Section 8 Utility Allowances

Need

Utility allowances are an important part of running the Section 8 Housing Certificate Voucher program. These represent the allowances that are paid to Voucher tenants who must pay for their own utilities, or to owners if they furnish utilities to their tenants. Because they are not tied to specific dwelling units (in contrast to the Public Housing program) they are based on average consumption for similar units in the same geographic area.

Many utility allowances are out-of-date, inaccurate, or poorly documented. I can help.

Recognizing that many PHAs don’t have detailed average consumption data, HUD provides some approximate consumption figures for a hypothetical 2 ½ bedroom single-family dwelling unit, in a location with an average of 4,000 heating degree days and 1,000 cooling degree days. My method is based loosely on the HUD figures.

HUD requires that utility allowances be examined at least once a year and updated if any utility rate changes by 10 percent or more. My method does this easily and precisely, and doesn't need a specialist to do it. Transcription errors are impossible with my method because the results of calculations are automatically transferred to the HUD-52667 form.

By replicating the actual formula used by local utility companies, my method easily and precisely updates utility allowances. This is in sharp contrast to methods that rely on utility company "increases" reported in the local press, which frequently apply only to one part of the calculation--the cost of fuel--without regard for the fact that delivery and fixed charges usually stay constant and that the overall effect of a given change in the cost of fuel will vary for large and small dwellings.

 

 

Process

Consumption
In the absence of usable PHA-supplied consumption data I use HUD’s base consumption figures for a hypothetical 2 ½ bedroom single family unit, and adjust these numbers for:

  • Size of unit—number of bedrooms compared to 2 ½ bedrooms
  • Structure type—Duplex or apartment, compared to single-family
  • Local climate—heating and cooling degree days, compared to 4,000 and 1,000, respectively
  • Efficiency improvements since the mid-1970’s

For HUD's instructions, click here

Utility Costs
I use the complete utility company cost structure, including fixed monthly costs, delivery costs, and fuel costs. (Fuel costs are what changes dramatically from year to year; the other two generally are stable.) I do this for each major fuel—gas, electricity, oil and propane, trying in all cases to get a projected cost for the upcoming winter heating season. I then compute utility cost for each month (for heating and air conditioning, taking into account the monthly pattern of heating and cooling degree days.) These costs are then transcribed to the completed form HUD-52667.

Water and Sewer
In rural areas, water and sewer charges can vary dramatically by supplier, and these are therefore calculated separately and displayed on separate lines of the HUD-52667. Generally, I create separate calculations for the towns where the PHA has the most Voucher clients.

For an in-depth look at my calculations, click here.

 

 

 

fees

My normal fee for a full set of utility allowances and a detailed description of the process is between $2,000 and $3,000, depending on circumstances. I charge $300 to $500 for annual updates.

 

 

Limitations and Legal Issues

  1. None of the computer programs or other materials that I provide to the sponsor may be given, sold or otherwise provided to any other parties without my express written permission. This includes other public housing authorities operating in the contracting PHA’s Fair Market Rent area.
  2. The utility allowances that I provide are to be considered rough averages for the PHA’s area, and no greater precision can be inferred from them. They are not to be used for Public Housing utility allowances, as they are not property-specific. Likewise, they are not suitable for use by Low Income Tax Credit developers, as they are not applicable to new construction.
  3. I am an economist by training, not a heating and cooling (“HVAC”) engineer. I will carry out the terms of this contract to the best of my ability. However, in no event shall I be liable in connection with this contract for incidental, special or consequential damages, or for any damages in excess of the amounts paid to me.