Portland 1 Bedroom Metro RLRA Could Bring $8,800 In Annual ADDITIONAL Subsidized Rental Income To Each LIHTC Unit.

Back in May (page 25) I provided written comments to the Portland Metro Regional Oversight Committee on the costs of the RLRA program and potential adverse impacts on housing choice for HUD housing voucher tenants. 

I pointed out that the use of a uniform 120% of HUD Fair Market rent as the RLRA rent limit resulted in more than a 20% gap for voucher tenants as their housing choice was limited by PHA set payment standards that were often BELOW HUD (100%) Fair Market rents. 

Since then 

1. PHA's have published higher payment standards to reflect a successful appeal of HUD FY 2022 fair market rents, and 
2. HUD has now published FY 2023 Fair Market Rents that are effective October 1st. 

With these new HUD FMR's I thought it would be instructive to look at how much MORE 1 bedroom Portland Metro RLRA rents are compared to 2022 LIHTC rent limits set at 60% of MFI.  In the three counties I count 33,000 LIHTC units in the OHCS inventory with 15,000 units placed in service from 2010 to 2023. 

This comparison assumes that RLRA paid rents CAN exceed published LIHTC rent limits so long as the tenant paid portion of rent does not exceed the LIHTC rent limit. The assumption is also made that reasonable rent is the same as the projected $1,600, $1,700, $1,800 and $1910 rent levels used. 

For LIHTC owners this means they would receive a RLRA rent that is HIGHER than the $1,198 LIHTC rent limit, increasing rental income above prior limits.

My Estimates Are Conservative

To help to show how MUCH higher a RLRA rent could be compared to the LIHTC 1 bedroom Portland metro 60% MFI limit of $1,681 I constructed the graph pasted below. 

Because I use 2022 LIHTC rent limits, IF RLRA is used in a LIHTC unit already in service before 2022 is is likely that those units have LOWER LIHTC rents limits so the EXTRA (subsidized) income for RLRA units would be even HIGHER than shown on the graph.

Because I use the 60% MFI LIHTC rent limit, the EXTRA (subsidized) income to owners would be HIGHER for LIHTC units with 30% or 50% MFI rent limits. 

RESULTS:

1. At the HUD October 1st FMR limit of $1,610 a RLRA tenant would bring $4,944/34% in ADDITIONAL annual rental income vs the maximum rent permitted ($1,198) for a LIHTC tenant with no assistance.  
2. At the RLRA rent limit of $1,912 (120% of the HUD FMR of $1,610) a RLRA tenant would bring $8,808/61% in ADDITIONAL annual rental income vs the maximum rent permitted ($1,198) for a LIHTC tenant with no assistance.
3. In all cases, since the tenant share of rent is a fixed percentage of their income, the source of additional income is RLRA subsidy. 

. Originally created and posted on the Oregon Housing Blog.