Yes, 811 can contract on all LIHTC units. However, an 811 project based subsidy cannot be combined with another project or tenant based subsidy to the same unit. The decision to have a contract applied to Market Rate Units lies in the hands of the developer because HUD 811 can only contract up to the Fair Market Rate. So what does this look like? Let’s look at an example…
First, the 811 program looks at HUD’s Fair Market Rents at HUD User.Gov. For a County in Georgia, the FMRs are as follows:
| One-Bedroom |
Two-Bedroom |
Three-Bedroom |
| $536 |
$661 |
$956 |
HUD 811 can only contract up to FMR which looks like Net rent plus the utility allowance. Therefore…
| |
One-Bedroom |
Two-Bedroom |
Three-Bedroom |
| FMR |
$536 |
$661 |
$956 |
| Utility Allowance Example |
$100 |
$125 |
$150 |
| Max Net 811 Contract Rent |
$436 |
$536 |
$806 |
Then, we look at the property specific rents:
| |
One-Bedroom |
Two-Bedroom |
Three-Bedroom |
| 50% Unit Net Rent |
$430 |
$530 |
$730 |
| 60% Unit Net Rent |
$530 |
$630 |
$830 |
| Fair Market Net Rent |
$630 |
$730 |
$930 |
Therefore, looking at the max net rent an 811 unit can contract at ($436, $536, and $806) and looking at the rent schedule at the property we negotiate the rent. Judging by this example, HUD 811 can contract at the 50% Net Rent at the property ($430, $530 and $730).
However, if 811 contracts for 60% units or even FMR units, it would not be able to contract for the max 60% or FMR net rent. It would only be able to contract up to $436, $536 and $806, which is possible, if the owner is ok with offering a 60% or FMR Unit at a lower contracted amount. In most cases, they are not open to doing this.
If the FMR was at or below the $436, $536, and $806 amounts, then the actual FMR requested net rent would be a viable option.
