Texas Department of Housing & Community Affairs - Building Homes and Strengthening Communities

Compliance: Frequently Asked Questions (FAQs)

Demystifying Effective Dates (PDF)

Reasonable Accommodations Under the Fair Housing Act (www.hud.gov)

Reasonable Accommodation and Reasonable Modification Infographic

Select from the following list of frequently asked questions:

Physical Inspections

Eligibility (go to section)

Compliance Monitoring Physical Inspections (go to section)

Utility Allowances (go to section)

 


Eligibility

Q. What should the effective date on the household’s Income Certification form be?
A. Please see this chart. (PDF)

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Q. Can a property monitored by TDHCA use a “flat-rate” utility allowance published by a Public Housing Authority?
A. Certain housing authorities, including "Moving to Work" Housing Authorities have the option of publishing a flat-rate utility allowance instead of publishing an allowance for each utility (electric, gas, water and/or trash). TDHCA is aware that the San Antonio Housing Authority published this type of allowance for their Section 8 voucher program in 2015. Provided that the “flat rate” utility allowance is compliant with HUD requirements, it can be used by a property monitored by TDHCA.

As a reminder, the PHA method is not an option for Rural Housing Services (RHS) buildings, buildings with RHS assisted tenants (10TAC§10.614(c)) and/or a HUD- Regulated building (10TAC§10.614(d)). In addition, there are certain areas of the state where there is no “applicable” housing authority. In general, in those areas developments must use one of the other options for calculating an allowance. Lastly, please note, this may change in the near future for the HOME program pending guidance from the Community Planning and Development (CPD) section of HUD.

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Q. Can an applicant complete an electronic application?
A. The intent of an application is to allow an applicant to disclose how many members in the household, student status and all sources of income and assets so that onsite staff knows what to verify to establish eligibility. The application must be completed by the applicant. Many owners are looking into having applications completed electronically. An electronic application can be used; however, it is important, as with any type of application, that onsite staff cannot alter the form once completed by the applicant. It will be the owner's responsibility to maintain documentation to evidence that the process is secure and that at no point during the process can staff change the application. (Top)

Q. How do I calculate the annual income of an applicant/resident?
A.
Our housing programs use the rules for calculating annual income set-forth in Chapter 5 of the HUD Handbook 4350.3: Occupancy Requirements of Subsidized Multifamily Housing Programs. To obtain a copy of the Handbook, contact HUDCLIPS on the web https://www.hud.gov or by phone 1-800-767-7468. (Top)

Q. How do I calculate the cash value of an asset?
A.
The cash value of an asset is the market value minus reasonable costs that would be incurred in selling or converting the asset to cash. The reasonable costs that may be deducted include: (1) penalties for withdrawing funds before maturity, (2) broker/legal fees assessed to sell or convert the asset to cash, (3) settlement costs for real estate transaction, and (4) loans on the asset. (Top)

Q. How do I know if an asset was disposed of for less than market value?
A.
Screen the applicant/resident for assets disposed of for at least $1000 less than market value. (Top)

Q. Can a live-in aid be a relative?
A.
A live-in aid is a person who lives with an elderly, disabled or handicapped individual(s) and is essential to that individual’s care and well-being, not obligated for the individual’s support and would not be living in the unit except to provide the support services. A relative may be considered a live-in aid if the individual meets all of the above requirements, especially the last. (Top)

Q. Is child support counted as income?
A.
Child support payments must be included when determining household eligibility. If a household does not receive the court ordered child support that they are entitled to, the amount must still be included, unless two requirements are met: 1) The household certifies that the support is not being received. AND 2) The household provides documentation that reasonable efforts to collect the support have been made, including filing with courts or agencies responsible for enforcing payments. (Top)

Q. May I use check stubs as income verification?
A.
Yes. Remember that you must use a consistent method for annualizing income from check stubs. (Top)

Q. How do I verify self-employment income if the resident/applicant only recently entered self-employment?
A.
As a case of last resort, the resident/applicant may complete a self-affidavit estimating income for the upcoming twelve months. (Top)

Q. How do I obtain a utility allowance schedule?
A.
The Public Housing Authority (PHA) serving the area where your property is located or the local utility provider can provide a utility allowance. Consult the compliance monitoring rules Section 10.614 (on the Secretary of State Web site) to determine which source is right for your property. A listing of Public Housing Authorities in Texas (www.hud.gov) is also available from the Housing Resource Center. Please visit the Utility Allowance page for addition information. (Top)

Q. How do I determine the cash vale of a whole or universal life insurance policy?
A. The cash value is the surrender value of the policy. This information is available in the policy or from the insurance company. (Top)

Q. Do existing households that transfer to another unit at the property need to be provided the Tenant Rights and Resources Guide?
A.
No. Only households that move in on or after January 8, 2015 must be provided the Tenant Rights and Resources Guide and are required to sign the Acknowledgement of Receipt. Although it is not a requirement to provide the Tenant Rights and Resources Guide to households that transfer, properties are encouraged to so. (Top)

Q. If a household member is added to an existing household, does the new household member need to be provided the Tenant Rights and Resources Guide?
A.
If the person joining the household is considered an adult (and would be signing the Income Certification), then yes, that person must be provided the Tenant Rights and Resources Guide and must sign the Acknowledgement of Receipt. Remember, for most programs, when an adult joins an existing low-income household, you will be screening that person for income and assets, verifying and adding that information to the existing Income Certification form. During this process, but no later than when the new member actually moves into the unit, they should be given the Tenant Rights and Resources Guide. (Top)

Q. Can the Unit Status Report (USR) be made available in Excel?
A.
YES. CMTS has been enhanced to allow for you to view your USR in PDF and Excel. This feature is already available. (Top)

 


Compliance Monitoring Physical Inspections

Q. What is a UPCS inspection?
A. The Uniform Physical Condition Standard (UPCS) inspection protocol was developed by the U.S. Department of Housing and Urban Development's (HUD) Real Estate Assessment Center (REAC) to ensure that housing is “decent, safe, sanitary and in good repair”. REAC conducts approximately 20,000 annual inspections of rental housing that is owned, insured or subsidized by HUD using the UPCS inspection protocol. Visit our listing of related Web sites regarding the inspection process. (Top)

Q. Why does the Texas Department of Housing and Community Affairs use UPCS?
A.
The Internal Revenue Service requires housing agencies to use local health, safety, and building codes or the UPCS to assess the physical condition of Housing Tax Credit developments. In Texas, building codes can vary from city to city and many areas do not have code enforcement at all. To ensure a uniform inspection standard is used state wide, the Department has adopted the UPCS for all programs we administer. (Top)

Q. Who performs the inspections?
A. The Department's Compliance Monitoring Physical Inspections (CMPI) staff will be conducting most of the inspections scheduled. The CMPI staff will perform a range of inspections including UPCS onsite assessments, construction inspections and reviews, and verification of construction and rehabilitation standards of single family structures financed through the HOME program. CMPI staff also supervises and evaluates inspections of our contractors and field inspectors.

Inspectors from On-site Insight and The Inspection Group (Department Contractors) are HUD certified with broad experience in conducting UPCS inspections. Many inspectors live in Texas and all are under the supervision of the contractor's staff. Each contracted inspection firm was selected through a competitive bidding process.

Additionally, in certain circumstances, the Department's Compliance Monitor(s) performing an onsite file review will conduct the physical inspection for a development. (Top)

Q. Who are On-site Insight and The Inspection Group?
A.
On-site Insight is a subsidiary of RECAP Real Estate Advisors, a multidisciplinary consulting firm specializing in asset management, physical inspections and capital needs assessments of multifamily, institutional and commercial real estate.

The Inspection Group was founded in 1998 with the objective of providing various building inspection related services. They have inspected over 100,000 units for more than 185 customers. All inspectors have been certified by HUD/REAC. The Inspection Group, Inc., has been putting to use its experience of performing thousands of HUD REAC protocol inspections nationwide, UPCS training, REAC report reviews and score appeals; advising in preparation for REAC inspections; installing new UPCS inspection systems, including software. (Top)

Q. How does the UPCS differ from individual city and/or HUD Housing Quality Standard inspections made at my development?
A.
UPCS is generally more detailed and thorough than HQS and most city inspections. The UPCS is designed to be more objective than the HQS protocol. UPCS follows Federal requirements at 24CFR 5.703 and addresses a multitude of inspectable items in five major areas: Site, building exteriors, building systems, common areas and dwelling units, . The Dictionary of Deficiency Definitions (see website listing) is a 325 page listing of each inspectable item with a description of the factors that dictate the level of deficiency. HQS does not address the number of inspectable items that the UPCS include and is not as objective when identifying deficiencies. (Top)

Q. How does the inspector know what to look for?
A.
Inspectors have been professionally trained to identify deficiencies based on the UPCS. Additionally, the UPCS inspection is software based. The inspector will generally have a laptop or hand held computer with the UPCS software. The software lists the various inspection items by the five inspectable areas in detail. The inspector notes deficiencies found and assigns a severity level to each deficiency noted during the inspection. (Top)

Q. When will the Physical Inspection be performed?
A.
Usually within 60 days of the Department's on site review. In some cases, such as in rural areas, the delay may be longer. (Top)

Q. What should I expect when the physical inspection is scheduled?
A.
The inspector should provide adequate notice to the on site manager and staff to allow them to send a notice to the tenants that their unit may be selected for inspection. When the inspector arrives he or she will have a list of the units to be inspected; the site manager will be asked to pull the keys for the units listed. It is recommended that keys for a few extra units be pulled in case a unit on the list cannot be entered. A development staff member is required to accompany the inspector at all times and must enter each dwelling unit with the inspector. The inspector will look at each building on the development and at each unit on the list. (Top)

Q. Can deficiencies be repaired while the inspector is on site?
A.
Yes. The inspector will allow reasonable correction of Exigent and Fire Safety Hazards (commonly known as EH&S) during the inspection--for example, if a tenant has disabled a smoke detector, site staff may repair or replace the smoke detector while the inspector is in the unit if time allows. The deficiency will be recorded and noted as corrected. There is usually not sufficient time for more extensive corrections during an inspection. (Top)

Q. What deficiencies are commonly seen?
A .
Exigent and Fire Safety deficiencies most commonly cited are missing covers or plates in electrical boxes that expose live wires and blocked egress (furniture blocking windows in bedrooms). Other issues reported are entrance door seals damaged, bathroom basin problems (usually stoppers or pop-ups not working or missing), missing splash blocks at gutter downspouts, and damaged or torn refrigerator door gaskets. (Top)

Q. How is the inspection score for the Development, as reported on the cover of the Physical Assessment Report, calculated?
A.
A combination of many factors is used by the software to calculate the final score. A complete discussion is on the HUD website listed in the useful websites. (Top)

Q. If I have deficiencies reported on the Exigent and Fire Safety Hazards Observed form, what is the next step?
A.
The inspector will complete a Notification of Exigent and Fire Safety Hazards Observed form at the conclusion of the inspection with a copy presented to the owner's onsite representative. Development staff must correct the deficiency in 24 hours and notify the Department of the correction within 72 hours (3 work days) of notice. A Certification of Correction Form will be left on site to report corrections and is included in the Forms section of the PMC Web site. Submission of the Certification of Correction may be by fax or email and should be addressed to the Department's inspector or as directed on the Certification of Correction Form. (Top)

Q. How do I receive the inspection report and what should I do?
A.
A letter to the owner contact listed in the Compliance Monitoring and Tracking System (CMTS) will be mailed with a copy of the report. A copy of the letter and the List of Deficiencies section of the report is mailed to the onsite staff and to the management company listed in CMTS. The letter will state whether or not the physical inspection resulted in any findings, the ending date of the corrective action period, and information on how to report corrections. Remember, all deficiencies must be corrected. (Top)

Q. For a tax credit development, if all deficiencies reported are corrected, will a finding still be reported to the IRS on Form 8823?
A.
At the conclusion of the corrective action period, the Department will issue Forms 8823 for each building with a deficiency. The IRS requires all deficiencies to be reported, whether or not corrected (see the IRS 8823 Guide). The finding on the IRS Form 8823 is: “Violation(s) of the UPCS or local inspection standards”. If all deficiencies reported for a particular building are reported corrected during the corrective action period, the Form 8823 will be marked “out of compliance” and “noncompliance corrected”. If not all deficiencies are corrected the Form 8823 will be submitted as “out of compliance”. When documentation of corrections is received for buildings reported out of compliance, additional Forms 8823 will be sent to the IRS reporting the correction(s). (Top)

Q. What does the IRS do when noncompliance is reported?
A.
The Department has no information as to how the IRS will treat the report of noncompliance once received. (Top)


Utility Allowance

Q. If I have Housing Tax Credits (“HTC”), can I use any method to calculate my utility allowance?
A. No. If you have Rural Housing Services (“RHS”) building(s) or building(s) with RHS assisted tenants, the utility allowance is determined under the method prescribed by the RHS. No other utility method can be used by RHS buildings or buildings with RHS assisted tenants. If neither the building nor any tenant in the building receives RHS rental assistance payments, but the rents and the utility allowances of the building are reviewed by HUD (“HUD-regulated building”), the utility allowance for all rent restricted Units in the building is the applicable HUD utility allowance. No other utility method can be used by HUD-regulated buildings.

As long as you do not have HUD-Regulated and/or RHS assisted building(s), you can choose any of the other methods to calculate the utility allowance. (Top)

Q. What utility allowance do I use if I have both RHS assisted tenants and HUD-regulated buildings?
A.
The utility allowance is determined under the method prescribed by the RHS. (Top)

Q. I want to use the Public Housing Authority (“PHA”) method to calculate the utility allowance. How do I figure out what PHA is most applicable to my property?
A. The Department defers to Chapter 392 of the Texas Local Government Code in making this determination. Please see this flow chart for guidance. (Top)

Q. If I have a household that has a section 8 voucher (fka Section 8 Existing Housing Program), what is the utility allowance for that unit?
A.
The correct utility allowance for a unit occupied by a household that has a section 8 voucher is the utility allowance schedule from the PHA that issued the voucher. No other utility allowance method is allowed when a household has a section 8 voucher. (Top)

Q. If I have one (1) or more Public Housing Unit in a building (note, this is not referencing households that have a section 8 voucher), what is my utility allowance to maintain compliance with Department administered programs?
A.
If a building has, one (1) or more Public Housing Units, the building is HUD-Regulated. For HUD-Regulated buildings (as long as neither the building nor any tenant in the building receives RHS rental assistance payments) the utility allowance for all rent restricted Units in the building is the applicable HUD utility allowance for the Public Housing program at your property. No other utility method described in this section can be used by HUD-regulated buildings. (Top)

Q. I received approval from the Department last year to use an alternate Public Housing Authority ("PHA"), a Written Local Estimate, the HUD Utility Schedule Model, the Energy Consumption Model or the Agency Estimate. However, the amounts for this year have not changed. Do I need to submit an approval again for this year?
A.
Yes. If you are using an alternate Public Housing Authority ("PHA"), a Written Local Estimate, the HUD Utility Schedule Model, the Energy Consumption Model or the Agency Estimate you must update the allowance once a calendar year and submit a request for approval to the Department. As a reminder, for an alternate PHA, Written Local Estimate, HUD Utility Schedule Model or Energy Consumption Model to be considered in effect by December 31st, the Notice to the Residents and Department must occur no later than October 1st. For the Agency Estimate, since the notification cannot occur until the Department calculates and approves the allowance, the annual review request must be submitted no later than August 17th to allow for the 45 day review period. (Top)

Q. I want to use the Written Local Estimate methodology but I am unsure what the written estimate letter from the utility provider needs to include.
A.
The Written Local Estimate is a letter that you obtain from the applicable residential utility provider that gives an estimated cost of a utility from that provider for units of similar size and construction in the same geographic area as your property. The letter must be dated, signed by the utility provider representative, and specifically include all "component charges" for providing the utility service. (Top)

Q. I am using the Public Housing Authority schedule for my utility allowance and the applicable PHA publishes 2 different utility allowance schedules 1) Apartments (5 or more units per building); and, 2) Row House/Townhouse & Semi-Detached/Duplex (up to 4 units per building) . At my property, I have buildings with four (4) units, eight (8) units, and twenty (20) units. Can I use the “Apartments (5 or more units per building)” for all of my buildings?
A.
No. If the Housing Authority publishes different schedules based on building type, the owner is responsible for implementing the correct schedule based on the development's building type(s). In this example, you would use the utility allowance schedule for Apartments (5 or more units per building) for the buildings that have 8 units and 20 units. For the buildings with 4 units, you must use the Row House/Townhouse & Semi-Detached/Duplex (up to 4 units per building) schedule. You cannot use the Apartments (5 or more units per building) schedule for buildings that have only 4 units. (Top)

Q. My development is located in Anytown, Texas and I need the latest Public Housing Authority utility allowance schedule that applies to me. Can you please send it me?
A.
You need to contact the applicable Public Housing Authority and request a copy of their utility allowance schedule for the Section 8 Voucher Program. This information is available to you under the Public Information Act (The Texas Government Code, Title 5, Subtitle A, Chapter 552: Public Information). Contact information for all PHA’s can be found on HUD.gov. (Top)

Q. I have 3 properties that are all located in different cities and I am trying to figure out how to calculate the taxes for the HUD Utility Model Schedule. Why do I include the local tax for some cities but not for others? And why don’t I include the county tax?
A .
Taxes for the electric utility are regulated by the Texas Comptroller of Public Accounts. The electric tax is comprised of three (3) factors: 

1) Miscellaneous Gross Receipts Tax- this tax varies based on the City’s population

2) Public Utility Gross Receipts Assessment Tax- Currently, this rate is set at 0.1667% and is included for all properties

3) Local Sales Tax- Residential use is exempt unless your city is included in this list.  If the city in which your property is located is included on that list, you must also include the Local Sales Tax for your city.

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Q. I want to start charging residents a utility (gas, water/sewer, trash, etc.). Do I need approval to do so? And when can I start charging them the utility?
A.
Yes. You must request approval from the Department to start or stop charging for any utility. In the event you want to start charging for a utility, after you receive approval from the Department, you must charge residents for the utility in accordance with the lease terms. If the household is within a current lease contract that specifies that a specific party pay for a utility, the tenant cannot be required to start paying for that utility until a new lease is in effect. At that time, the utility must be considered in the utility allowance and included in the gross rent calculation. The utility can be charged to new move-ins, as long as the utility is included in the utility allowance. (Top)

Q. The residents at my development are responsible for electric and gas utilities. Can I use different utility allowance methods for each utility? For example, can I use the PHA method for electric and the Written Local Estimate method for gas?
A.
Yes. You can use different utility allowance methods for different utilities, as long as you do not have HUD-regulated building(s) and/or RHS assisted buildings/tenants.. Remember, each method has different requirements and you must comply with both. (Top)

Q. I need to submit a utility allowance request, what do I need to submit and how do I submit the request?
A.
A request to calculate your utility allowance using an alternate method or an annual review request must include the Utility Allowance Questionnaire, a copy of the Notice to the Residents, the proposed utility allowance, and all back up data used in for the allowance.  Please visit the Utility Allowance page for the Utility Allowance Questionnaire and a template for the Notice to Residents.  All requests should be uploaded to the property’s CMTS account (instructions). (Top)