HUD Releases New Utility Allowance Guidelines

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If you own or manage affordable housing, you’re probably wondering what the new utility allowance guidelines released by the U.S. Department of Housing and Urban Development (HUD) mean for you. Currently HUD has annual utility outlays exceeding $6 billion per year. These guidelines will aid HUD in exploring methods to decrease utility spending and property operating costs, as well as improve water and energy efficiency in multifamily affordable housing (most notably, project-based Section 8).

Overview of HUD Notice H-2015-04

More than any previous guidance from HUD, the new Notice provides owners and managers with clarity and explicit guidance regarding the calculation of Utility Allowances. We’ve broken down the 11-page Notice to highlight important takeaways:

Impacts

The new guidelines will have varying degrees of impact on property owners and managers depending on the current requirements of their overseeing agency. Some contract administrators (e.g. State Housing Finance Agencies) already require Utility Allowance calculations such as those outlined in the Notice, while others have less rigid guidelines.

Having a national standard provides clarity on the requirements, but complying could be overwhelming for many owners and managers. Luckily, HUD has included funding stipulations to help offset the additional time and expense associated with the new process:

Most importantly, these new guidelines will more accurately identify what tenants are spending on utilities, which will enable HUD to work with owners and tenants to improve the energy performance of HUD housing and reduce its energy expenditures. 

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More questions about the new guidelines?