On June 19th HUD issued a memorandum to implement language from the Consolidated and Further Continuing Appropriations Act, 2015. That Act contains language directing the Department to utilize residual receipts balances to support current program purposes. Any excess greater than $250 per unit in a residual receipt account must be remitted to HUD’s Accounting Center upon termination of the PRAC. Termination is defined as expiration of the contract term, which for most PRACs is the annual contract anniversary date.
This guidance applies to all projects subject to Section 202 or Section 811 PRACs and is effective for all contracts with an annual or multi-year term renewal date or expiration date no less than 30 days after issuance of this memorandum.
Residual Receipts proceeds will be sent to the Accounting Center in either of the following ways:
U.S. Department of Housing and Urban Development and sent to:
The check information must include the iREMS project number and “PRAC ERR Termination”
Owners will continue to make the required deposits to residual receipts 90 days after year end. At contract termination/renewal owners will prepare and submit form HUD-9250, “Funds Authorization” for the release of those residual receipts exceeding $250 per unit.
We have received no comment from REAC on the potential impacts to project accounting and the financial statements. However, it seems abundantly clear that residual receipts balances in excess of $250 per unit are no longer assets of the project, even though they will be required to report the amounts in the REAC template. How REAC expects this amount to be reported will likely be discussed in the next few weeks. We will communicate to you as soon as they become available.
See https://ahacpa.org/announcements/202-811-prac-recapture/ for clarification information.