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SRO Project Development

After the application process is complete, there are several other critical steps leading to HAP Contract execution and the occupancy of assisted units by tenants.

Annual Contributions Contract (ACC) Execution

A PHA must submit the following to the Field Office for review and approval prior to ACC execution:

1. An Equal Opportunity Housing Plan and Certification.
2. A proposed Schedule of Allowances for Tenant-Furnished Utilities and Other Services.
3. If applicable, proposed variations to the acceptability criteria of the Housing Quality Standards (HQS).
4. The fire and building codes applicable to each project. Please note that the McKinney Homeless Assistance Act requires the installation of sprinklers to protect all major spaces in each building, hard-wired smoke detectors, and other fire and safety improvements required by State and local law.
5. An Administrative Plan, including:
   1. Procedures for establishing tenant outreach;
   2. A HUD-approved policy governing temporary relocation; and
   3. A mechanism to monitor the provision of supportive services.
6. Estimates of Required Annual Contributions.

Environmental Review

The SRO program is governed by the environmental regulations at 24 CFR part 58, which provide that a responsible entity, usually the unit of general local government within which the project is located, must complete the environmental review and a HUD Form 7015.15 (Request for Release of Funds and Certification). The recipient is responsible for submitting the form to HUD with a cover letter requesting the release of funds. Until HUD has approved the Request for Release of Funds, the recipient may not commit any funds for acquisition or rehabilitation costs for the project.

Agreement to Enter Into Housing Assistance Payments Contract (AHAP)

The AHAP establishes that, upon satisfactory completion of the rehabilitation in accordance with the AHAP provisions, the PHA will enter into a HAP Contract with the owner. An AHAP must be executed before beginning any rehabilitation. The PHA must perform a number of critical tasks before the AHAP may be executed, including:

• inspecting the structure to determine specific work items which need to be accomplished to bring the units to be assisted up to HQS or other standards approved by HUD;
• conducting a final feasibility analysis and determining whether cost-effective energy-conserving improvements can be added;
• ensuring that the owner adequately prepares work write-ups and cost estimates;
• determining initial base and contract rents;
• after firm commitments for financing and a contractor are obtained, determining whether the costs can be covered by the original contract rents and, where a project contains more than 50 units to be assisted, submitting the base and contract rent calculations to the HUD Field Office for review and approval in sufficient time for execution of the AHAP in a timely manner;
• confirming that the per unit $3,000 minimum amount of HQS-required rehabilitation is met;
• determining the eligibility of any current tenants, and selecting the units to be assisted; and
• discussing with the owner the various financing options available and approving all financing terms in accordance with program standards.

HAP Contract Execution

When rehabilitation for a project is completed, the PHA must inspect the units to be assisted to determine that the units have been completed in accordance with the AHAP and meet the HQS or other standards approved by HUD. Upon PHA acceptance of the units, the HAP Contract may be executed between the owner and the PHA. The HAP Contract effective date must be no earlier than the PHA inspection which provides the basis for accepting the units.

All units must be under an AHAP, rehabilitated, and under HAP Contract within 12 months of the execution of the ACC with HUD. If this 12-month period is going to be exceeded, the PHA must request an extension of the rehabilitation and leasing schedule.

The initial contract rents established at AHAP can be increased prior to HAP execution only for the following reasons:

1. When the actual, certified costs of rehabilitation are more than estimated due to unforeseen factors beyond the owner's control;
2. When the PHA approves changes in financing;
3. When the actual relocation payments made by the owner to temporarily relocate individuals varies from the cost estimated in the AHAP contract rent calculation;
4. When necessary to correct errors in the computation of base and contract rents to comply with HUD requirements;
5. When, during rehabilitation, work items which (A) could not have been reasonably anticipated or are necessitated by a change in local codes or ordinances and (B) were not listed in the work write-up approved by the PHA are subsequently required and approved by the PHA. In these cases, the PHA must review and approve the new items and recalculate the rents accordingly. A PHA may approve exception rents of up to 110% of the Moderate Rehabilitation SRO FMR. Additionally, a Field Office may approve exception rents of up to 120% of the Moderate Rehabilitation SRO FMR for these costs.