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Annie Stevenson

Verification Techniques

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Welcome to Lunch N Learn!

Upcoming topics for the occupancy series:• 8/1/08: Factors of Eligibility (PH and HCV)• 8/15/08: EIV• 9/4/08: PH Denials and Terminations• 9/5/08: HCV Reasonable Accommodation

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Welcome to Lunch N Learn!

Today’s topics:• Total tenant payment calculation• Minimum rent• Utility allowances• Flat rents

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Total Tenant Payment

TTP is highest of:• 10% total

monthly income• 30% monthly

adjusted Income• the welfare rent• minimum rent

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How to Get TTP

Annual Income $2000 4 children x $480 1920 Adjusted Income $ 80 Annual divided by 12 = $167 (mo. Inc) Adjusted divided by 12 = $7 (mo adj inc)

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How to Get TTP

10% of $167 = $17 30% of $7 = $2 Minimum Rent $25 Welfare Rent $0 (N/A) TTP is ??????

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TTP Calculation

Learning activity 1 TTP calculation on 50058

• 8a = $15,780• 8y = $11,392• Minimum rent = $35

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Learning Activity 1 Answers

1,315

132

285

285

N

949 30

35

0

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Minimum Rents

PHAs may establish minimum rents$0 - $50

PHAs must adopt minimum rent hardship exemption policies

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Minimum Rent Hardship Exemptions

Lost eligibility/awaiting determination for Federal, State or local assistance program

Would be evicted as result of requirement

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Minimum Rent Hardship Exemptions

Family income decrease because of changed circumstances (unemployed)

Death in family Other circumstances as determined by PHA

or HUD

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Minimum Rent Process PHA notifies family if TTP = Minimum Rent Family requests exemption PHA suspends payment beginning of next

month (use next higher TTP)• Family not required to pay Minimum Rent

during period• PHA may request reasonable documentation

of hardship

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Minimum Rent Process

PHA must promptly determine• if hardship exists• whether temporary (PHA policy)

or long term

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Minimum Rent Process

PHA may not evict the family for nonpayment of minimum rent for a 90-day period• Beginning the month following family’s

request for a hardship exemption

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Minimum Rent Process

If PHA determines no hardship under statute, minimum rent is imposed retroactively

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Minimum Rent Process

If PHA determines the hardship is temporary• Must reinstate minimum rent retroactively to

beginning of suspension• Reasonable repayment agreement offered

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Minimum Rent Process

If PHA determines hardship of long-term duration exists, minimum rent is exempted retroactively to date of family’s request for exemption

Exemption continues until hardship no longer exists

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PHA Procedures

PHA must have minimum rent hardship exemption policy

PHA must notify families• Of right to request hardship exemption• Hardship exemptions are subject to PHA’s

informal hearing procedures

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TTP Calculation: Minimum Rent Hardship Exemption

Learning activity 2 TTP calculation on 50058

• 8a = $900• 8y = $55• Minimum rent = $50• Family requested and was granted exemption

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Learning Activity 2 Answers

75

8

2

8

Y

5

30

0

0

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Exemption Doesn’t Apply to Other Factors of TTP

Financial hardship exemption only applies to the payment of minimum rent and not to other elements used to calculate TTP

Example:• 30% of AMI $45 • 10% of MI $27• PHA’s Min Rent $50

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Utility Allowance

PHAs are required to establish and maintain utility allowance schedules (see CFR 965.502)

A utility allowance is that amount approved by the PHA for reasonable monthly costs of local utility consumption

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Utility Allowance

Families responsible for utility costs (excluding telephone) will see a utility allowance applied to their rent calculation

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Definitions for Income-Based Rent

Tenant Rent – amount payable by the family as rent to the PHA

Utility Reimbursement – amount by which utility allowance exceeds TTP

Income Based Rent – rent based upon family income, allowances and deductions

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Calculation of Tenant Rent and URP

To get Tenant Rent, subtract the utility allowance (UA) from TTP

If UA is greater than the TTP, Tenant Rent is zero and there is a Utility Reimbursement Payment (URP)• The URP is the difference between the TTP and the

Utility Allowance• (Tenant credit on bottom line 10f of 50058)

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Utility Allowances

TTP $80- UA 50

Tenant Rent $30

TTP 40- UA 50

Tenant Rent 0

URP $10

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Rent Calculation

Learning activity 3 Income-based rent calculation on 50058

• 8a = $12,312 8y = $10,020• Minimum rent = $50• Flat Rent = $550• Utility Allowance = $75

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Learning Activity 3 Answers

1,026

103

251

251

N

30

835

50

0

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Learning Activity 3 Answers

251

176

251

X

550

75

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Rent Calculation

Learning activity 4 Income-based rent calculation on 50058

• 8a = $3,212 8y = $792• Minimum rent = $25• Flat Rent = $425• Utility Allowance = $100

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Learning Activity 4 Answers

268

27

20

27

N

30

66

25

0

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Learning Activity 4 Answers

27

73

27

X

425

100

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Ceiling Rents

Purpose• to set a maximum rent families will pay in PH,

regardless of how high their income goes Used prior to existence of flat rents

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Retaining Ceiling Rents

As of 10/1/2002, ceiling rents had to be adjusted to flat rent level• PH OCC Guidebook says

flat rent + utility allowance = ceiling rent No time limit on ceiling rents

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Ceiling Rent Calculation

Calculate TTP as normal• 30% of monthly adjusted income• 10% of monthly income• Welfare Rent (if applicable)• PHA's minimum TTP ($0 - 50 – PHA Policy) then…

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Ceiling Rent Calculation

Use the lesser of:• TTP just calculated • Ceiling rent for the unit

Formula:• TTP (ceiling rent) - UA = tenant rent

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Rent Calculation

Learning activity 5 Income-based ceiling rent calculation

• TTP = $ 398• Ceiling rent = $ 350• Flat Rent = $ 325• Utility Allowance = $ 25

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Learning Activity 5 Answers

398

325

350

X

350

325

25

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Flat Rents Effective for families admitted or recertified

on/after 10/1/99 There must be a flat rent established for each

unit Flat rent has no formula based limit on what

tenant pays • Utility allowances are not deducted• Flat Rent = THE RENT

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Flat Rents Flat Rent is:

• based on PHA determination of rental value of the unit

• designed to not create a disincentive for families to stay in PH as their income increases

Recertifications are done not less than once every 3 years

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Flat Rent Methodology

Market value is rent which would allow the unit to be successfully rented after preparation for occupancy

Acceptable methodology incorporates the same 9 factors used in Section 8 rent reasonableness methodology

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Flat Rent Methodology

• Age • Location• Quality• Amenities• Size of unit

Relevant factors must include:

Housing services Maintenance Utilities provided by PHA Unit type

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Flat Rents: Family Choice

Families elect annually whether to pay income based or flat rent

If family has elected to pay flat rent but has a hardship and is unable to pay, the PHA must allow the family to switch to income based rent

Income needs to be reviewed only every 3 years

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Switching Rent Determination Methods

Allowable hardships to switch from flat to income based rent• income decreased due to family circumstances

loss or reduction of employment or other incomedeath in the family

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Switching Rent Determination Methods

Allowable hardships to switch from flat to income based rent• expenses increased, due to changed

circumstances medical costs child care transportation, education or similar items other situations in PHA policy

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Rent Calculation

Learning Activity 6 Flat rent calculation

• TTP = $ 450• Flat Rent = $ 400

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Learning Activity 6 Answers

450

X

400

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Proration of Assistance

Mixed Families receive prorated assistance• Must use PHA’s maximum rent schedule to

determine prorated TTP• DO NOT use ceiling rent in lieu of TTP• Special rules for Mixed Families requesting

Flat Rent – see 50058 Instruction Booklet, Appendix 3

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Proration of Assistance

Methodology for calculating PH maximum rent• Included in session materials• Download for reference

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Proration Exercise

Learning activity 7• 50058 lines 10h through 10s

2 family members are eligible; 1 is ineligible TTP: $174 PHA maximum rent is $325 Flat rent: $500

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Learning Activity 7 Answers

174

X

500

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Learning Activity 7 Prorated Rent Answers

325

101

45

179

3

2

151

224

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