Quadel’s PBCA Contract Renewal Manager, Mark Burch, works with Multifamily property owners across Indiana and North Carolina.
This past February, the Department of Housing and Urban Development (HUD) published Housing Notice 2024-05 and officially implemented Budget-Based Rent Adjustments (BBRA) for Section 8 Market-to-Market (M2M) properties. Indiana Quadel and North Carolina Quadel team members attended HUD’s webinar regarding the change to serve our Indiana property owners best. Mark Burch, PBCA Contract Renewal Manager, attended the webinar. He discusses common questions property owners may have about the exciting change in this week’s blog.
Why is the rent adjustment process changing for M2M properties?
“The Federal Government and HUD realized the Operating Cost Adjustment Factor (OCAF) used for rent increase has been inadequate for many M2M properties, and owners are unable to cover the project’s operating expenses. The change to BBRA intends to help all M2M properties that can show the OCAF rent increases are not adequate to cover operating expenses,” Burch said. “With expenses going up so much recently, these properties have been limited to the OCAF rent increase and have not been able to seek a larger increase as so many other properties have.”
Which M2M properties are eligible for a BBRA? How do property owners apply?
“HUD has broken down the M2M properties into groups. Some criteria need to be met to be included in each group. Because this program has limited funding, properties that do not qualify for the earlier groups will have an extended wait,” Burch said. “M2M property owners should first read the notice, and visit the HUD website that details all of the requirements and rules regarding this BBRA and see if it’s right for them. “With the limited funding for this program, only the properties with the greatest need will be approved first.”
Burch said interested property owners should take the following steps to apply:
- Visit the HUD website and file the initial submission
- If approved, owners will need to do the following:
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- Get a new Rent Comparability Study (RCS) to determine BBRA
- Submit Budget, RCS, and required forms including an owner narrative, Organization Chart; Good Standing Justification; a capital needs assessment (CNA) within the last 180 days; and an MOR in the last three (3) years; Developmental Budget; Financing Commitments, Vacancy/Occupancy Report; Audited Annual Financial Statement; Operating Pro Forma; Statement of Compliance; Resident Notification; UEI Number; and Service Coordinator Budget if applicable
3. Wait for HUD approval of the Final Submission
Does the rent adjustment change affect the M2M contract?
“In requesting the BBRA, the owner is accepting an extension to the current use agreement. The owner will remain in the program longer than the original 30 years,” Burch said. “Additionally, owners will continue under their current HAP contracts.”
How will the policy change impact M2M properties?
“Owners will be able to fix property issues and plan projects to keep the properties up to date. Tenants will be able to live at these properties and be assured owners have the money to fix problems and issues when they come about and rehab the property as needed to keep everything in good working order,” Burch said. “This policy plays a pivotal role in ensuring all properties can receive higher rents given to non-M2M properties. Adjustments to the program underscore the real struggle many Section 8 properties and owners have in paying bills and keeping the properties in good condition for residents.”
Want more info? HUD provided a Frequently Asked Questions (FAQ) for the BBRA process for M2M properties.