More on Residual Receipts for New Regulation Section 8 Contracts

Janet Golrick, Associate Deputy Assistant Secretary for Multifamily Housing Programs, has sent, to owners and agents, a follow-up to her letter of November 22, 2011 giving some clarification as to the distribution of residual receipts.

“My November 22, 2011 memorandum indicated that funds currently held in project residual receipts accounts will be used to reduce Section 8 Project Based Rental Assistance Payments. This is to clarify that the forthcoming Housing Notice to implement this policy will be applicable to Section 8 contracts generally known as “New Regulation” and subject to the regulatory authority at 24 C.F.R. §§ 880.205(e), 881.205(e), and 883.306(e).”

The references state that ” If HUD determines at any time that project funds are more than the amount needed for project operations, reserve requirements and permitted distribution, HUD may require the excess to be placed in an account to be used to reduce housing assistance payments or for other project purposes. Upon termination of the Contract, any excess funds must be remitted to HUD.”

Does this apply to your property?  In 1980, HUD changed the regulations controlling the use of Residual Receipts.  Section 8 projects that received a HAP notice of selection before this change are referred to as “Old Regulation” projects.  Properties that received the notice of selection after the change are called “New Regulation” projects.  New Regulation project owners are required to transfer all residual receipts to HUD upon termination of the regulatory agreement (in other words, these monies do not belong to the property owner at the end of the contract term).

Please check with your HUD Project Manager if you have further questions about your site’s residual receipts.