR part 200, subpart S); (4) Accessibility Requirements as required by section 504 of the Rehabilitation Act (29 U.S.C. 794) and implementing regulations at 24 CFR part 8; title II of the Americans with Disabilities Act (42 U.S.C. 12101 et seq. (5) Occupancy of high-rise elevator structures by families with children. Pursuant to 42 U.S.C. 1437d(a), a high-rise elevator structure shall not be provided for families with children regardless of density, unless the PHA demonstrates and HUD determines that there is no practical alternative. (c) All modernization projects shall be designed and constructed in compliance with: (1) The modernization standards as prescribed by HUD; (2) Accessibility requirements as required by section 504 of the Rehabilitation Act (29 U.S.C. 794) and implementing regulations at 24 CFR part 8; title II of the Americans with Disabilities Act (42 U.S.C. 12101 et seq. (3) Cost-effective energy conservation measures, identified in the PHA's most recently updated energy audit. (d) Pursuant to the Energy Policy Act of 2005, in purchasing appliances, PHAs shall purchase appliances that are Energy Star products or Federal Energy Management Program designed products, unless the PHA determines that the purchase of these appliances is not cost effective. (e) Broadband infrastructure. (1) The location of the new construction or substantial rehabilitation makes installation of broadband infrastructure infeasible; (2) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or (3) The structure of the housing to be rehabilitated makes installation of broadband infrastructure infeasible. [78 FR 63773, Oct. 24, 2013, as amended at 81 FR 92639, Dec. 20, 2016] § 905.314 Cost and other limitations. (a) Eligible administrative costs. (b) Maximum project cost. (1) Project costs that are subject to the TDC limit ( i.e. (2) Project costs that are not subject to the TDC limit ( i.e. (c) TDC limit. (2) Determination of TDC limit. (i) Step 1: Unit construction cost guideline. Federal Register. (ii) Step 2: Bedroom size and structure types. (iii) Step 3: Elevator and nonelevator type structures. (iv) Step 4: TDC limit. (3) Costs not subject to the TDC limit. (4) Funds not subject to the TDC limit. (d) Housing Construction Costs (HCC). General. (2) Determination of HCC limit. Federal Register. (3) The HCC limit is not applicable to the acquisition of existing housing, whether or not such housing will be rehabilitated. The TDC limit is applicable to such acquisition. (e) Community Renewal Costs. (f) Rehabilitation of existing public housing projects. (g) Modernization cost limits. (1) Emergency work; (2) Essential maintenance necessary to keep a public housing project habitable until the demolition or disposition application is approved; or (3) The costs of maintaining the safety and security of a site that is undergoing demolition. (h) Administrative cost limits and Capital Fund Program Fee. (2) Capital Fund Program Fee (for asset-management PHAs). For a PHA that is under asset management, the Capital Fund Program Fee and administrative cost limits are the same. For the Capital Fund Program Fee, a PHA may charge a management fee of up to 10 percent of the annual CFP formula grant(s) amount, excluding emergency and disaster grants and also excluding any costs related to lead-based paint or asbestos testing, in-house architectural and engineering work, or other special administrative costs required by state or local law. (i) Modernization. The PHA shall not budget or expend more than 10 percent of its annual Capital Fund grant on administrative costs, in accordance with its CFP 5-Year Action Plan. The 10 percent limit excludes any costs related to lead-based paint or asbestos testing, in-house Architectural and Engineering work, or other special administrative costs required by state or local law. (ii) Development. For development work with Capital Fund and RHF grants, the administrative cost limit is 3 percent of the total project budget, or, with HUD's approval, up to 6 percent of the total project budget. (i) Management improvement cost limits. (j) Types of labor. (k) RMC activities. (l) Capital Funds for operating costs. (1) Large PHAs. (2) Small PHAs. § 905.316 Procurement and contract requirements. (a) General. (b) Contracts. (c) Mixed-finance development projects. (d) Assurances of completion. (1) A bid guarantee from each bidder, equivalent to 5 percent of the bid price; and (2) One of the following: (i) A performance bond and payment bond for 100 percent of the contract price; (ii) A performance bond and a payment bond, each for 50 percent or more of the contract price; (iii) A 20 percent cash escrow; (iv) A 10 percent irrevocable letter of credit with terms acceptable to HUD, or (v) Any other payment method acceptable to HUD. (e) Procurement of recovered materials. [78 FR 63770, Oct. 24, 2013, as amended at 80 FR 75942, Dec. 7, 2015] § 905.318 Title and deed. The PHA, or, in the case of mixed-finance, the Owner Entity, shall obtain title insurance that guarantees the title is good and marketable before taking title to any and all sites and properties acquired with public housing funds. Immediately upon taking title to a property, the PHA or Owner Entity shall record the deed and a Declaration of Trust or, in the case of mixed finance, a Declaration of Restrictive Covenants, in the form and in the manner and order prescribed by HUD. The PHA shall at all times maintain a recorded Declaration of Trust or Declaration of Restrictive Covenants in the form and in the manner and order prescribed by HUD on all public housing projects covering the term required by this part. § 905.320 Contract administration and acceptance of work. (a) Contract administration. (b) Inspection and acceptance. (c) Guarantees and warranties. (d) Notification of completion. [78 FR 63770, Oct. 24, 2013, as amended at 80 FR 75942, Dec. 7, 2015] § 905.322 Fiscal closeout. (a) General. (b) Submission of cost certificate. (i) Actual Development Cost Certificate (ADCC) within 12 months. For purposes of the CF ACC, costs incurred between the completion of the development and the date of full availability (DOFA) becomes the actual development cost; and (ii) Actual Modernization Cost Certificate (AMCC) for each grant, no later than 12 months after the expenditure deadline but no earlier than the obligation end date. A PHA with under 250 units with an approved CFP 5-Year Action Plan for use of 100 percent of the Capital Fund grant in operations may submit the cost certificate any time after the funds have been budgeted to operations and withdrawn, as described in § 905.314(l) of this part. (2) If the PHA does not submit the cost certificate and the final CFP Annual Statement/Performance and Evaluation Report within the period prescribed in this section, HUD may impose restrictions on open Capital Fund grants; e.g., establish review thresholds, set the grant to “auto review” (HUD automatically reviews it on a periodic basis), or suspend grants, until the cost certificate for the affected grant is submitted. These restrictions may be imposed by HUD after notification of the PHA. (c) Audit. (d) Review and approval. (e) Recapture. [78 FR 63770, Oct. 24, 2013, as amended at 80 FR 75942, Dec. 7, 2015] § 905.324 Data reporting requirements. The PHA shall provide, at minimum, the following data reports, at a time and in a form prescribed by HUD: (a) The Performance and Evaluation Report as described in § 905.300(b)(8) of this part; (b) Updates on the PHA's building and unit data as required by HUD; (c) Reports of obligation and expenditure; and (d) Any other information required for participation in the Capital Fund Program. § 905.326 Records. (a) The PHA will maintain full and complete records of the history of each Capital Fund grant, including, but not limited to, CFP 5-Year Action Plans, procurement, contracts, obligations, and expenditures. (b) The PHA shall retain for 5 years after HUD approves either the actual development or modernization cost certificate all documents related to the activities for which the Capital Fund grant was received, unless a longer period is required by applicable law. (c) HUD and its duly authorized representatives shall have full and free access to all PHA offices, facilities, books, documents, and records, including the right to audit and make copies. Subpart D—Capital Fund Formula Source: 78 FR 63773, Oct. 24, 2013, unless otherwise noted. § 905.400 Capital Fund formula (CF formula). (a) General. (b) Formula allocation based on relative needs. (c) Allocation for existing modernization needs under the CF formula. (d) PHAs with 250 or more units in FFY 1999, except the New York City and Chicago Housing Authorities. (1) Objective measurable data concerning the following PHA, community, and project characteristics applied to each project: (i) The average number of bedrooms in the units in a project (Equation coefficient 4604.7); (ii) The total number of units in a project (Equation coefficient: 10.17); (iii) The proportion of units in a project in buildings completed in 1978 or earlier. In the case of acquired projects, HUD will use the DOFA unless the PHA provides HUD with the actual date of construction completion. When the PHA provides the actual date of construction completion, HUD will use that date (or, for scattered sites, the average dates of construction of all the buildings), subject to a 50-year cap. (Equation coefficient: 4965.4); (iv) The cost index of rehabilitating property in the area (Equation coefficient: −10608); (v) The extent to which the units of a project were in a nonmetropolitan area as defined by the United States Bureau of the Census (Census Bureau) during FFY 1996 (Equation coefficient: 2703.9); (vi) The PHA is located in the Southern census region, as defined by the Census Bureau (Equation coefficient: −269.4); (vii) The PHA is located in the Western census region, as defined by the Census Bureau (Equation coefficient: −1709.5); (viii) The PHA is located in the Midwest census region as defined by the Census Bureau (Equation coefficient: 246.2); and (2) An equation constant of 13851. (i) Newly constructed units. (ii) Acquired projects. (3) For New York City and Chicago Housing Authorities, based on a large sample of direct inspections. (i) Newly constructed units. (ii) Acquired projects. (4) PHAs with fewer than 250 units in FFY 1999. (i) Objective measurable data concerning the PHA, community, and project characteristics applied to each project: (A) The average number of bedrooms in the units in a project. (Equation coefficient: 1427.1); (B) The total number of units in a project. (Equation coefficient: 24.3); (C) The proportion of units in a project in buildings completed in 1978 or earlier. In the case of acquired projects, HUD shall use the DOFA date unless the PHA provides HUD with the actual date of construction completion, in which case HUD shall use the actual date of construction completion (or, for scattered sites, the average dates of construction of all the buildings), subject to a 50-year cap. (Equation coefficient: −1389.7); (D) The cost index of rehabilitating property in the area, as of FFY 1999. (Equation coefficient: −20163); (E) The extent to which the units of a project were in a nonmetropolitan area as defined by the Census Bureau during FFY 1996. (Equation coefficient: 6157.7); (F) The PHA is located in the Southern census region, as defined by the Census Bureau. (Equation coefficient: 4379.2); (G) The PHA is located in the Western census region, as defined by the Census Bureau. (Equation coefficient: 3747.7); (H) The PHA is located in the Midwest census region as defined by the Census Bureau. (Equation coefficient: −2073.5); and (ii) An equation constant of 24762. (A) Newly constructed units. (B) Acquired projects. (5) Calibration of existing modernization need for cost index of rehabilitating property in the area. (6) Freezing of the determination of existing modernization need. (e) Allocation for accrual needs under the CF formula. (1) PHAs with 250 or more units, except the New York City and Chicago Housing Authorities. The estimates of the accrual need shall be based on the following: (i) Objective measurable data concerning the following PHA, community, and project characteristics applied to each project: (A) The average number of bedrooms in the units in a project. (Equation coefficient: 324.0); (B) The extent to which the buildings in a project average fewer than 5 units. (Equation coefficient: 93.3); (C) The age of a project, as determined by the DOFA date. In the case of acquired projects, HUD shall use the DOFA date unless the PHA provides HUD with the actual date of construction completion, in which case HUD shall 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 coefficient: −7.8); (D) Whether the development is a family project. (Equation coefficient: 184.5); (E) The cost index of rehabilitating property in the area. (Equation coefficient: −252.8); (F) The extent to which the units of a project were in a nonmetropolitan area as defined by the Census Bureau during FFY 1996. (Equation coefficient: −121.3); (G) PHA size of 6,600 or more units in FFY 1999. (Equation coefficient: −150.7); (H) The PHA is located in the Southern census region, as defined by the Census Bureau. (Equation coefficient: 28.4); (I) The PHA is located in the Western census region, as defined by the Census Bureau. (Equation coefficient: −116.9); (J) The PHA is located in the Midwest census region as defined by the Census Bureau. (Equation coefficient: 60.7); and (ii) An equation constant of 1371.9. (2) For the New York City and Chicago Housing Authorities, based on a large sample of direct inspections. 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 City, and $1,251 in Chicago, and the number for elderly developments is $734 in New York City and $864 in Chicago. (3) PHAs with fewer than 250 units. The estimates of the accrual need shall be based on the following: (i) Objective measurable data concerning the following PHA, community, and project characteristics applied to each project: (A) The average number of bedrooms in the units in a project. (Equation coefficient: 325.5); (B) The extent to which the buildings in a project average fewer than 5 units. (Equation coefficient: 179.8); (C) The age of a project, as determined by the DOFA date. In the case of acquired projects, HUD shall use the DOFA date unless the PHA provides HUD with the actual date of construction completion. When provided with the actual date of construction completion, HUD shall use this date (or, for scattered sites, the average dates of construction of all the buildings), subject to a 50-year cap. (Equation coefficient: −9.0); (D) Whether the project is a family development. (Equation coefficient: 59.3); (E) The cost index of rehabilitating property in the area. (Equation coefficient: −1570.5); (F) The extent to which the units of a project were in a nonmetropolitan area as defined by the Census Bureau during FFY 1996. (Equation coefficient: −122.9); (G) The PHA is located in the Southern census region, as defined by the Census Bureau. (Equation coefficient: −564.0); (H) The PHA is located in the Western census region, as defined by the Census Bureau. (Equation coefficient: −29.6); (I) The PHA is located in the Midwest census region as defined by the Census Bureau. (Equation coefficient: −418.3); and (ii) An equation constant of 3193.6. (4) Calibration of accrual need for the cost index of rehabilitating property in the area. (f) Calculation of number of units. General. (i) HUD shall count as one unit: (A) Each public housing and section 23 bond-financed CF unit, except that each existing unit under the Turnkey III program shall count as one-fourth of a unit. 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 any units that the PHA adds to its inventory when the units are under CF ACC amendment and have reached DOFA by the date that HUD establishes for the FFY in which the CF formula is being run (hereafter called the “reporting date”). New CF units and those reaching DOFA after the reporting date shall be counted for CF formula purposes in the following FFY. (2) Replacement units. (3) Reconfiguration of units. (4) Reduction of units. (g) Computation of formula shares under the CF formula. Total estimated existing modernization need. (2) Total accrual need. (3) PHA's formula share of existing modernization need. (4) PHA's formula share of accrual need. (5) PHA's formula share of capital need. (h) CF formula capping. (2) For a Moving to Work (MTW) PHA whose MTW agreement provides that its CF formula share is to be calculated in accordance with the previously existing formula, the PHA's CF formula share, during the term of the MTW agreement, may be approximately the formula share that the PHA would have received had the FFY 1999 formula funding system been applied to the CF formula eligible units. (i) Replacement Housing Factor to reflect formula need for developments with demolition or disposition occurring on or after October 1, 1998, and prior to September 30, 2013. RHF generally. (2) When applied. (i) For the first 5 years after the reduction of 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 RHF. (4) Replacement housing funding in FFYs 1998 and 1999. (5) PHA Eligibility for the RHF. (i) The PHA will use the funding in question only for replacement housing; (ii) 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 5-Year Action Plan, as approved by HUD under part 903 of this chapter as well as the PHA's Board of Commissioners; (iii) The PHA has not received funding for public housing units that will replace the lost units under Public Housing Development, Major Reconstruction of Obsolete Public Housing, HOPE VI, Choice Neighborhoods, Rental Assistance Payment (RAP), or programs that otherwise provide for replacement with public housing units; (iv) The PHA, if designated as a troubled PHA by HUD, and not already under the direction of HUD or an 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 (v) 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. (A) Use the restored funding that results from the use of the RHF 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 applicable HUD requirements and regulations. (ii) If a PHA fails to act as described in paragraph (i)(6)(i) of this section, 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 RHF funds within the specified period. (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 RHF within the time frames required by this paragraph, or has not expended such funds within a reasonable time, HUD shall recapture the unobligated amount of the grant. (j) Demolition and Disposition Transitional Funding (DDTF) to reflect formula need for developments with demolition or disposition on or after October 1, 2013. DDTF generally. (2) When applied. (3) Computation of DDTF. (4) PHA eligibility for the DDTF. (i) The PHA will automatically receive the DDTF for reduction of units in accordance with paragraph (j)(1) of this section, unless the PHA rejects the DDTF funding for that fiscal year in writing; (ii) The PHA will use the funding in question for eligible activities under the Capital Fund Program, found at 905.200—such as modernization and development—that are included in the PHA's HUD approved CFP 5-Year Action Plan. (iii) The PHA has not received funding for public housing units that will replace the lost units from disposition proceeds, or under Public Housing Development, Major Reconstruction of Obsolete Public Housing, HOPE VI, Choice Neighborhoods, RAP, or programs that otherwise provide for replacement with public housing units; (iv) The PHA, if designated as a troubled PHA by HUD, and not already under the direction of HUD or an appointed receiver, in accordance with part 902 of this chapter, uses an Alternative Management Entity, as defined in part 902 of this chapter, and complies with any applicable provisions of its Memorandum of Agreement executed with HUD under that part; and (v) The PHA undertakes any eligible activities in accordance with applicable HUD requirements and regulations. (5) Requirement to obligate and expend DDTF funds within the specified period. (ii) To the extent the PHA has not obligated any funds provided as a result of the DDTF within the time frames required by this paragraph, or expended such funds within a reasonable time frame, HUD shall reduce the amount of DDTF to be provided to the PHA. (k) RHF Transition. (2) PHAs that received a portion of a first increment RHF grant in FY 2013, for units removed from inventory prior to the reporting date of June 30, 2012, will receive up to 10 years of funding consisting of the remainder of first-increment RHF, subject to the requirements of § 905.400(i) of this part, and, if eligible, 5 years of DDTF, subject to the requirements of § 905.400(j) of this part. (3) PHAs that received a portion of a second increment RHF grant in FY 2013, for units removed from inventory prior to the reporting date of June 30, 2012, will continue to receive the remaining portion of the 5-year increment as a separate second increment RHF grant, as described in § 905.400(i) of this part. (l) Performance reward factor. High performer. (i) Three (3) percent above its base formula amount in the first 5 years these awards are given (for any year in this 5-year period in which the performance reward is earned); or (ii) Five (5) percent above its base formula amount in future years (for any year in which the performance reward is earned); (2) Condition. (3) Redistribution. Subpart E—Use of Capital Funds for Financing Source: 75 FR 65208, Oct. 21, 2010, unless otherwise noted. § 905.500 Purpose and description. (a) This subpart provides the requirements necessary for a PHA to participate in the Capital Fund Financing Program (CFFP), under which the PHA may obtain HUD approval to borrow private capital and pledge a portion of its annual Capital Fund grant or public housing assets and other public housing property of the public housing agency as security. (b) Under the CFFP, PHAs are permitted to borrow private capital to finance public housing development or modernization activities. A PHA may use a portion of its Capital Fund for debt service payments and usual and customary financing costs associated with public housing development or modernization (including public housing in mixed-finance developments). A PHA that undertakes such financing activities may, subject to HUD's written approval, grant a security interest in its future annual Capital Fund grants, which shall be subject to the appropriation of those funds by Congress. The PHA's financing activities are not obligations or liabilities of the Federal Government. The Federal Government does not assume any liability with respect to any such pledge of future appropriations, and the Federal Government neither guarantees nor provides any full faith and credit for these financing transactions. § 905.505 Program requirements. (a) Written approval. (1) The ability of the PHA to complete the financing transaction along with the associated improvements; (2) The reasonableness of the provisions in the Capital Fund Financing Proposal considering the other pledges or commitments of public housing assets, the PHA's capital needs, and the pledge being proposed; and (3) Whether the PHA meets the requirements of this subpart. (b) Antideficiency. (c) Conditions on use Development. (2) Modernization. (3) Applicability of latest expiration date. (4) Declaration of Trust. (d) Public Housing Assessment System (PHAS) designation. (e) Management capacity. (f) Existing financing. (g) Need for financing. (2) Based on the assessment under paragraph (g)(1) of this section, the PHA must demonstrate that the financing will not negatively impact the ability of the PHA to meet the ongoing needs of its public housing portfolio over the term of the financing. In making this demonstration, PHAs must reduce any projected future Capital Fund grants to account for planned or anticipated activities that would have the effect of reducing or otherwise limiting the availability of future Capital Fund grants. PHA projections must be detailed on the portfolio schedule form prescribed by HUD, and shall project a stabilized number of units (Stabilized Base Unit Count) to be reached in no more than 5 years after all planned or anticipated activities have been completed that would reduce future Capital Fund grants. PHAs must also take into consideration projected use of Capital Funds for other eligible activities under part 905, and may take into consideration alternative sources of financing that are available to help meet its needs. (3) For PHAs that are proposing to borrow more than $2 million on a cumulative basis, to the extent that: (i) Capital and other eligible Capital Fund needs exceed projected Capital Fund program funding amounts, and the PHA is not leveraging non-public housing funds as part of its Capital Fund Financing Proposal transaction, then (ii) The PHA must demonstrate that it has considered leveraging non-public housing funds, and state why the proposed financing is appropriate in light of alternative sources available. (iii) Notwithstanding paragraphs (g)(3)(i) and (ii) of this section, PHAs that size their financing by utilizing only replacement housing factor (RHF) funds, or PHAs that propose to use their Capital Fund Financing Proposal proceeds as part of a mixed-finance modernization transaction, are not required to comply with § 905.505(g). (h) CFP Plan. (2) As part of its Capital Fund Financing Proposal, the PHA shall submit a Capital Fund financing budget, in the form and manner required by HUD, detailing the proposed use of the Capital Fund Financing Proposal proceeds. There shall be no requirement for PHAs to submit a Capital Fund financing budget as part of their Capital Fund financing proceeds where the sizing of the financing is based upon the use of RHF funds for debt service, or where the Capital Fund Financing Proposal proceeds are being used as part of a mixed-finance transaction. Approval letters for mixed-finance and RHF-related Capital Fund financing transactions shall be conditioned upon the approval of the mixed-finance proposal, or, in the case of conventional development, upon the approval of the development proposal and the execution of an associated construction contract with which the Capital Fund financing proceeds would be used. (3) The work financed with Capital Funds and described in the Capital Fund financing budget will be based on the physical needs assessment. The Capital Fund financing budget shall list the work items (e.g., roof replacement, window replacement, accessibility modifications) by development. These work items will constitute performance measures upon which the PHA's performance will be evaluated. A general representation of the work (e.g., “rehabilitation of the development”) is not sufficient. (4) The CFP Plan (submission (as described in paragraph (h) of this section) shall include a copy of the physical needs assessment described in § 905.505(g). (5) Financing proceeds under this part may be used only for the modernization or development of public housing and related costs including the modernization or development of non-dwelling space. Financing proceeds may not be used for administration or central office cost center costs (except for mixed-finance projects), management improvements, or upon non-viable projects, such as those subject to required conversion. Financing proceeds may be used to reimburse predevelopment costs, but only to the extent they were incurred in conformance with applicable regulatory requirements. (i) Debt Coverage Percentage. (2) A PHA may pledge up to 100 percent of any projected replacement housing factor (RHF) grants for debt service payments, provided that the pledge extends to the formula fund portion of its Capital Fund grants also, but that not more than 50 percent of its overall projected Capital Fund grants (including formula funds and RHF funds) are pledged. RHF projections shall account for any projected reductions in RHF over the term of the financing. Unless otherwise approved by HUD, PHAs shall be limited to sizing their loans based upon increments of RHF currently being received by the PHA. CFFP transactions pledging RHF funds shall include accelerated amortization provisions, requiring all RHF funds received by the PHA to pay debt service as those RHF funds are received. A RHF grant shall be used only to develop or pay financing costs for the development of replacement public housing units in accordance with § 905.10. (3) Subject to the reasonableness test in § 905.505(a)(2), PHAs may exceed 33 percent when pledging existing Capital Fund grants and RHF grants for the payment of debt service. Existing grants are grants that have been received by the PHA at the time of HUD's approval of the Capital Fund Financing Proposal. (j) Terms and conditions of financing. (1) Term. (2) Acceleration. (3) Public housing assets. (4) Variable interest rate. (5) Other pledges or commitments. (6) Terms and conditions. (k) Fairness opinion. (l) Financial controls and construction management. (i) Adequate controls are in place regarding the use of the Capital Fund financing proceeds; and (ii) The improvements will be developed and completed in a timely manner consistent with the contract documents. (2) This plan shall contain protocols and financial control mechanisms that address the design of the improvements, construction inspections, construction draws, and requisition approval checks and balances. A PHA that is designated troubled under PHAS, or other PHAs as determined by HUD, may be required to institute risk mitigation measures to ensure that the funds are used properly and for the purposes intended. (m) Work items. (1) A change in the type of activity being financed (for example, if the approved Capital Fund financing budget contemplated the proceeds being used for modernization, but after the proposal is approved, the PHA decides instead to pursue development); (2) A change in the project being modernized or developed with the proceeds; (3) A reduction in 20 percent or more in the number of public housing units being modernized; or (4) An increase of 20 percent or more of the cost of non-dwelling space. (n) Applicability of other Federal requirements. (1) Amounts payable to the PHA by HUD pursuant to the CFFP and pledged to the payment of debt service by the PHA shall be used exclusively for debt service in accordance with the debt service schedule approved by HUD and shall not be available for any other purpose; (2) The financing does not constitute a debt or liability of HUD or the United States, the full faith and credit of the United States are not pledged to the payment of debt service, and debt service is not guaranteed by HUD or the United States; (3) Nothing in this CFF ACC Amendment or 24 CFR part 905 is intended to diminish HUD's authority to administer, monitor, and regulate the public housing program, including HUD's authority to exercise any administrative sanction or remedy provided by law; provided, however, that except as required by law, HUD will not assert any claim or right under the ACC, including the exercise of administrative sanctions and remedies, if and to the extent that the effect of such claim or right would be to reduce the payment of Capital Fund moneys to the PHA below the level necessary to pay debt service or delay the time for payment of such moneys such that required amounts would not be available to pay debt service when due; (4) The financing is subject to mandatory prepayment prior to the obligation end date and expenditure end date of the Capital Fund financing proceeds to the extent necessary for the Capital Fund Financing Proposal proceeds to comply with section 9(j) of the 1937 Act (42 U.S.C. 1437g(j)). Bond and loan documents shall include appropriate provisions such that prepayment shall be made by the lender, trustee, or appropriate third-party servicer approved by HUD, without any action by HUD post-approval; (5) HUD agrees, subject to the availability of appropriations, to approve immediately upon receipt from the PHA (subject to any legal requirements or constraints applicable at the time), a CFP Plan document (as described in 24 CFR 905.505(h)) and/or an annual CFF ACC Amendment, to the extent and in an amount sufficient to make the applicable debt service payment; (6) Prior to cumulatively reducing its inventory of public housing units by more than 5 percent of the Stabilized Base Unit Count, if, after the removal of units from inventory, the Debt Coverage Percentage under § 905.505(i)(1) would constitute more than 33 percent of future Capital Funds, the PHA shall prepay the financing such that the reduction in inventory shall not cause the Debt Coverage Percentage to increase. If the reduction in inventory is required by law or public housing requirements, the prepayment is not required to be made prior to the reduction in inventory, but instead shall be made as soon as possible after the PHA becomes aware of the requirement of law or public housing requirements, but only to the extent that Capital Funds are not otherwise needed by the PHA to address the health and safety issues or other requirements of law in the PHA's public housing portfolio, all as determined by HUD. For PHAs that size their loans based upon the projected receipt of RHF funds, prior to undertaking an activity that will reduce its RHF units below the number of units projected in the Capital Fund Financing Proposal as required by § 905.505(i)(3), the PHA shall prepay its loan such that debt service does not exceed 100 percent of projected RHF after accounting for the reduction in RHF units, all as determined by HUD. (o) Performance measures. (1) Failure to receive HUD approval for future financing transactions; (2) Failure to be considered for future competitive grant programs; and (3) Other sanctions HUD deems appropriate and authorized by law or regulation. (p) Reporting requirements. (2) Each CFFP transaction and/or development project is subject to fiscal closeout in the same manner of a Capital Fund grant. Fiscal closeout includes the submission of an Actual Modernization Cost Certificate (AMCC) or Actual Development Cost Certificate (ADCC), an audit, if applicable, a final quarterly report, and a final Performance and Evaluation report. § 905.507 Streamlined application requirements for standard and high-performing PHAs. (a) PHAs with cumulative CFFP borrowings of less than $2 million and that are standard or high performers under PHAS; PHAs that are high performers under PHAS with cumulative CFFP borrowings of less than $20 million; PHAs that propose to use their CFFP proceeds in a mixed-finance transaction, or proposals where the sizing of the financing is based only upon the use of RHF funds for debt service, shall not be required to submit: (1) A third-party management assessment under § 905.505(e); (2) A third-party fairness opinion under § 905.505(k); (3) An assurance of financial controls and construction management under § 905.505(l). (b) Notwithstanding § 905.507(a), if HUD determines that interest or other costs do not appear to meet industry norms, or other aspects of the proposal present atypical risks, HUD retains the discretion to require assessments, opinions, or controls, or to return the proposal. § 905.510 Submission requirements. (a) All requests for HUD approval of CFFP transactions shall be submitted to the Office of Public and Indian Housing (PIH), Attention: Office of Capital Improvements, in such form and in such number of copies as designated by PIH through direct notice. (b) Each Capital Fund Financing Proposal shall be tabbed and presented with the following information in the order listed: (1) PHA transmittal letter. (i) Describing the transaction being proposed; (ii) Describing in detail any existing financing or similar commitments of public housing funds; (iii) Describing and providing justification for significant financial or legal provisions, such as variable interest or acceleration provisions; (iv) Describing construction management and financial controls. (2) Term sheet, table of contents, and contact information. (3) Financing schedules. (4) Other required submissions. (5) Financing documents. (6) Declaration of Trust requirements. (7) Board resolution and counsel's opinion. (8) Depository Agreement and ACC. (9) Other documents as required by HUD. § 905.515 HUD review and approval. (a) After receipt of a Capital Fund Financing Proposal, HUD shall review the proposal for completeness. HUD will return to the PHA all incomplete or unapprovable proposals, identifying the deficiencies, and will not take any further action. HUD will also return proposals submitted by entities other than the PHA (e.g., the PHA's consultants). HUD shall review all complete proposals for compliance with the requirements under this subpart. HUD may require the PHA to make modifications to any of the CFFP documents submitted and may require the PHA to resubmit all or any portion of the proposal. After HUD determines that a proposal complies with all applicable requirements, HUD shall notify the PHA in writing of its approval and any condition(s) of the approval. (b) (1) A copy or copies of the CFF ACC Amendment shall accompany the approval letter. (2) Within 60 days of the date of HUD's approval of the transaction or, if HUD sets conditions on its approval, within 60 days of the date that the PHA satisfies such conditions (as evidenced by documentation retained in the PHA's file and available to HUD upon request), but in no event longer than 120 days after the HUD approval, unless the time has otherwise been extended by HUD in writing, the PHA must submit: (i) Closing documents as directed by HUD; and (ii) All documents required by HUD to take certain actions such as initiating debt service payments through HUD's automated systems. (3) Failure to provide the required documents to HUD within the time frame required under § 905.515(b)(2) may result in HUD rescinding its approval. Subpart F—Development Requirements Source: 78 FR 63786, Oct. 24, 2013, unless otherwise noted. § 905.600 General. (a) Applicability. (b) Description. (1) Conventional. (2) Turnkey. (3) Acquisition with or without rehabilitation. (4) PHA use of force account labor. (5) Mixed finance. (c) Development process. (1) The PHA will identify a site to be acquired or a public housing project to be developed or redeveloped. The PHA or its Partner and/or the Owner Entity will prepare a site acquisition proposal pursuant to § 905.608 of this part and/or a development proposal pursuant to § 905.606 of this part for submission to HUD or as otherwise directed by HUD. The PHA may request predevelopment funding necessary for preparation of the acquisition proposal and/or development proposal, as stated in § 905.612(a) of this part. (2) The PHA must consult with affected residents prior to submission of an acquisition proposal, development proposal, or both to HUD to solicit resident input into development of the public housing project. (3) After HUD approval of the site acquisition proposal and/or development proposal, HUD and the PHA shall execute the applicable ACC Amendment for the public housing units and record a Declaration of Trust or Declaration of Restrictive Covenants on all property acquired and/or to be developed. The PHA may then commence development of the units. (4) Upon completion of the public housing project, the PHA will establish the DOFA. After the DOFA, the PHA will submit a cost certificate to HUD attesting to the actual cost of the project that will be subject to audit. (d) Funding sources. (1) Capital Funds; (2) HOPE VI funds; (3) Choice Neighborhoods funds; (4) Proceeds from the sale of units under a homeownership program in accordance with 24 CFR part 906; (5) Proceeds resulting from the disposition of PHA-owned land or improvements; (6) Private financing used in accordance with § 905.604 of this part, Mixed-finance development; (7) Capital Fund Financing Program (CFFP) proceeds under § 905.500 of this part; (8) Proceeds resulting from an Operating Fund Financing Program (OFFP) approved by HUD pursuant to 24 CFR part 990; and (9) Funds available from any other eligible sources. § 905.602 Program requirements. (a) Local cooperation. (b) New construction limitation. (1) Limitation on the number of units. (i) The units are available and affordable to eligible low-income families and the CF formula does not provide additional funding for the specific purpose of constructing, modernizing, and operating such excess units; or (ii) The units are part of a mixed-finance project or otherwise leverage significant additional investment, and the cost of the useful life of the projects is less than the estimated cost of providing tenant-based assistance under section 8(o) of the 1937 Act. (2) Limitations on cost. (i) Demonstrating through a cost comparison that the cost of new construction in the neighborhood where the PHA proposes to construct the housing is less than the cost of acquisition of existing housing, with or without rehabilitation, in the same neighborhood; or (ii) Documenting that there is insufficient existing housing in the neighborhood to acquire. (c) Existing PHA-owned nonpublic housing properties. (d) Site and neighborhood standards. (1) The site must be adequate in size, exposure, and contour to accommodate the number and type of units proposed. Adequate utilities (e.g., water, sewer, gas, and electricity) and streets shall be available to service the site. (2) The site and neighborhood shall be suitable to facilitating and furthering full compliance with the applicable provisions of title VI of the Civil Rights Act of 1964, title VIII of the Civil Rights Act of 1968, Executive Order 11063, and HUD regulations issued under these statutes. (3) The site for new construction shall not be located in an area of minority concentration unless: (i) There are already sufficient, comparable opportunities outside areas of minority concentration for housing minority families in the income range that is to be served by the proposed project; or (ii) The project is necessary to meet overriding housing needs that cannot feasibly be met otherwise in that housing market area. “Overriding housing needs” shall not serve as the basis for determining that a site is acceptable if the only reason that these needs cannot otherwise feasibly be met is that, due to discrimination because of race, color, religion, creed, sex, disability, familial status, or national origin, sites outside areas of minority concentration are unavailable. (4) The site for new construction shall not be located in a racially mixed area if the project will cause a significant increase in the proportion of minority to nonminority residents in the area. (5) Notwithstanding the foregoing, after demolition of public housing units a PHA may construct public housing units on the original public housing site or in the same neighborhood if the number of replacement public housing units is significantly fewer than the number of public housing units demolished. One of the following criteria must be satisfied: (i) The number of public housing units being constructed is not more than 50 percent of the number of public housing units in the original development; or (ii) In the case of replacing an occupied development, the number of public housing units being constructed is the number needed to house current residents who want to remain at the site, so long as the number of public housing units being constructed is significantly fewer than the number being demolished; or (iii) The public housing units being constructed constitute no more than 25 units. (6) The site shall promote greater choice of housing opportunities and avoid undue concentration of assisted persons in areas containing a high proportion of low-income persons. (7) The site shall be free from adverse environmental conditions, natural or manmade, such as: Toxic or contaminated soils and substances; mudslide or other unstable soil conditions; flooding; septic tank backups or other sewage hazards; harmful air pollution or excessive smoke or dust; excessive noise or vibrations from vehicular traffic; insect, rodent, or vermin infestation; or fire hazards. The neighborhood shall not be seriously detrimental to family life. It shall not be filled with substandard dwellings nor shall other undesirable elements predominate, unless there is a concerted program in progress to remedy the undesirable conditions. (8) The site shall be accessible to social, recreational, educational, commercial, and health facilities; health services; and other municipal facilities and services that are at least equivalent to those typically found in neighborhoods consisting largely of similar unassisted standard housing. The availability of public transportation must be considered. (9) The site shall be accessible to a range of jobs for low-income workers and for other needs. The availability of public transportation must be considered, and travel time and cost via public transportation and private automobile must not be excessive. This requirement may be given less consideration for elderly housing. (10) The project may not be built on a site that has occupants unless the relocation requirements at § 905.308(b)(9) of this part are met. (11) The site shall not be in an area that HUD has identified as having special flood hazards and in which the sale of flood insurance has been made available under the National Flood Insurance Act of 1968, unless the development is covered by flood insurance required by the Flood Disaster Protection Act of 1973 and meets all applicable HUD standards and local requirements. (e) Relocation. (f) Environmental requirements. et seq. § 905.604 Mixed-finance development. (a) General. (1) Ownership. (2) Partnerships. (3) Funding. (4) Modernization. (b) Definitions applicable to this subpart. Mixed-finance. (2) Owner Entity. (3) PHA instrumentality. (4) PHA affiliate. (5) Public housing funds. (c) Structure of projects. (1) Ensure the continued operation of the public housing units in accordance with all Public Housing Requirements; (2) Ensure that public housing funds committed to a mixed-finance project are used only to pay for costs associated with the public housing units, including such costs as demolition, site work, infrastructure, and common area improvements. (3) To ensure that the amount of public housing funds committed to a project is proportionate to the number of public housing units contained in the project. To meet this “pro rata test,” the proportion of public housing funds compared to total project funds committed to a project must not exceed the proportion of public housing units compared to total number of units contained in the project. For example, if there are a total of 120 units in the project and 50 are public housing units, the public housing units are 42 percent of the total number of units in the project. Therefore the amount of public housing funds committed to the project cannot exceed 42 percent of the total project budget, unless otherwise approved by the Secretary. However, if public housing funds are to be used to pay for more than the pro rata cost of common area improvements, HUD will evaluate the proposal to ensure that common area improvements will benefit the residents in the development in a mixed-income project; and (4) Ensure that the project is within the Total Development Cost (TDC) and Housing Construction Cost (HCC) limits pursuant to § 905.314(c) and (d) of this part. (d) Process. (e) Conflicts. (f) HUD approval. (g) Comparability. (h) Mixed-finance procurement. (1) PHAs may select a development partner using competitive proposals procedures for qualifications-based procurement, subject to negotiation of fair and reasonable compensation and compliance with TDC and other applicable cost limitations; (2) An Owner Entity (which, as a private entity, would normally not be subject to 2 CFR part 200) shall be required to comply with 2 CFR part 200 if HUD determines that the PHA or PHA instrumentality, or either of their members or employees, exercises significant decision making functions within the Owner Entity with respect to managing the development of the proposed units. HUD may, on a case-by-case basis, exempt such an Owner Entity from the need to comply with 2 CFR part 200 if it determines that the Owner Entity has developed an acceptable alternative procurement plan. (i) Identity of interest. (1) The identity of interest general contractor's bid is the lowest bid submitted in response to a request for bids; or (2) The PHA submits a written justification to HUD that includes an independent third-party cost estimate that demonstrates that the identity of interest general contractor's costs are less than or equal to the independent third-party cost estimate; and (3) HUD approves the identity of interest general contractor in conjunction with HUD's approval of the development proposal for the mixed-finance project. (j) Operating Subsidy-Only and Capital Fund-Only Assistance. General. (2) Operating Subsidy-Only Development. (i) The newly developed public housing units will be included in the calculation of the Capital Fund formula in § 905.400 of this part. (ii) An ACC Amendment will be executed to include the new public housing units. The term of the ACC Amendment will be determined based on the assistance as provided in § 905.304, unless reduced by the Secretary. (iii) There shall be no disposition of the public housing units without the prior written approval of HUD, during, and for 10 years after the end of, the period in which the public housing units receive operating subsidy from the PHA, as required by 42 U.S.C. 1437g(3), as those requirements may be amended from time to time. However, if the PHA is no longer able to provide operating subsidies to the Owner Entity pursuant to Section 9(e) of the 1937 Act, the PHA may (on behalf of the Owner Entity) request that HUD terminate the Declaration of Trust or Declaration of Restrictive Covenants, as applicable. Termination under this section does not require disposition approval from HUD pursuant to Section 18 of the 1937 Act, 42 U.S.C. 1437p. However, the PHA must provide public housing residents with a decent, safe, sanitary, and affordable unit to which they can relocate, which may include a public housing unit in another development or a Housing Choice Voucher, and pay for the tenant's reasonable moving costs. The URA is not applicable in this situation. (iv) Where the PHA elects in the future to use public housing funds for modernization of these units, the PHA must execute an ACC Amendment with a 20-year use restriction and record a Declaration of Trust or Declaration of Restrictive Covenants, in accordance with § 905.304. There may be no disposition of the public housing units without the prior written approval of HUD during the 20-year period, and the public housing units shall be maintained and operated in accordance with all applicable Public Housing Requirements (including the ACC), as those requirements may be amended from time to time. (3) Capital Fund-Only Development. (i) The newly developed public housing units will not be included in the calculation of the Operating Fund formula. (ii) The PHA must sign an ACC Amendment, with a 40-year use restriction, for development of new units and record a Declaration of Trust or Declaration of Restrictive Covenants in accordance with § 905.304 of this part, unless the time period is reduced by the Secretary. (iii) There shall be no disposition of the public housing units, without the prior written approval of HUD, during a 40-year period, and the public housing units shall be maintained and operated in accordance with all applicable Public Housing Requirements (including the ACC), as required by section 9(d)(3) of the 1937 Act, 42 U.S.C. 1437g(d)(3), as those requirements may be amended from time to time. (4) Procedures. (k) Mixed-finance operations: Deviation from HUD requirements pursuant to section 35(h) of the 1937 Act, 42 U.S.C. 1437z-7(h). Deviation. (i) There are a significant number of units in the mixed-finance project that are not public housing units; (ii) There is a reduction in appropriations under Section 9(e) of the 1937 Act (see 42 U.S.C. 1437g(e)) or a change in applicable law that results in the PHA being unable to fulfill its contractual obligation to the Owner Entity with respect to the public housing units; (iii) Prior to implementation of the contractual terms related to deviation from the Public Housing Requirements, HUD approves an Alternative Management Plan for the mixed-finance project; and (iv) The deviation shall be to the extent necessary to preserve the viability of those units while maintaining the low-income character of the units to the maximum extent practicable. (2) Preparation of an Alternative Management Plan. (i) A statement describing the Owner Entity's reasons for deviating from the Public Housing Requirements; (ii) An explanation of the Owner Entity's proposed remedies, including, but not limited to: (A) How the Owner Entity will select the residents (including the number and income levels of the families proposed to be admitted to the public housing units) and units to be affected by the proposed change; (B) The Owner Entity's timetable for implementing the Alternative Management Plan; (C) The impact on existing residents. Note that for any resident who is unable to remain in the unit as a result of implementation of the Alternative Management Plan, the resident must be relocated to a public housing unit or given a Housing Choice Voucher by the PHA or by another entity as provided for in the contractual agreement between the PHA and the Owner Entity; (iii) An amendment to the existing contractual agreement between the PHA and the Owner Entity that includes provisions which ensure that: (A) An update on the Alternative Management Plan is submitted annually to HUD to ensure that implementation of the provisions of the Alternative Management Plan continue to be appropriate; (B) The Owner Entity complies with the requirements of this subpart in its management and operation of the public housing units in accordance with the Alternative Management Plan; (C) The Owner Entity provides the PHA any income that is generated by the public housing units in excess of the Owner Entity's expenses on behalf of those units, as a result of implementation of provisions in the Alternative Management Plan; (D) The Owner Entity reinstates all Public Housing Requirements (including rent and income eligibility requirements) with respect to the original number of public housing units and number of bedrooms in the mixed-finance development, following the PHA's reinstatement of operating subsidies at the level originally agreed to in its contract with the Owner Entity; and (iv) Additional evidence. The PHA must provide documentation that: (A) The Owner Entity has provided copies of the Alternative Management Plan to residents of the project and provided the opportunity for review and comment prior to submission to HUD. The Owner Entity must have provided written notice to each of the public housing residents in the mixed-finance development of its intention to implement the Alternative Management Plan. Such notice must comply with all relevant federal, state, and local substantive and procedural requirements and, at a minimum, provide public housing residents 90 days advance notice of any proposal to increase rents or to relocate public housing residents to alternative housing; (B) The revenues being generated by the public housing units (in combination with the reduced allocation of Operating Subsidy resulting primarily from a reduction in appropriations or changes in applicable law such that the PHA is unable to comply with its contractual obligations to the Owner Entity) are inadequate to cover the reasonable and necessary operating expenses of the public housing units. Documentation should include a financial statement showing actual operating expenses and revenues over the past 5 years and the projected expenses and revenues over the next 10 years; (C) A demonstration that the PHA cannot meet its contractual obligation, and; (D) The Owner Entity has attempted to offset with regard to the project, the impact of reduced operating subsidies or changes in applicable law by all available means; including the use of other public and private development resources, the use of cash flow from any nonpublic housing units, and funds from other operating deficient reserves. (3) HUD review. (i) The justification for deviation from the Public Housing Requirements does not qualify in accordance with section 35(h) of the Act (42 U.S.C. 1437z-7(h)). (ii) The proposed deviation(s) from the Public Housing Requirements are not limited to preserving the viability of the public housing units. (iii) The information that HUD requires to be included in the Alternative Management Plan has not been included, is not accurate, or does not support the need for deviation from the Public Housing Requirements. (iv) HUD has evidence that the proposed Alternative Management Plan is not in compliance with other federal requirements, including civil rights laws. (4) HUD reevaluation and reapproval. [78 FR 63770, Oct. 24, 2013, as amended at 80 FR 75942, Dec. 7, 2015] § 905.606 Development proposal. (a) Development proposal. (1) Project description. (i) Proposed development method (e.g., mixed-finance, new construction, acquisition with or without rehabilitation, turnkey, etc.), including the extent to which the PHA will use force account labor and use procured contractors. For new construction projects, the PHA must meet the program requirements contained in § 905.602. For projects involving acquisition of existing properties less than 2 years old, the PHA must include an attestation from the PHA and the owner of the property that the property was not constructed with the intent that it would be sold to the PHA or, if it was constructed with the intent that it be sold to the PHA, that it was constructed in compliance with all applicable requirements (e.g., Davis Bacon wage rates, accessibility, etc.); (ii) Type of residents to occupy the units (e.g., family, elderly, persons with disabilities, or families that include persons with disabilities); (iii) Number and type of unit (detached, semidetached, row house, walkup, elevator), with bedroom count, broken out by public housing vs. nonpublic housing, if applicable; (iv) The type and size of nondwelling space, if applicable; and (v) Schematic drawings of the proposed buildings, unit plans, and additional information regarding plans and specifications, as needed by HUD to review the project. (2) Site information. (3) Participant description. (4) Development project schedule. (5) Accessibility. (6) Project costs. Budgets. (ii) TDC calculation. (iii) Financing. (A) Commitment of funds. (B) Irrevocability of funds. (C) Third-party documents. (D) Opinion of counsel. (7) Operating pro-forma/Operating Fund methodology. (8) Local Cooperation Agreement. (9) Environmental requirements. (10) Market analysis. (11) Program income and fees. (b) Additional HUD-requested information. § 905.608 Site acquisition proposal. (a) Submission. (b) Justification. (c) Description. i.e. (d) Project description; site and neighborhood standards. (e) Zoning. (f) Appraisal. (g) Schedule. (h) Environmental assessment. § 905.610 Technical processing. (a) Review. (b) Subsidy layering analysis. (c) Safe harbor standards. (d) Approval. (e) Amendments to approved development proposals. (1) A change in the number of public housing units; (2) A change in the number of bedrooms by an increase/decrease of more than 10 percent; (3) A change in cost or financing by an increase/decrease of more than 10 percent; or (4) A change in the site. § 905.612 Disbursement of Capital Funds—predevelopment costs. (a) Predevelopment costs. (1) Predevelopment assistance may be used to pay for materials and services related to proposal development and project soft costs. It may also be used to pay for costs related to the demolition of units on a proposed site. Absent HUD approval, predevelopment assistance may not be used to pay for site work, installation of infrastructure, construction, or other hard costs related to a development. (2) For non-mixed-finance projects, predevelopment funding up to 5 percent of the total amount of the public housing funds committed to a project does not require HUD approval. HUD shall determine on a case-by-case basis that an amount greater than 5 percent may be drawn down by a PHA to pay for necessary and reasonable predevelopment costs, based upon a consideration of the nature and scope of activities proposed to be carried out by the PHA. Before a request for predevelopment assistance in excess of 5 percent may be approved, the PHA must provide to HUD information and documentation specified in §§ 905.606 and 905.608 of this part, as HUD deems appropriate. (3) For mixed-finance projects, all funding for predevelopment costs must be reviewed and approved by HUD prior to expenditure. (4) The requirements in paragraph (b) of this section to disburse funds for mixed-financed projects in an approved ratio to other public and private funding do not apply to disbursement of predevelopment funds. (b) Standard drawdown requirements. General. (2) Mixed-finance projects. Subpart G—Other Security Interests Source: 78 FR 63786, Oct. 24, 2013, unless otherwise noted. § 905.700 Other security interests. (a) The PHA may not pledge, mortgage, enter into a transaction that provides recourse to public housing assets, or otherwise grant a security interest in any public housing project, portion thereof, or other property of the PHA without the written approval of HUD. (b) The PHA shall submit the request in the form and manner prescribed by HUD. (c) HUD shall consider: (1) The ability of the PHA to complete the financing, the improvements, and repay the financing; (2) The reasonableness of the provisions in the proposal; or (3) Any other factors HUD deems appropriate. Subpart H—Compliance, HUD Review, Penalties, and Sanctions Source: 78 FR 63786, Oct. 24, 2013, unless otherwise noted. § 905.800 Compliance. As provided in § 905.106 of this part, PHAs or other owner/management entities and their partners are required to comply with all applicable provisions of this part. Execution of the CF ACC Amendment received from the PHA, submissions required by this part, and disbursement of Capital Fund grants from HUD are individually and collectively deemed to be the PHA's certification that it is in compliance with the provisions of this part and all other Public Housing Program Requirements. Noncompliance with any provision of this part or other applicable requirements may subject the PHA and/or its partners to sanctions contained in § 905.804 of this part. § 905.802 HUD review of PHA performance. (a) HUD determination. (1) HUD shall determine whether the PHA has carried out its activities under this part in a timely manner and in accordance with its CFP 5-Year Action Plan and other applicable requirements. (2) HUD shall determine whether the PHA has a continuing capacity to carry out its Capital Fund activities in a timely manner. (3) HUD shall determine whether the PHA has accurately reported its obligation and expenditures in a timely manner. (4) HUD shall determine whether the PHA has accurately reported required building and unit data for the calculation of the formula. (5) HUD shall determine whether the PHA has obtained approval for any CFFP or OFFP proposal and any PHA development proposal. (b) [Reserved] § 905.804 Sanctions. (a) If at any time, HUD finds that a PHA has failed to comply substantially with any provision this part, HUD may impose one or a combination of sanctions, as it determines is necessary. Sanctions associated with failure to obligate or expend in a timely manner are specified at § 905.306 of this part. Other possible sanctions that HUD may impose for noncompliance by the PHA include, but are not limited to, the following: (1) Issue a corrective action order, at any time, by notifying the PHA of the specific program requirements that the PHA has violated, and specifying that any of the corrective actions listed in this section must be taken. Any corrective action ordered by HUD shall become a condition of the CF ACC Amendment. (2) Require reimbursement from non-HUD sources. (3) Limit, withhold, reduce, or terminate Capital Fund or Operating Fund assistance. (4) Issue a Limited Denial of Participation or Debar responsible PHA officials, pursuant to 2 CFR parts 180 and 2424. (5) Withhold assistance to the PHA under section 8 of the Act, 42 U.S.C. 1437f. (6) Declare a breach of the CF ACC with respect to some or all of the PHA's functions. (7) Take any other available corrective action or sanction as HUD deems necessary. (b) Right to appeal.

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