Budget-based Rent Increase (BBRI)
Mortgage Risk-Sharing Program (Sec 542(c))
Section 236 (e)(2)Decoupling of
Interest Reduction Payments (IRP)
! You do not know what you do not know!
What do I mean? HUD Regulations and outstanding instructions are
constantly changing. What you thought you knew may not be the truth.
That is why before you commit to submitting a Budget-based Rent Increase
or request renewal of your Section 8 Contract you should know what
current HUD Policies are.
My Consulting Services will help you in doing your “due diligence” in
making a decision on what to include when you prepare Proposals.
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BUDGET-BASED RENT INCREASE
If your HUD Section 8
Contract or HUD Project Rental. Assistance Contract (PRAC)
is due for renewal or annual rent adjustment, let
us make a deal.
If you are
contemplating submitting a Budget-based Rent Increase (BBRI) proposal to
HUD, I may be of help. I am presenting you with a proposal; I am
agreeable to the following Consulting Services.
After you have
prepared your BBRI proposal for submission to HUD, forward me the
of your recent Audited Financial Statement Audited (AFS) transmitted
to HUD. If you do not wish to send me the Audited AFS, send me ONLY
the Balance Sheet and HUD Profit and Loss (P&L) Statement.
interim P&L Statement from the beginning of the current FY through
Y-T-D. Provide the P&L Statement data on HUD P&L Statement
HERE AND DOWNLOAD HUD P&L Chart of Accounts Definitions
HERE AND DOWNLOAD HUD Profit Loss Statement.
will prepare an Independent BBRI, based on your documentation
I will contact you to discuss my process, to determine if there are HUD
allowable Budget Expenses you may have overlooked.
if my BBRI is greater than your prepare BBRI, we can discuss possible
engagement of my Consulting Services. If your BBRI appears to be greater
than my prepared BBRI, there will be NO CHARGE.
Alvin L. Sutherlin
Post Office Box 162
Mount Rainier, Maryland 20712-0162
Voice Number: 301-277-3465
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New HUD Methodology for Completing a
Tenant Utility Allowance
HUD has established a new policy for
Owners/Management Agents submissions of Annual Tenant Utility Surveys.
If you need assistance in establishing Utility Baseline for your
Project, please contact me.
Revised Section 8 Renewal Policy Guidebook (Guide)
has published a complete revision to the Section 8 Renewal Policy
Guidebook (Guide) effective November 5, 2015. The revised guidance
applies to Contract renewal and amend rent packages received by the
Contract Administrators/HUD (or post-marked) November 5, 2015 or later.
Section 8 Contract Renewal Options Titles either are the same or
Options published in the new Guide have additional requirements or
Option One, Mark-Up-To-Market
Option Two, Contract Renewals For Other Projects with Current Rents
At or Below Comparable Market Rents
Option Three, Referral to Office of Recapitalization (Recap)
Option Four, Renewal of Projects Exempt from or not Eligible for
Option Five, Renewal of Portfolio Reengineering Demonstration or
Option Six, Opt-Outs
If you want a copy of
HUD published revised Section 8 Renewal Policy Guide Book click on the
below link to order the Revised Section 8 Renewal Policy Guide Book.
Check By Mail
Section 8 Renewal Policy Guidebook
is my introduction as a Housing Consultant.
I retired in 1989 from the Department of Housing and Urban
Development, as a Senior Asset Manager in the
Multifamily Asset Management Branch. Since
my retirement, I have provided consulting services to owners and
management agents of HUD multifamily subsidized communities throughout the
your original Section 8 Contract was effective in the 1980s and 1990s and
is approximately a 20year Contract; your Contract Renewal Proposal is due
for submission to Contract Administrator 120 days prior to expiration of
the Contract and must be renewed pursuant to guidelines in revised HUD Section 8 Renewal Policy Guide (Guide).
The Guide reflects major changes to amendment to the Housing Act;
Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA),
Title V of the HUD Fiscal Year 1998 Appropriations Act, Pub. L. 105-65,
enacted on October 27, 1997. MAHRA
established new policies for the renewal of Section 8 project-based
contracts based on market rents instead of the Fair Market Rent (FMR)
Rent Comparability Study (RCS) is required to be submitted with requests
for renewal under Option
1, Option 2, Option 3 and maybe Option 4.
Owner must submit the RCS to HUD (or the Section 8 Contract Administrator
(CA) if there is one) no later than 120 days before the expiration of the
Section 8 contract. Early submissions are allowed. Owners should not
submit their requests no more than 180 days before the Section 8 Contract
expires. Owners should submit the RCS along with the other information
required in this GUIDE. If a RCS is submitted, HUD recommends the renewal
request be submitted 180 days before the contract expires, because HUD
will commission an Independent RCS when processing the request.
in mind; under the original unexpired Contract your annual rents are
adjusted through application of HUD published Annual Adjustment Factors (AAF).
However, under the current revised Guide,
request for Contract Renewals (and annual rent adjustments through the
term of your renewed Contract) rents will be adjusted through Budget-based
rent increase (BBRI) requests or application of HUD published Operating
Cost Adjustment Factors (OCAF).
particular, Budget-Based Rent Increase (BBRI) requests must be prepared
pursuant to Chapter 7 of HUD Servicing Handbook, and requests must be
submitted on HUD approved Budget Worksheet, accompanied by required HUD
forms. HUD BBRI formula consists of 2-components; a HUD Budget Worksheet
and HUD Rent Computation Worksheet. To arrive at Owners’ BBRI Annual
Gross Rent Potential, the HUD formula considers projected budget expense
line items, other expense adjustments and Owners’ Annual Return on
Under HUD Section 8 Renewal Policy Guide there are several Options.
Owner Option One, Mark-Up-To-Market
This is an Option for renewing a contract under the
Mark-Up-To- Market option. It identifies who is eligible for renewal
under this option and how to process the renewal request. Owners must
meet certain eligibility criteria which are outlined in the HUD Section
8 Renewal Policy Guide. This Option also provides information on how to
calculate owner distributions and future rent adjustments.
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Owner Option Two, Other Contract Renewals with
Current Rents At or Below Comparable Market Rents
This Option provides instructions for renewing a
contract in cases where a contract’s current rents are at or below
comparable market rents but the contract is not being renewed using
the mark-up-to-market option. It outlines who is eligible to renew
under this option and identifies documentation to be submitted by the
Owner to HUD/Contract Administrators for review. It also provides
processing instructions and guidance for future rent adjustments.
Owner Option Three, Referral to the Office of
Affordable Housing Preservation (OAHP (formally known as the Office of
Multifamily Housing Assistance Restructuring (OMHAR))
This Option discusses the procedures by which a
project with rents above comparable market rents is referred to the
Office of OAHP for processing and renewal. The Option identifies items
an Owner must submit with their renewal request and it outlines what
steps will be taken by OAHP if a restructuring agreement is not reached
between the owner and OAHP.
Owner Option Four, Renewal of Projects Exempted
From OAHP (formally known as OMHAR)
This Option identifies exception projects.
Exception projects are ineligible for OAHP and as such, they are exempt
from having to conduct rent comparability studies and lower rents to
comparable market rents. This Option outlines the Owners renewal
submission requirements and provides instructions for initial and
Option Five, Renewal of Portfolio Reengineering
Demonstration or Preservation Projects
This Option details how to renew a contract that
has been through the Demonstration program. It provides instructions
for renewal in cases where the project had its rents reduced and/or had
its mortgage restructured and it provides instructions for processing a
renewal in instances where the project failed to have a rent reduction
or debt restructuring. It also provides guidance for renewing
Preservation contracts according to the approved Plan of Action (POA).
Option Six, Opt-Outs
This Option provides instructions for processing
Owner opt-outs. Opt-outs are expiring Section 8 project-based contracts
whose owners elect not to renew the contract. This Option identifies
owners responsibilities to the tenants and provides processing
Rent Comparability Studies (RCS)
This Option provides instructions for conducting
and reviewing rent comparability studies.
This Option identifies the steps that must be
taken, when appropriate, to assure that residual receipts are returned
This Option outlines all of the steps that must be
followed to assure that tenants are protected during the renewal
process. This Option defines housing conversion actions and identifies
notification requirements an owner must meet. It also describes the
differences between a regular voucher and an enhanced voucher.
Physical Condition of the Property
This Option discusses how a project’s physical
condition impacts the contract renewal process.
HUD's Refusal to Renew/Section 8 Contract
Owner’s Dispute and Appeal of Rejection
This Option outlines the circumstances under which
HUD may refuse to renew an expiring Section 8 contract, and it provides
Owners with an appeal process to follow in cases where their request to
renew is rejected.
This Option outlines how to renew a Farmers Home
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Nonprofit Rent Increases
This Option outlines the procedure for providing
budget-based rent increases to nonprofit owners. The Option identifies
eligibility requirements for marking up to budget and provides
instructions for future rent adjustments.
This Option discusses miscellaneous issues that
have not been included in previous Options. This Option includes rent
increases for non-Section 8 rents, and HUD REMS reporting requirements.
It also addresses the effect of refinancing FHA insured properties on
Mark-to-Market eligibility and how any new debt should be addressed in a
projects operating budget.
if Tenants receive Utility Allowances (UA), HUD published new instructions
requiring owners to request annual UA adjustments.
you need my assistance in preparing a Proposal for Contract renewal,
please contact me.
Office Box 162
Rainier, MD 20712-0162
Address: 4104-29th Street
Rainier, MD 20712-1820
Notice H-2012-14, SUBJECT: Use of “New Regulation” Section 8 Housing
Assistance Payments (HAP) Contracts Residual Receipts to Offset
Project-Based Section 8 Housing Assistance Payments
Browse my web
site and review the Services and Products offered to clients. Services
include preparing proposals, researching HUD directives, regulations for
multifamily subsidized programs and more... If you do not have resources
to satisfy your needs, contact me I may have a solution.
My Services and Products will help to bridge the gap between HUD Field
Offices/Contract Administrators and Project Owners/Management Agents.
HUD Mailing List
HUD mailing list is an easy way
to stay informed about current HUD Policies and Procedures.
Go to the below LINK to access the HUD Website to ask questions and
Property owners, management
companies, sponsors, and developers can also subscribe to
be put on a Mailing List to be
informed about recent HUD Policies and Procedures on specific issues.
Go to the below Link to subscribe for your State and Topic of Interest.
Link to HUD Mailing List
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Link to Nixon Peabody, Affordable Housing Law Alerts
ASSUMPTION AND AMENDMENT AGREEMENT
SECTION 8 HOUSING ASSISTANCE
PAYMENTS CONTRACT (UNINSURED PROJECT)
An Assignment or Assumption of Housing Assistance Payments (HAP)
Contract is required when the property being sold is subject to a HAP
contract, with or without mortgage insurance. The HAP rents are set by a
variety of factors, so it's important to understand how the rents may
change from year to year before purchasing a property.
Starting in June of 2004, the Department will no
longer consent to the assignment of the Section 8 Housing Assistance
Payments (HAP) contract unless there is a provision for requiring both
physical condition standards and annual financial statement reporting.
This applies to all Section 8 HAP contracts, regardless of whether there
is a HUD-insured mortgage.
of Physical Assets (Full TPA)
Change in Property Ownership
A full Transfer
of Physical Assets (TPA) is a property sales transaction involving the
assumption of a HUD-insured loan. Transactions which do not involve a
complete change in ownership may be eligible for a Modified TPA.
Transactions involving Section 8, HAP Contracts and/or Preservation or
other use agreements may have additional considerations
here for additional information).
If you need assistance in preparing a proposal, contact me at 301-277-3465,or by email
& Occupancy Reviews
Contract Administrators are
conducting On-site Management & Occupancy Reviews annually. As
you know, most of you have not seen a visit from your HUD Project Manager
in years, all that has changed. U.S. Department of Housing and Urban
Development (HUD) has contracted with Contract Administrators (CA) to
administer Section 8 Contracts. CA are required to fulfill their contract
obligations with HUD, to annually conduct On-site Management &
Occupancy Reviews on Section 8 assisted properties.
you need assistance in preparing for or responding to an On-site
Management & Occupancy Review, contact me. I have draft copies
of documents that may be cited as lacking in Reviews. Example of some of
the documents, such as;
Previous Participation Certification, form HUD-2530
principals in owning entities for HUD multifamily mortgage and project based subsidy
programs to submit electronic Previous Participation Certificate
(for HUD-2530) via HUD's secure web server as condition
prerequisite to new or revised participation.
you need assistance in filing your form HUD-2530 online to HUD,
contact me at 301-277-3465, or by email
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