HUD Updates FAQ on Multifamily Housing Utility Allowance Requirements

The Department of Housing & Urban Development (HUD) has recently updated the Frequently Asked Questions Methodology for Completing a Multifamily Housing Utility Analysis. The original Notice on the UA requirement was Notice H 2015-04, which was published on June 22, 2015.

HUD added three updates to the FAQ:

  1. In the years in which Owner/Agents (OAs) perform a factor-based analysis, the new UA should be calculated by considering the previous UA both before rounding and after rounding. The new UA will be whichever method provides the higher UA, which will be a benefit to the tenants.
  2. In the past few years, some O/As have been issuing utility reimbursements on debit cards. In some cases, tenants have never activated the cards even though they have been notified several times to do so. They may have several hundred dollars on the cards. The question has arisen as to whether the O/As should pull the money back off the cards and return it to HUD after giving tenants proper notice. HUD responds in the FAQ that “The balance must be left to accumulate on the debit card. For utility allowance reimbursements, once a check is made payable to the tenant, or funds are deposited to a tenant’s debit card, ownership of the funds passes to the tenant. HUD does not receive the funds back, nor does the owner.” This position does create some potential problems for O/As, especially in the case of uncashed checks. If you write a check and the money never leaves your account, you may develop the false belief that you can spend those funds, but the money still belongs to the payee. If the payee finally deposits the check after months of delay, you risk overdrawing the account and bouncing the check.

         Businesses must track outstanding items to avoid breaking unclaimed property laws. If payments remain uncashed, the assets may eventually have to be turned over to the state as unclaimed assets. This usually occurs after a few years but depends on the state. In any case, careful tracking of these payments is required, and make sure you use an accounting system that deducts uncashed checks from your available funds.

  • For RAD conversions that have both Project-Based Rental Assistance (PBRA) and Project-Based Voucher (PBV) units, which units should be selected for the RAD PBRA baseline UA? HUD requires that the sample selected should include only units covered under the RAD PBRA HAP Contract. These are two distinct programs, and the unit samples should not overlap.

While these three issues represent to update to the FAQ, O/As should review the original notice and the complete FAQ, which may be found on HUDCLIPS.