3 - PUBLIC HEARING ANNUAL ACTION PLAN

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Administrative Plan 4/1/16 Page 8-14 PART III: RENT REASONABLENESS [24 CFR 982.507] 8-III.A. OVERVIEW Except in the case of certain LIHTC- and HOME-assisted units, no HAP contract can be approved until SAHA has determined that the rent for the unit is reasonable. The purpose of the rent reasonableness test is to ensure that a fair rent is paid for each unit rented under the HCV program. HUD regulations define a reasonable rent as one that does not exceed the rent charged for comparable, unassisted units in the same market area. HUD also requires that owners not charge more for assisted units than for comparable units on the premises. This part explains the method used to determine whether a unit’s rent is reasonable. SAHA-Owned Units [24 CFR 982.352(b)] In cases where an HCV family is receiving assistance in a SAHA-owned unit, SAHA must obtain the services of an independent entity to determine rent reasonableness in accordance with program requirements, and to assist the family in negotiating the contract rent when the family requests assistance. A SAHA-owned unit is defined as a unit that is owned by SAHA that administers the assistance under the consolidated ACC (including a unit owned by an entity substantially controlled by SAHA). The independent agency must communicate the results of the rent reasonableness determination to the family and SAHA. The independent agency must be approved by HUD, and may be the unit of general local government for SAHA jurisdiction (unless SAHA is itself the unit of general local government or an agency of such government). 8-III.B. WHEN RENT REASONABLENESS DETERMINATIONS ARE REQUIRED Owner-Initiated Rent Determinations SAHA must make a rent reasonableness determination at initial occupancy and whenever the owner requests a rent adjustment. The owner and family first negotiate the rent for a unit. SAHA (or independent agency in the case of SAHA-owned units) will assist the family with the negotiations upon request. At initial occupancy SAHA must determine whether the proposed rent is reasonable before a HAP Contract is signed. The owner must not change the rent during the initial lease term. Subsequent requests for rent adjustments must be consistent with the lease between the owner and the family. Rent increases will not be approved unless any failed items identified by the most recent HQS inspection have been corrected. SAHA Policy After the initial occupancy period, the owner may request a rent adjustment in accordance with the owner’s lease. For rent increase requests after initial lease-up, SAHA may request owners to provide information about the rents charged for other units on the premises, if the premises includes more than 4 units. In evaluating the proposed rents in comparison to other units on the premises SAHA will consider unit size and length of tenancy in the other units. 3-224