HUD published in the November 23, 2018 Federal Register the Utility Allowance Adjustment Factors (UAFs) for 2019. HUD permits owners to use these adjustment factors to adjust baseline utility allowances that were prepared in accordance with Housing Notice 2015-04. The factors are effective for any site with an anniversary date on or after February 11, 2019. The UAFs can be found at www.govinfo.gov/content/pkg/FR-2018-11-23/pdf/2018-25440.pdf.
HUD requires multifamily owners in its programs that receive rent subsidy and where HUD approves the utility allowances, to adjust that utility allowance each year. This methodology is required for the following programs:
- Project-Based Section 8;
- Section 101 Rent Supplement;
- Section 202/162 Project Assistance Contract (“PAC”);
- Section 202 Project Rental Assistance Contract (“PRAC”);
- Section 202 Senior Preservation Rental Assistance Contracts (“SPRAC”);
- Section 811 PRAC;
- Section 236;
- Section 236 Rental Assistance Payments; and
- Section 221(d)(3) Below Market Interest Rate (“BMIR”)
Site owners are required to establish a “baseline “utility allowance for each of their bedroom sizes once every third year. For the two years after the baseline is established, owners have the option to perform a factor-based utility allowance. It is these factors that HUD has recently published.
Owners of affected projects should review and implement the UAFs for their properties for 2019.