HUD Releases Guidance on Property and Casualty Insurance Issues

On September 20, HUD’s Office of Public and Indian Housing Issued HUD Notice PIH-2016-13 entitled Guidance on Property and Casualty Insurance Issues. The Notice provides guidance on the procedures, restrictions, reporting requirements and eligible uses related to casualties for Operating or Capital Funds. The Notice also modifies existing guidance on the eligibility of units that have been subject to a casualty for continued Operating Funds.

The Notice specifies that costs of repairing or rebuilding public housing projects due to damage or destruction caused by casualties, emergencies or natural disasters are eligible Capital Fund expenses. Costs may eventually be covered with insurance proceeds or, if approved by HUD, in a separate grant from the annual appropriations set-aside funds for emergency and natural disasters. PHAs are not required to repay the Capital Fund unless  the proceeds cover the same work funded by an Emergency or Disaster grant.

PHAs are also allowed to use Operating Funds for emergency work due to unforeseeable and unpreventable emergencies that include damage to the physical structure of a PHA’s housing stock. PHAs must reimburse their operating account for any expenses that were initially covered with Operating Funds. PHAs must use insurance or disaster proceeds to reimburse their operating account up to the amount received.

The Notice further discusses steps PHAs must take in the event of rebuilding or demolishing damaged properties from unforeseeable and unpreventable emergencies.