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OHFA Revises Utility Allowance Policy

 

 

OHFA’s Utility Allowance (UA) Policy and forms have been updated. The policy assists owners with two important objectives. First, owners who develop energy efficient properties are rewarded with lower utility costs and second, help to ensure tax credit communities are sustainable and viable by allowing additional cash flow due to savings from the utility allowance.

The updated policy is effective December 6, 2016. Revisions to the policy focused on changes occurring in the industry related to the HOME program, updates to OHFA’s extended use policy and OHFA’s policy shift regarding consumption-based allowances. Effective immediately, OHFA will no longer accept consumption-based methodology utility allowance requests. Potential alternatives to a consumption-based allowance were thoroughly evaluated before reaching this decision. These changes are necessary so that the policy and process continue to comply with federal program requirements.

 

Properties Currently Using an Approved Consumption-Based UA

OHFA will allow for a waiver to this policy change for owners who submitted a consumption-based utility allowance request from January 1, 2016 to June 30, 2016, and were approved to use that allowance.  Owners of these projects (list) will be able to request a one-time consumption-based utility allowance upon annual renewal. OHFA believes this waiver period is reasonable and will allow owners of these projects to effectively plan how the use of another utility allowance methodology may impact the project’s financial status. If the owner of an eligible project decides to request a consumption-based allowance, the submission should go directly to Betsy Krieger, PC Director, at bkrieger@ohiohome.org. The owner will have to select another utility allowance methodology as outlined in the utility allowance policy upon the next annual renewal date for any requests after this one time waiver.

Extended Use Projects

Owners of extended use projects (e.g. those in the second 15-year compliance period) are not exempt from this policy change. If an owner is currently using a consumption-based utility allowance, the owner must use another utility allowance methodology as outlined in the policy when the allowance is due for an annual update. The owner is not required to submit the allowance to OHFA for approval. However, OHFA reserves the right to request documents regarding the utility allowance. Changes in utility allowances must be completed in DevCo at least once annually, as per the Internal Revenue Code Section 1.42-10.

2013 Final HOME Rule and Utility Allowance Requirement

Due to the 2013 Final HOME Rule utility allowance requirement, OHFA requires owners of projects that receive an allocation of HOME funds on or after August 23, 2013 to request a utility allowance from PC. Owners of these projects are longer able to use the Public Housing Authority (PHA) allowance for all HOME units in the project. Effective January 1, 2017, owners of these projects are required to submit an individual utility allowance for the HOME units by using the HUD Utility Model, utility company estimate or energy consumption model.  Projects that have a utility allowance mandated by another Federal Program (e.g. HUD Section 8, Rural Development) may use the utility allowance as determined by the housing contract.  Due to the HOME program not allowing the PHA utility allowance to be utilized, a household with a Housing Choice Voucher would not be able to meet the HOME utility allowance requirement.  If selecting such a unit is the only option at the property, the owner must contact OHFA for further guidance.

Owners of projects that received OHFA HOME funds prior to August 23, 2013 are not impacted by the new utility allowance requirement and may continue to use any utility method described in OHFA’s Utility Allowance Policy to include PHA estimates.

 

As part of the policy update both the Utility Allowance Request Form PC-E30 (PC-E32 UA Certification is incorporated into this form) and the Utility Allowance Statement of Non-Renewal Form PC-E31 were modified, and the optional form requesting utility records from residents PC-E33 was reformatted.

In drafting the policy and form changes OHFA's Program Compliance Advisory Committee was consulted and provided input. Questions regarding this matter should be directed to Betsy Krieger, bkrieger@ohiohome.org.