Our goal is to work with owners and agents to ensure that contracts remain current and that there are no lapse in HAP payments. Multi-year Contract Renewals are one way to preserve affordable housing. It is important to provide a reasonable increase to rents to make sure that your property has the resources available to cover expenses, repairs, services and provide a fair return.
The Rent Adjustments and Contract Renewal options for your property are defined by the Section 8 Renewal Policy Guide and the governing documents for your property (e.g., Housing Assistance Payments Contract, Use Agreement, Plan of Action).
If you selected a Contract Renewal option that requires the submission of a Rent Comparable Study (RCS), you need to contract a Certified General Appraiser to prepare the Rent Comparability Study in accordance with Chapter 9 of the Section 8 Renewal Policy Guide (Issued: 06/30/2017 Effective 07/28/2017). Please remember that not all RCS’s are associated with Contract Renewals; however, if your contract term exceeds the 5-year life span of the RCS, review the contract requirements to determine if an RCS is required. If you are unsure if you need a RCS, please email LOMOD at email@example.com for assistance.
- There are two alternatives to submitting an RCS, which are detailed in Sections 9-4 through 9-6. Please review them as they may save you the cost of an RCS.
- Upon receipt of the RCS from your appraiser, please take the time to review it before submitting it to LOMOD. Appendix 9-2-1, Chapter 9 of the Section 8 Renewal Policy Guide is a good tool to get a general idea as to whether your appraiser prepared the RCS in accordance with the requirements. HUD will not accept an RCS that is not in compliance with Chapter 9, of the Section 8 Renewal Policy Guide.
- An Owner’s Cover Letter & Owner’s Checklist are required when submitting a new Rent Comparability Study. It must include all the certifications and statements listed in Appendix 9-2-1.
- In the event that the Owners RCS exceeds the 140% Median Rent threshold, HUD will also hire an independent third-party appraiser to perform a Rent comparability Study. The Account Executive will rely on the information contained in the third-party RCS in determining rents. Therefore, it is important to review your RCS carefully to ensure the results are reflective of market conditions in your area. There is no appeal process when your RCS has been submitted to HUD and HUD’s third-party appraiser determines that the comparable rents are different.
- In connection with a project’s scheduled or requested annual contract renewal or rent adjustment, each owner must submit a Baseline Utility Allowance analysis followed by two consecutive years of Factored Utility Allowance Adjustment Please refer to HUD Notice: H-2015-04 and the Frequently Asked Questions (Revised July 2016) Methodology for Completing a Multifamily Housing Utility Analysis Notice H 2015-04.
- The analysis must include the most recent 12 months of data for each bedroom size category that exists in the project.
- The recommended utility allowance should represent the owner’s best estimate of the average monthly utility cost that an energy conscious resident will incur for the year.
- You do not need to submit your complete analysis to LOMOD (i.e. consumption charts and past bills). Keep in mind that during the management and occupancy review, the utility bills may be viewed and referenced against your recommended utility allowance.
- Utility Allowance Recommendation Form
Prior to submitting your request for a Rent Adjustment or Contract Renewal, be sure to review the submission requirements in the Section 8 Renewal Policy Guide. Incomplete submissions can delay the processing of your request. Below is a list of the most frequently missing documents that delay processing Contract Renewals and Rent Adjustments.
- Debt Service Verification – (Mortgage Payment/Amortization Schedule)
- One-year tenant notification – (signed and on owners letterhead)
- Utility Allowance Analysis – (If applicable)
- Utility Allowance Recommendation form – (If applicable)
- Signature Authority – (in cases where agents sign on behalf of the owner)
- Rent Comparability Study (RCS)-(If applicable)
- Budget Based Cover Letter – (budget based submission)
- Line item justification/invoices – (budget based submissions)