HUD PIH Notice § 2021-16

Special Attention of:                                 Notice: PIH 2021-16 (HA)
Public Housing Agencies                               Issued: May 18, 2021
Regional and Field Office Directors of
Public Housing                                        Expires: Effective until amended,
Regional Administrators                               superseded, or rescinded
                                                      Cross Reference: 24 CFR Part 964
                                                      PIH Notice 2001-3, PIH Notice 2013-21



Subject: Guidance on the use of Tenant Participation Funds
1. Purpose. This notice serves to clarify previous guidance on the use of tenant participation
funds as established by 24 CFR § 964.150 and supersedes PIH Notice 2013-21.
2. Applicability. This notice applies to all public housing agencies (PHAs) operating public
housing programs.
3. Background. HUD encourages resident participation and the active involvement of residents
in all aspects of a PHA's overall mission and operation, particularly through duly-elected resident
councils (RC). The role of a resident council is to improve the quality of life and resident
satisfaction and participate in self-help initiatives to enable residents to create a positive living
environment for families living in public housing. To support resident participation, HUD
provides funding through the Operating Fund Grant (24 CFR Part 990) to PHAs specifically for
resident participation activities. This Notice provides guidance on the use and financial
management of Tenant Participation (TP) funds, including a framework to determine allowable
expenses.
4. Tenant Participation Funds and the Roles of PHAs and Resident Councils. When
appropriations are sufficient, HUD provides $25 per unit, per year to PHAs through the
Operating Fund Grant (24 CFR 990.190(e)) for TP activities, including but not limited to, those
described in 24 CFR part 964. This funding is subsequently provided to the RCs to create a bona
fide partnership among the duly-elected resident councils, the PHA and HUD.1 Of this amount,
$15 per unit, per year is provided to duly-elected RCs at each development and/or those
jurisdiction-wide councils eligible to receive the resident portion to carry out purposes for which
it was provided.2 $10 per unit per year would be used by the PHA to pay for costs incurred in
carrying out activities under 24 CFR 964, subpart B as described in Section 6 of this Notice.




1
    24 CFR § 964.150(a)(1)
2
    24 CFR § 964.150(a)(1)


                                  www.hud.gov        espanol.hud.gov
To correctly apply the Department’s requirements on TP funds, it is important that PHAs and
RCs understand their specific roles and responsibilities.
A. The Role of the PHA
The PHA’s role with respect to the use of TP funds is to:
      Collaborate with the RC and enter into a written agreement on the distribution and use of
       TP funds;
      Administer TP funds timely and in accordance with the written agreement with the RC;
      Ensure the RC’s requested expenses are allowable under HUD regulations and consistent
       with the written agreement;
      Advise RCs on the supporting documentation that may be necessary to verify and audit
       expenses;
      Maintain accurate records of TP funds and expenditures and provide this information to
       RCs; and
      Inspect and audit the RC’s financial records.
PHA policies on the disbursement of TP funds, as incorporated in the written agreement, should
be designed to ensure that each funding request from an RC:
   1) Is consistent with the applicable HUD requirements as provided in the written agreement;
   2) Incorporates appropriate financial controls, including the submission of a budget and
      conformance with HUD (2 CFR Part 200) and local procurement rules and insurance
      requirements, if applicable; and
   3) Meets other administrative requirements specified in the written agreement between the
      PHA and the RC (described below).
PHAs may need to provide or encourage RCs to seek technical assistance in the areas of
administration, budgeting, and financial reporting to comply with HUD requirements for TP
funds and the written agreement with the PHA. The PHA may use the PHA’s portion of the TP
funds to provide technical assistance and training in these areas.
B. The Role of the Resident Council
RCs and their leadership play an active role in determining how the TP funds will be used to
improve the quality of life for public housing residents. Each RC has the ability to decide which
activities they will pursue to expend TP funds as long as the expenditures:
   1) Are made in accordance with the written agreement with the PHA and
   2) Comply with the HUD requirements for use of TP funds.
C. Written Agreement
The written agreement between the PHA and the RC is required and establishes the parties’
relationship as it relates to TP funds and governs decisions on how TP funds are budgeted,




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disbursed, and audited.3 HUD encourages PHAs and RCs to develop agreements that establish a
collaborative partnership, provide flexibility, and support autonomy facilitating the leadership of
RCs for their communities.
At a minimum, the written agreement must:
     Require the RC to submit a budget to request and receive TP funds;
     Require the RC to provide assurance that all expenditures comply with all relevant
       provisions of law and will promote serviceability, efficiency, economy and stability in the
       operation of the local development; 4
     Require the RC to account to the PHA for the use of the funds; 5 and
     Require the RC to permit the PHA to inspect and audit the RCs financial records related
       to the agreement. 6
In addition, HUD recommends as a best practice that the written agreement:
     Describe how proposed TP fund requests will be evaluated;
     Describe the method and timing of disbursements;
     Describe any agreements for transfers of funding to either jurisdiction-wide councils or
        RCs at other developments;
     Describe specific legal, conflict of interest, procurement and/or insurance requirements;
     Describe the PHA’s process for inspecting and auditing the RC’s financial records;
     Describe the minimum records needed for an audit;
     Provide that the PHA deliver a written explanation for any denied requests, describing
        why the request failed to meet established evaluation criteria; and
     Describe how the parties will remedy misappropriation of funds.
            a. For example, the description might include how remedies for misspent funds will
               be handled, including whether remedies may be negotiated between the PHA and
               the RC or, if a tenant member of the RC is responsible for that misuse of funds,
               between the PHA and that member.
            b. The description might also identify the role of the PHA’s counsel in the
               establishment of the terms of any remedial agreement.
5. Financial Management of TP Funds. This Section provides guidance on accounting for
funds provided for resident participation activities.
Resident participation activities is a formula element of the Operating Fund Grant that provides
TP Funding. Therefore, PHAs do not receive TP funding, per se. HUD regulations permit PHAs
to fund $25 per unit per year for units represented by duly-elected RCs for tenant participation
activities, subject to the availability of appropriations; $15 per unit per year to the RC and $10


3
  24 CFR § 964.150(b)(3); While the written agreement for the use of TP funds is separate from
the required Memorandum of Understanding (MOU) described in 964.18(a)(10), the written
agreement may be included in the MOU.
4
  24 CFR § 964.150(b)(3)
5
  24 CFR § 964.150(b)(3)
6
  24 CFR § 964.150(b)(3)
                                                                                                  3
per unit per year to the PHA.7 The minimum amount of $15 to be provided to the RC may be
adjusted to reflect the Operating Fund Grant proration rate each year. A PHA, at its discretion,
may fund the RC above the $15 minimum, however, the PHA remains responsible for supporting
TP activities.8
Funding can only be provided to an RC, or payments made on behalf of the RC, under a written
agreement and the agreement must include provisions as outlined above in Section 4C: “Written
Agreement.”9
A. PHA Expenditure of Funds for an RC
Any allowable payments made to or on behalf of an RC meet the definition of a PHA expense.
Funds due from the PHA to an RC for expenses incurred on or before calendar year end are also
considered PHA expenses for the calendar year. PHAs should not place funds for an RC in a
PHA controlled escrow. Funds placed in a PHA-controlled escrow are not considered expenses.
PHAs should be aware that Operating Funds must be expended by the cancellation date as
defined by the Appropriations Law for that fiscal year. Operating Funds from 2016 and before
cancel in six years; Operating Funds after 2017 (subject to change based upon future
Appropriation Acts) cancel in seven years.
HUD encourages PHAs to pay to the RC the entire $15 per unit by the end of the calendar year.
The written agreement will determine the method and timing of disbursements to the RC. Best
practices limit the amount of time between the distribution of funds and expenditure by the RC,
such as quarterly disbursements. Any TP funds remaining in RC controlled accounts at the end
of the calendar may remain in those accounts for subsequent allowable RC expenses because
those funds are considered to have been expended by the PHA. To the extent $15 per unit is not
expended by the PHA because the RC’s allowable expenses did not use all available funds in the
calendar year, then there is no requirement for the PHA to pay the RC any remaining balance of
the $15 per unit the following calendar year.
B. Absence of an RC and formation of a new RC
The formula element of the Operating Fund Grant that provides tenant participation funding is
not dependent upon the existence of resident organizations. If there is no duly-elected RC, HUD
still encourages the PHA to inform residents of the availability of TP funds and to use up to $10
per unit, per year to carry out tenant participation activities, including training and building
resident capacity to establish and operate an RC.10 If a duly-elected RC is formed during the
funding year, the PHA must provide the RC with a minimum of $15 per unit per year to fund
resident activities. These amounts must be available for this purpose for the entire funding year.

If there is interest by residents, a PHA may engage a jurisdiction-wide councils or separate local
RC to implement local activities at developments with no RC and may make available the TP


7
  24 CFR § 990.190(e)
8
  24 CFR § 964.18
9
  24 CFR § 964.150(b)(3)
10
   24 CFR § 964.140, § 964.18
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funding allocated for that local development as defined by written agreement. In this scenario, if
an RC is formed during the funding year, the PHA must provide the RC with the remaining
balance of funds allocated for that local development.

At the end of the funding year, if a duly-elected resident council has not been formed the PHA
may use the remaining tenant participation amounts for resident participation activities for any
eligible Operating Fund expense.
C. Increasing TP Funding at an Asset Management Projects (AMPs)
Tenant participation is an element of eligibility in the Operating Fund Formula. As such, PHAs
do not receive separate funding for tenant participation. Rather, tenant participation is an eligible
use of Operating Subsidy. PHAs who do not expend Operating Subsidy at one project may want
to increase the TP funding they provide to an RC at another project. Transferring funds between
projects is addressed in Section 6.2 of the Supplement to HUD Handbook 7475.1 REV., CHG-1,
Financial Management Handbook, transmitted via PIH Notice 2007-9. However, PHAs are not
required to transfer Operating Subsidy to another project in order to increase the TP funding they
provide to an RC. The amounts referenced in this Notice and in 24 CFR part 964 do not
represent caps on amount spent on tenant participation activities, but rather are minimums,
provided the requirements for making such payments are met.
Pursuant to written agreements between a PHA and an RC, an RC eligible for TP funding may
transfer their eligibility to resident councils at other projects or to a jurisdiction-wide resident
council. Such transfers will not impact the calculation of a project’s Operating Fund Formula
and the amount of Operating Subsidy that project receives.
6. Allowable and Unallowable Expenses
A. Allowable Expenses
TP expenditures are generally allowable if necessary and reasonable11 for the purposes stated in
24 CFR Part 964 Subpart B and consistent with the written agreement between the PHA and RC.
Purposes for which TP funds may be used for activities to improve the quality of life, as well as
resident satisfaction and participation in self-help initiatives that enable residents to create a
positive living environment for families living in public housing.12 HUD encourages PHAs and
RCs to work collaboratively to identify eligible activities within these broad parameters to be
included in the written agreement and accompanying budget. HUD encourages RCs and PHAs
to partner with local organizations to undertake any of these activities.
B. PHA-specific activities
TP funds are provided to PHAs to pay for costs incurred in carrying out tenant participation
activities under 24 CFR Part 964 Subpart B including the expenses for conducting elections,
recalls or arbitration required under § 964.130.


11
     2 CFR § 200.404
12
     24 CFR §964.100
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Generally, TP funds cannot to be used to supplant the salaries of PHA staff since the PHA is
allocated Operating Subsidy from HUD to cover these salary costs. The per unit per year
amount allocated to PHAs may be used by the PHA to pay for costs incurred in carrying out
tenant participation activities, including the expenses for conducting elections, printing, renting
of space for meetings (if requested/needed and not available at the PHA’s properties), hiring an
arbitrator, or as permitted under 24 CFR Part 964 Subpart B. HUD recognizes that some of these
activities represent staff time and some PHAs may employ staff specifically to support and liaise
with RCs. In those instances, the amount of funding used for PHA staff salaries must be directly
proportionate to staff time specifically carrying out allowable tenant participation activities.
C. Unallowable Expenses
TP funds may not be used for any activity outside the scope of the TP fund written agreement
and HUD regulatory requirements at 24 CFR Part 964 Subpart B. Unallowable expenses also
include any activities prohibited by fair housing and non-discrimination laws. In addition,
federal funds are prohibited, including TP funds, for the following:13
         Purchase of alcoholic beverages
         Entertainment, where the dedicated purpose of the event falls under the following
          categories:
              o Amusement (e.g., trips to theme parks, county fairs)
              o Diversions (e.g., theatre, movies, sports events)
              o Social activities (e.g., parties, bowling nights)
              o Any directly associated costs for the events in the categories above (tickets to
                 shows or sports events, meals, lodging, rentals, transportation, and gratuities)
              o Organized fundraising costs, including financial or political campaigns,
                 solicitation of gifts and bequests, and similar expenses incurred to raise capital or
                 obtain contributions, regardless of the purpose for which the funds will be used

As the list provided does not include all unallowable activities, PHAs and RCs should become
familiar with the applicable 2 CFR 200 Subpart E requirements related to permissible use of
federal funds.




13
     2 CFR § 200.420 - § 200.475
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     7. Proposed Guide for Evaluating TP Fund Expenses. TP expenditures are generally
     allowable if necessary and reasonable for the purposes stated in 24 CFR Part 964 Subpart B and
     consistent with the written agreement between the PHA and RC. See 2 CFR 200.403 for further
     clarification regarding factors affecting allowability of costs. Generally, a cost is reasonable if
     the nature and amount do not exceed what a reasonable person would incur under the same
     circumstances.14 HUD encourages PHAs and RCs to consider the following chart as a resource
     to evaluate whether a proposed TP fund expenditure is necessary and reasonable. If the answer
     to the question in the first column is no, then use the additional questions to explore other
     options. If a yes cannot be reached, the expenditure may not be an allowable expense.
                                                                     If no, Additional Questions/
                       Question                        Y N
                                                                      Tips to help refine request
          Is the expense necessary and reasonable
1.        in order carry out the purposes15 for
          which the TP funds were provided?
          Is the proposed TP activity consistent
                                                             Can the activity or the agreement be
2.        with the written agreement between the
                                                             revised?
          PHA and the RC?
          Is the proposed activity included in the
3.                                                           Can be budget be amended?
          RC’s approved budget?
          Is the specific proposed activity or               If no, what details does the RC need to
4.
          resource requested by the RC clear?                include?
          Is this expense of benefit to the
                                                             Can RC clarify how this will benefit the
5.        community at large and not for an
                                                             larger community?
          individual’s personal gain?
          Is the cost reasonable according to                Are the guidelines for cost reasonableness
6.        procurement policies or other relevant             agreed upon by the PHA and RC? If no, can
          policies in the written agreement?                 agreed upon guidelines be established?
          Will the RC be able to provide the
                                                             Can tools or training be provided to the RC
8.        appropriate receipts and invoices for
                                                             to assist?
          auditing purposes?
          Will this expense present any conflicts of         Are there any alternatives that may prevent
9.
          interest?                                          this conflict?
          If applicable, does the proposed expense
10.
          abide by the PHA’s procurement policy?
                                                             Is the proposed activity allowable? How
          If the proposed activity includes food or          long is length of event? Where it is located?
11.       transportation, are the costs necessary            Are there safety concerns? Are there nearby
          and reasonable?                                    food options are available? What is the time
                                                             of day? How may it impact participation?

     14
          2 CFR § 200.404
     15
          24 CFR § 964.100
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8. Tenant Participation Funds in Mixed-Income Communities. Public housing residents in
mixed-income communities are eligible to use TP funds in accordance with the requirements
outlined in this Notice.
The Department recommends that the amount of TP funds used for eligible activities be in
appropriate proportion to the number of public housing residents who live in the development or
community. For example, if a mixed-income development is composed of half public housing
residents, the resident association could fund half of the expense of an eligible activity with TP
funds. TP funds along with other sources of funds may be used to support eligible resident
participation and self-sufficiency activities benefitting all of the development’s residents. This
does not prohibit the ability of these associations and/or management from funding activities
entirely with other sources.
PHAs serving mixed-income communities must adopt policies as outlined in Section 4 of the
Notice regarding the use of TP funds in these communities.
9. RAD and Resident Councils. Properties converting from Public Housing to Project Based
Rental Assistance (PBRA) or Project Based Vouchers (PBV) through the Rental Assistance
Demonstration (RAD) program are subject to Notice H-2019-09 PIH-2019-23 (HA), Rental
Assistance Demonstration REV-4 which includes guidelines on the use of TP Funds (see Section
1.B2 “Resident Participation and Funding”).
10. Resolution of Disputes. HUD recognizes that during the collaborative process there may be
disagreement.16 The Department strongly encourages residents and PHA staff to work together to
resolve questions concerning specific uses of TP funds or proposals for TP funds. HUD
intervention should only be sought when the dispute is at an impasse.
If a HUD intervention is required, the PHA or RC may submit a formal written request that
outlines their position and reasoning, setting out the circumstances including attempts to resolve
the dispute and providing copies of relevant materials evidencing the efforts to negotiate in good
faith.
Intervention requests must be made to the local HUD Field Office. Upon a request for HUD
intervention, the Field Office will require the parties to undertake further negotiations in a good
faith effort to resolve the dispute. The HUD Field Office, at its discretion, may act as a neutral
facilitator; however, HUD suggests that the PHA and RC engage a neutral third-party facilitator
or mediator, if feasible which is an eligible TP fund expense. If the PHA and RC do not achieve
resolution within 90 days from the date of the request for Field Office intervention, the Field
Office will refer the matter to the Office of Public Housing Programs in Headquarters (HQ) for
final resolution. The referral to HQ should include a memo that demonstrates attempts to
achieve a resolution and a clear outline of the two party’s differing positions and reasoning.
The Office of Public Housing Programs may contact the parties for additional information and
will only review disputes that have been submitted to the Field Office first. The review process
will only determine whether the underlying policy affecting the dispute is a permissible

16
     24 CFR § 964.150(a)(3)
                                                                                                   8
implementation of the applicable statutes and regulations. While HQ may provide
recommendations, HUD cannot overturn actions that are consistent with relevant statutes and
regulations. If necessary, HQ’s response will outline any required corrective actions the parties
must take, to be monitored by the Field Office.
11. Further Information. Questions regarding this Notice may be directed to
publichousingpolicyquestions@hud.gov.


                                                        ______________/s/_________________
__
                                                        Dominique Blom
                                                        General Deputy Assistant Secretary for
                                                        Public and Indian Housing




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