FOR DETERMINING UTILITY ALLOWANCES
submission requirements will depend on the anniversary date of your contract:
· If your property’s contract
anniversary is before December 20, 2015, you may choose to implement
the new methodology or you may use the current methodology.
· If your property’s contract
anniversary is December 20, 2015 or later, you MUST submit a Baseline
Utility Analysis using the new methodology outlined in HUD
been questions raised by all of San Francisco Hub PBCAs and Hub Asset
Management staff on how to implement both the Carol Galante and Tom Azumbrado policy memos regarding the Owner/Agent
(O/A) submittal of the Utility Allowance (UA) Analysis and review and
approval of the UA by HUD/PBCA. Following are key requirements in both the
O/A must submit to the PBCA a UA Analysis with Rent Adjustment and
Contract Renewal packages regardless of the increase, decrease, or no
change in the amount for each unit type.
any time the recently approved UA increases by 10% or more due to
increase in utility rates, the O/A must submit to the PBCA a request to
adjust the UA. This request for adjustment does not have to be
concurrent with the annual Rent Adjustment cycle or Contract Renewal
the O/A determines there should be a decrease in the UA, the O/A must
notify the tenants in writing at least 30 days prior to submitting the
request to the PBCA for approval and must provide the tenants with the
right to participate in and comment on the proposed decrease in the
UA. The written tenant notification must be included in the UA
approved decrease in the UA can go lower than the UA levels
originally set in the HAP contract per result of the analysis.
O/A’s best estimate of average monthly utility cost that an
energy-conscious tenant will incur for the year can be better achieved
by the PBCA recognizing anomalies in the O/A’s UA Analysis such as
unusually high or low utility consumption (high and low spikes) for each
unit type. The PBCA must instruct the O/A’s not to consider those
high and low spikes in its analysis. If the high and low spikes
are present in the analysis submitted by the O/A, the PBCA must not
include those spikes in determining the approvable UA levels.
only 3 are looked at, the high/low spikes may not be apparent, but the
O/A should not be submitting supporting documentation from the same
residents each year.
Tom Azumbrado policy memo limits the number of supporting documentation
to the UA Analysis to be submitted by the O/A, which is 10% of all unit
types and from the minimum of three (3) to a maximum of twenty
(20). The standard practice in requiring supporting documentation
should be based on the 10% of all unit types; and
minimum of three (3) supporting documentation should only be used in
recognizing the O/A’s best effort and verifiable hardship in acquiring
the supporting documentation.
small properties where the 10% of all unit types result in just three
supporting documentation, the PBCA must strive to not allow the O/A to
submit the same supporting documentation from the same residents in
every submittal. This is consistent with the intent of determining
the average utility consumption from energy-conscious residents.
This cannot be ascertained unless supporting documentation is received
from other residents. However, the PBCA will be sensitive to the
O/A’s dilemma and hardship in getting cooperation from both the Utility
Company and the residents and will exercise good judgment.
The UA levels will be based
on the PBCA’s analysis of the O/A’s submittal and cannot be left at the
current level if the analysis results in a change of less than 10%. If there
is even a $1 change in UA based on the analysis, the change will proceed.
New Methodology (Reminder: If your property’s contract anniversary is
before 12/20/15, you may choose to implement the new methodology or you
may use the current methodology).
New UA guidance outlined in HUD
Notice 2015-04 instructs owner/agents to establish a baseline for each
bedroom size once every three years. For two years after the baseline
submission, utility allowances for each bedroom size and each utility type at
the property will be adjusted by a state-specific increase factor called a
Utility Adjustment Factor (UAF). These factors will be published annually by
data from either the utility company or the tenant household for at least the
number of units determined by the sample size methodology detailed below.
This must be done
for each bedroom size at the property;
If the property
consists of multiple identical buildings (or buildings that are substantially
similar, then the sampling may be performed at the property level, encompassing
all buildings on a site. If buildings are not identical, the sampling must be
done for each bedroom size);
If the analysis
is performed by a third party or the utility provider, the sample size
data/bills must be submitted;
collected must be for the same time frame;
The data used must not be more
than eighteen (18) months from the contract anniversary date;
must be from units receiving Section 8 assistance;
A unit should be excluded
from the sample if it:
Is receiving an increased UA as a reasonable
Has been vacant for 2 or more months. Units included
in the sample should have at least 10 months of occupancy; or
Is receiving a flat utility rate as part of a
low-income rate assistance utility program.
NOTE: RHS/USDA Properties must comply with the requirements
outlined in HUD Notice 2015-04.
Number of Units
1 – 20
21 – 61
62 – 71
72 – 83
84 – 99
100 – 120
121 – 149
150 – 191
192 – 259
260 – 388
389 and above
average utility cost for each bedroom size without removing any units from the
sample size beyond those excluded as indicated in (G.) above. Do not remove
the highest and/or lowest utility cost household when determining the average. The monthly cost of consumption is the NET COST after
the application of discounts (e.g. California Climate Credit, Solar Discount,
surcharges, transmission fees, etc.). Do not include late fees in
the monthly cost of consumption.
A sample format
for utility allowance submissions, which includes built-in formulas to average
utility costs for each unit size, can be found here.
A sample tenant
release form can be found here
explanation for any sample sizes that do not meet the required criteria
established in Notice
Recommend the UA
amount to the contract administrator for approval.
requirements in 24 CFR Part 245.405(a) and 245.410 to notify tenants of a
utility allowance decrease
decreases that would exceed 15% AND $10 from the most recent (approved) UA.
applies only to decreases resulting from the initial baseline
analysis. Refer to HUD
Notice 2015-04 for additional information on phase-in requirements.
For the two years after a
baseline utility analysis is completed, the UA amounts for each bedroom size
and each utility type can be adjusted by the established Utility Allowance
Factor (UAF) in lieu of a baseline utility allowance.
After completing the
property’s utility analysis under the factor-based utility analysis method,
O/As should compare the adjusted utility analysis to their paid utilities over
the previous twelve months. If the results indicate a significant disparity
between the two, the O/A should complete a baseline analysis to help ensure the
allowance(s) provided are accurate.
When the factor-based method
is used to determine UAs, the O/A should submit their recommendation for the UA
amount to the contract administrator for approval.
to HUD Notice 2015-04 for more information about:
Utility Allowance Changes Outside of the Contract Rent
Allowances for New Construction or Substantial
Requirements for Tenant Households
Penalties for Tenant Noncompliance
Voluntary Use of EPAs Energy Star Portfolio Manager
This policy will be updated
accordingly as HUD releases additional information. Please contact your CAHI Contract Specialist with
For questions about the
methodology outlined in notice 2015-04, please contact Kate Brennan at Catherine.M.Brennan@hud.gov in
the office of Asset Management and Portfolio Oversight.