Rent Determination Presentation from 9/30/2013

Report
Housing Choice Voucher Program
Cuyahoga Metropolitan Housing Authority
Rent Determination
Parma Library
September 30, 2014
Denita Johnson,
Deputy Director of HCVP
Topics of Discussion,
Putting all the pieces together





Voucher Term & Size
Briefing Packet
Request for Tenancy Approval {intake process}
Important Facts
Rent Affordability Calculator
1
Voucher Term
Voucher Term
o Valid for a period of:
• New Admissions-60 days from the date the
voucher was issued
• Movers-120 days from the date of issuance
o Extensions may be granted by the Housing
Authority for reasonable accommodations
purposes
2
Voucher Size
0 Voucher Size
0 The number of bedrooms the family is eligible
to receive
0 A family can go up a voucher size or down a
voucher size
0 Final rent is determined on the lower of the two
3
Briefing Packet
The Briefing Packet is an informational
packet of forms that the family uses to
request the HCVP’s approval for assisted
tenancy
4
Briefing Packet
The packet consists of the following:
0 Landlord Instructions
0 Request for Tenancy Approval
0
0
0
0
(RFTA)
Landlord Certification
W-9
Agent Form
Sample Lease (lease is on the
CMHA website)
0 Lead based paint disclosure
0 Property built before Jan 1, 1978
0 30 day notice of intent to vacate
0 Building Rent Form
0 Addendum for Drug Free
Housing
0 Tenancy Addendum
0 Landlord Fraud Letter
5
When the Family Finds A Unit…
what happens?
 The owner and the family must complete the RFTA packet
in its entirety, inconsistent information will cause delay in
the process.
 The completed RFTA packet is submitted to the HCVP,
Room 101 (8:00 a.m. – 6:00 p.m.)
 RFTA process begins
6
7
RFTA intake process
0 HCVP WILL:
• Review the RFTA packet; all forms must be signed.
• Check to confirm that the unit isn’t in foreclosure
0 HCVP WILL NOT:
• Provide a preliminary rent offer
• Provide an inspection date
8
0 Submitting multiple RFTA packets
0 We will only accept one(1) RFTA packet
0 If the unit is a double or multi-family, please
indicate UP or DOWN or the unit number
0 Submitting multiple RFTA’s could lead to all
RFTA’s being cancelled
0 Inspections
0 Unit must be ready for HQS inspections
0 If the unit fails HQS inspections twice, the RFTA
will be cancelled
9
0 Contract signing days are held twice a month
0 Move-in Date
• Is established by the Contract Specialist, Owner, and
Tenant
• If the Tenant moves into the unit prior to the Contract
Specialist establishing the move-in date, the tenant is
responsible for ALL rent until the contract goes into
effect.
You MUST submit a signed lease before the contract
can go into effect
Important Facts cont.:
0 New Landlord Briefing
0 All new landlords must attend the briefing before
signing the housing assistance contract with HCVP.
0 The workshops are held three or more times a
month:
0 Morning
0 Afternoon
0 Saturday
11
Important Facts cont.:
0 BREAKING THE CONTRACT EARLY?
0 The Housing Assistance Payment (HAP) Contract is
for a 1-year term.
0 Mutual agreements between the landlord and
tenant to break the lease early will not be honored
by the HCVP.
0 A change in ownership requires assumption of the
existing contract in the first year of the contract.
12
Voucher
Three-Way Partnership
CMHA
FAMILY
OWNER
13
Three-Way Partnership
0 HCVP Responsibilities:
0 Determine if the family is eligible to participate
in the HCVP.
0 Determine the rental amount of the unit.
0 Determine the family’s portion of the rent to
owner.
0 Inspect the subsidized unit annually.
0 Issue housing assistance payments.
14
Three-Way Partnership Cont.
0 Owner’s Responsibilities:
0 Screen families to determine their suitability
as a renter
0 Maintain the housing unit by making
necessary repairs
0 Comply with the terms of the Housing
Assistance Payment (HAP) Contract
0 Enforce the lease
0 CMHA is not a party to the lease
15
Three-Way Partnership Cont.
0 Family’s
Responsibilities:
0 Abide by the terms of the lease
0 Pay rent on time and take care of the housing unit
0 Provide any utilities and maintain appliances which are
not furnished by the owner
0 The family is responsible for damages to the unit or
premises beyond normal wear and tear which results in a
breach of the HQS.
16
Rent Affordability Calculator
Interactive tool to determine
affordability. Available on the CMHA
website, www.cmha.net
17
18
19
Rent Affordability Calculator
continued…
20
Rent Determination
Ava Decembly
Overview
Before the Public Housing Authority (PHA)
establishes a Housing Assistance Payment (HAP)
contract with a landlord, the following must occur:
1. Unit must pass an inspection;
2. Rent reasonableness test must be conducted; and
3. Final rent has to be affordable
22
Rent Determination Factors
Rent determination process reflects:
Fair Market Rent
Payment Standards
Utility Allowances
Income
Reasonable Rent
Affordability
23
Fair Market Rents
24 CFR § 888.111

Developed by HUD and published annually around October 1

Rent estimates which allow rental of modest housing within
specific geographic area

Represents housing costs which are comprised of the rent plus
tenant-paid utilities

CMHA permitted to use the 50th percentile rent estimates
0
Provides broader range of housing opportunities
0
Low-poverty areas
24
Fair Market Rents
24 CFR § 888.111

Are not reasonable rent

Primary function is to control
costs

Published by bedroom size

Basis for determining the payment standards
25
Payment Standards
24 CFR § 982.402
• Based on the FMRs
• Established by PHA
• Individual payment standard created for
each bedroom size
• Must fall within 90% - 110% of the FMRs
• Represents maximum allowable amount PHA can contribute
towards the rent

Entire amount may not necessarily be contributed.
26
Applicable Payment Standard
 Payment standard used to determine who contributes what
towards the rent
o
PHA subsidy standards used to determine eligible
voucher size
 Once unit selected, applicable payment standard comes into
play
 Compare unit size to eligible voucher size
o
Lower of the two determines applicable payment standard
used in the rent calculation
27
Applicable Payment Standard
Important affordability concept
0 Lesser of unit and eligible voucher sizes prevail
Unit size
3
$1,026
Voucher size
2
$ 783
Factor in determining portions contributed towards the final rent
(HAP) +
(Tenant Rent to Landlord) = (Contract Rent)
PHA portion + Tenant portion
= Final Rent
28
FMR’s and Payment Standards
BR
Size
1
2
3
4
FY 2013
FMR
FY 2013
PS
$ 623
$ 790
$1,058
$1,093
$ 673
$ 783
$1,026
$1,155
PS ÷
FMR
108.0%
99.1%
97.0%
105.7%
FY 2014
FMR
$ 632
$ 801
$1,073
$1,108
FY2014
PS
$ 673
$ 783
$1,026
$1,155
PS ÷
FMR
106.5%
97.8%
95.6%
104.2%
• PHAs must change if outside of HUD’s 90%-110% guidelines
 FY2014 payment standards have remained the same
• PHA’s decision to change payment standards based on:
a. Budget constraints
b. Utilization
c. Create housing opportunities
29
Utility Allowances (UA)
 Represents tenant-paid utilities
 Includes heating, electricity,
water, sewer, trash collection
fee, stove, and refrigerator
 Unit size, fuel sources,
structure type taken into
consideration
Consumption * Rates
30
Utility Allowance Schedule
0
HUD requirement
Must revise whenever local rates change +/- 10%
Factor in determining reasonable rent, gross rent, and
tenant rent to owner
Recent change in how determined for rent calculation
Previously unit size determined which allowances to
use
Changes to the LOWER of the unit versus voucher
size will determine which allowances to use
31
Utility Allowance Schedule CONTINUED…
CMHA updates annually regardless

January 2014 schedule reflects:





Slight decrease in natural gas rates
Slight increase in electric rates
Increase in water and sewer rates
Increase in range & refrigerator rental
rates
An updated schedule will be effective on
January 1, 2015
32
Utility Allowance Schedule
Effective January 1, 2014
Actual bedrooms in unit:
1
1 BR
2 BR
3 BR
4 BR
Monthly dollar allowances:
SPACE HEAT (natural gas):
2
1
Single-family dwelling
49
60
71
81
2
Townhouse, Duplex/Triplex, Row House
48
57
66
76
3
Multi-unit apartment
3
36
39
41
43
4
Manufactured home
44
45
46
47
5
Manufactured home - OIL
108
108
108
108
How to read:
Step 1: Unit size
Step 2: Fuel source
Step 3: Structure type
33
Utility Reimbursement (UAP)
Who’s eligible
Based on income
0
0
Usually very low income
Not automatic, must reside in a unit to receive
How determined
0
Amount by which the UA exceeds the TTP
Participant’s TTP Minus Utility Allowance
0
Less any additional monies tenant is required to contribute
towards the rent (Gross Rent Minus Payment Standard)
34
Change in Utility Responsibility
Requirements for changing:

Landlord must submit formal request

PHA must conduct a new rent reasonableness test
taking the revised utility responsibility into
consideration
0
0
0
May result in revised rent,
Will result in new HAP contract
In most cases owner request shifts their responsibility over to
tenant

More than likely will result in rent decrease due to:
0
0
0
0
Change in responsibility
Market changes
Utility allowances revisions
Affordability
35
Household Income

Could change during life of contract



Client’s annual recertification
Interim changes (reduction in work hours, no longer employed,
promotion, new job, etc.)
Another factor in determining rent portions
Income
Change
Client’s
Portion
PHA’s
Portion
Increase
Decrease

Very low income may trigger $50 minimum rent or utility reimbursement
36
Initial Family Contribution
1. 10% of Gross
Annual Income
2. 30% of Annual
Adjusted Income
1. Gross Income = $10,000
(($10,000 * .10) ÷ 12)
$1,000 ÷ 12) = $83
2. Adjusted Income = $9,200
(($9,200 * .30) ÷ 12
($2,760 ÷ 12) = $230
3. Minimum Rent = $50
3. Minimum Rent
Greater of the 3
The $230 is the greater of the three and
therefore becomes the initial family
contribution.
37
Reasonable Rent (RR)
Units rated based on:
1. Comparable unassisted
rents
2. Unit attributes
a.
b.
c.
d.
Structure type
Unit size
Condition
Location
3. Utility responsibility
38
Reasonable Rent (RR)
Sources for comparables
1.Advertisements
• Local newspapers
2.Internet
• Online rental websites
3.Real estate and apartment associations
4.Apartment complexes
39
Reasonable Rent
24 CFR §982.507
PHA must determine if rent is reasonable before lease
approval
Must be re-determined:
1. At HUD’s direction
2. Prior to rent adjustments
3. If 5% decrease in FMRs in effect 60 days before
contract anniversary
4. PHA may re-determine at any other time.
At all times during the assisted tenancy, the rent to owner may not exceed the
reasonable rent as most recently determined or re-determined by the PHA.
40
Gross Rent
Rent to Owner PLUS Tenant-paid utilities
Example:
Rent to Owner
Tenant-paid Utilities
Gross Rent
$1,000
+ 200
= $ 1,200
Factor in determining if tenant must contribute
additional dollars towards the contract rent.
41
Affordability
0 Only applies to new contracts
0 Rent Burden
0 Household’s total contribution towards housing costs as
percentage of household’s TTP
0 Cannot exceed 40%
0 Initial year of contract
0 Amount gross rent exceeds payment standard
0 Represents additional amount for which tenant’s responsible
Gross Rent > Pmt. Std.
Pmt. Std. > Gross Rent
Tenant contributes additional
amount.
There is no additional amount
and the rent burden = 30%.
42
Affordability Example
Gross rent [$1,000 (rent) + $200 (UA)] $1,200
Payment Standard [3BR]
- $1,026
(Additional Tenant Payment)
$174
TTP
[(($9,200 (adjusted income)* 0.30) + ($174 * 12))] =
($2,760
+
$2,088) = $4,848
$4,848 ÷ $9,200 = 52.7%
Rent Burden = 53%
In this example, the household’s rent burden exceeds 40% and is not
affordable. In order to make it affordable, the owner would have to
agree to a $903 rent, a decrease of $97.
43
Affordability Factors
1.
Tenant- vs. Landlord-paid utilities
2.
Payment standards
a. Applicable
3.
Income
a. Low-income rental assistance program
b. 84% of the new admissions to program at extremely low income level.
HUD Income Limits
BR Size
1
2
3
4
Extremely Low Income
$13,200
$15,050
$16,950
$18,800
4.
Over-housed (In unit with more bedrooms than eligible for)
5.
Rents high in comparison to tenant income
44
Rent Determination
0 Final rent determined by PHA
0 Establishes HAP and Tenant Rent to Owner
Housing Assistance Payment (HAP)
+
Tenant Rent to Owner (TR)
=
Contract Rent (CR)
Landlord requests seeking additional monies from tenants beyond that
approved by the PHA are forbidden according to HUD regulations.
45
Rent Determination
Rents will change for:
 New contracts (Movers)
 Change in utility responsibility
 Requested rent adjustments
0
Could be less than the current rent based on rent reasonableness test
results
 Required based on HUD’s 5% rule
46
Building Rent
Building serves as the market
0 Must have:
0 Minimum 3 unassisted units paying requested rents
0 Similarly sized units
0 Within same property/complex
0 If doesn’t meet the above criteria will have to conduct
regular rent reasonableness test.
47
Building Rent
0 Landlord must provide requested information
0 CMHA Building Rent Form
0 Rent roll/schedule (proof of rents charged)
0 PHA must have this documentation to substantiate rents
[On HAP Contract under item 8. Owner Certification (page 4 of 10)]
By executing a HAP contract the owner is certifying that the “…rent to owner
does not exceed rents charged by the owner for rental of comparable
unassisted units in the premises.”
0 Same
affordability rule applies for initial year of contract
48
In summary:
Contract rent determined using a combination of unit
and client related data.
1. Rent reasonableness based upon:
0 Utilities
0 Unit attributes
0 Comparables
2. Client data
0 Income
0 Voucher size
49
Partnership
Maintaining positive relationships
with our communities and landlords
has been instrumental in expanding
housing choice opportunities for our
program participants.
Thank you.
50
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