Section 60. Determination of contract rents for units

The contract rent for a unit under the project-based certificate assistance program plus the allowance to be paid by the tenant may not exceed the section 8 existing fair market rent.

The contract rent for a unit under the moderate rehabilitation program is calculated using a two-step process. The authority first computes a "base rent" for the owner's unit and then adds to it the monthly cost of amortizing the owner's rehabilitation expenditure in the following manner.

1. The base rent shall be calculated in accordance with whichever of the following methods produces the higher rent:

a. The average rent collected for the unit during the 18 months preceding the owner's proposal, plus an adjustment factor for inflation and trending; or

b. A rent based on the anticipated costs of owning, managing and maintaining the rehabilitated unit. The formula used to calculate this base rent takes into account all operating expenses and allows a return (not to exceed 8.0%) on owner equity.

2. To the base rent is added the actual or imputed monthly per unit debt service cost for eligible rehabilitation costs, including the cost of any required temporary relocation of current tenants during the rehabilitation period.

Under the moderate rehabilitation program, the contract rent for a rehabilitated unit plus the allowance for any utilities to be paid by the tenant may not exceed the moderate rehabilitation fair market rent established by HUD for a unit of that size. The allowances for any utilities to be paid by tenant will be established by the authority and will be made available to the owner upon request.

In the moderate rehabilitation program, contract rents are tentatively calculated and the feasibility of the owner's proposal evaluated at several times during the processing period, as information concerning base rents, anticipated rehabilitation costs, and the terms of financing is received by the authority. The final calculation of the contract rent is made after the rehabilitation work has been completed and the owner's construction costs, temporary relocation costs, and financing terms are established, subject to the approval of the authority. In the project-based certificate assistance program, the initial contract rents shall be as set forth in the agreement unless adjusted in accordance with the section 8 rules and regulations.

Historical Notes

Derived from VR400-02-0007 § 6, eff. July 1, 1989; amended, Volume 11, Issue 17, eff. May 1, 1995.

Statutory Authority

§ 36-55.30:3 of the Code of Virginia.