Q:
May Participating Jurisdictions use Section 8 "exception rent
limits" as the basis for determining HOME program rents?
What is the difference between "exception rent limits"
and HOME "rent exceptions"?
A:
Section 8 "exception rent limits" do not apply to the
HOME program and cannot be used to determine the maximum HOME program
rents. Unfortunately, the "Building HOME" training manual
contains an error in Chapter 6, page 6-11 which states that communities
may use the Section 8 "exception rent limits". This error
has been corrected in current versions of the manual.
The rent limits which Participating Jurisdictions may use for HOME-assisted
rental units are those which HUD establishes each year for the HOME
program. There are two types of rent limits - "High HOME Rent
Limits" and "Low HOME Rent Limits." These rent limits
are provided to HUD Field Offices and Participating Jurisdictions,
generally in February or March. The HOME
rent limits are also available on the HOME program web page.
The HOME regulations at 24 CFR 92.252
describe the methods HUD uses to establish the HOME rent limits.
Note that the HUD established HOME rent limits do not apply to HOME-assisted
units which also receive Federal or State project-based rental subsidies,
are occupied by very low-income families and the very low-income
families do not pay as a contribution towards rent more than 30
percent of the familys adjusted income. In this case the maximum
rent (i.e. tenant contribution plus project-based rental subsidy)
is the rent allowable under the Federal or State project-based subsidy
program in accordance with 24 CFR 92.252
(b)(2).
Section 8 "exception rent limits" apply to HUD's Section
8 rental assistance programs. HUD may approve Section 8 exception
rent limits for a community if HUD determines that certificate or
voucher holders can not locate housing bearing rents within the
established Fair Market Rent (FMR) standards. Exception rents may
be approved on an area-wide basis or as a reasonable accommodation
for persons with disabilities. The Section 8 regulations at 24 CFR
982.504 describe the methods for determining Section 8 exception
rent limits.
HOME "rent exceptions" are rent adjustments that HUD approves
for an individual HOME project in order to support the project's
continued financial viability. 24 CFR 92.252(g) authorizes such
rent adjustments. Notice
CPD-94-20 dated July 25, 1994, "Rent Exceptions for HOME-Assisted
Rental Projects" describes the procedures to be followed.
HUD expects that the exception authority under 24 CFR 92.252(g)
will be used sparingly since HOME program rents help ensure that
the rents charged for HOME-assisted units are affordable to low-
and very-low income families. Only those HOME projects which demonstrate
serious financial distress due to conditions which were unforeseen
or beyond the control of the owner will be considered. As a general
rule, rent exceptions may not exceed 120 percent of the applicable
HOME program rents. Rent exceptions are approved by the local HUD
Field Office and are valid for two years. HUD may extend rent exceptions
for an additional two years under limited circumstances. If longer-term
steps are needed, HUD expects that the owner and Participating Jurisdiction
will identify a more permanent form of financial relief.
Notice
CPD-94-20 discusses in more detail the criteria for issuing
rent exceptions, presents the steps Participating Jurisdictions
must follow in applying for rent exceptions, and outlines the procedures
HUD Field Offices will use in reviewing and approving rent exceptions
applications. Applications for HOME rent exceptions can only be
made by the Participating Jurisdiction. Before requesting a rent
exception, a Participating Jurisdiction should become familiar with
the regulations at 24 CFR 92.252(g)
and Notice
CPD-94-20.
Because the terms "exception rent limits" which apply to the Section
8 rental programs and "rent exceptions" which apply to
the HOME program sound similar, it is easy to confuse them. Participating
Jurisdictions and their recipients, subrecipients and subgrantees,
must be careful to use only the latest HUD-established HOME program
rent limits, except when written HUD approval has been granted for
specific HOME "rent exceptions" to be used for an individual
HOME project, or the project receives a Federal or State project-based
rental subsidy and meets the very low-income requirements of 24
CFR 92.252(b)(2).
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