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Guidance for Determining Utility Allowances

Thursday, August 30, 2012

REMINDER - On Thursday April 5, 2012, the HUD CAOM for Northern California issued the following  UA guidance and clarifications below:



There have 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 policy memos:

  • 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.
  • At 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 submittal.
  • If 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 Analysis submittal. 
  • The approved decrease in the UA can go lower than the UA levels originally set in the HAP contract per result of the analysis.
  • The 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/As 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.  
    • If 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. 
    • The 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; the minimum of three (3) supporting documentation should only be used in recognizing O/A’s best effort and verifiable hardship in acquiring the supporting documentation.
  • On 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.  
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