RENT ADJUSTMENTS

Utility Allowance Analysis

OVERVIEW

For projects with Utility Allowance, HUD requires that a Utility Allowance Baseline Analysis be submitted every three years with all rent adjustment types.   A project can accept a factor-based adjustment between baselines.

 

The acceptable format for the Utility Allowance Analysis is a full 12-month survey of all applicable units at the property requesting the rent adjustment.  The owner (or owner’s agent) will present a monthly average for each unit type with the survey data to support the findings.  If the owner’s current Utility Allowance features different figures for the same unit type (for example: 1BR inside and 1BR outside), then each year’s survey must follow that same format.  Should the survey indicate a change, an increase or decrease regardless of percentage difference, the cover letter to the analysis should recommend that change to the current Utility Allowance figures.

 

In addition, the owner is required to address the following in their cover letter:

 

  • Identify the type of utilities covered by the Utility Allowance (e.g., gas for heating)

  • State whether any utility rate increases or decreases were implemented during the past 12 months or are expected to be implemented during the next 12 months as well as the amount of those increases or decreases,  and

  • State how any energy conservation initiatives undertaken by the project have or will impact consumption.

 

The utility allowance submitted will be considered a baseline Utility Allowance.  The subsequent two years the property has the option to use a Utility Allowance Factor rather than complete the full UA analysis.

 

 

HUD GUIDANCE

HUD Handbook 4350.1, Chapter 7, Section 7-24

HUD Notice 2015-04 - Methodology for Completing a Multifamily Housing Utility Analysis

          Frequently Asked Questions for New Methodology

          A – Sample Utility Analysis Submission Workbook

          B – Sample Release of Tenant Utility Information

 

SUBMISSION REQUIREMENTS

Cover Letter Certifying to each Item in Section 7-24 or UA Summary Form

Notice to Tenants (for UA decreases)

Appendix 2 - Owner’s Certification as to Compliance with Tenant Comment Procedure

Back-up Documentation from Utility Companies