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Utility Allowances in Federally Assisted Housing
Generally, residents of federally assisted housing are obligated to pay 30 percent of income for rent and utilities. Because most federally assisted residents pay utilities directly, the amount that they are required to pay for rent is adjusted by a “utility allowance.” Details vary between programs, but for most housing subsidies, the basic standard for utility allowances is similar: utility allowances must be calculated to approximate “a reasonable consumption of utilities by an energy-conservative household of modest circumstances consistent with the requirements of a safe, sanitary, and healthful living environment.” See, e.g., 24 C.F.R. § 982.517 (Voucher program). Details to be considered include the type of building, the size of the unit and household, and the unit’s appliances.
Payment of utilities depends on the type of metering system used in the tenant’s building: master, check, or retail metering. Federal law requires that utility allowances be reviewed for adjustments at least annually, and more frequently when utility rates have increased by 10 percent or more. For various reasons, utility allowances are often not adjusted promptly. As a consequence, residents often pay in excess of 30 percent of income for shelter for long periods of time, placing extreme hardship on their capacity to pay for other necessities, such as food, medical care, and rent. A lack of sufficient income to meet the combined housing costs of rent and utilities that exceed legal limits can ultimately result in unnecessary evictions and terminations.
Regardless of applicable metering and billing systems, tenants usually control a large portion of energy usage in multifamily housing and are indispensable partners in energy conservation and cost reduction efforts. In affordable housing, renewable energy and energy efficiency investments that ignore low-income tenants’ concerns may fail to achieve the level of widespread tenant participation essential to energy reduction and cost-saving goals.
This page contains references to some helpful resources to evaluate these problems and address any noncompliance. Click here for information on NHLP’s work to encourage energy efficiency improvements in affordable multi-family housing without unduly impacting low-income tenant.
NHLP, Having Trouble Paying Your Utilities and Rent? (July 2009).
NHLP Bulletin Article on Basic Advocacy Steps to Ensure Properly Adjusted Utility Allowances. The 2005 article describes basic advocacy steps needed to ensure that federally assisted residents receive proper adjustments for higher utility costs.
NHLP Bulletin Article re: Galindo v. HACoLA. Describing $3.3 million settlement in 2015 to compensate over 4,000 Los Angeles public housing tenants the tenants for garbage pick up fees that were supossed to have been paid for by housing.
NHLP Bulletin Article re McDowell v. Phila Hous. Auth. Describing 2006 U.S. Court of Appeals decision to enforce an earlier consent decree obtained by the tenants in a lawsuit seeking to enforce the PHA's duty to follow federal regulations on allowance adjustments.
NHLP Bulletin Article re Johnson v. Hous. Auth. of Jefferson Parish. Describing the 2006 decision by the United States Court of Appeals for the Fifth Circuit finding the Section 8 couvher tenants could enforce their federal rights to properly adjusted utility allowances in federal court through a claim under 42 U.S.C. Section 1983.
McCullumn v. Vancouver Housing Authority (2015). Settlement of $488,824 and prospective relief against PHA for failing to adjust public housing utility allowances to keep pace with utility rates.
Lewis v. Charlottesville Redevelopment & Housing Authority (2014). Monetary settlement and prospective relief against PHA for failing to properly calculate utility allowances.
HUD, Methodology for Completing a Multifamily Housing utility Analysis (Notice H-2015-04, June 2015). This notice establishes a required methodology for calculating utility allowances in its privately owned multifamily programs, most notably project-based Section 8. By establishing consistent property-specific utility allowances, this guidance provides a foundation for owners to pursue energy improvements that can benefit owners, tenants and HUD. It does not address another necessary ingredient for incentivizing improvements—the sharing of subsidy savings with owners to support the improvement costs.
Advocating for Higher Utility Allowances in Federally Subsidized Housing: A Practical Guide (2007). This guide, written for tenant advocates by NHLP and the Legal Aid Society of Hawaii, helps advocates identify, develop and litigate basic cases where allowances have not been updated to account for recent significant rate increases. The Guide’s appendices include spreadsheets to simplify required calculations, as well as sample information and demand requests, and pleadings.
An Affordable Housing Owner’s Guide to Utility Allowances (2016). NHLP and California Housing Partnership have jointly published a guide to assist owners and advocates of affordable housing in understanding the implications of recent changes to federal program utility allowance requirements, and to provide tips for assessing whether utility allowance adjustments can be used as a resource to finance or pay back the costs of energy efficiency and renewable improvement projects.
Training Materials from NHLP Webinar (2009). PowerPoint slides from NHLP’s Utility Allowance Webinar.
Sample Utility Allowance Schedules. Housing authorities and project-based Section 8 owners are required to maintain a record of their utility allowances. This document provides examples of utility allowance schedules.
Sample Records Act Request. Information gathering is one of the first steps in determining whether utility allowances are adequate. These files provide two sample public records requests: (1) a short request seeking all utility allowance schedules used by a housing authority and all documentation supporting the schedules; and (2) a long request that is more detailed and technical, which includes a request for information.
Sample Motion to Dismiss. Inadequate utility allowances mean that tenants have been illegally overpaying rent for the entire period that the allowance has been improperly set. In many jurisdictions, evictions for nonpayment of rent must be predicated upon a notice setting forth the amount of rent due. If the amount is incorrect as a result of the tenant’s overpayments due to inadequate utility allowances, advocates can challenge the amount due via an affirmative defense or motion to dismiss. This sample motion to dismiss alleges that the eviction notice demands rent in excess of the amount due because the defendant failed to properly adjust its utility allowances.
Tenant Pamphlet on Utility Allowances (2013). NHLP developed this pamphlet regarding utility allowances in federally subsidized housing. Many federally assisted tenants throughout the country are being overcharged for rent because their utility allowances are too low. Designed for tenant leaders, this pamphlet provides a basic overview of how utility allowances work. It will help your clients identify whether there is a problem with the allowances and, if so, how they can seek assistance from housing advocates and attorneys. Please feel free to reproduce this pamphlet and distribute it widely.
Empire Justice Center, The Section 8 Voucher Utility Allowance Dilemma (2010). This document explains and demonstrates why, because of the unique structure of the Section 8 Housing Choice Voucher program, an increase in the utility allowance to offset tenant-paid utility costs when rates go up may not provide immediate financial benefit to all tenants. Once the sum of the total rent paid to the owner plus the utility allowance exceeds the payment standard, voucher tenants receive no dollar benefit from increased allowances. Households will only benefit where the gross rent — including the utility allowance — is less than the payment standard. As a result, it is often necessary for advocates to seek simultaneous increases in the utility allowance and the payment standard.