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
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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.”

OMB Control #2502-0587
Exp. (10/31/2012)
“Public reporting burden for this collection of information is estimated to average 1 hour. This
includes the time for collecting, reviewing, and reporting the data. The information is being
collected for purposes of establishing a use agreement between the owner and HUD and will be used
for that purpose. Response to this request for information is required in order to receive the
benefits to be derived. 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. No
confidentiality is assured.”

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