Section 5.1: Using the Line of Credit Control System (LOCCS)

The LOCCS system is the accounting and grantee reimbursement system used by HUD.

Attached to the grant agreement for all new grants should be the following:

  • One copy of the Grantee Financial Instructions;
  • Three copies of the LOCCS/Voice Response System (VRS) Access Authorization Form (HUD 27054) and instructions for its completion;
  • Copies of the LOCCS/VRS Shelter Plus Care Request Voucher for Grant payment; and
  • One Direct Deposit Form.

When a new project is approved for funding, a line of credit is established with HUD. This allows the grantee to be paid through the Federal Reserve to the grantee's financial institution via direct deposit. The HUD Field Office provides all the necessary paperwork (as described above) to initiate the reimbursement process, which should be completed and returned to the appropriate HUD offices.

The process for reimbursement is as follows:

  • The grantee should prepare the S+C Request Voucher.
  • A call should then be made to HUD's LOCCS Voice Response System.
  • LOCCS will prompt the caller to enter information about the type and number of units and tenants being assisted with this drawdown of funds.
  • The caller will then enter the amount of funds to be drawn down for each grant type and program component.
  • LOCCS will confirm the total voucher amount with the caller before submitting the request for payment.
  • Funds will be wired to the grantee's bank account within 48 hours of approvable telephone requests.

The LOCCS Report

A LOCCS status of funds report is similar to a bank statement. It is a monthly report listing all of a grantee's sponsors by grant and S+C component, including funds spent-to-date and remaining balances. The authorized grant amount is listed in the first column under Authorized. The second and third columns show the amount spent-to-date under Disbursed and Disbursement in Process. The last column shows the remaining balance of funds available under the grant.

Grantees should carefully monitor these reports, paying particular attention to the balance and the end date of the grant to ensure that the program is on track to spend its funds within the grant term.

Drawdowns

Grantees should draw down S+C funds regularly, preferably on a monthly basis, to reimburse their costs. The Field Office's ability to track expenditures and monitor grants accordingly is hindered when grantees do not regularly use the LOCCS system to draw down funds. The management of the grant may be called in to question if a grantee delays reimbursement.

Eligible expenses that can be drawn down from the LOCCS for the S+C program include:

  • Rental assistance payments; and
  • Eligible administrative costs (see Section 2).

Understanding "Effective Date" and "Operation Start Date"

All S+C grant terms begin on the effective date and, depending upon the component and whether the grant is a renewal, terminate 1, 5, or 10 years from that date. A new S+C grant is effective and the operating year begins on the date the grant agreement is signed by HUD and the grantee. This is known as the effective date on the LOCCS Status of Funds report. A renewal S+C grant is effective the date immediately following termination of the prior grant period. For S+C renewals, the operating start date in LOCCS will be the same as the effective date. Note that for S+C renewals, the effective date may be prior to, or following, the date the renewal grant agreement is signed and executed.

The operation start date is a term used mostly in conjunction with the Supportive Housing Program. For the S+C program, the operating start date always coincides with the effective date. The operating start date is used primarily to set the beginning and end of the operating year for a S+C grant.

Note: Grantees may be prevented from drawing down funds if no APR has been submitted within 110 days of the APR due date. (For more information about APR reporting requirements, see Section 7).

Accounting for Administrative Fee in LOCCS

Within the LOCCS system, there is no line item for administrative costs. It appears on the LOCCS report as rental assistance. However, once funds are drawn down for administrative costs, they are shown in the disbursed column of the LOCCS report. Remember that the administrative costs may not exceed 8 percent of the total S+C grant and may only pay for eligible administrative costs. It is the responsibility of the grantee to track administrative drawdowns. As these costs are incurred, the grantee should draw down funds from LOCCS.

Partially Funded Grants

Requests for budget amendments may be made only in cases of partial funding. Some S+C conditional awardees may receive partial funding because HUD has limited funds available for a particular jurisdiction or for some other reason connected to the competition. For these grants, the original application and budget will need to be adjusted to reflect the funded amount before a grant agreement is executed.

To obtain full funding of the grant, a Request for Budget Adjustment will be sent to the grantee along with a request for a revision of the number of participants and the budget. This information should be submitted as quickly as possible so the Field Office staff can review it and a grant agreement can be completed.

Notes

Often the person who receives the grant agreement is different from the person responsible for drawing down funds. Therefore, it is important that from the point of grant execution, the materials regarding using the LOCCS system are provided to the appropriate party.