0. Housing Choice Voucher Program Cuyahoga Metropolitan Housing Authority
Rent Determination
Independence Library - Cuyahoga County Library
October 18, 2013

1. 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

2. Voucher Term
Voucher Term
Valid for a period of:
New Admissions-60 days from the date the voucher was issued
Movers-120 days from the date of issuance
Extensions may be granted by the Housing Authority for reasonable accommodations purposes

3. 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

4. Briefing Packet
The Briefing Packet is an informational packet of forms that the family uses to request the HCVP’s approval for assisted tenancy

5. 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

6. 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

7. RFTA

8. 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

9. 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

10. You MUST submit a signed lease before the contract can go into effect
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

11. 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

12. BREAKING THE CONTRACT EARLY?
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.

13. Three-Way Partnership
Voucher
CMHA
FAMILY
HAP Contract
Lease
OWNER

14. 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.

15. 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

16. 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.

17. Rent Affordability Calculator
Interactive tool to determine affordability. Available on the CMHA website,

18. Rent Affordability Calculator continued…

19. Rent Affordability Calculator continued…

20. Rent Affordability Calculator continued…

21. Rent Determination Ava Decembly

22. Overview
Before the Public Housing Authority (PHA) establishes a Housing Assistance Payment (HAP) contract with a landlord, the following must occur:
Unit must pass an inspection;
Rent reasonableness test must be conducted; and
Final rent has to be affordable

23. Rent Determination Factors
Rent determination process begins with:
Fair Market Rent
Payment Standards
Utility Allowances
Income
Reasonable Rent
Affordability

24. Fair Market Rents 24 CFR §
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

25. Fair Market Rents 24 CFR §
Is not reasonable rent
Primary function is to control costs
Published by bedroom size
Basis of determining the payment standards

26. 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.

27. Applicable Payment Standard
Payment standard used to determine who contributes what towards the rent
PHA subsidy standards determine eligible voucher size
Once unit selected, applicable payment standard comes into play
Compare unit size to eligible voucher size
Lower of the two determines applicable payment standard used in the rent calculation

28. Applicable Payment Standard
Important affordability concept
Lesser of unit and eligible voucher sizes prevail
Unit size 3 $1,026
Voucher size 2
$ 783
Factor in portions contributed towards the final rent
(HAP) (Tenant Rent to Landlord) = (Contract Rent)
PHA portion Tenant portion Final Rent

29. FMR’s and Payment StandardsBR
Size
FY 2013
FMR PS
PS ÷
FY 2014
FY2014 1 2 3 4
$ 623
$ 790
$1,058
$1,093
$ 673
$ 783
$1,026
$1,155
108.0%
99.1%
97.0%
105.7%
$ 632
$ 801
$1,073
$1,108
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:
Budget
Utilization
Create housing opportunities

30. 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

31. 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

32. Utility Allowance Schedule Effective January 1, 2013
Actual bedrooms in unit:
1 BR
2 BR
3 BR
4 BR
Monthly dollar allowances:
SPACE HEAT (natural gas): 1
Single-family dwelling 49 60 71 81 2
Townhouse, Duplex/Triplex, Row House 48 57 66 76 3
Multi-unit apartment 36 39 41 43 4
Manufactured home 44 45 46 47 5
Manufactured home - OIL
108 1 2 3
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
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)

34. 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

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
Very low income may trigger $50 minimum rent or utility reimbursement
Income
Change
Client’s
Portion
PHA’s
Increase
Decrease

36. Initial Family Contribution
10% of Gross Annual Income
30% of Annual Adjusted Income
Minimum Rent
Greater of the 3
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
The $230 is the greater of the three and therefore becomes the initial family contribution.

37. Reasonable Rent (RR) Units rated based on: Comparable unassisted rents
Unit attributes
Structure type
Unit size
Condition
Location
Utility responsibility

38. Sources for comparables
Reasonable Rent (RR)
Sources for comparables
Advertisements
Local newspapers
Internet
Online rental websites
Real estate and apartment associations
Apartment complexes

39. Reasonable Rent 24 CFR §
PHA must determine if rent is reasonable before lease approval
Must be re-determined:
At HUD’s direction
Prior to rent adjustments
If 5% decrease in FMRs in effect 60 days before contract anniversary
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. Rent to Owner PLUS Tenant-paid utilities
Gross Rent
Rent to Owner PLUS Tenant-paid utilities
Example:
Rent to Owner $1,000
Tenant-paid Utilities
Gross Rent = $ 1,200
Factor in determining if tenant must contribute additional dollars towards the contract rent.

41. 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%.

42. Affordability Example
Gross rent [$1,000 (rent) + $200 (UA)] $1,200
Payment Standard [3BR] $1,026
(Additional Tenant Payment)
[(($9,200 (adjusted income)* 0.30) + ($174 * 12))] =
($2, $2,088) = $4,848
$4,848 ÷ $9,200 = 52.7%
Rent Burden = 53%
$174
TTP
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
Tenant- vs. Landlord-paid utilities
Payment standards
Applicable
Income
Low-income rental assistance program
84% of the new admissions to program at extremely low income level.
Over-housed (In unit with more bedrooms than eligible for)
Rents high in comparison to tenant income
HUD Income Limits
BR Size 1 2 3 4
Extremely Low Income
$13,300
$15,200
$17,100
$19,000

44. Housing Assistance Payment (HAP) Tenant Rent to Owner (TR)
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.

45. 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

46. 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.

47. Same affordability rule applies for initial year of contract
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

48. In summary:
Contract rent determined using a combination of unit and client related data.
Rent reasonableness based upon:
Utilities
Unit attributes
Comparables
Client data
Income
Voucher size

49. Maintaining positive relationships with our communities and landlords
Partnership
Maintaining positive relationships
with our communities and landlords
has been instrumental in expanding
housing choice opportunities for our
program participants.
Thank you.