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  1. Budget-based Rent Increase (BBRI)

  2. Section 8 Contract Renewal

  3. Project Rental Assistance Contract (PRAC)

  4. Multifamily Mortgage Risk-Sharing Program (Sec 542(c))

  5. Section 236 (e)(2)Decoupling of Interest Reduction Payments (IRP)

! You do not know what you do not know!

What do I mean? HUD Regulations and outstanding instructions are constantly changing. What you thought you knew may not be the truth. That is why before you commit to submitting a Budget-based Rent Increase or request renewal of your Section 8 Contract you should know what current HUD Policies are.

My Consulting Services will help you in doing your “due diligence” in making a decision on what to include when you prepare Proposals.

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BUDGET-BASED RENT INCREASE

If your HUD Section 8 Contract or HUD Project Rental. Assistance Contract (PRAC) is due for renewal or annual rent adjustment, let us make a deal.

If you are contemplating submitting a Budget-based Rent Increase (BBRI) proposal to HUD, I may be of help. I am presenting you with a proposal; I am agreeable to the following Consulting Services.

After you have prepared your BBRI proposal for submission to HUD, forward me the following documentation

  1. Copy of your recent Audited Financial Statement Audited (AFS) transmitted to HUD. If you do not wish to send me the Audited AFS, send me ONLY the Balance Sheet and HUD Profit and Loss (P&L) Statement. 

  2. Copy of your interim P&L Statement from the beginning of the current FY through Y-T-D. Provide the P&L Statement data on HUD P&L Statement

  3. CLICK HERE AND DOWNLOAD HUD P&L Chart of Accounts Definitions

  4. CLICK HERE  AND DOWNLOAD HUD Profit Loss Statement.

I will prepare an Independent BBRI, based on your documentation

Subsequently, I will contact you to discuss my process, to determine if there are HUD allowable Budget Expenses you may have overlooked.

Finally, if my BBRI is greater than your prepare BBRI, we can discuss possible engagement of my Consulting Services. If your BBRI appears to be greater than my prepared BBRI, there will be NO CHARGE.

Alvin L. Sutherlin
Housing Consultant
Post Office Box 162
Mount Rainier, Maryland 20712-0162
Email: ALVINL.SUTHERLIN@VERIZON.NET
Voice Number: 301-277-3465
 

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New HUD Methodology for Completing a M/F Housing UA

Tenant Utility Allowance

HUD has established a new policy for Owners/Management Agents submissions of Annual Tenant Utility Surveys.  If you need assistance in establishing Utility Baseline for your Project, please contact me.

Revised Section 8 Renewal Policy Guidebook (Guide)

 HUD has published a complete revision to the Section 8 Renewal Policy Guidebook (Guide) effective November 5, 2015. The revised guidance applies to Contract renewal and amend rent packages received by the Contract Administrators/HUD (or post-marked) November 5, 2015 or later.

The Six Section 8 Contract Renewal Options Titles either are the same or renamed.

Most Options published in the new Guide have additional requirements or restrictions.

New Options

  1. Option One, Mark-Up-To-Market

  2. Option Two, Contract Renewals For Other Projects with Current Rents At or Below Comparable Market Rents

  3. Option Three, Referral to Office of Recapitalization (Recap)

  4. Option Four, Renewal of Projects Exempt from or not Eligible for Debt-Restructuring

  5. Option Five, Renewal of Portfolio Reengineering Demonstration or Preservation Projects

  6. Option Six, Opt-Outs

If you want a copy of HUD published revised Section 8 Renewal Policy Guide Book click on the below link to order the Revised Section 8 Renewal Policy Guide Book.

Check By Mail

History of Section 8 Renewal Policy Guidebook

This is my introduction as a Housing Consultant.  I retired in 1989 from the Department of Housing and Urban Development, as a Senior Asset Manager in the Washington , DC Multifamily Asset Management Branch.  Since my retirement, I have provided consulting services to owners and management agents of HUD multifamily subsidized communities throughout the United States .

 

If your original Section 8 Contract was effective in the 1980s and 1990s and is approximately a 20year Contract; your Contract Renewal Proposal is due for submission to Contract Administrator 120 days prior to expiration of the Contract and must be renewed pursuant to guidelines in revised HUD Section 8 Renewal Policy Guide (Guide). The Guide reflects major changes to amendment to the Housing Act; Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA), Title V of the HUD Fiscal Year 1998 Appropriations Act, Pub. L. 105-65, enacted on October 27, 1997. MAHRA established new policies for the renewal of Section 8 project-based contracts based on market rents instead of the Fair Market Rent (FMR) standard.

 

A Rent Comparability Study (RCS) is required to be submitted with requests for renewal under   Option 1,  Option 2, Option 3 and maybe Option 4.

 

The Owner must submit the RCS to HUD (or the Section 8 Contract Administrator (CA) if there is one) no later than 120 days before the expiration of the Section 8 contract. Early submissions are allowed. Owners should not submit their requests no more than 180 days before the Section 8 Contract expires. Owners should submit the RCS along with the other information required in this GUIDE. If a RCS is submitted, HUD recommends the renewal request be submitted 180 days before the contract expires, because HUD will commission an Independent RCS when processing the request.

 

Keep in mind; under the original unexpired Contract your annual rents are adjusted through application of HUD published Annual Adjustment Factors (AAF). However, under the current revised Guide, request for Contract Renewals (and annual rent adjustments through the term of your renewed Contract) rents will be adjusted through Budget-based rent increase (BBRI) requests or application of HUD published Operating Cost Adjustment Factors (OCAF).

 

In particular, Budget-Based Rent Increase (BBRI) requests must be prepared pursuant to Chapter 7 of HUD Servicing Handbook, and requests must be submitted on HUD approved Budget Worksheet, accompanied by required HUD forms. HUD BBRI formula consists of 2-components; a HUD Budget Worksheet and HUD Rent Computation Worksheet. To arrive at Owners’ BBRI Annual Gross Rent Potential, the HUD formula considers projected budget expense line items, other expense adjustments and Owners’ Annual Return on Initial Equity.

 

Under HUD Section 8 Renewal Policy Guide there are several Options.

Owner Option One, Mark-Up-To-Market

This is an Option for renewing a contract under the Mark-Up-To- Market option.  It identifies who is eligible for renewal under this option and how to process the renewal request.  Owners must meet certain eligibility criteria which are outlined in the HUD Section 8 Renewal Policy Guide.  This Option also provides information on how to calculate owner distributions and future rent adjustments.

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Owner Option Two, Other Contract Renewals with Current Rents At or Below Comparable Market Rents

This Option provides instructions for renewing a contract in cases where a contract’s current rents are at or below comparable market rents but  the contract is not being renewed using the  mark-up-to-market option.  It outlines who is eligible to renew under this option and identifies documentation to be submitted by the Owner to HUD/Contract Administrators for review.  It also provides processing instructions and guidance for future rent adjustments. 

Owner Option Three, Referral to the Office of Affordable Housing Preservation (OAHP (formally known as the Office of Multifamily Housing Assistance Restructuring (OMHAR))

This Option discusses the procedures by which a project with rents above comparable market rents is referred to the Office of OAHP for processing and renewal.  The Option identifies items an Owner must submit with their renewal request and it outlines what steps will be taken by OAHP if a restructuring agreement is not reached between the owner and OAHP.  

Owner Option Four, Renewal of Projects Exempted From OAHP (formally known as OMHAR)

This Option identifies exception projects.  Exception projects are ineligible for OAHP and as such, they are exempt from having to conduct rent comparability studies and lower rents to comparable market rents.  This Option outlines the Owners renewal submission requirements and provides instructions for initial and subsequent renewals. 

Option Five, Renewal of Portfolio Reengineering Demonstration or Preservation Projects

This Option details how to renew a contract that has been through the Demonstration program.  It provides instructions for renewal in cases where the project had its rents reduced and/or had its mortgage restructured and it provides instructions for processing a renewal in instances where the project failed to have a rent reduction or debt restructuring. It also provides guidance for renewing Preservation contracts according to the approved Plan of Action (POA).

Option Six, Opt-Outs

This Option provides instructions for processing Owner opt-outs.  Opt-outs are expiring Section 8 project-based contracts whose owners elect not to renew the contract.  This Option identifies owners responsibilities to the tenants and provides processing instructions.  

Rent Comparability Studies (RCS)

This Option provides instructions for conducting and reviewing rent comparability studies.

Residual Receipts

This Option identifies the steps that must be taken, when appropriate, to assure that residual receipts are returned to HUD. 

Resident Issues

This Option outlines all of the steps that must be followed to assure that tenants are protected during the renewal process.  This Option defines housing conversion actions and identifies notification requirements an owner must meet.  It also describes the differences between a regular voucher and an enhanced voucher.

Physical Condition of the Property

This Option discusses how a project’s physical condition impacts the contract renewal process.

HUD's Refusal to Renew/Section 8 Contract Owner’s Dispute and Appeal of Rejection

This Option outlines the circumstances under which HUD may refuse to renew an expiring Section 8 contract, and it provides Owners with an appeal process to follow in cases where their request to renew is rejected. 

RHS/515 Projects

This Option outlines how to renew a Farmers Home 515 project.

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Nonprofit Rent Increases

This Option outlines the procedure for providing budget-based rent increases to nonprofit owners.  The Option identifies eligibility requirements for marking up to budget and provides instructions for future rent adjustments.  

Other Issues

This Option discusses miscellaneous issues that have not been included in previous Options.  This Option includes rent increases for non-Section 8 rents, and HUD REMS reporting requirements.  It also addresses the effect of refinancing FHA insured properties on Mark-to-Market eligibility and how any new debt should be addressed in a projects operating budget.

Further, if Tenants receive Utility Allowances (UA), HUD published new instructions requiring owners to request annual UA adjustments.

 

If you need my assistance in preparing a Proposal for Contract renewal, please contact me.

 

Alvin L. Sutherlin

Housing Consultant

Post Office Box 162

Mount Rainier, MD 20712-0162

 

Office Address: 4104-29th Street

Mount Rainier, MD 20712-1820 

 

301-277-3465

 

ALVINL.SUTHERLIN@VERIZON.NET

 

http://hud-consultant.com

 

References:

http://hud-consultant.com/References.html

 

Notice H-2012-14, SUBJECT:   Use of “New Regulation” Section 8 Housing Assistance Payments (HAP) Contracts Residual Receipts to Offset Project-Based Section 8 Housing Assistance Payments

Browse my web site and review the Services and Products offered to clients. Services include preparing proposals, researching HUD directives, regulations for multifamily subsidized programs and more... If you do not have resources to satisfy your needs, contact me I may have a solution.

My Services and Products will help to bridge the gap between HUD Field Offices/Contract Administrators and Project Owners/Management Agents.

HUD Mailing List

HUD mailing list is an easy way to stay informed about current HUD Policies and Procedures. Go to the below LINK to access the HUD Website to ask questions and share ideas.

Property owners, management companies, sponsors, and developers can also subscribe to be put on a Mailing List to be informed about recent HUD Policies and Procedures on specific issues. Go to the below Link to subscribe for your State and Topic of Interest.

Link to HUD Mailing List

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Link to Nixon Peabody, Affordable Housing Law Alerts

 

ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT SECTION 8 HOUSING ASSISTANCE PAYMENTS CONTRACT (UNINSURED PROJECT)

An Assignment or Assumption of Housing Assistance Payments (HAP) Contract is required when the property being sold is subject to a HAP contract, with or without mortgage insurance. The HAP rents are set by a variety of factors, so it's important to understand how the rents may change from year to year before purchasing a property.

Starting in June of 2004, the Department will no longer consent to the assignment of the Section 8 Housing Assistance Payments (HAP) contract unless there is a provision for requiring both physical condition standards and annual financial statement reporting. This applies to all Section 8 HAP contracts, regardless of whether there is a HUD-insured mortgage.

Transfer of Physical Assets (Full TPA)
Change in Property Ownership

A full Transfer of Physical Assets (TPA) is a property sales transaction involving the assumption of a HUD-insured loan. Transactions which do not involve a complete change in ownership may be eligible for a Modified TPA. Transactions involving Section 8, HAP Contracts and/or Preservation or other use agreements may have additional considerations (Click here for additional information).  

If you need assistance in preparing a proposal, contact me at 301-277-3465,or by email alvinl.sutherlin@verizon.net.

On-site Management & Occupancy Reviews

Contract Administrators are conducting On-site Management & Occupancy Reviews annually.  As you know, most of you have not seen a visit from your HUD Project Manager in years, all that has changed.  U.S. Department of Housing and Urban Development (HUD) has contracted with Contract Administrators (CA) to administer Section 8 Contracts. CA are required to fulfill their contract obligations with HUD, to annually conduct On-site Management & Occupancy Reviews on Section 8 assisted properties.

If you need assistance in preparing for or responding to an On-site Management & Occupancy Review, contact me.  I have draft copies of documents that may be cited as lacking in Reviews. Example of some of the documents, such as;

  • Drug-Free Housing Policy

  • Maintenance & Occupancy Procedural Manuals

  • Tenant Selection Plan

  • Verification Forms, and more

 

Electronic Previous Participation Certification, form HUD-2530

HUD requires all principals in owning entities for HUD multifamily mortgage and project based subsidy programs to submit electronic Previous Participation Certificate (for HUD-2530) via HUD's secure web server as condition prerequisite to new or revised participation.

If you need assistance in filing your form HUD-2530 online to HUD, contact me at 301-277-3465, or by email at

alvinl.sutherlin@verizon.net

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