Hud-9635 Projects Preparing A Budget-based Rent Increase

Attachment 5

P ROJECTS P REPARING A B UDGET -B ASED R ENT I NCREASE
Guidance for preparing a budget-based rent increase may be found in HUD Handbook
4350.1,REV-1, Chapter 7. Projects that have not previously prepared or submitted a budget
based increase should carefully follow these instructions. The basic components to be included
are listed in paragraph 7-22.
Allowance for Owner Distribution For Profit Motivated Projects that Have Not
Previously Submitted a Budget Based Rent Increase.
Projects falling under this blanket may factor in an allowance for owner return/distribution as
follows:
• For Section 515/8 projects (regardless of whether they are for the elderly or families), 8%
of the initial Owner equity.
• For all other projects:
⇒ for Elderly, 6% of the initial owner equity.
⇒ for Families, 10% of the initial owner equity.
To determine initial owner equity, the owner(s) should refer to the original firm commitment
from HUD (form HUD-92264). If the project was not insured, or the HUD-92264 in not
available, the Owner(s) must certify as to the amount of the initial equity and provide supporting
documentation.
For Section 515/8 projects:
__________________________ x .08 = ______________________________
Initial Owner Equity
Allowance for Owner Return/Distribution
For Elderly Projects:
__________________________ x .06 = ______________________________
Initial Owner Equity
Allowance for Owner Return/Distribution
For Family Projects:
__________________________ x .10 = ______________________________
Initial Owner Equity
Allowance for Owner Return/Distribution
I hereby certify that this accurately reflects the initial Owner equity in the project as of the date
the project initially entered into a Section 8 contract.
____________________________________________ __________________
Owner(s) Signature
Date
01/15/08

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Attachment 5

The allowance for Owner Return/Distribution should be factored into the Rent Computation
Worksheet (Appendix 5, Chapter 7 of the 4350.1) in Box C, “Return/Net Income Reserve.”

01/15/08

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