utility allowance “noncompliance” can cost you!
What happens if you don’t update your utility allowance schedule?
The utility allowance schedule in place at your property must be reviewed
at least once during each calendar year and updated if any changes in utility costs are found. If using the local Public Housing Authority (PHA) utility allowance schedule, updates may occur more often than annually.
- Failure to update annually or utilize the most current utility schedule can result in
reporting noncompliance to the IRS and a loss of credits.
- Noncompliance due to gross rents exceeding the maximum allowed based on the applicable
rent limit is also a reportable deficiency to the IRS and will result in a loss of credits.
Please note that overcharge of gross rents that are refunded back to a household does
not correct the noncompliance; the date noncompliance is corrected is always the first day of the owner’s next tax year.
Records Retained Specific to the computation of utilities allowance, Treas. Reg. §1.42-10(d) explains that owners must retain any utility consumption estimates and supporting data as part of the taxpayer's records for purposes of Treas. Reg. §1.6001-1(a) and available for review at any time by any monitoring agency. Copies of utility allowance schedules must be kept onsite at all times.
Watch for “other specify” monthly gas and electric fees If any utility allowance schedule indicates “other specify”
gas and electric fees, generally these fees must be included in the gross rent as part of your utility allowance fee per bedroom size.
Changes in policy
- Fees: CHFA charges an annual utility allowance review fee of $125.00 for owners submitting local utility company estimates for review.
- Option 1 (Public Housing Authority utility schedule): Any updates to PHA must be implemented immediately following the 90-day period from the most current effective date of the utility allowance schedule.
- Option 4 (Energy Consumption Model): Provide most recent 12-month data or available historical data if less than 12 months
Reminder of annual updates and CHFA review/approval If using the local utility company estimates, HUD Model, or Energy Consumption Model option, add to your calendar a reminder to obtain data 60 days prior to your annual utility effective date and submit to CHFA for review/approval. If using the local PHA utility schedule, add to your calendar quarterly to check for any updates as PHAs have updated several times within a calendar year.
Please review the
Utility Allowance Policy updated February 8, 2016.
If you have any questions, please contact your Program Compliance Officer for assistance.