HUD-52485 Demonstration of Financial Feasibility

U.S. Department of Housing
and Urban Development
Office of Public and Indian Housing

Demonstration of
Financial Feasibility

OMB Approval No. 2577-0157 (exp. 3/31/2010)

Public reporting burden for this collection of information is estimated to average 1 hour per response, including the time for reviewing instructions,
searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. This agency may
not collect this information, and you are not required to complete this form, unless it displays a currently valid OMB control number.
This collection of information is required for developing a public housing project pursuant to HUD regulations 24 CFR 94l. The information will be used
to provide HUDwith sufficient information to enable a determination that funds should or should not be reserved or a contractual commitment made. This
information collection is mandated pursuant to the U.S. Housing Act of l937. The information requested does not lend itself to confidentiality.

Part 1. Estimate of PHA and Tenant Utility Costs
Project Number:

Public Housing Agency:

Estimated Amount per Unit per Month
PHA Furnished
Tenant Purchased
Quantity
Cost
Quantity
Cost

Type of Utility or Fuel
a. Water Services. Uses:

Household

123456789012345
Gals. $
123456789012345
123456789012345
123456789012345
123456789012345 $
123456789012345

Lawn and Shrubs

b. Sewage Disposal.
c. Electricity.

$
$

Uses:

Lighting and Refrigeration
Domestic Hot Water
Other: (identify)
d. Gas / LP.

12345678901234
Gals
12345678901234
12345678901234
12345678901234
12345678901234
12345678901234

Cooking
Space Heater

Air Conditioning

Cooking

Space Heater

KWH

$

Therms

$

KWH

$

Uses:

Domestic Hot Water
Other: (identify)
e. Oil (Type No.:

Domestic Hot Water

). Uses:

Cooking

Therms $

123456789012345
12345678901234
Gals. $
Gals 123456789012345
$
123456789012345
12345678901234
123456789012345
123456789012345
12345678901234123456789012345
123456789012345
12345678901234
123456789012345 $
12345678901234123456789012345
123456789012345
123456789012345
12345678901234
123456789012345
12345678901234
123456789012345 $
12345678901234123456789012345
$
123456789012345
12345678901234
123456789012345
12345678901234123456789012345
123456789012345
12345678901234123456789012345
123456789012345
12345678901234
$
123456789012345123456789012345
12345678901234123456789012345
123456789012345
123456789012345
123456789012345
12345678901234
123456789012345
123456789012345
12345678901234
123456789012345
123456789012345
12345678901234
$
123456789012345
123456789012345
12345678901234
123456789012345
123456789012345
12345678901234
123456789012345
123456789012345
12345678901234
123456789012345
123456789012345
12345678901234 $
123456789012345
123456789012345
12345678901234

Space Heater

f. Heating Labor. (Project Oper. Plant Only)
g. Other Utilities or Services. (specify)
h. Sub Total - PHA Furnished Utilities.
i. Sub Total - Tenant-Purchased Utilities.
j. Total PHA and Tenant-Purchased Utilities. (h plus i)

Part 2. Estimate of Anticipated Operating Expenses
a. Administrative Expense: Salaries (including maintenance supervision), legal, staff training, travel,
accounting fees and other administrative expenses.

Estimated Amount per Unit per Month
$

b. Tenant Services Expense: Salaries and other expenses incurred in providing tenant services and the
cost of other tenant services activities.

$

c. Utilities Furnished by PHA: Water, electricity, gas, fuel, sewer and other utilities. Also utilities labor
and other utilities expense (from item 1h, above).

$

d. Ordinary maintenance and Operation: Labor, materials, and contract costs for all routine
maintenance including janitorial and watchman service. Exclude expense applicable to utilities.

$

e. Protective Services: Labor, material and contract costs for protective services.
f. Insurance: Fire and Extended coverage, Public Liability, Workmen's Compensation, Employers'
Liability, boiler, automobile, burglary, theft and robbery, and Fidelity Bonds, as appropriate.
g. Payment in Lieu of Taxes: (Part 3,c (below) minus Part 2,c (above) times 10 percent).
h. Other General Expenses: Terminal leave payments, employee benefit contributions, collection
losses, and other general expenses.

$
$
$
$

i. Sub-Total (a through h)

$

j. Provision for Nonroutine Expenses and Reserve (10 percent of i )

$

k. Estimated Monthly Operating Expenses ( i plus j )

$

Previous edition is obsolete

page 1 of 3

form HUD-52485 (5/94)
ref. Handbooks 7417.1 & 7450.1

Part 3. Estimate of Average Monthly Contract Rent of the Proposed Project

per Unit Month

a. Estimate of Average Monthly Gross Rent

$

b. Estimate of Tenant-Purchased Utilities ( from item 1i, above)

$

c. Estimate of Monthly Contract Rent (a minus b)

$

d. Estimate of Average Monthly Contract Rent Based on 97% Occupancy (.97 x c)

$

Part 4. PHA Determination The PHA determines that (mark and complete "a" or "b") :
a.

The project's estimated operating expenses,
(item 2k) $___________________________
will not exceed the estimated operating income
(item 3d) $___________________________

b.

The project's estimated operating expenses, (item 2k) $________________________
will exceed the estimated operating income (item 3d) $________________________
by
$________________________
(item 2k minus item 3d) and an operating subsidy of that amount will be required. To
be feasible, this amount cannot exceed item 5d (below).

Part 5. Maximum Allowable Operating Subsidy

per Unit Month

a. The PUM allowable expense level

$

b. Plus: The PUM allowable utilities expense level (from item 1h, above, less utilities labor and
other utilities expense)

$

c. Minus: The PUM contract rental income (item 3d, above)

$

d. Maximum PFS operating subsidy (5a plus 5b minus 5c)

$

Part 6. Signature
I hereby certify that all the information stated herein, as well as any information provided in the accompaniment herewith, is true and accurate.
Warning: HUD will prosecute false claims and statements. Conviction may result in criminal and/or civil penalties. (18 U.S.C. 1001, 1010, 1012; 31 U.S.C. 3729, 3802)
Typed Name and Title of Authorized PHA Official:
Signature:
Date:

x
Instructions
1. Purpose. This form shall be used to demonstrate financial
feasibility of a project submitted by a Public Housing Agency (PHA)
under the Public Housing Program pursuant to 24 CFR 941 and the
Public Housing Development Handbook 7417.1 REV-1 and by an
Indian Housing Authority (IHA) under the Indian Housing Program
pursuant to 24 CFR 905 and the Indian Housing Handbook 7440.1.
This form is to be used for all development methods: conventional,
turnkey or acquisition. A project may be approved by the HUD Field
Office if it is determined that the project is financially feasible based
on the PHA’s demonstration of financial feasibility pursuant to this
form. This form is not to be used by PHAs located in Alaska, Guam,
Puerto Rico or the Virgin Islands (See Handbook 7417.1 REV-1). A
revision of this financial feasibility test is mandatory if the PHA
proposes to change any physical element of the proposed project or
its method of management or plans to increase services, and such
change would materially increase the estimated operating costs of
said project.
2. Prepared By: The form HUD-52485 is prepared by the PHA, with
assistance if necessary from the HUD Field Office.
3. Number: Original and one or more copies.
4. Distribution: A PHA shall submit the original to the applicable
HUD Field Office with the PHA Proposal for the project and shall
retain a copy for its files. A PHA may also be requested by the Field
Office to submit additional copies.
5. Instructions for PHA Preparation:
Heading: In the space provided, enter the name and address of the
PHA and the project number.
Part 1. - Estimate of PHA and Tenant Utility Costs. Enter the
estimated per unit per month (PUM) consumption and PUM cost
applicable to PHA furnished and/or tenant purchased utilities. The
source data for consumption and cost for electricity, gas, fuel,
heating supplies and heating labor is available on Form HUD-51994,
Previous edition is obsolete

Part A, Life Cycle Cost Analysis of Utility Combinations. The PHA
shall use the cost associated with the utility combination which HUD
has determined is most suitable for the project. Estimates for water
and sewage disposal shall be determined separately and entered in
Part 1, Items a and b. Costs shown on HUD-51994 will be allocated
to PHA furnished or tenant purchased and the results entered into
Part 1, Items h and i.
Part 2. - Estimate of Operating Expenses. The PHA shall submit
an estimate of its average monthly operating expenses for its first
year of operation. This estimate shall be based on the actual
expenses of a project which is comparable from a physical and
tenancy standpoint and is located in or about the locality of the
proposed project. The expense estimates shall be based on current
data and shall not include a projected inflation factor.
a. Administrative Expenses. Enter the PUM estimated total administrative expense for the project. Do not include an estimate for
audit fees.
b. Tenant Services Expense. Enter the PUM estimated total
expense for any tenant services programs projected for the project.
c. Utilities Furnished by PHA. Enter the PUM estimated total
expense for utilities to be supplied by the PHA for the project.
d. Ordinary Maintenance and Operation. Enter the PUM estimated
total expenses for ordinary maintenance and operation for the project.
e. Protective Services. Enter the PUM estimated total expenses
applicable to protective services for the project.
f. Insurance. Enter the PUM annual cost of the required insurance,
even though the initial insurance may be charged to the development
cost of the project.
g. Payment in Lieu of Taxes (PILOT). Enter the PUM estimated
cost for PILOT. PILOT is ten (10) percent of the difference between
the estimate of monthly contract rent and the utilities supplied by the
project. No entry need be made where the Cooperation Agreement

page 2 of 3

form HUD-52485 (5/94)
ref. Handbooks 7417.1 & 7450.1

specifically waives PILOT. In the Indian Housing Program PILOT
may only be paid on taxable land. If PILOT rate is less than ten (10)
percent of shelter rent, entry should reflect such reduced rate.
h. Other General Expenses. Enter PUM estimated total expense
for other general expenses (e.g., terminal leave payments, collection
losses, employee benefit contribution and in the Indian Housing
Program payment for services offered by other government agencies) for the project.
Part 3. - Estimate of Average Monthly Contract Rent of the
Proposed Project. The estimate of operating income shall be the
projected income for the first fiscal year of operation (without operating subsidy) based upon 97 percent occupancy by a tenant body
selected in accordance with PHA regulations (based on Sections 3
and 6(c) (4) of the Act and 24 CFR Part 960 and in the case of the
Indian Housing Program 24 CFR 905).
a. Estimate of Average Monthly Gross Rent. To determine the
estimate of average monthly gross rents, the PHA shall, first, determine the range of incomes of low-income families residing in rental
units in the county or jurisdiction which the project would serve. The
families shall be classified by household types (elderly/non-elderly)
and by income intervals. The percentage distribution of these
incomes shall be recorded in established income intervals. The PHA
shall determine the estimated rental income of the project by projecting
occupancy which approximates the percentage distribution of families
and by applying its current rent determination standards.
The PHA shall submit an analysis, with Form HUD-52485 that will
indicate the average monthly gross rent that would result if the PHA
selected families with a broad range of incomes representing the
distribution of incomes of the eligible population. The PHA shall take
into consideration the size of the families most likely to occupy the
proposed project if it were constructed at the proposed location. The
PHA should use whatever data is available to it to determine the
income ranges in the community This could include such sources
as census data., CDBG applications, wage surveys, etc. which
should be updated to reflect current income levels. The Field Office
may have data which could be of assistance to the PHA. If there are
not a sufficient number of eligible applicants in a particular range or
ranges existing on the PHA’s waiting list to fulfill the requirements
stated above regarding the tenant body, the PHA must submit its
proposed plan to attract applicants whose incomes will permit tenant
selection resulting in the project housing tenants with a distribution
of income reflecting the distribution of incomes of the potential
population in the community. If the PHA proposes to acquire a project
occupied in whole or part by low-income families, who will be retained
as residents, the estimate of average monthly gross rent shall include
the income distribution of those families as well. Based upon the
instructions, provide a realistic estimate of the average PUM gross rent.
b. Estimate of Tenant Purchased Utilities. Insert figure calculated in Item 1i of this form.
c. Estimate of Monthly Contract Rent. Subtract tenant purchased utilitties PUM (item 3b) from the Average Monthly Gross Rent
( item 3a) to determine the amount to be entered on this line.
d. Estimate of Average Monthly Contract Rent Based Upon 97
Percent Occupancy.
Enter the product of Average Monthly
Contract Rent (Item 3c) multiplied by 97 percent (.97).
Part 4. - PHA Determination.
a. If the estimated operating expenses for the first fiscal year
following the End of the Initial Operating Period (EIOP) does not
exceed the estimated operating income (without operating subsidy)
for the same period, the project is financially feasible. In this case
check block “a” and do not complete the remainder of this form.
b. If the estimated operating expenses exceed the estimated
operating income (without operating subsidy), check block “b” and
complete remainder of this form to determine if the project will be
financially feasible within the limitations of the available Performance Funding System (PFS) operating subsidy.
Part 5. - Maximum Allowable Operating Subsidy.
General. The PUM amount of operating subsidy which can be
Previous edition is obsolete

considered will be based upon whether the proposed project is to be
included in the Consolidated Annual Contributions Contract (CACC)
or whether the proposed project is to be placed in a separate Annual
Contributions Contract (ACC).
Existing PHA/New Project - CACC. If an existing PHA is proposing
a new project, and wishes to incorporate the project into its CACC,
the maximum allowable PUM amount of operating subsidy which
may be used in the determination of the financial feasibility test shall
be based on the following:
a. The PUM Allowable Expense Level for the project shall be
based upon the current PUM Allowable Expense Level for the CACC
recomputed to incorporate the characteristics of the project on all
required PFS forms. The recomputation of the Allowable Expense
Level shall be accomplished pursuant to Section 990.105 (d) (3) of
24 CFR Part 990, Subpart A, Operating Subsidy - Performance
Funding System. The PHA’s current fiscal year PFS shall be
recomputed to incorporate the project. In the recomputation no data
regarding the project shall be in the Current Year Columns, but shall
be shown in the Requested Year Columns. For this recomputation,
the estimated date of EIOP for the proposed project shall be the last
day of the current fiscal year. For purposes of this recomputation, the
project will be considered to be one year old.
b. Plus: The PUM Allowable Utilities Expense Level (do not
include Utilities Labor and Utilities Other).
c. Minus: The PUM estimate of the average monthly contract rent
based upon 97 percent occupancy.
Existing PHA/New Project to be Placed in Separate ACC or New
PHA / New Project. If project is to be in a separate ACC, the
maximum allowable PUM amount of operating subsidy which may be
used in the determination of the financial feasibility test should be
based on the following:
a. The PUM Allowable Expense Level for the proposed project
shall be determined to be the same as the current Allowable Expense
Level of a PHA already in management which is located in or about
the locality of the proposed project, if the proposed project and the
comparable PHA are generally alike in physical characteristics and
tenancy. Comparison should exclude a project age comparison. If
the project is not the first project of the PHA, the comparable PHA
might be the PHA itself. The usable Allowable Expenses Level would
have been developed pursuant to Section 990.105 of the PFS
Regulation. The HUD Field Office shall provide the appropriate
Allowable Expense Level upon request.
b. Plus: The PUM Allowable Utilities Expense Level (not to
include Utilities Labor and Utilities Other).
c. Minus: The PUM estimate of average monthly contract rent
based upon 97 percent occupancy.
d. Initial Operating Subsidy Eligibility. If the proposed project is
deemed to be financially feasible, the PUM Allowable Expense Level
determined in accordance with this subparagraph will be the basis
for the PUM Allowable Expense Level to be used in the project’s first
fiscal year in management. This PUM will be adjusted by an inflation
factor(s) for the intervening years. Instructions for the computation
of the first fiscal year PUM Allowable Expense Level are contained
in Performance Funding System Handbook 7475.13.
Completion of Part 5.
a. PUM Allowable Expense Level. Enter the PUM computed
using the instructions above.
b. PUM Allowable Utilities Expense Level. Enter the PUM cost
of PHA furnished utilities shown in Item 1h of this form less Utilities
Labor and Other Utilities Expense.
c. PUM Contract Rental Income. Enter the PUM rental income
amount as shown in 3d above.
d. Maximum PFS Operating Subsidy. Item 5(a) plus Item 5(b)
minus Item 5(c). If this amount is equal to or greater than the deficit
(Item 2k minus Item 3d) shown in Item 4b of this form, then the
proposed project shall be determined to be financially feasible.

page 3 of 3

form HUD-52485 (5/94)
ref. Handbooks 7417.1 & 7450.1