Your monthly HCV newsletter is here!

Note from the Chief HCV Officer, Cheryl L. Burns

Owner News is now a monthly e-newsletter. In an effort to support housing providers as they navigate the ins and outs of the HCV Program, each issue will include a short how-to, an answer to a common question and a timely program reminder ... plus links to news you may have missed and our most frequently used resources. We hope you enjoy this new format.

How To Use the Owner Portal Affordability Calculator

Did you know that you can check if an HCV participant can afford your unit before you submit an RTA packet to CHA?

Click the thumbnail to watch a short video on how to use the Affordability Calculator on the HCV Owner Portal!

Remember: The Affordability Calculator is designed to check tenant-unit affordability without an Exception Payment Standard applied. For more on Exception Payment Standards, see the FAQ article below.

FAQ Corner: Rent Offers Capped by Affordability

Property owners often ask ... "What does CHA mean when they say a rent offer is capped by affordability? I thought the voucher covered any rent the family couldn't afford on their own?"

The short answer is CHA's rent offer is always the lowest of three numbers: The property owner's asking rent, the market rent (based on comparable units) and the family's affordable rent (their income + CHA subsidy). Therefore, a rent offer capped by affordability means that the family's "affordable rent" was the lowest amount of the three.

The long answer starts by clarifying the two most common mistakes HCV participants and property owners make in estimating affordability.

First ... Forgetting tenant-paid utilities. Every HCV Program nationwide is designed to assist families in paying rent and utilities, however utilities are often forgotten as most conversations focus on rent. Property owners should know that, to help with their unit, CHA provides each HCV family with a customized budget when they receive their "moving papers" (a voucher and an RTA packet). Their budget document accounts for many variables, provides explanations (to combat this common mistake), lists a suggested maximum budget and includes an estimate of how much the family can expect to pay per month in rent and toward tenant-paid utilities.

To avoid this common mistake, property owners should know that if an HCV family states "CHA told me I can afford X dollars in rent", it's likely they are referencing their total budget amount, which must also cover tenant-paid utilities. Therefore, if the unit's listed rent is already at the top of a family's budget, and doesn't have all utilities included, the property owner is not likely to receive a matching rent offer, with a note that it's capped by affordability. Talking with the HCV family about utilities and asking a few more clarifying questions can save everyone a lot of time (and heartache).

Second ... Some participants and property owners assume the CHA-provided budget is on top of the family's existing income. We're not sure where that misconception came from, but property owners who "double up" are all the more likely to be disappointed when a rent offer comes back capped by affordability.

Again, avoiding this mistake starts with clear communication. The budget provided to the HCV family already factors in all of their reported income. Property owners will likely want to verify the family's income through their normal screening process. If an HCV family claims their income on file is incorrect, they can contact CHA to report a change (although it takes time, and will delay their ability to submit an RTA packet).

Article continues after the break ...

Thursday, May 4 | Hyatt McCormick Place + Online

You're invited for an unforgettable day of education and networking. The 14th Annual Owner Symposium is free, and all Chicago housing providers are welcome to attend!

... continued from before the break

Now for everyone's favorite part, the math ... See below for a quick summary of how affordability is calculated:

1. CHA calculates the unit's Gross Rent (unit asking rent + Utility Allowance).

2. CHA compares the Gross Rent to the family's Payment Standard.

2-1. If the Gross Rent is lower than the standard, the unit is affordable for the family.

2-2. If the Gross Rent is higher than the standard, more calculations are needed.

3. CHA calculates the family's Total Tenant Payment (TTP) based on HUD regulations.

4. CHA will subtract the family's TTP from their standard to determine their max subsidy.

5. A family's "affordable rent" is 40% of the family's monthly income + their max subsidy.

You can find an expanded explanation (including examples) of how CHA calculates rent offers on pages 30-33 of CHA's HCV Property Owner Guidebook.

Rent Determination Glossary

Total Tenant Payment (TTP) is the minimum monthly amount an HCV family is expected to pay toward rent and utilities. It can be a highly complex calculation (depending on family circumstances) and considers all types of income, eligible deductions and CHA's "minimum rent".

A Utility Allowance is the cost CHA expects that an HCV family will pay for a specific utility (or select appliances) each month, and is based on the type of utility, unit size and unit structure type.

A Payment Standard is the maximum amount that CHA will pay on the HCV family’s behalf – again, toward rent and utilities – and is assigned based on voucher size. Some families may be eligible for an Exception Payment Standard if they meet certain criteria and need additional assistance to afford a qualified unit.

Note: Since these calculations, standards and allowances change, it's best to refer to an HCV participant's budget to determine if they can afford a specific unit (as it already accounts for the most complicated affordability math).

If you're asking "why can't we just skip the comparison and go right to the maximum affordable rent?", it's because CHA never wants to immediately approve the highest possible financial burden. If the unit's Gross Rent is lower than the family's standard, the family pays their TTP each month, which is never higher than 30% of their adjusted monthly income. While HUD regulations do allow a family to pay up to 40% in rent and utilities, asking every family to do so would defeat the purpose of the HCV Program.

To bring this answer full circle, remember that CHA cannot calculate a rent offer or exact portions until a family chooses a specific unit, an RTA packet is submitted and the unit is inspected. Why?

All three amounts CHA considers in the rent calculation are impacted by property owner decisions (asking rent, tenant-paid utilities, etc.) and unit-specific factors (location, comparables, inspection-verified bedrooms, etc.).
HCV participant income and subsidy varies widely based on family composition, deductions and/or accommodation eligibility.

A final takeaway: CHA has made recent improvements to how affordability and rent determination is explained to HCV participants and property owners. We understand that this kind of math is stressful and so we have developed many different resources to help.

We encourage everyone to learn more about rent determination, and practice the math for your own units, by watching our on-demand webinar "How CHA Determines Contract Rent for Units on the HCV Program".

Questions? Reply to this email, or email Owner Services at [email protected].

Resources for Property Owners

After three years of weekly live webinars, we’re on a brief hiatus to regroup and plan for the future of HCV education and events.

Don’t worry, you can still watch dozens of recorded sessions online, anytime. Click here to watch.

We still want to hear from you! Especially if you’ve never attended one of our educational sessions before ... Would you take a minute to share what you'd like to see from HCV education and events?

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Have leasing-related questions, or want to request a 1:1 consultation? The HCV Owner Outreach team is here to help. Email [email protected].

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