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Rent Increase Requests Policy



OHCS's new Rent Increase Requests Policy goes into effect on June 1, 2020. The Policy guidance is intended for OHCS funded property owners. Please review carefully.


The purpose of the Project Rent Increase Request Policy is two-fold: 
  1. To provide affordable rental housing owners with a predictable, clear path forward for requesting and implementing rent increases, within applicable program limits, necessary to sustain the ongoing operations of their affordable housing projects. Ongoing financial viability for an affordable housing project requires regular and reasonable increases to rents.
  2. To ensure that tenants in affordable rental housing projects are protected from extreme increases to rents. While affordable rental housing is exempt from Oregon’s Renter Protections which limit rent increases, this policy aims to align with the principles of the state regulations, and limit increases accordingly. ​
Oregon Housing and Community Services (OHCS) has established, for most OHCS funded properties with rent restrictions, a requirement that OHCS approve the property’s rent structure at lease-up and pre-approve all rent increases throughout the affordability period as required per the funding source. This includes increases in rent during the first year as well as during acquisition / rehabilitation of rental housing. Funding sources that may require rent increase approval include, but may not be limited to:
  • Low Income Tax Credit Program (LIHTC) both 9% and 4% (after issuance of 8609),
  • General Housing Assistance Program (GHAP)
  • Housing Development Grant Program (HDGP)
  • Local Innovation & Fast Track Program (LIFT)
  • Risk Share Loan Program
  • Elderly/Disabled Bond Program
  • Oregon Affordable Housing Tax Credit (OAHTC) Program
  • HOME Program
  • Operating Agreements such as those extending affordability
OHCS policy establishes four paths for rent increase requests; the type of review is scaled in relationship to the degree of impact to the tenants:
  1. Streamlined Rent Increase Path​ is for those projects requesting up to 5% rent increases on existing and new tenants. This is the lowest barrier option requiring minimal review.
  2. Bifurcated Rent Increase Path is for those projects requesting up to 5% rent increases for existing tenants and up to 7% plus Consumer Price Index ( consistent with Oregon Renter Protections1) increases on new residents. This requires modest review.
  3. Elevated Review Rent Increase Path is for those projects requesting greater than five percent and up to 7% plus Consumer Price Index (CPI) increases on existing and new tenants. This requires an elevated review to justify the higher impact to current tenants.
  4. Exception Rent Increase Path​ is for those projects requesting greater than 7% + CPI increases on existing and new tenants. This requires the most robust review given the most substantive impact to tenants.

Table: The Four Paths for Rent Increase Requests​ are shown in table format below. Click a table column title for path details.
OHCS will not approve more than one rent increase during a 12-month period. Subsequent approved rent increase requests may take place 12 months from the effective date of the previous increase as outlined in the approval letter and subject to other implementation rules and regulations.
 
Retroactive rent increase requests will not be considered (see Unapproved Rent Increases Section of this policy for more information). 

Please allow approximately 30 days to process streamlined rent increases requests and approximately 60 days to process bi-furcated and elevated review rent increase requests. Exception rent increase requests may result in an increased information and communication exchange and therefore may take longer than 60 days. 

Rent increase requests submitted in compliance with the applicable submittal criteria outlined above must be received no sooner than 120 days and/or no later than 90 days prior to the eligible effective date and/or the intended implementation date. OHCS cannot begin its review until all required information has been received.
​If OHCS determines that a project is not compliant with this policy and the owner is or was charging rents that exceed the most recent approved amounts, OHCS may require the owner to refund the excess rents to the tenants and/or local housing authority where determined appropriate. Proof of rent credit or refund may be required by OHCS. When a refund or credit is required, OHCS will not consider new rent increase requests until repayment or credit is made and proof provided to OHCS satisfaction. Refunding of rents does not satisfy other non-compliance reporting requirements (for example 8823’s will still be required to be filed with the IRS if rents exceeded program limits).

If a project is found to be in non-compliance with this rent increase policy more than once, including in implementation of approved rents, a financial penalty may be applied. Penalty amounts will be commensurate with the degree of non-compliance as determined by OHCS; any such charge will be reviewed and recommended by OHCS Finance Committee.
​During the term when the property is receiving the OAHTC pass through, rent increases for OAHTC units are approved at the rent level prior to OAHTC pass through. To ensure that OHCS has this pass through information, OAHTC properties will need to fill out the OAHTC supplement information form, which is a part of all rent increase options.

Please consult your Reservation and Extended Use Agreement (REUA) for additional information on OAHTC requirements.

Upon OAHTC expiration, owners may set rents to pre-pass through approved rent levels without additional OHCS approval. Any rent increases above pre-pass through OAHTC rents levels are bound by the terms of this policy if a rent increase approval requirement exists with any remaining program.
Project-Based Rent Assistance is defined as a residential home with rent assistance tied to the unit. The assistance can come from any source including the federal, state or local government but the resident generally pays no more than 30% of their adjusted income towards rent costs when living in the project-based unit (with some exceptions). Because resident rent payments are capped by the program itself, this policy does not apply to project based rent assistance properties when 100% of the units receive project based rent assistance.

HOME Project Based Units:
Rent collected in a HOME-funded unit with a Project-Based Voucher (PBV) in a designated Low-HOME unit occupied by a very low-income household may set rents up to the maximum PBV level (even if above FMR/HOME maximum): 24 C.F.R. 92.252(b)(2). This does NOT apply to designated High-HOME units. Designated High-HOME units must cap rents at the High HOME rent amount. Rent increases for these project-based units are exempt from the review criteria of this policy.

HOME units monitored by other Participating Jurisdictions (PJ’s) may utilize rent approval documents from the PJ. OHCS will require proof of the approved rent such as a letter from the PJ. HOME rents may not exceed LIHTC max or HOME max (unless PBV as outlined above).

Rural Development Units with LIHTC:
Rural Development project-based units are exempt from this rent increase policy. Gross rent does not include any rent payment to the owner of the unit to the extent such owner pays an equivalent amount to the USDA Rural Housing Service under Section 515 of the Housing Act of 1949. See IRC §42(g)(2)(B)(iv). As long as the owner pays Rural Development the rent amount over the limit (all of the overage) that unit is considered to be in compliance.

Non-USDA units with OHCS rent increase restrictions are bound by this policy.

Over Income Tenants in Project Based Units:
When a household’s income increases and/or the household is no longer eligible to receive project-based assistance, the rent charged must be adjusted to be at or below the property funding requirements based on the most restrictive funding source for the specific unit. Because the tenant is no longer receiving subsidy, this rent increase policy is applicable to these tenants.
​This policy is applicable to these programs but there are additional restrictions. OHCS does not approve the tenant share of rent for Housing Choice Vouchers (Section 8) utilized within OHCS affordable housing units. However, unit rents must be capped at or below the required housing authority payment standard, minus the utility allowance, per unit type to ensure the tenant portion of the rent is not increased above the applicable housing authority affordability calculation (to ensure the tenant is not rent burdened). This protection is not extended to households renting a unit size that does not align with housing authority’s determination of unit size based on household composition.

Housing Choice Voucher (Section 8) rents in HOME funded units cannot exceed the applicable HIGH or Low HOME rent for the designated HOME unit. The Subsidy, Total Tenant Payment (TTP) and Utility Allowance (UA) must calculate to at or below the HOME rent.
In the event that a rent increase request has been denied or was approved at a level different than the requested amount (modified), a Request For Decision Review may be submitted within 30 days of the denial or modification should the requestor wish to challenge the determination. To submit this request, the entity that made the rent increase request must submit a written Request For Decision Review explaining the following:
  • The basis for the decision review request
  • The requested resolution sought
  • Supplemental documentation to support the decision review request
  • Any addition documentation or information that is pertinent to why the requesting entity feels a decision review is appropriate.
​Any Requests For Decision Review should be sent to the same electronic location as the original request. Generally, OHCS will not request additional information, but will rely solely on the appeal information submitted. Though OHCS does retain to right to gather additional information, specifically in regard to clarifications or questions that arise from the decision review request.

All Decision For Review requests, after information is gathered by OHCS staff, will be submitted to the OHCS Finance Committee for a recommendation. The OHCS Executive Director will make the final determination. It is important to note that the OHCS Executive Director retains the right to modify the approval or denial as they deem appropriate. Decision Review determinations are final and considered in effect for the 12 month period.

Image: Portfolio Administration, Compliance Monitoring

Contact

For Rent Increase Request Information, please email us at:
MFRent.Request@hcs.oregon.gov

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Table: Four Paths for Rent Increase Requests

Click Column Titles for Required Form and Completion Guide.
  1) Streamlined
Path Webpage
 2) Bifurcated
Path Webpage
 3) Elevated
Path Webpage
 4) Exception 
Path Webpage
Project Rent Increase Description:Up to 5% Increase on Tenant Rent
Up to 5% on current tenants & up to 7% + CPI on new tenants
Increase on existing and/or new tenants above 5% and up to 7% +CPI
Increase above the 7% +CPI limitations on existing and/or new tenants
Evaluation Elements
 Evaluation of Allowable Program Rent X X X X
 Severe Compliance Issues    
 - Unapproved rent increases X X X X
 - Unresolved Health and Safety Issues X
 X X X
 - Unresponsive / Unresolved Issues X X X X
 Property Vacancy History
 X X X
 Property Needs; capital repair needs, maintenance, services & staffing 
  X X
 Reasonableness to comparable market area rents   X X
 Assessment of project resources   X X
 Rent Burden of Current Residents
   X X
 OHCS Finance Committee Review and Approval
   X X
 Thorough Analysis and Review of Need*    X
Required Documentation
 Rent Increase Request Form X X X X
 Current Rent Roll  X X X
 12-month Occupancy Report  X X X
 Utility Allowance Documentation  X X X
 ProLink / WCMS Annual Reporting (or proxy)   X X
 Rent Burden Worksheet 
  X X
 Audited Financials   X X
Replacement Reserve AnalysisXX
Capital Needs Info:
 - third party reports   X X
 - capital needs assessment if applicable   X X
 - updated replacement schedule, detail   X X
 Other Health / Safety documentation   X X
 Other Staffing Needs, cost documentation   X X
 HOME Monitoring report (If applicable) X X X X
 Explanation of property need    X
* This review requires the applicant to make a clear and concise argument as to why this level of increase is necessary. Increases of this magnitude can put both the residents and the property at risk requiring exceptional circumstances for OHCS to grant approval.