The National Housing Law Project (NHLP) has provided a reminder about utility allowances in federally subsidized housing, “Protect Subsidized Tenants from Rising Utility Costs.” The reminder addresses the requirement that utility allowances be factored into the rent paid by HUD-assisted households when those households pay for utilities out of their own pockets.
The reminder includes a link to NHLP’s Advocating for Higher Utility Allowances in Federally Subsidized Housing: A Practical Guide (published in 2007). Utility allowance provisions apply to public housing, Housing Choice Vouchers (HCVs), Project-Based Vouchers (PBVs), and privately owned properties assisted with Project-Based Rental Assistance or through Rural Development Section 515, as well as those assisted with Low Income Housing Tax Credit (LIHTC) tax expenditures.
Advocates and tenant leaders can play a key role in preserving stable and affordable housing by helping federally assisted tenants secure prompt adjustments to their utility allowances when utility rates rise significantly. Utility rate increases like those projected in the coming months may be sufficient to trigger the obligation of a public housing agency (PHA) or private owner to adjust their tenants’ utility allowances. The prescribed method for adjusting utility allowances varies by program, as reflected in the chart on the second page of NHLP’s reminder.
Background
To keep subsidized housing affordable for lower-income households, federal law for most federally assisted housing programs limits rent to no more than 30% of a household’s adjusted monthly income. The tenant rent contribution in these programs includes both shelter and the costs for reasonable amounts of utilities. When utilities are tenant-paid, a tenant must be provided with a utility allowance to cover reasonable utility costs, which is generally credited against the otherwise payable tenant’s share of the rent.
Federal regulations require the entity setting the utility allowance to review the utility allowance schedule at least annually. In addition, for most housing subsidies, the regulations require that if the applicable utility rates have increased by 10% or more from the rates used for the previous utility allowance adjustment, the utility allowance must immediately be adjusted accordingly. Importantly, the requirement to adjust the utility allowance is contingent on a change in rates – not bills. (For example, extreme weather that temporarily requires greater energy consumption does not trigger a change in a utility allowance, even if bills are higher than normal in consequence.)
The 10%-increase requirement provides a simple enforcement mechanism to ensure utility allowances are updated. Demonstrating a rate increase simply requires (1) identifying when the
utility rates were last updated and (2) showing that rates have increased more than 10% since that
time.
Read NHLP’s “Protect Subsidized Tenants from Rising Utility Costs” guide at: https://bit.ly/3ri4IwX
Read NHLP’s Advocating for Higher Utility Allowances in Federally Subsidized Housing: A Practical Guide at: https://bit.ly/3ou8wJV