Office of Multifamily Housing Programs General RHIIP Presentation

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

2. 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 Office of Multifamily Housing Programs

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

4. What is RHIIP? Right Benefits to the Right Persons

5. 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) Office of Multifamily Housing Programs

6. 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 Office of Multifamily Housing Programs

7. 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 Office of Multifamily Housing Programs

8. Performance Goals Embracing high standards of management and accountability

9. 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 2003 • 30% in 2004 • 50% by 2005 Notes: Error goals are cumulative 15 percent by 2003, 30 percent by 2004, and 50 percent by 2005. Error reduction percentage is determined by comparing error rate in current year with the baseline data. Office of Multifamily Housing Programs

10. 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 Office of Multifamily Housing Programs

11. Background Income and Rent Calculation Dilemma

12. 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 600-900 million were attributed to unreported tenant income. Office of Multifamily Housing Programs

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

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

15. 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 Office of Multifamily Housing Programs

16. Rent Error Rate by Program Type Source: 2001 Quality Control for Rental Assistance Subsidies Determination Study, pg. ES-iii Office of Multifamily Housing Programs

17. 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 Office of Multifamily Housing Programs

18. 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 Office of Multifamily Housing Programs

19. 2003 PD&R Quality Control Rental Assistance Subsidies Study Results – All values are presented in the thousands Source: FY 2003 Performance and Accountability Report, Note 17 Office of Multifamily Housing Programs

20. Results of 2003 QC Study * All values are presented in millions. Office of Multifamily Housing Programs

21. 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 Office of Multifamily Housing Programs

22. 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 Office of Multifamily Housing Programs

23. Materials and Resources Job Aides for Program Administration and Oversight

24. Materials and Resources • Handbook 4350.3, 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: http://www.hud.gov/offices/hsg/mfh/rhiip/mfhrhiip.cfm Office of Multifamily Housing Programs

25. 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 4350.3 summaries for owners and tenants • Located at: http://www.hud.gov/offices/hsg/mfh/rhiip/mfhrhiip.cfm Office of Multifamily Housing Programs

26. RHIIP and You A Cooperative Effort

27. 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 Office of Multifamily Housing Programs

28. 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 Office of Multifamily Housing Programs

29. 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) Office of Multifamily Housing Programs

30. 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 Office of Multifamily Housing Programs

31. 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 Office of Multifamily Housing Programs

32. 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 Office of Multifamily Housing Programs

33. 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 Office of Multifamily Housing Programs

34. 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 The right benefits for the right persons Tenacity Office of Multifamily Housing Programs

35. Questions and Answers Office of Multifamily Housing Programs