15c. The Primary Means of Funding SCMF Programs
HUD considers two primary mechanisms through which Owners can fund their Service Coordinator programs:
- SCMF grant award (See Section 15c.1)
- Operating funding, which can include: Section 8 operating funds, Project Rental Assistance Contract (PRAC) funds, Section 236 Excess Income, Residual Receipts, and Debt Service Savings
15c.1 SCMF Grant Funds
Each year HUD offers grant monies to owners of eligible HUD assisted housing, enabling them to hire a Service Coordinator to serve their residents. Awards are made for an initial three-year term and provide funding for the salary, fringe benefits and related administrative costs associated with employing a Service Coordinator.
Subject to the availability of funds, HUD provides one-year grant extension funding to currently operating grants. Applicants need to complete a form HUD-91186-A, Multifamily Housing Service Coordinator One-Year Budget, as part of an extension request. For current information on annual extensions, visit HUD’s Service Coordinator webpage.
15c.2 HUD’s Preference for Project-related Funding Sources
The majority of HUD’s multifamily housing properties designed for the elderly and persons with disabilities operate with rental subsidy. Most properties receive either project-based Section 8 or Section 202 Project Rental Assistance Contract (PRAC) funds; both sources pay share of the property’s annual operating expenses.
Where the position is supported by budget-based Section 8 or PRAC funds, housing owners may include the Service Coordinator position in the development’s operating budget, subject to HUD approval. Owners of eligible projects may also use residual receipts, debt service savings or excess income to pay for a Service Coordinator program, with HUD approval. [MAH.8.1]
HUD urges housing owners and managing agents to use these budget-based funding sources to fund a Service Coordinator program, whenever possible. These funding streams are more stable and consistent over time. Grants, by their nature, are temporary sources of assistance and the future availability of such funds is never certain. Requests will be evaluated under the criteria stated in the Management Agent Handbook, Chapter 8 [MAH.8], which is downloadable from HUD’s website; and they must also be consistent with the availability of HUD funding in a “changing regulatory environment.”
Owners and Managing Agents Wanting to Use Section 8 or PRAC Funds, Residual Receipts or Excess Income Should Reference the Following Resources for Guidance
- Multifamily Asset Management and Project Servicing Handbook (No. 4350.1), Chap. 4, 7, 25 & 34.
- Notice H 12-14 “Use of “New Regulation” Section 8 Housing Assistance Payments (HAP) Contracts Residual Receipts to Offset Project-Based Section 8 Housing Assistance Payments”
- Service Coordinator frequently asked questions (FAQs) for Housing Notice 2012-14.
15c.3 Frequently Asked Questions (FAQs) Related to the SCMF Program
Following are three FAQs related to the use of residual receipts for SCMFs in Housing Notice 2012-14:
Q1. Paragraph V, B, states that Owners may use Residual Receipts to fund a Service Coordinator program. Are we correct in assuming that this applies to properties without Service Coordinator Grants? Or does it mean that properties with Service Coordinator Grants should use residual receipts in lieu of grant money?
- Answer: Service Coordinator programs that are now funded from Residual Receipts may continue to use Residual Receipts to fund those programs. Service Coordinator programs that are funded with Grants also continue under that funding stream and Residual Receipts are used to offset assistance payments according to the requirements of the Notice.
Q2. Re: Service Coordinators, there is concern that projects can’t properly plan, perhaps some funds for Service Coordinators can be set aside or a year’s worth of such funding reserved?
- Answer: In order to facilitate owners’ ability to plan for Service Coordinator funding, one year of required Service Coordinator funding may be allocated for this purpose. The funding required for one year of Service Coordinator activities should be subtracted from the residual receipts balance prior to determining whether the retained balance level of $250 per unit has been reached.
Q3. If we have approval to fund SC through residual receipts, are we at risk of losing this approval after the current one-year agreement? How do we keep the funds that are needed for future years’ SC from being used for other purposes? Will HUD continue to be supportive of building SCs into project budgets if they have previously been grant funded?
- Answer: Residual Receipts may continue to be used to fund Service Coordinators for one-year terms after expiration of any existing one-year agreements. HUD will continue to permit Service Coordinators to be funded through project budgets in accordance with outstanding instructions.