PHA Operating Fund final rule issued

HUD's Public Housing Operating Fund final rule is out today and effective Nov. 18. Much emphasis in the preamble on the carefulness of the negotiated rulemaking process. Here's the summary of main changes that were not included in the April 14 proposed rule:

Adoption of Five Committee Recommendations

HUD has adopted five of the seven Committee Recommendations that
were omitted from the April 14, 2005, proposed rule. These are:
1. The ten percent non-profit coefficient.
2. The three percent vacancy allowance.
3. The phase-in of operating subsidy gains over two years.
4. The provision regarding the discontinuation of subsidy reduction
through demonstration of successful conversion to asset management
(i.e., ``stop-loss provision'').
5. The language requiring use of an advisory committee to review
the Project Expense Level (PEL) methodology and utility benchmarking,
convened in accordance with the Federal Advisory Committee Act (FACA).
With respect to the remaining two Committee Recommendations not
adopted in the April 14, 2005, proposed rule (i.e., the change in
methodology for inflating PELs and the elimination of the $2 per unit
per month public entity fee), the final rule remains unchanged.

Removal of Provisions Not Contained in the Committee Recommendations

Additionally, HUD has removed the three proposed rule provisions
that were not part of the Committee Recommendations. These are:
1. The adjustment in Sec. 990.190(i) based on the Committee
Recommendations for certain PHAs.
2. The two-year limit on a higher subsidy for vacant units due to
changing market conditions, and the related requirements that PHAs
requesting such subsidy submit a plan for ending the higher subsidy
within the two-year period.
3. The provision authorizing sanctions on PHAs that fail to comply
with the asset management requirements or that do not submit accurate
and timely data.

There's also new language regarding eligible expenses for energy loan amortization and other changes described as "technical non-substantive."