Jed Graef MRI Software January, 2014

Overview Spec Status REV-1, Change 4 Fosters Terminations Deletions of material Spec Changes Since May New & Changed Documents Status of Fosters Terminations RAD Rent Phase In RAD/SPRAC/811 PRA Demo (PRAD) Rent Overrides 2

202D Spec Status Per our agreed upon process, clarifications can come at any time by request Working group conference calls will continue before, during and after the 202D transition to deal with questions and differences in implementation 3

Change 4-Fosters Major change in the status of foster children and foster adults (fosters) Fosters are now considered family for all purposes Previously their income counted but they were not included for income limit and other purposes 4

Change 4-Terminations Language has changed in paragraph 8-5.D that potentially contradicts other handbook language and advice in the MAT Guide 5

Change 4-Deletions of Material The old Chapter 9 is gone and is now a new Chapter 7 in the MAT Guide minus the sections on Special Claims and Excess Income Reports The appendices related to Chapter 5 of the MAT Guide are gone Appendix 8 on rounding is gone. Material from it has been added to MAT Guide Appendix H and a new spreadsheet (202DCertificationDataEntry.xls) added 6

Spec Changes Since May 7

Updated and New Documents 202DAdjustmentCalculations.xls (Updated) 202DCalculationsForRepayments.xls (Updated) 202DNonCitizenRuleProration.xls (Updated) 202DSpecialClaimsRounding.xls (Updated) 202DRelationshipRules.xls (Updated) 202DRADPhase-In.xls (New) MAT Guide Chapters 4-6 (Updated) MAT Guide Appendix H (Updated)—Includes old handbook Appendix 8 information 202DCertificationDataEntry.xls (New) MAT Guide Chapter 7 (New)—Old handbook Chapter 9 8

Fosters Become Family MAT10-2, Field 26, Number of Family Members (50059 field 53) Fosters are included here and for income limits (LIHTC impact) MAT10-2, Field 27, Number of Non-Family Members (50059 field 54) Remove fosters. This is now a count of L and N. Number of Eligible Members (50059 field 56) (Not currently in the MAT) Include fosters with Citizen Codes of EC, EN, PV— drives noncitizen rule proration 9

Fosters Become Family MAT10-2, Field 50, Disability Expense (50059 field 101) Include disability assistance expenses incurred by fosters MAT10-2, Field 51, Disability Deduction (50059 field 102) Include fosters MAT10-2, Field 52, Medical Expense (50059 field 103) Include medical expenses of fosters when eligible MAT10-2, Field 53, Medical Deduction (50059 field 104) Include fosters 10

Fosters Become Family Deductions for child care expense are unaffected by the change. They have previously been allowed for foster children. 11

Fosters Become Family MAT10-2, Field 79, HH Citizenship Eligibility (50059 field 96) Include fosters in determining the correct code. Also impacts noncitizen rule proration MAT10-2, Field 82, Family Addition Foster Children (50059 field 59) Counts for Income Limit purposes MAT10-2, Field 96-98, Mobility, Hearing, Vision Disability (50059 field 50-52) Include Fosters and Dependents in setting the flags 12

Fosters Become Family In addition the various income limit (cert fields 87-89) and rent related fields (cert fields 108, ) are also impacted 13

Fosters Become Family MAT10-3, Field 7 Relationship Code (50059 field 37) Updated field description mentioning fosters as family and counting for income limit purposes. MAT10-3, Field 10 Special Status Code (50059 field 42) Include codes that may be applicable to fosters such as S (full- time student), H(andicapped), M (US military vet) and P (temporarily housed as the result of a declared disaster). Note: A foster adult who is a full-time student (S) and who has employment income is subject to the cap on earned income of $480 specified in the regulations. However such a person will not be listed on the as a dependent and will not receive a dependent allowance. 14

Fosters Become Family MAT10-3, Field 12 Member Citizenship Code (50059 field 46) Include a valid code for fosters. Previously an XX (not applicable) code was used for fosters. XX continues to be proper for Live-in Aides and None of the Above but is no longer valid for a foster. MAT10-3, Field 15 Able To Work Care Code (50059 field 49) Include foster adults when assigning codes if the adult’s employment income is enabled. MAT10-3, Field 25 Student Status (50059 field 43) Fill this field for fosters but not for those with relation codes L or N. Race and Ethnicity—no change—TRACS already stores the data 15

Fosters Become Family These rules are effective for new certifications executed on or after the change in site software to 202D. Corrections to 202C certifications are subject to the old rules. Compliance in 202C would be difficult as there is no distinction between Live-in Aides and Foster Adults and TRACS is not programmed to treat income of fosters as valid. “Additionally, owners/management agents have until March 1, 2014, to implement those changes requiring modifications to their TRACS software. If requested, HUD may permit an exception to the March 1, 2014, date if there are modifications that cannot be made by this date due to incompatibility with HUD’s TRACS software.” 16

Terminations 17

Terminations Paragraph 8-5.D—Old language *When assistance is terminated for a tenant with more than one form of subsidy, the tenant must pay the market rent, full contract rent, or 110% of BMIR rent. For example, if a tenant resides in a Section 236 property and receives Section 8 assistance, the tenant would pay rent based on the Section 236 rent formula if his or her assistance were terminated. 18

Terminations Paragraph 8-5.D—New language *When assistance is terminated for a tenant with more than one form of subsidy, the tenant must pay the market rent, full contract rent, or 110% of BMIR rent. For example, if a tenant resides in a Section 236 property and receives Section 8 assistance, the tenant would pay *the full Section 8 contract rent if his or her assistance were terminated unless there is an eligible in-place Section 236 tenant or a vacant unit the Section 8 can be transferred to.* 19

Terminations Paragraph 5-30.C.2 Section 236/Section 8. A family with a Section 8 subsidy in a Section 236 property will pay the Section 8 tenant rent unless, at recertification, the family’s TTP equals or exceeds the Section 8 contract rent. Thereafter, the family will pay the tenant rent based on the Section 236 rent formula. A family living in a Section 236 property receiving Rent Supplement assistance would also stop receiving Rent Supplement assistance at the point the family’s TTP increased to the level of the rent supplement contract rent. Thereafter the family will pay the tenant rent based on the Section 236 rent formula. 20

Terminations Questions related to the new handbook language Does it apply only to the case of a failure to transfer units as required? The note is indented under that specific example in the handbook If the new language is not a drafting error, how is it to be reconciled with the language in handbook paragraph 5-30: Determining Tenant Contribution at Properties with Multiple Forms of Subsidy No TRACS impact—only site software 21

RAD Rent Phase In HUD notice PIH (HA), Rev-1 issued on July 2, 2013 clarifies the rules concerning rent phase-ins Phase-ins, when applicable, will be for either a 3-year or a 5-year term, with the percentage increases each year being equal (for a 3-year phase-in, 33% in year 1 and 66% in year 2; for a 5-year, 20%, 40%, 60%, 80% in years 1-4) and that the increase on any particular certification is calculated by applying the proper percentage increase to the difference between the TTP on the prior certification and that for the current certification. In the final year (the year-3 or year-5 annual) the calculated TTP is used as the phase-in is complete. In addition tenants who are subject to the Public Housing Earned Income Disregard (EID) continue to be subject to EID after conversion. 22

RAD Rent Phase In It is not a TRACS 202D requirement for site software to automate the calculation of the override TTP but that is certainly permitted. As before, site software needs only a mechanism for the user to perform the override when necessary. A new spreadsheet, 202DRADPhase-In.xls, has been added to the spec documents. The spreadsheet can be used to determine if phase-in applies and to determine the override TTP on any certification. There is also no requirement for site software to implement EID income phase-in calculations. Software users will simply enter the income amounts that are required under EID on each certification. Doing so will likely result in EIV discrepancies and the tenant file should be documented explaining that EID is the cause of the discrepancy. 23

RAD Rent Phase In For in-place tenants at the time of conversion, if the current rent is lower than that calculated by the S8 formula by more than a specified amount (the greater of 10% or $25), there is either a 3 or 5 year phase in to full rent—similar concept to the old POA rollout. 24

RAD Rent Phase In TTP at RAD Conversion Used when phasing in rent for an in-place tenant as part of a RAD Conversion from PIH to Multifamily Section 8 Defined as the TTP for the tenant immediately prior to the conversion to RAD. Becomes the TTP for the IC to RAD Does not change from cert to cert during the phase in 25

RAD Rent Phase In During RAD rent phase-in: Rent Override = Y Total Tenant Payment = 85 TTP Before Override = 100 TTP at RAD Conversion = 80 At end of phase-in—The first cert with no override: Rent Override = blank Total Tenant Payment = 45 TTP Before Override =45 TTP at RAD Conversion = 80 Subsequent certs fill only the Total Tenant Payment field 26

RAD Rent Phase In 27

RAD Rent Phase In If the difference is <= 0, phase-in is over Any effective date > the conversion date and < the Second AR date is counted as year 1 28

RAD Rent Phase In * Note: The increase is the amount to be added to the TTP on the prior cert given the phase-in year and the difference between the TTP as calculated on the new certification and the TTP on the prior certification 29

RAD Rent Phase In 30

RAD Rent Phase In The rules can result in counter-intuitive results. A GR decrease can result in a rent increase A corrected cert with no change in financial information can result in a rent increase An IR adding a member with no income but with deductions can result in a rent increase 31

RAD/SPRAC/811 PRA Demo 32

RAD/SPRAC/811 PRA Demo Waiting on HUD clarification on the rules related to these new programs When available they will be published in the MAT Guide, Appendix J The next step will be to incorporate any necessary references in the body of the MAT Guide The current Appendix references various HUD web pages for those interested 33

Rent Overrides 34

Rent Overrides Prior to 202D, there was no way to indicate that the TTP or TR had been overridden for a legitimate reason The result when this happens is typically a cascade of cert calculation error messages 202D adds two override related fields Rent Override—blank or Y TTP Before Override—numeric Note: there is no TR Before Override field for use with 236 and BMIR 35

Rent Overrides If either TTP or TR is modified compared to the normal calculations, the Rent Override field is set to “Y” See , paragraph 5-30: Determining Tenant Contribution at Properties with Multiple Forms of Subsidy 36

Rent Overrides TTP Before Override When TTP calculations are different than normal as a result of applying POA rules, RAD rent phase-in, PRAC failure to recertify or the requirements of another funding program, the Rent Override flag is set and the TTP Before Override field is filled with what the TTP would normally be. “Normal” includes noncitizen rule proration and minimum rent—anything part of the usual rent calculations Note that this field does not apply to overrides for Section 236 or BMIR as there is no TTP 37

Rent Overrides and POAs Plan of Action projects have regulatory agreements with rent calculations specified that differ from the standard ones There are some general themes but, since the agreements were written locally without headquarters review, almost anything is possible Rent calculations are usually tied to the unit type Very Low Income Low Income Moderate Income 38

Rent Overrides and POAs Sample Text Very Low Income Tenants: Current and Future Tenants classified as occupying very low-income units under the tenant profile, including tenants receiving Section 8 assistance pursuant to Paragraph 9 of this Agreement, shall make a Total Tenant Payment that does not exceed the lesser of (1) 30 percent of the tenant's monthly Adjusted Income or (2) 90 percent of the Project Specific Rent. 39

Rent Overrides and POAs Sample text Low Income Tenants: Current and Future Tenants classified as occupying Low-Income units under the tenant profile, including tenants receiving Section 8 assistance pursuant to Paragraph 9 of the Agreement, shall make a Total Tenant Payment that does not exceed the lesser of 30 percent of the tenant's monthly Adjusted Income or 90 percent of the Project Specific Rent but may not be less than the lesser of 30 percent of 45 percent of median income for that area (as determined by HUD and adjusted for family size) or 90 percent of the Project specific Rent. 40

Rent Overrides and POAs Sample text Low Income Tenants who become Very Low and are waiting for a VLI slot will pay 30% of monthly adjusted income 41

Rent Overrides and POAs Sample text Moderate-Income Tenants: Current and Future Tenants classified as occupying Moderate-Income units under the tenant profile shall make Total Tenant Payments that do not exceed the lesser of (1) 30 percent of the tenant's monthly Adjusted Income or (2) 90 percent of the Project Specific Rent. 42

Rent Overrides and POAs Tenants shall be recertified annually Any tenant who refuses to certify or recertify income shall make a Total Tenant Payment that is equal to 90 percent of the Project Specific Rent 43

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