Occupancy Requirements

This section will review HUD's occupancy requirements for the Owner following the issuance of the Project Rental Assistance Contract (PRAC). HUD will transmit the executed PRAC with a cover letter listing its requirements:

• HUD will indicate the effective date of the PRAC.
   

• The PRAC subsidy is based upon the amount approved at Fund Reservation.
   

• The approved operating budget is found in the approved Firm Commitment.
   

• HUD will indicate the amount that must be deposited monthly into the project's Replacement Reserve Account. This amount must be made starting with the effective date of the PRAC.
   

• HUD counsels that all responsible persons representing the Sponsor, Owner and Management Agent be familiar with the provisions of the Regulatory Agreement, signed at the Initial Closing.
   

• HUD counsels that all responsible representatives be familiar with the operating budget in the approved Firm Commitment as specified in Form HUD-92264. Payroll expenses are listed in the approved budget.      
   

• HUD lists the following "significant responsibilities" which must be addressed:

  1. Monthly Accounting Reports are to be submitted during the first six months of occupancy.

  2. An annual budget must be prepared prior to the end of the project's fiscal-year-end date and a copy is to be maintained in the Sponsor's files and at the project site. For guidance, HUD refers the Owner to Section II on page 2 of HUD Notice H99-13, Revised Asset Management Procedures. 

  3. Owner-certified financial statements are to be submitted on an annual basis, within 90 days of the project's fiscal year end. Audited financial statements must be submitted in compliance with OMB Circular A-133 within nine months of the project fiscal year end and in conformance with the FASSUB Industry User Guide. Financial statements are to be filed electronically. HUD requires that within 60 days of the date of the letter, the Owner must submit confirmation to the New York HUD Office that the Owner has secured a User ID and that the project CPA is registered in the Quality Assurance Subsystem. HUD cautions that failure to comply with HUD's financial statement filing timetable could jeopardize the Owner's ability to conclude a final closing or to participate in future HUD programs.

  4. The Owner must establish a Residual Receipts account in accordance with the PRAC and Regulatory Agreement. All surplus cash accounted for at the end of the project fiscal year end must be deposited into this account within 60 days of the project fiscal year end.

  5. The Owner must establish a separate Replacement Reserve Account in the name of the project in a federally insured bank that will agree to specific functions listed by HUD:

a. Bill the project monthly and advise HUD when payments are 30-days delinquent.

b. Invest account funds as requested by the Owner in insured interest bearing accounts or AAA bonds.

c. Divulge account balances when requested by HUD by telephone.

d. Change monthly account billing periodically when requested by HUD on Form HUD-9250, Funds Authorizations.  

e. Release funds to the Owner as requested by Form HUD-9250 within 14 days.

f. Make payments into the account as per the Regulatory Agreement or as modified by Form HUD-9250.

g. Inform HUD of the name, address and telephone number of the bank holding the account.

The Owner will notify HUD within 10 days of the date of the letter that the Replacement Reserve Account has been opened. If the Owner does not maintain the Replacement Reserve Account in an acceptable fashion, it will jeopardize the project's ability to conclude a final closing as well as to fund necessary replacements in the future.

• Documents cited above should also be submitted to the New York Multifamily Housing HUB, attention: Ms. Rochelle Printz, Director, Project Management, U.S. Department of Housing and Urban Development, 26 Federal Plaza, Room 3200, New York, NY 10278-0068. A copy of the transmittal letter should also be furnished to the project manager for the project.

• To review policy guidance for all tenant-related issues including payments under TRACS, HUD advises that the Owner and Management Agent obtain Handbook 4350.3 Rev 1, "Occupancy Requirements of Subsidized Multifamily Housing Programs."

• Monthly payment vouchers are submitted electronically to TRACS. One paper submission goes to Kansas City Voucher Processing HUB at: Section 8 FMC, Voucher Processing Division, 2345 Grand Boulevard, Kansas City, MO  64108.