Utility Allowance Analysis

The purpose of the Utility Allowance (UA) is to determine the subsidy required to reimburse an energy conscious resident for utility costs. With each request for a rent adjustment, the property owner is required to complete an analysis of the current UA. The analysis must be prepared and submitted to SHCC in accordance with HUD Notice H-2015-4 and the related Frequently Asked Questions (Revised February 2022) document from HUD.

Obtaining the utility samples required for a UA can be very time consuming. SHCC recommends that you start at least a month before your submission is due. Any delays in submitting the analysis could result in a delay in implementing the new UA. If the analysis results in a decrease and implementation is delayed, the owner will be responsible for absorbing the decrease until the required notices can be distributed to residents. HUD has gathered utility provider data in a helpful website that can be accessed here.

There are two types of analyses, Baseline and Factor Based. In the first year after implementation of the Notice, the owner will be required to submit a Baseline analysis. In the two years following the Baseline year, the owner will be able to use the Utility Allowance Factor (UAF) published by HUD. Please note that there are other situations that trigger a Baseline Analysis. These are laid out in the Notice.

A list of Utility Allowance Analysis providers can be found here.

Baseline Analysis Submission Requirements

Utility Allowance Baseline Analysis Owner Certification – This is an SHCC form that includes all the supplemental information that is required for the Baseline Analysis

Calculation Spreadsheet – HUD has created a spreadsheet that may be used, or the owner may create their own. The calculations must be based on an average of the previous 12 month’s actual costs. To determine the minimum required number of samples by bedroom please refer to the grid below. If the property consists of multiple non-identical buildings (the buildings are not substantially similar), then the sampling must be performed for each bedroom size for each building on the site.

HUD has outlined three exceptions to these requirements. Units that meet the following criteria should not be included in the analysis:

1. Is receiving an increased utility allowance as a reasonable accommodation;
2. Has been vacant for 2 or more months. Units included in the sample should have at least 10 months of occupancy
3. Is receiving a flat utility rate as part of a low-income rate assistance utility program.

The Calculation Spreadsheet should indicate if any units qualify for any of these exemptions.

Factor Based Analysis Submission Requirements

For the two years following a baseline utility allowance analysis, the utility allowance for each unit type and each utility type can be adjusted by a state-specific increase factor, the Utility Allowance Factor (UAF). The UAF can be found here. After completing the utility analysis using the UAF, owners and agents should compare the results to their paid utilities over the previous 12-months. If, in the owner’s opinion, the results indicate a significant disparity between the two, the owner should complete a baseline analysis to ensure that the allowances are accurate.

Utility Allowance Factor Based Analysis Owner Certification – This is an SHCC form that includes all the information that is required for the Factor-Based Analysis.

Special Procedures for UA Decreases

In the event of a UA decrease, residents must receive two notices. The first resident notice is to advise them of their right to comment on the Utility Allowance decrease during a 30-day comment period. This must be conducted in form and manner required by 24 CFR 245.410  and 24 CFR 245.320.  SHCC has created a sample notice that you may use as a template to advise residents of their right to comment.  Please include a copy of the notice when you submit your Utility Allowance analysis.  At the end of the 30-day comment period, you must provide us with the certification of your compliance with the tenant comment procedures along with any resident comments you have received.

The second resident notice serves as the notice of an increase in the tenant portion of the rent that resulted from the UA decrease. It can be distributed anytime after SHCC has sent notified the owner of the approved UA amounts. SHCC has created a template you may use for this purpose; however this format is not required. The required elements are:

1. Date (must be 30 days in advance of effective date of rent change)
2. State the paragraph of the lease pertaining to rent changes (Paragraph 3 of the Family Lease and Paragraph 5 of the 202 Lease)
3. Effective date of rent change
4. New tenant portion of the rent
5. Reasons for the change in rent
6. Advise the resident that they may meet with the Landlord to discuss the rent change
7. Section 504 Language

You may be asked to provide a copy of this notice when you submit the monthly voucher that implements the UA decrease. Please note that failure to provide residents with this notice 30 days before the UA effective date will result in the owner having to cover the difference in the UA for the period before the residents were properly notified.