HCCP Utility Allowances and Rent Calculations 2 — Questions and Answers
Question 1: The HUD Utility Schedule Model, an IRS-approved utility allowance method, estimates costs based on which factors?
- The owner's actual utility bills averaged over the prior 12 months
- Local utility rates, unit size, and climate zone data (Correct answer)
- National average utility consumption tables published annually by HUD
- Tenant-reported utility expenses from the most recently completed lease term
Correct answer: Local utility rates, unit size, and climate zone data
The HUD Utility Schedule Model uses local utility rate data combined with unit size and climate zone characteristics to produce utility cost estimates for LIHTC properties.
Question 2: Which of the following is NOT an IRS-approved source for utility allowances under Treasury Regulation 1.42-10?
- An energy consumption model prepared by a qualified energy auditor
- The property owner's estimate based on comparable market-rate units nearby (Correct answer)
- A Rural Development (RD) utility schedule for properties with RD financing
- A written estimate from the local utility company
Correct answer: The property owner's estimate based on comparable market-rate units nearby
An owner's personal estimate is not an approved source; IRS-approved methods include PHA schedules, the HUD Utility Schedule Model, energy auditor studies, utility company estimates, RD schedules, and state agency estimates.
Question 3: After an annual review establishes a new utility allowance, within how many days must the updated allowance be implemented?
- 30 days
- 60 days
- 90 days (Correct answer)
- 180 days
Correct answer: 90 days
Treasury Regulation 1.42-10 requires that changes to utility allowances resulting from an annual review be implemented within 90 days of the review.
Question 4: For a 0-bedroom (studio) LIHTC unit, what imputed household size is used when calculating the maximum gross rent?
- 0.5 persons
- 1 person (Correct answer)
- 1.5 persons
- 2 persons
Correct answer: 1 person
A 0-bedroom studio unit uses an imputed household size of 1 person under Section 42(g)(2)(C)(ii) for maximum gross rent calculations.
Question 5: When a LIHTC property owner uses an energy consumption model to establish utility allowances, who must prepare the analysis?
- A staff member of the state housing finance agency
- A licensed engineer or energy auditor qualified to perform such studies (Correct answer)
- The property management company's certified maintenance supervisor
- A HUD-certified housing counselor with energy audit credentials
Correct answer: A licensed engineer or energy auditor qualified to perform such studies
An energy consumption model must be prepared by a qualified professional such as a licensed engineer or energy auditor with expertise in building energy analysis.
Question 6: For a 3-bedroom LIHTC unit, what imputed household size is used to look up the applicable income limit for rent purposes?
- 3 persons
- 3.5 persons
- 4 persons
- 4.5 persons (Correct answer)
Correct answer: 4.5 persons
A 3-bedroom unit uses an imputed household size of 4.5 persons (3 bedrooms × 1.5), which is the applicable size under Section 42(g)(2)(C)(ii).
Question 7: If the maximum gross rent for a 2-bedroom unit at 60% AMI is $1,200 and the utility allowance is $150, what is the maximum allowable contract rent?
- $1,050 (Correct answer)
- $1,200
- $1,350
- $900
Correct answer: $1,050
Maximum contract rent = maximum gross rent minus utility allowance = $1,200 - $150 = $1,050, ensuring that gross rent does not exceed the Section 42 limit.
HCCP Utility Allowances and Rent Calculations 2
The HUD Utility Schedule Model, an IRS-approved utility allowance method, estimates costs based on which factors?