HOUSING CHOICE VOUCHER PROGRAM
CUYAHOGA METROPOLITAN HOUSING AUTHORITY
Rent Determination
Independence Library - Cuyahoga County Library
October 18, 2013
DENITA JOHNSON
MANAGER OF APPLICATIONS & CONTRACTING
Topics of Discussion





Voucher Term & Size
Briefing Packet
Request for Tenancy Approval {intake process}
Important Facts
Rent Affordability Calculator
1
VOUCHER TERM
Voucher Term
oValid for a period of:
• New Admissions-60 days from the date the voucher
was issued
• Movers-120 days from the date of issuance
oExtensions may be granted by the Housing Authority
for reasonable accommodations purposes
2
VOUCHER SIZE
Voucher Size
The number of bedrooms the family is eligible
to receive
A family can go up a voucher size or down a
voucher size
Final rent is determined on the lower of the two
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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:
 Landlord Instructions
 Request for Tenancy Approval (RFTA)
 Landlord Certification
 W-9
 Agent Form
 Sample Lease (lease is on the
CMHA website)
 Lead based paint disclosure
 Property built before Jan 1, 1978
 30 day notice of intent to vacate
 Building Rent Form
 Addendum for Drug Free Housing
 Tenancy Addendum
 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
 The completed RFTA packet
is submitted to the HCVP
 RFTA process begins
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7
RFTA INTAKE PROCESS
HCVP WILL:
• Review the RFTA packet; all forms must be signed.
• Check to confirm that the unit isn’t in foreclosure
HCVP WILL NOT:
• Provide preliminary rent offer
• Provide inspection date
8
IMPORTANT FACTS:
Submitting multiple RFTA packets
We will only accept 1 RFTA packet
If the unit is a 2-family, please indicate up or down
Submitting multiple RFTA’s could lead to all RFTA’s
being cancelled
Inspections
Unit must be ready for HQS inspections
If the unit fails HQS inspections twice, the RFTA will be
cancelled
9
IMPORTANT FACTS CONT.:
Contract signing days are held twice a month
• The 1st & 3rd week of the month
Move-in Date
• Is established by the Contract Specialist, Owner &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
10
IMPORTANT FACTS CONT.:
New Landlord Briefing
All new landlords must attend the briefing before
signing the housing assistance contract with HCVP.
The workshop are held 3 or more times a month:
Morning
Saturday
Afternoon
11
IMPORTANT FACTS CONT.:
BREAKING THE CONTRACT EARLY?
The Housing Assistance Payment (HAP) Contract is for
a 1 year term.
Mutual agreements between the landlord and tenant
to break the lease early will not be honored by the
HCVP.
A change in ownership requires assumption of the
existing contract in the first year of the contract.
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Voucher
THREE-WAY PARTNERSHIP
CMHA
FAMILY
OWNER
13
THREE-WAY PARTNERSHIP
HCVP Responsibilities:
Determine if the family is eligible to participate in
the HCVP.
Determine the rental amount of the unit.
Determine the family’s portion of the rent to owner.
Inspect the subsidized unit annually.
Issue housing assistance payments.
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THREE-WAY PARTNERSHIP CONT.
Owner’s Responsibilities:
Screen families to determine their suitability
as a renter
Maintain the housing unit by making
necessary repairs
Comply with the terms of the Housing
Assistance Payment (HAP) Contract
Enforce the lease
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THREE-WAY PARTNERSHIP CONT.
Family’s Responsibilities:
Abide by the terms of the lease
Pay rent on time and take care of the housing
unit
Provide any utilities and maintain appliances
which are not furnished by the owner
The family is responsible for damages to the
unit or premises beyond normal wear and
tear which results in a breach of the HQS.
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RENT AFFORDABILITY CALCULATOR
Interactive tool to determine
affordability. Available on the CMHA
website, www.cmha.net
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RENT AFFORDABILITY CALCULATOR CONTINUED…
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RENT AFFORDABILITY CALCULATOR CONTINUED…
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RENT AFFORDABILITY CALCULATOR CONTINUED…
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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
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RENT DETERMINATION FACTORS
Rent determination process begins with:
Fair Market Rent
Payment Standards
Utility Allowances
Income
Reasonable Rent
Affordability
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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

Provides broader range of housing opportunities

Low-poverty areas
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FAIR MARKET RENTS
24 CFR § 888.111

Is not reasonable rent

Primary function is to control
costs

Published by bedroom size

Basis of determining the payment standards
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PAYMENT STANDARDS
24 CFR § 982.402
• Based on FMRs
• Established by PHA
• Individual payment standard created for
each bedroom size
• Must fall within 90% - 110% of FMRs
• Represents maximum allowable amount PHA can contribute
towards the rent

Entire amount may not necessarily be contributed.
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APPLICABLE PAYMENT STANDARD
 Payment standard used to determine who contributes what
towards the rent
o
PHA subsidy standards 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
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APPLICABLE PAYMENT STANDARD
Important affordability concept
 Lesser of unit and eligible voucher sizes prevail
Unit size
Voucher size
3
2
$1,026
$ 783
Factor in portions contributed towards the final rent
(HAP) +
PHA portion
(Tenant Rent to Landlord) = (Contract Rent)
Tenant portion
Final Rent
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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 will remain the same
• PHA’s decision to change payment standards based on:
a. Budget
b. Utilization
c. Create housing opportunities
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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
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UTILITY ALLOWANCE SCHEDULE
HUD requirement
Must revise whenever local rates change +/- 10%
Factor in determining reasonable rent, gross rent, and tenant rent to
owner
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
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UTILITY ALLOWANCE SCHEDULE
EFFECTIVE JANUARY 1, 2013
Actual bedrooms in unit:
1 BR
2 BR
3 BR
4 BR
Single-family dwelling
49
60
71
81
2
Townhouse, Duplex/Triplex, Row House
48
57
66
76
3
Multi-unit apartment
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39
41
43
4
Manufactured home
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45
46
47
5
Manufactured home - OIL
108
108
108
108
1
Monthly dollar allowances:
SPACE HEAT (natural gas):
1
3
2
How to read:
Step 1: Unit size
Step 2: Fuel source
Step 3: Structure type
32
UTILITY REIMBURSEMENT (UAP)
Who’s eligible
Based on income
 Usually very low income

Not automatic, must reside in a unit to receive
How determined
 Amount by which the UA exceeds the TTP
Participant’s TTP Minus Utility Allowance

Less any additional monies tenant is required to contribute towards
the rent (Gross Rent Minus Payment Standard)
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CHANGE IN UTILITY RESPONSIBILITY
Requirements for changing:


Landlord must submit formal request
PHA must conduct rent reasonableness test taking
revised utility responsibility into consideration



May result in revised rent,
Will result in new HAP contract
In most cases owner shifts their responsibility over to tenant

More than likely will result in rent decrease due to:




Change in responsibility
Market changes
Utility allowances revisions
Affordability
34
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
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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.
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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
37
REASONABLE RENT (RR)
Sources for comparables
1. Advertisements
• Local newspapers
2. Internet
• Online rental websites
3. Real estate and apartment
associations
4. Apartment complexes
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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.
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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.
40
AFFORDABILITY
Only applies to new contracts
Rent Burden
 Household’s total contribution towards housing costs as
percentage of household’s TTP
 Cannot exceed 40%
 Initial year of contract
Amount gross rent exceeds payment standard
 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%.
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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.
42
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
$13,300
$15,200
$17,100
$19,000
4.
Over-housed (In unit with more bedrooms than eligible for)
5.
Rents high in comparison to tenant income
43
RENT DETERMINATION
Final rent determined by PHA
 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.
44
RENT DETERMINATION
Rents will change for:
 New contracts (Movers)
 Change in utility responsibility
 Requested rent adjustments

Could be less than the current rent based on rent reasonableness test
results
 Required based on HUD’s 5% rule
45
BUILDING RENT
Building serves as the market
Must have:
 Minimum 3 unassisted units paying requested rents
 Similarly sized units
 Within same property/complex
If doesn’t meet the above criteria will have to
conduct regular rent reasonableness test.
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BUILDING RENT
Landlord must provide requested information
 CMHA Building Rent Form
 Rent roll/schedule (proof of rents charged)
 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.”
Same affordability rule applies for initial year of contract
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IN SUMMARY:
Contract rent determined using a combination of
unit and client related data.
1. Rent reasonableness based upon:
 Utilities
 Unit attributes
 Comparables
2. Client data
 Income
 Voucher size
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Partnership
Maintaining positive relationships
with our communities and landlords
has been instrumental in expanding
housing choice opportunities for our
program participants.
Thank you.
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Voucher Size - Cuyahoga Metropolitan Housing Authority