Generally, residents of federally assisted housing must 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.” Under all programs, the utility allowance is a reasonable estimate of the cost of utilities in the area, given the type of building, the size of the unit and household, and the unit’s appliances. 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 on an annual basis or as required for rate increases exceeding 10%. 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.
This section contains references to some helpful resources to evaluate these problems and address any noncompliance.
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.
Describing the 2006 decision by the United States Court of Appeals for the Fifth Circuit finding the Section 8 voucher tenants could enforce their federal rights to properly adjusted utility allowances in federal court through a claim under 42 U.S.C. Section 1983.
In the wake of Hurricane Katrina, utility costs spiked around the nation. The article descibes basic advocacy steps needed to ensure that federally assisted residents receive proper adjustments for these higher utility costs.
The American Reinvestment and Recovery Act of 2009 (ARRA) provided unprecedented funding for improving the energy efficiency of housing serving low-income families. The Department of Housing and Urban Development (HUD's) Green Retrofit Program (GRP) for Multifamily Housing will provide $250 million in grants and loans for building rehabilitation that will reduce utility costs, improve tenant health and provide other environmental benefits. This article describes in detail the Notice HUD recently published to implement the GRP program.
Tenant advocates can download this from the Publications/Guidebooks Page.
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.
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 in the voucher program. Voucher tenants receive no dollar benefit from increased allowances once the sum of the total rent paid to the owner plus the utility allowance exceeds the payment standard. Households will only benefit where the gross rent — including the utility allowance — is less than the payment standard.
Power Points from NHLP Utility Allowance Webinar
In 2008, NHLP obtained data on utility allowances from many Northern California PHAs for their public housing and voucher programs back to 2003. These files (password protected) contain the results of that analysis. For further information, please contact Meliah Schultzman or Jim Grow at NHLP's Oakland office.
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
Illegally inadequate utility allowances mean that tenants have been 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.
Many federally assisted tenants throughout the country are being overcharged for rent because their utility allowances are too low. NHLP has developed a pamphlet regarding utility allowances in federally subsidized housing. 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.