Section XXI of the Cooperative Agreement refers to required Fidelity Bond coverage. What is an adequate amount?

Date Published: November 2015

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In regard to Fidelity Bond, PRA is going to mimic the Performance-Based Contract Administration (PBCA) program, thus the following coverage will be required:

The amount of the Fidelity Bond should be sufficient to cover the maximum possible monthly Rental Assistance Payments (RAPs) that can be received by the Grantee once the Grantee starts making RAPs to the owners. Debt service offsets are not received by the Grantee and therefore need not be covered by the Fidelity Bond. RAPs for a given month may significantly exceed the normally vouchered amounts. This can be caused by factors such as retroactive vouchers for several months resulting from the owners' failure to submit past vouchers or delayed contract increases or other processing delays. Grantees should increase the "normal" coverage of one month’s "net" payments by an amount that gives them comfort in discharging their fiduciary responsibilities. Also, as additional Rental Assistance Contracts (RACs) are assigned, the Fidelity Bond must be increased before the Grantee begins making RAPs for the added contracts.

Tags: 811 PRA Program Administration - General