HOMEfires - Vol. 3 No. 3, March 2001

Information by State  Print version

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 family’s 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).