Utility Allowances Notice
As a Public Housing Authority (PHA) operating a Section 8 Voucher program, AHFC is required to maintain a schedule of utility allowances for all tenant-paid utilities published under HUD Form HUD-52667. (Ref 24 CFR 982.517) Schedules are developed based on the typical cost of utilities and services paid by households that occupy housing of similar size and type in the same locality. AHFC uses normal patterns of consumption for each community and current utility rates.
The PHA published Utility Allowances may also be used with other affordable housing programs including the IRS’ Low Income Housing Tax Credit (LIHTC) program,HUD’s HOME Investment Partnerships (HOME) program, the State of Alaska’s Senior Citizens Housing Development Fund (SCHDF), and HUD’s Neighborhood Stabilization Program (NSP) and Housing Trust Fund (HTF).
Under the IRS’ Treasury Regulation 1.42-10, LIHTC developments using a Utility Allowance component may use one (1) of the six (6) methods to calculate and determine a development allowance.
For Owners/Managers of a development funded under the HOME Investment Partnerships (HOME) program where HOME funds were committed prior to 08/23/13 may also use one (1) of the six (6) Utility Allowance options addressed below.
For developments funded under the HOME Investment Partnerships (HOME) program where HOME funds were committed after08/23/13, Owners/Managers may not use the PHA published allowance. (Reference HUD ‘HOMEfire’ publication, Vol. 13; #2; May 2016.)
- Public Housing Authority (PHA) Utility Allowance reported on form HUD-52667.
The PHA Utility Allowance Schedule is reviewed periodically through the year with updates published at the AHFC website noting the effective date of the updated allowance. Owners/Managers using the PHA published Utility Allowance should review the AHFC website monthly for changes in Utility Allowances for a specific area to ensure the use of the most current data.
- Paid directly by the Tenants and not through the Owner of the Building.
Although an option, it is unlikely to be applicable in other than unusual circumstances as this option would require the design and installation of a monitoring system (sub-metering). [Ref IRS Notice 2009-44]
- Local Utility Company Estimates [Reference Treasury Regulation §1.42-10(b)(4)(ii)(B)]
Requires the cooperation of the local utility company/service provider to provide annual data for each tenant unit of a building/development. Would also require acceptance by Tenant/Household to share account data used to generate analysis.
- State Agency Estimate (if available) [Reference Treasury Regulation §1.42-10(b)(4)(ii)(C)] & [IRS 8823 Guide, page 10-5]
Owners/Managers interested in developing a Utility Allowance supported by AHFC should contact AHFC Internal Audit Department (IAD) for clarification as to the process. The IAD will work as the liaison between the development’s Owner/Manager and AHFC’s ‘Research and Rural Development Division’ to assist in determining the best method leading to an approved Utility Allowance for the particular development based on geographic location. AHFC may require reimbursement of costs associated with the development of the Utility Allowance analysis.
- HUD Utility Schedule Model [Reference Treasury Regulation §1.42-10(b)(4)(ii)(D)]
Owner or Owner Energy Contractor prepared analysis. AHFC will require that results be supported and reported with a HUD Form 52667. Website for the model may be found at the following link: https://www.huduser.gov/portal/datasets/husm/uam.html
- Energy Consumption Model[Reference Treasury Regulation §1.42-10(b)(4)(ii)(E)]
Utility Allowance is based on calculations specific to building construction, systems, environment and operating costs related to the geographical location of the building. Calculation to determine Utility Allowances and/or allowance services are required to be performed by a properly licensed engineer or qualified professional as approved by the AHFC.
The Utility Allowance option selected is completely the decision of an Owner of developments funded under any of the affordable housing programs noted above and should be considered carefully. This could also potentially include a seventh option of not implementing a Utility Allowance with the development paying for all services.
With the use of high efficiency heating equipment installed in new construction or the replacement of equipment in older/existing developments, Owners, Developers and Managers of LIHTC, HOME, SCHDF and NSP developments are encouraged to follow the Utility Allowance option detailed under the HUD Utility Schedule Model, (1.42-109(b)(4)(ii(D), enlist the assistance of the AHFC’s Research and Rural Development Division, (1.42-10(b)(4)(ii)(C), or implement an Energy Consumption model (1.42-10(b)(4)(ii)(E). Again, however, the decision of which Utility Allowance option to implement is completely that of the Owner.
With exception to the PHA developed Utility Allowance, the following points are reminders specific to LIHTC, HOME, SCHDF, NSP, and HTF programs when applicable:
- Owners of LIHTC, HOME, NSP, and HTF program developments must review Utility Allowances at least once each calendar year and update data as needed if not using the PHA utility allowance. For SCHDF developments Owners/Manager should refer to the specific funding agreement with AHFC.
- During the 90 day Utility Allowance implementation period of a new allowance, the development Owner/manager must submit copies of the Utility Allowance estimates to AHFC IAD. The estimates must also be made available to all tenants. During this period, the state agency may require additional data or information if the agency deems it necessary.
- Building Owners are required to maintain records of all utility data received, estimates used and notifications made to the tenants and state agency throughout the extended use period.
- If the development receives assistance from USDA Rural Housing Services (RHS), the RHS utility allowance must be used.
- If a tenant receives rental assistance through RHS then all affordable units in a building must use the RHS utility allowance.
- If the development receives assistance from HUD (project based assistance) the HUD approved utility allowance must be used for all ‘rent restricted’ households.
- For Section 8 voucher tenants in developments without RHS or HUD assistance, households must receive the PHA utility allowance.
- If AHFC has a Public Housing (PHA) presence in a community and an Owner chooses to use the PHA Utility Allowance for other than Section 8 voucher tenants, only the ‘development’ in that community may use the PHA UA. The PHA UA may not be used for outlying communities (more than 50 miles) and not specifically designated by the PHA.