With everything going on in the world, you might have forgotten about changes and updates to the LIHTC utility allowance in 2020. You might even be scrambling right now as you try to complete your annual review without the information.
Fortunately, we put together this quick guide to the top things you need to remember about completing your 2020 LIHTC utility allowance annual review.
LIHTC Utility Allowance Updates You Need to Know About in 2020
Aside from resident information, like the number of residents and household income, there are two key things to consider about the LIHTC utility allowance in 2020.
1. LIHTC Utility Allowance Metering
A critical factor that determines eligibility for the utility allowance is how services are metered. The three different options for metering tenants are:
- Checkmetered utilities: With checkmetered utilities, a LIHTC property installs checkmeters that manage individual units from the utility company’s master meter.
- Individually metered utilities: For individually metered homes, tenants establish an account directly with the utility provider and might pay a surcharge for sewer and garbage. The utility allowance comes in the form of rent reduction.
- Master-metered utilities: LIHTC properties that rely on a master meter assess consumption on the entire building. The property includes the allowance in the rent costs. Surcharges can be assessed for anything that isn’t covered by HUD.
In Texas, we have the option of switching to a different methodology for our utility allowances. The Texas Department of Housing and Community Affairs (TDHCA) has a document you can fill out and submit.
2. LIHTC Utility Allowance Calculations
The LIHTC and HOME utility allowances vary based on several factors. Some of those factors include the size of the dwelling, the number of residents, and your location. HOME utility allowances can be calculated five different ways:
- HUD Utility Schedule Model: This is based on climate data from the U.S. Energy Information Administration of the Department of Energy and is suitable for use with LIHTC properties.
- Multifamily Housing Utility Analysis: This model incorporates the optional factor-based analysis, required baseline utility analysis, and utility analysis sample and is available to LIHTC properties.
- Utility Company Estimate: This model accepts estimates from the utility company as long as they match units of similar size and construction. The estimates must be based on the location of the unit.
- LIHTC Agency Estimate: This model looks at both projections from the LIHTC agency based on similar building characteristics and utilizes the actual usage methodology.
- Energy Consumption Model: This model takes utility consumption rates from a licensed engineer and relies on analytical data about energy models.
The right approach for your property will depend on how you choose to meter your tenants, as well as which methodology makes the most accounting sense for your records.
Choosing an Affordable Housing Compliance Consultant
If you’re just trying to figure out LIHTC utility allowances in 2020 or you are looking to update your methodology, an affordable housing compliance consultant can help review your procedures and craft a solution that keeps your property in line.
Ready for a full-service compliance expert? Sanchez Compliance & Consulting is your resource for affordable housing compliance standards.