Section 8 Rent Increase

Section 8 AAF Rent Increases and Special Adjustment Factors

HUD and USDA Rural Housing Services Loans
Rental and Carrying Charge Increases

Section 8 AAF Rent Increase (Projects with original contracts) - If your contract was effective during the 1980s and early 1990s and have not expired, and your contract rents are increased through the application of the Annual Adjustment Factors (AAF), I can assist you in preparing a request for a rent increase.

If your current Section 8 rents exceed the published Fair Market Rents (FMR), you must submit a Rent Comparability Study with your request for a rent increase (Certain projects are exempt from this requirement).

Your request must be submitted at least 60-days prior to the anniversary date of the contract. If HUD or the Contract Administrator receives your request for a rent increase after the contract anniversary date, your request will be denied.

Section 8ection 8
Contract Renewals & Annual Rent Adjustments
(Projects with renewed contracts - FY 1999 and beyond)

I prepare Section 8 annual rent adjustments and Section 8 Contract renewals, based on the new Section 8 Contract Renewal Policy Guidance.

Depending upon the type of project funding, Section of the Housing Act and construction, HUD Rules differ as to the approach to granting an annual rent adjustment, or contract renewal. Contact me and I can work with you to get the maximum increase possible.

CALCULATING SPECIAL RENT INCREASES FOR AAF RENTS

There are certain types of special rent increases that are allowed by law for
rents calculated using the Annual Adjustment Factor (AAF) method.

Types of Special Rent Increases.

The owner for property taxes, utilities and hazard insurance may request a special adjustment. For Property Disposition properties sold on a "cash as is" basis, certain expenses are allowable when calculating a special adjustment.

The Consideration of Special Adjustments for Property Taxes, Insurance and Utilities.

Prior to the consideration of special adjustments the Contract Administrator should evaluate the owners request and make sure the owner has taken the required steps prior
to requesting a special rent increase. Increases in these items which went into effect prior to the last processed annual adjustment should not be considered for a special adjustment. Only increases in those items that will be implemented soon (e.g. within 90 days) should be processed.

OPERATING COST ADJUSTMENT FACTORS (OCAF)

Each year the Department of Housing and Urban Development (HUD) develop and publish an OCAF for metropolitan areas a Notice of Operating Cost Adjustment Factors (OCAF) for Low Income Housing Preservation and Resident Homeownership (LIHPRHA) projects assisted with Section 8 Rental Assistance payments.

The Factors are used in the OCAF Worksheet when an Owner/Agent requests an annual Section 8 rent adjustment, which must be submitted to HUD/Contract Administrator 120 days before the anniversary date of the Section 8 Contract.

Budget-Based Rent Increases - Rentals
Carrying Charge Increases - Cooperatives

HUD Directives provides procedures for processing budgeted carrying charge and rent increases in certain HUD projects.

All project owners whose mortgages are insured under Section 231, 232, 202 projects (who do not use the Section 8 Annual Adjustment Factor (AAF)), 213, 236 (including cooperatives), Rent Supplement, 221(d)(3) Market Rate and 221(d)(3) Below Market Interest Rate (BMIR) rental and cooperative projects, 207's and 231's both regulated and controlled by alternative rent mechanism; Section 220 and 221(d)(4)'s that are regulated; and all of the above that are not automatically preempted by HUD and request exemption from local rent control, are required to use the Budget Approach when requesting HUD to increase the Maximum Allowable Rent Potential.

I have developed a computerized version of the budgeted carrying charge/rent increase process. Our prepared proposals have been accepted and approved by Contract Administrators and HUD Field Offices in several states. If you provide me with the necessary information, I will prepare complete budget proposals for rentals and cooperatives projects. Proposals are prepared on your letterhead, and packaged for submission to your local HUD Field Office at a reasonable cost. You only have to sign it.

Preemption of Local Rent Control

Unsubsidized projects, that are subject to State or local Rent Control are preempted under HUD regulations, when HUD determines that the delay, or decision of the local rent control Board, or other authority regulating rents, pursuant to State or local law jeopardizes the Department’s economic interest.

All requests for HUD preemption of local Boards’ rent control must be processed in specific procedural steps. I can offer guidance to walk you through the steps, and prepare the formal request to HUD.

LIHPRHA Project Owners Annual Rent Adjustments

I also prepare annual rent adjustments for Owners of LIHPRHA projects. Section 8 Contracts executed for LIHPRHA projects have special provisions they must be comply with, in order for Contract Administrators to grant annual rent adjustments. We are familiar with this procedure and can assist you in preparing an annual rent adjustment.

If you need assistance in preparing a Budget-based rent increase, Section 8 AAF annual adjustment or a Special Rent Increase Adjustment request for submission to your Contract Administrator, contact me at alvinl.sutherlin@verizon.net.

Note: Outstanding HUD policy says that new debt service is to be used in the OCAF Worksheet computations and that original debt service is to be used in budget based rent calculations.

Disclaimer: There are no guarantees that HUD will approve my prepared proposals. The services I provide are based upon current HUD Directives and Regulations. I will prepare rent increase proposals based on data provided by clients. All proposals are prepared according to HUD procedures.

However, if a Contract Administrator or HUD requires detailed information over and above normal requirements, a nominal fee will be charged to respond to supplemental requests.

Referrals will be provided upon request.

My Resume

References provided upon request

Date Updated: 04/22/2010 06:19:16 AM