Introduction
All Section 8 participant families have been transitioned to the Housing Choice Voucher Program on or before October 1, 2001. Rent calculation methods for the Housing Choice Voucher Program are described at 24 CFR 982.505. The rent calculation formula is specific and is not subject to interpretation.
The OHA will determine rent reasonableness in accordance with 24 CFR 982.507(a). It is the OHA’s responsibility to ensure that the rents charged by owners are reasonable based upon unassisted comparables in the rental market, using the criteria specified in 24 CFR 982.507(a).
Rent to Owner in Housing Choice Voucher Program
The rent to owner is limited only by rent reasonableness and tenant affordability. The OHA must demonstrate that the rent to owner is reasonable in comparison to rent for other comparable unassisted units.
The only other limitation on rent to owner is the maximum rent standard at initial occupancy (24 CFR 982.508). At the time a family initially receives tenant-based assistance for occupancy of a dwelling unit, whether it is a new admission or a move to a different unit, if the gross rent for the unit exceeds the applicable payment standard for the family, the family share may not exceed 40 percent of the family’s monthly adjusted income.
During the initial term of the lease, the owner may not increase the rent to the tenant.
Making Payments to Owners
Once the HAP Contract is executed, the OHA begins processing payments to the landlord. A HAP Register will be used as a basis for monitoring the accuracy and timeliness of payments. Changes are made automatically to the HAP Register for the following month. Checks are disbursed by the accounting department to the owner each month. A direct deposit goes into the owner’s account on file by the fifth working day of the month. A check detail, listing tenant names, and amounts will be mailed to the owner.
Excess Payments
The total of rent paid by the tenant plus the OHA housing assistance payment to the owner may not be more than the rent to owner. The owner must immediately return any excess payment to the OHA.
Owners who do not return excess payments will be subject to penalties as outlined in the “Program Integrity” chapter 14 of the Administrative Plan. The Compliance Dept. establishes policies and procedures to deter and detect fraud and abuse by Tenants, Landlords, and Employees.
Late Payments to Owners
It is local business practice in the City of Omaha for property managers and owners to charge tenants a reasonable late fee for rents not received by the owner or property manager by the due date, not withstanding any grace period which is typically 5 days past the first of the month.
Therefore, in keeping with generally accepted practices in the local housing market, the OHA must make housing payments to the owner promptly and in accordance with the HAP contract.
Rent Reasonableness Standards
The OHA will not approve a lease until the OHA determines that the initial rent to owner is a reasonable rent. The OHA must re-determine the reasonable rent before any increase in the rent to owner, and if there is a five percent decrease in the published FMR in effect 60 days before the contract anniversary (for the unit size rented by the family) as compared with the FMR in effect one year before the contract anniversary.
The OHA also will re-determine rent reasonableness when an owner requests an increase in the rent to owner for a Voucher.
The OHA must re-determine rent reasonableness if directed by HUD and based on a need identified by the OHA auditing system, the OHA may elect to re-determine rent reasonableness 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 OHA
For the Voucher Programs, the OHA will determine and document on a case-by-case basis that the approved rent is reasonable in comparison to rent for other comparable unassisted units in the market.
The owner will be advised that by accepting each monthly housing assistance payment s/he will be certifying that the rent to owner is not more than rent charged by the owner for comparable unassisted units in the premises.
If requested, the owner must give the OHA information on rents charged by the owner for other units in the premises or elsewhere. The OHA will only request information on the owner units elsewhere if the OHA has cause to demonstrate that the owner has a tendency to charge higher rents to Program participants or if needed for rent reasonableness comparables.
The data for other unassisted units will be gathered from newspapers, Realtors, professional associations, inquiries of owners, market surveys, and other available sources.
The market areas for rent reasonableness are census tracts within the OHA jurisdiction. Subject units within a defined housing market area will be compared to similar units within the same area.
The following items will be used for rent reasonableness documentation:
- Size (number of Bedrooms/square footage)
- Location
- Quality
- Amenities (bathrooms, dishwasher, air conditioning, etc.
- Housing Services
- Age of unit
- Unit Type
- Utilities
- Maintenance
The OHA maintains a computer, which includes data on unassisted units for use by staff in making rent reasonableness determinations. The data is updated on an ongoing basis and purged when it is more than 18 months old.
At least three comparable units will be used for each rent determination, one of which must be from the first category above if possible. All comparables must be based on the rent that the unit would command if leased in the current market. Leased in the current market means that the unit has been leased within the last 365 days.
When there is a discrepancy in bedroom size, comparing the Request for Tenancy Approval to the County Assessor’s Database, management may choose to inspect the property to assess unit size and determine rent reasonableness.
Payment Standards for the Voucher Program
The Payment Standard is used to calculate the housing assistance payment for a family. The Payment Standard is set by the OHA between 90 percent and 110 percent of the FMR/exception rent. The OHA reviews the appropriateness of the Payment Standard annually when the FMR is published. In determining whether a change is needed, the OHA will ensure that the Payment Standard is within the range of 90 percent to 110 percent of the new FMR.
Adjustments to Payment Standards
Payment Standards may be adjusted to increase Housing Assistance Payments in order to keep families rents affordable. The OHA will not raise the Payment Standards so high that the number of families that can be assisted under available funding is substantially reduced. Nor will the OHA raise Standards if the need is solely to make “high end” units available to Voucher holders.
The OHA will review the Payment Standard annually to determine whether an adjustment should be made for some or all unit sizes. The Payment Standard will be reviewed according to HUD requirements and this policy and if an increase is warranted, the payment standard will be adjusted within 90% to 110% of the current Fair Market Rent.
In a volatile market, it will be at the OHA’s discretion whether to make the change immediately or wait until the time of the annual review of the OHA’s Payment Standard.
The OHA may use some or all of the measures below in making its determination whether an adjustment should be made to the Payment Standards.
Assisted Families Rent Burdens
The OHA will review reports showing the percent of income used for rent by Voucher families to determine the extent to which the rent burden is more than 40% of income.
Availability of Suitable Vacant Units Below the Payment Standard
The OHA will review its rent reasonableness database and vacancy rate data to determine whether there is an ample supply of vacant units below the Payment Standard in areas without minority concentration and/or poverty-impacted areas.
Quality of Units Selected
The OHA will review the quality of units selected by participant families before determining any change to the Payment Standard to ensure that Payment Standard increases are only made when needed to reach the mid-range of the market.
Rent to Owner Increases
The OHA may review a sample of the units to determine how often owners are increasing rents after the first year of the lease and the average percent of increase by bedroom size. The sample will be divided into units with and without the highest cost utility included.
A comparison will then be made to the applicable annual adjustment factor to determine whether owner increases are excessive in relation to the published annual adjustment factor.
Rent Reasonableness Data Base/Average Contract Rents
The OHA will compare the Payment Standards to average rents in its Rent Reasonableness Database and to the average Contract Rents by unit size. The Payment Standards should be on a par (equivalent) with these amounts.
Lowering of the Payment Standard
Lowering of the FMR may require an adjustment of the Payment Standard. Additionally, statistical analysis may reveal that the Payment Standard should be lowered. In any case, the Payment Standard will not be set below 90 percent of the FMR without authorization from HUD.
Financial Feasibility
Before increasing the Payment Standard, the OHA may review the budget and the project reserve, to determine the impact projected subsidy increases would have on funding available for the program and number of families served.
For this purpose, the OHA will compare the number of families who could be served under a higher Payment Standard with the number assisted under current Payment Standards.
File Documentation
A file will be retained by the OHA for at least three years to document the analysis and findings to justify whether or not the Payment Standard was changed.
Exception Payment Standards
If the dwelling unit is located in an exception area, the OHA must use the appropriate payment standard amount established by the OHA for the exception area in accordance with regulation at 24 CFR 982.503(c).
HUD has authorized the OHA to establish a payment standard [between 90% and 110%] for [all unit sizes] in[designated area/OHA jurisdiction]. This is referred to by HUD as the upper range.