Updates to the Section 8
Renewal Policy and New Utility
Allowance Methodology
Tammy Fotinos, Contracts Manager
Lonnie Winton, Contracts Manager
New OCAFs
OCAF = Operating Cost Adjustment
Factor
 Applies to rent adjustments that will be
effective February 11, 2016 or later.
 Arkansas = 1.024 (last year was
1.019)
 Texas = 1.028 (last year was 1.024)

Updates to the Section 8 Renewal Policy
Issued August 5, 2015
 Effective with submissions received or
post-marked after November 5, 2015
 Owners and agents should review the
policy before submitting their renewal
request

What HASN’T changed
Six Renewal Options
 Most rent adjustments are OCAF or
budget-based
 Must submit at least 120 days before
expiration or anniversary date

What’s New
Pre-MAHRA contracts (still use AAF rent
adjustment method) can terminate and
renew.
 All owners must have DUNS number.
 HUD will no longer accept USDA/RD
approval of Utility Allowance for 515s

What’s New - RCS
New RCS required for ALL contract
renewal requests for more than 5 year
terms.
 “140% rule” – Compare median rent
from RCS to HUD’s figure “140% of the
‘Gross Rent By Zip Code Tabulation Area’
as published by the US Bureau of Census”

To find median:
143/2 = 71.5
Median = 72
X
Compare 1 BR
RCS rent to rent
on HUD
spreadsheet.
140% rent = $998
RCS rent = $562
What does that mean?
RCS 140% Test
 RCS rents less than 140%, rents will be
set at owner’s RCS rents
 RCS rents greater than 140%, HUD will
do a 3rd party RCS.
 Rents will be set at lower of:
◦ Owner’s RCS
◦ 105% of HUD’s 3rd party RCS
Annual Rent Potential Comparison
 Owner RCS ARP = $110,000
 HUD RCS ARP = $100,00
 Final RCS Rents = $105,000
Budget-Based Rent Increases
No more 2% contingency fee for 202s
 Vacancy allowed for all BBRIs

◦
◦
◦
◦
100% Section 8 (more than 50 units) – 3%
50 or fewer total units – 5%
20% or less of total units are assisted – 7%
For a refi – use lender’s requirement
Some tax credit fees are allowed
 Owner can forego rent increase – called a
“zero budget-based adjustment.”

Tenant Notices
New language in Notice of Intent to
Renew
 New requirements to consider LEP and
communications with persons with
disabilities

Chapter 15 - Preservation
 HUD is encouraging long term
preservation.
◦ 20-year contracts
◦ Refinancing and Rehabilitation as needed
 Chapter 15 allows for the promise of
post-rehab rents to assist with securing
financing.
◦ Allows rents to be marked up to the RCS
rents
◦ May allow for increased owner distributions.
NEW UTILITY
ALLOWANCE
METHODOLOGY
HUD Notice H-2015-04
Issued June 22, 2015
 Applies to all rent adjustments effective
after 12/22/15.
 Two types of analyses

◦ Year One – Baseline Analysis
◦ Year Two – Factor-Based Analysis
Baseline Analysis
Sample Size (per unit type)
Baseline Analysis
Exclusions from sample size
 Unit/resident receiving increased UA as
reasonable accommodation
 Unit with less than 10 months of
occupancy
 Unit/resident receiving flat utility rate as
part of low-income rate assistance utility
program
◦ This does NOT include LITE UP Texas or
other low income assistance credit.
BASELINE ANALYSIS
Baseline Analysis
Calculations
 Calculate the average usage. Do not
subtract out any discounts, subsidies or
fees.
 Use HUD’s spreadsheet or create your
own. Make sure you note the reason for
excluding any units from the sample.
Baseline Analysis

What to submit
◦ Calculation Spreadsheet
◦ Owner Certifications
◦ Utility Data
 Only exception is when the data is in the form of
monthly bills.
FACTOR-BASED
ANALYSIS
Factor-Based Analysis
No utility data!!!
 Use HUD-published factor to calculate
UA
 SHCC will create owner certification and
post on website.
 Compare to property’s utility bills. If
there is a significant disparity, owner must
do Baseline Analysis

Factor-Based Analysis
Current Utility Allowance Factor
(UAF)
State
Oil
Arkansas .994
Gas
.887
Water
Sewer
Electric Trash
1.023
1.033
Texas
.994
.988
1.036
1.033
US
.994
.965
1.020
1.033
UA DECREASES
UA Decreases
 Resident notification and comment
period requirements have not changed.
 Changes over 15% and $10 or more must
be phased in.
◦ Year One: Owner will implement 15%
decrease
◦ Year Two: Owner will implement
remainder of decrease with UAF.
UA Decreases
 Current UA is $120
 New UA is calculated at $96 (20%
decrease)
 O/A will submit an adjustment to $102
(15% decrease from $120) in the first
year
 Owner will submit an adjustment to $96
(multiplied by the UAF) in the second
year
UA Decrease Implementation
 Example: August 1 anniversary date
◦ 4/1 – You submit UA analysis to SHCC with
30-day tenant comment notice
◦ 5/1 – Comment period ends.You send
certification to SHCC.
◦ 5/25 – SHCC finalized processing. Sends you
rent schedules.
◦ 7/1 – You send 30-day notices to residents
◦ 8/1 – You implement UA decrease on time.
UA Decrease Implementation
 Example: August 1 anniversary date
◦ 4/1 – UA is due. Tammy doesn’t have enough samples.
◦ 4/22 – Tammy submits UA analysis to SHCC but forgets tenant
notice.
◦ 4/27 – SHCC reminds Tammy to send notice of 30-day comment
period.
◦ 5/11 – SHCC follows up with Tammy on notice.
◦ 5/15 – Tammy sends notice.
◦ 6/14 – Comment period ends. SHCC follow up with Tammy.
◦ 6/24 – Tammy sends certification to SHCC.
◦ 7/20 – SHCC finalized processing. Sends rent schedules.
◦ 8/2 – Tammy sends 30-day notices to residents.
◦ 10/1 – EARLIEST Tammy can implement UA decrease.
TAMMY’S PROPERTY HAS TO COVER TWO
MONTHS OF THE UA DECREASE.
NEW
CONSTRUCTION/
SUBSTANTIAL REHAB
New Construction/Rehab
 Owners may use UA completed at
underwriting through an energy
conservation model
 See Section VII of Notice for details.
QUESTIONS?