HUD Capital Fund Rule: Less Money for Repairs

The Department of Housing and Urban Development has released the final rules on legislation proposed on Feb. 7, 2011, taking its time to decide on quite significant modifications.

One of the most noteworthy changes, note Ballard Spahr’s housing group attorneys familiar with the rule in a report, is the creation of the Demolition or Disposition Transitional Funding grant, which replaces the Replacement Housing Factor fund.

The same as their peers, small public housing authorities also will have to comply with a physical needs assessment requirement to be phased in over time. Only 10% of the capital fund, rather than the previous 20%, can be used for “management improvements,” the report notes. It is another change to be implemented over a five-year period.

The final rule provides “more clarity on the methodology to ensure the long-term feasibility of mixed-finance projects” and the calculation of capital limits capital planning, “and other capital and management activities that promote energy conservation and efficiency,” Teri Guarnaccia and Mary Grace Folwell, the authors of the report, wrote in their summary.