Office of Multifamily Housing Programs General RHIIP Presentation June 14, 2004

2 Office of Multifamily Housing Programs Introduction  The purpose of this presentation is to: Explain HUD’s Rental Housing Integrity Improvement Project (RHIIP) initiative Provide an overview of the extent of the income and rent problem in HUD’s rental programs Communicate your role in RHIIP

3 Office of Multifamily Housing Programs Preview  What is RHIIP?  Performance Goals  Background  RHIIP Components  Accomplishments  Materials and Resources  RHIIP and You

What is RHIIP? Right Benefits to the Right Persons

5 Office of Multifamily Housing Programs About RHIIP  Initiated in 2001, RHIIP is a comprehensive strategy to address causes of errors and improper payments  Department-wide effort, including: Office of Housing (Housing) Office of Public and Indian Housing (PIH) Office of Policy Development & Research (PD&R) Chief Financial Officer (CFO) Office of General Council (OGC) Office of Administration (OA)

6 Office of Multifamily Housing Programs Multifamily Housing Programs Covered under RHIIP  Project-based Section 8  Section 202/811 – Project Rental Assistance Contract (PRAC); 202/162 – Project Assistance Contract (PAC)  Section 221(d)(3) Below Market Interest Rate (BMIR)  Section 236  Rental Assistant Payments (RAP)  Rent Supplement

7 Office of Multifamily Housing Programs RHIIP Objectives  Improve the Department’s program and management performance  Reduce errors in project-based rental assistance programs  Ensure that the right benefits go to the right persons

Performance Goals Embracing high standards of management and accountability

9 Office of Multifamily Housing Programs RHIIP Goals  President’s Management Agenda – government wide initiative to reduce program errors  RHIIP is HUD’s strategy to reduce errors in the administration of HUD’s rental housing assistance funds.  Reduce errors in rent and income determinations by: 15% in % in % by 2005 Notes: Error goals are cumulative 15 percent by 2003, 30 percent by 2004, and 50 percent by Error reduction percentage is determined by comparing error rate in current year with the baseline data.

10 Office of Multifamily Housing Programs RHIIP Goals  Demand excellence in monitoring, rent and income determination knowledge, and program administrator compliance  Reduce the number and dollar amount of errors  Complete Management and Occupancy Reviews (MORs) that are designed to find and correct errors

Background Income and Rent Calculation Dilemma

12 Office of Multifamily Housing Programs 2001 Quality Control for Rental Assistance Subsidies Determination Study (QC)  Estimated that 60% of all rent and subsidy calculations contained some type of error  Dollar error impact: $2.6 billion in HUD annual housing subsidy overpayments $634 million in HUD underpayments  Set the baseline for error measurement Note: Of the $2.6 billion in annual housing subsidy overpayments, $1.7 billion were attributed to administrative and component errors and million were attributed to unreported tenant income.

13 Office of Multifamily Housing Programs Sources of Errors  Administrative  Component  Rent

14 Office of Multifamily Housing Programs Administrative Errors  Consistency errors  Calculation errors  Transcription errors  Recertifications not completed on time  Unverified tenant file information

15 Office of Multifamily Housing Programs Component Errors  Income Components Earned income Social Security and pensions Public Assistance (Temporary Assistance for Needy Families (TANF))  Expense/Allowance Components Elderly/disabled allowance Dependent allowance Medical, childcare, and disability expenses

16 Office of Multifamily Housing Programs Rent Error Rate by Program Type Program Rent Underpayment (Subsidy Overpayment) Rent Overpayment (Subsidy Underpayment) Owner-Administered Section 827%25% Public Housing33%20% PHA-Administered Section 842%20% Total34%22% Source: 2001 Quality Control for Rental Assistance Subsidies Determination Study, pg. ES-iii

17 Office of Multifamily Housing Programs Improper Payments Information Act of 2002  Requires agencies to: Annually review all programs susceptible to significant erroneous payments Estimate the annual amount of improper payments Report to Congress and the President the action being taken to reduce improper payments

18 Office of Multifamily Housing Programs 2003 QC Study  Update to the 2001 error measurement baseline report  Focused on the first half of FY 2003  Estimated a 26% reduction in gross erroneous payments: $562 million in rent underpayments annually $987 million in rent overpayments annually Source: FY 2003 Performance and Accountability Report, Note 17

19 Office of Multifamily Housing Programs 2003 PD&R Quality Control Rental Assistance Subsidies Study Results Rental Assistance Program FY 2000 Estimates of Errors/Gross Erroneous Payments FY 2003 Estimates of Errors/Gross Erroneous Payments Percent of Reduction in Gross Errors Project-based Assistance$539,160$395, % Vouchers & Mod Rehab$1,132,560$797, % Public Housing$631,776$356, % Total PHA Administered$1,764,336$1,153, % Total $2,303,496 (+/– $275,000) $1,549,344 (+/– $229,000) 32.7% – All values are presented in the thousands Source: FY 2003 Performance and Accountability Report, Note 17

20 Office of Multifamily Housing Programs Results of 2003 QC Study Type of Payment ErrorPublic Housing Voucher and Mod Rehab Project Based Total All Programs Error in Subsidy Determinations (2003) $356$797$396$1,549 Tenant under-reported Income (2002) $294$418$266$978 Billing error (To be determined in 2004) N/A Total gross error$650$1,215$662$2,527 FY 2003 expenditures$3,435$13,409$7,737$24,581 Percent of error18.9%9.0%8.6%10.3% * All values are presented in millions.

21 Office of Multifamily Housing Programs 2004 Studies  For FY 2004, HUD will submit an error estimate report to OMB and Congress that will include: Errors in subsidy determinations data from QC study conducted for the first half of FY 2003 combined with data from study conducted for the second half of FY 2003 Billing error data from billing study conducted by contractor Unreported tenant income data from income match with National New Hires Data Base

22 Office of Multifamily Housing Programs National Directory of New Hires  Consolidated Appropriations Act of 2004 provides authority to obtain information from the Directory  Authority was given to disclose information to public housing agencies to verify employment and income  May be available to owners in the future through HUD

Materials and Resources Job Aides for Program Administration and Oversight

24 Office of Multifamily Housing Programs Materials and Resources  Handbook , Revision 1  Rent and Income Determination Quality Control Guide  Automation Rule Information Sheet  Multifamily RHIIP Web Site  RHIIP Help Desk Representatives  RHIIP Newsletter, brochure, and information sheets  Materials Available at:

25 Office of Multifamily Housing Programs Multifamily RHIIP Web Site  A “Crosswalk between the Old and Revised Handbook”  FAQs on occupancy and income and rent determinations  Fact sheets on “How Your Rent is Determined”  Handbook summaries for owners and tenants  Located at:

RHIIP and You A Cooperative Effort

27 Office of Multifamily Housing Programs HUD Headquarters  Issue updated guidance  Develop tools and resources to assist HUD staff and CAs  Ensure adequate and sufficiently trained HUD staff  Communicate RHIIP goals and objectives to Industry partners

28 Office of Multifamily Housing Programs HUD Field Staff  Perform MORs for all properties for which HUD serves as the CA  Conduct reviews of non-PBCAs, as well as PBCAs  Provide guidance and technical assistance to non-PBCAs, PBCA, and owners/agents  Assess compliance with occupancy rules, and assure the correction of compliance deficiencies  Verify and ensure owners have corrected voucher errors and taken corrective actions to reduce the chances of errors in the future

29 Office of Multifamily Housing Programs Contract Administrators  Verify and certify housing assistance payments (HAPs)  Ensure owners correct their vouchers and that they take corrective actions to reduce errors  Enforce the execution of corrective action plans (CAPs) submitted by owners  Track the correction of errors on the quality control tracking log  Conduct MORs as required by the annual contributions contract (ACC)

30 Office of Multifamily Housing Programs Contract Administrators (cont.)  Verify that rent and income determination errors have been corrected  Document all owner-corrected underpayment and overpayment errors on the quality control tracking log  Provide technical assistance and training to owners and management agents

31 Office of Multifamily Housing Programs Owners and Management Agents  Know the rules and regulations governing income and rent calculations  Submit all tenant certification data to the Tenant Rental Assistance Certification System (TRACS)  Ensure that staff are trained on requirements  Develop written policies and procedures for onsite staff to ensure compliance with HUD requirements  Verify tenant information via third-party verification  Maintain complete and up-to-date tenant files/records

32 Office of Multifamily Housing Programs Tenants  Provide current and accurate income and expense information at certification/recertification  Consent to the release of information for third-party verification  Report changes in income, benefits, and family composition  Know your rights and follow the rules governing your assisted property

33 Office of Multifamily Housing Programs Tenants (cont.)  Be aware of allowable exclusions and deductions that will benefit you and your family  Contact your property owner/agent regarding questions on how your rent is calculated and documented

34 Office of Multifamily Housing Programs Conclusion  HUD’s top-priority for FY 2004 is to build on 2003 successes and exceed HUD’s goal for FY 2005  Awareness, Collaboration and Tenacity (ACT)  ACT to ensure that the right benefits go to the right people Awareness Collaboration Tenacity The right benefits for the right persons

35 Office of Multifamily Housing Programs Questions and Answers