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Debt Service in BBRI
Can I include debt service in my budget-based rent increase request?No, under PRAC, budget-based rents do not permit debt service in the calculation of project rents.
Cap to BBRI Before Conversion
I’ve reviewed my project operating expenses and will be requesting a budget-based rent increase at the annual PRAC renewal. Is there a cap on the increase to the budget-based rent increase before conversion?No, there is no cap on the Budget Based Rent Increase; however, any budget line item increase of 5% of more must be supported with documentation in accordance with HUD Handbook 4350.1, Chapter 7. Owners should also be mindful that at the time of conversion, rents cannot exceed 120% of FMR for PBRA or 110% of FMR for PBV.
Caps on BBRI
Is there a cap on the increase to the budget-based rent increase prior to conversion?Under PRAC program rules, prior to conversion there are no maximum rents and no cap on the increase. However, owners should keep in mind that maximum rent criteria apply to converting projects. If converting to PBRA, rents cannot exceed 120% of FMR. If converting to PBV, rents cannot exceed 110% of FMR. If a project has current rents that exceed the 120% of FMR (PBRA) or 110% of FMR (PBV), then rents would have to be decreased in order to convert.
CNA for BBRI
For the first CNA used for the budget-based rent increase request, as long as the recommendations were similar to the second, does it need to be MAP compliant?A CNA submitted with a PRAC budget-based rent adjustment and corresponding increase to the Reserve for Replacement is required to be MAP compliant if the requested annual reserve deposit is greater than $250 per unit per year.
Capital Expenditures in BBRI
What type of capital expenditures are allowed in my budget-based rent increase?The type of capital expenditures permitted in the budget-based rent adjustment includes short- and long-term capital needs identified in the Capital 20-year Needs Assessment. As part of the budget-based rent increase review, HUD will consider increasing the annual R4R deposits to provide the necessary funds to address the capital needs of the property.
BBRI for Three Adjacent Properties
I have 3 properties on adjacent lots. Two have completed the BBRI based on CNA results, the third property is not due for several months. Can I start the process for all 3 now or should I wait until all three are ready?It is not necessary to wait until all three properties are ready. HUD recommends you initiate a submission of interest through the Resource Desk early and a Transaction Manager will be assigned to you and will conduct an introductory call with you to discuss your concept for the conversion.
Costs to Include in BBRI Request
The RAD Notice references $27 PUPM and Service Coordinator salary. Should our next BBRI request should include both the $27 PUPM and the service coordinator salary as two separate costs?Yes, the Budget Based Rent Increase submission should reflect the current salary of the service coordinator and the supportive services provided at the property up to $27 PUPM.