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December 2002 Owners Update

Owner Update "Question Of The Month"

What are the current funding levels for the various bedroom sizes?

The technical term for the bedroom size funding levels is Payment Standard. The figure is supposed to represent the gross rent for an average unit in our local area - gross rent being the rent to owner figure plus an estimate of utilities (heat, electric, W&S, trash) not included in the rent. For a more complete explanation of Gross Rent, see last monthís Owner Update.

Congress typically adjusts the Payment Standard amount in line with
inflation each year around the time of the new Federal fiscal year, which
is October 1. The new Payment Standard schedule is as follows:

Q. How does the Payment Standard amount work in calculating the amount
paid to an owner?

A. The Payment Standard is used to determine the Maximum Subsidy paid on
behalf of a family. This Maximum Subsidy amount is what is paid to the Owner. It works like this. TMHA determines the Monthly Adjusted Income of the family and then calculates 30% of that figure (Tenant Payment). This Tenant Payment is then subtracted from the Payment Standard for the bedroom size. The result is the Maximum Subsidy.

Because the Maximum Subsidy is based on the familyís income, itís higher when the familyís income is very low, and of course lower when the family has a higher income. In some cases, the familyís Maximum Subsidy will pay all the rent with some subsidy left over. In that case, TMHA will pay the remainder directly to the family to assist with paying their utilities (if any).

Q. Are the Payment Standards supposed to be rent ceilings?

A. No, think of them more as rent ranges. The actual gross rent on a program unit is often higher than the Payment Standard. Within reason, that is not a problem. When the gross rent exceeds the Payment Standard, TMHA looks at two factors. Is the rent ìreasonable,î in other words, in line with comparable units.

Can the tenant afford the unit? TMHAís payment will not exceed the Maximum Subsidy no matter how high the actual rent is, so the tenant will have to pay the difference - what we call ìoverage.î Regulation says that a new assisted lease HAP Contract should not be done if the tenant is paying more than 40% of their income for rent/utilities. At that point the unit is too expensive for the tenant even
with our help.

Q. How do new Payment Standards affect units already on the program?

A. All units go through the annual recertification process sometime during the year, and the updated Payment Standard is applied when the assistance is recalculated, so ongoing units as well as news take advantage of the updated Payment Standard.The staff at TMHA would like to wish our participating landlords and their families a wonderful holiday season along with a healthy and prosperous new year. We would also like to take just a second to extend our sincere appreciation for participating in the Section 8 program as owners and
providing affordable rental housing opportunities to TMHA program participants.