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Section 3: Rental Assistance Payment

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Criteria

An eligible displacee who rents a replacement dwelling is entitled to a payment not to exceed $7,200 for rental assistance. Such payment will be 42 times the amount obtained by subtracting the base monthly rental for the displacement dwelling from the lesser of:

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  • the monthly rent and estimated average monthly cost of utilities for a comparable replacement dwelling; or
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  • the monthly rent and estimated average monthly cost of utilities for the DSS replacement dwelling actually occupied by the displacee.

The base monthly rental for the displacement dwelling is the lesser of:

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  • the average monthly cost for rent and utilities at the displacement dwelling for a reasonable period of time prior to displacement; or “fair market rent” if the displacee is an owner-occupant or a tenant that pays “little or no rent.” TxDOT defines “little or no rent” as less than half of the estimated rent of displacement dwelling on the open market.
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  • thirty percent (30%) of the displacees average monthly gross household income if the amount is classified as “low income” by the U.S. Department of Housing and Urban Development’s Annual Survey of Income Limits for the Public Housing and Section 8 Programs.
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  • the total of the amounts designated for shelter and utilities if the person receives a welfare assistance payment from a program that specifically designates that amount only for shelter and utilities.
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Eligibility

Determine the tenant’s eligibility for a rental assistance payment by including the total gross household income received for a 12-month period from all sources (earned and unearned) including, but not limited to wages, salary, child support, alimony, unemployment benefits, workers’ compensation, social security or the net income from a business. It does not include income received or earned by dependent children and full time students under 18 years of age. Documentation of income may be provided by IRS income tax returns, W-2 forms, paycheck stubs, accountant certified profit and loss statements or other documentation TxDOT deems appropriate.

When there are two or more persons living together without an identifiable head of household, each of the displaced persons will attest to his own annual gross income or current monthly income. Base the rent supplement on the combined financial means of all occupants of the displaced household.

If a displacee cannot or will not provide reasonable verifiable documentation of his income or financial means, the cost of comparable housing will be considered within the displacee’s financial means, and base monthly rent will be considered as the average cost of rent and utilities and the displacement dwelling, or “fair market rent” if applicable. For example, when a person’s mode or manner of living or assets indicate a higher than reported income from cash payments, or the displacee’s monthly rent and utility payments are exceptionally high in relation to his reported income, the cost of comparable replacement housing will be considered within the displacee’s financial means.

If the displacee will receive a housing subsidy after displacement, compute the rental assistance payment based on the person’s actual out-of-pocket costs for replacement housing. If a displacee is dependent upon family or outside sources for the majority of his living expenses, base monthly rent will be considered as the average cost of rent and utilities at the displacement dwelling.

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Fair Market Rent

Use fair market rent, as established by TxDOT, instead of average monthly cost for rent and utilities at the displacement dwelling if:

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  • a displaced owner-occupant elects to relocate as a tenant; or
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  • a tenant pays less than half of the fair market rent for the displacement dwelling, unless fair market rent is 30 percent or more of the tenant’s income or its use would result in other hardship.

Formulate fair market rent from the average monthly rental and utility cost of comparable dwellings (preferably three) located in the subject area. Document fair market rent determinations in the project file. These dwellings should be comparable to the subject property in terms of the standard for DSS dwellings. Include reasons for using fair market rent on form ROW-R-107.

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Utility Expenses

Utility services are defined as gas, electricity, water, sewer, and garbage collection charges. Include utilities in the base monthly rent computation because utilities are considered an integral part of monthly housing costs. The objective in adjusting for utilities is to achieve consistency between rental properties and ultimately to reduce any additional out-of-pocket monthly expenses for tenants of all types of dwellings, including mobile homes. The existence of adequate utilities is a primary requirement for a DSS dwelling.

If reliable utility information for a 12-month period is not available (e.g., displaced tenant’s receipts or monthly statements), using the U.S. Department of Housing and Urban Development Utility Schedule Model for the project area is acceptable. The latter method is preferred by TxDOT. Add utility costs to the subject (including mobile homes), comparable and replacement rents unless they are already included in the rent.

If comparable utility services are included in both the monthly rent of the displacement dwelling and the monthly rent of the selected replacement dwelling, record this information on form ROW-R-107 and compute the rent supplement on a rent vs. rent basis.

If a utility service is not included in the monthly rent of a displacement dwelling, record the type and monthly cost of the utility service in the remarks section of form ROW-R-107. If a utility service not included in the monthly rent of a comparable replacement dwelling, record the type and monthly cost of the utility service in the remarks section of form ROW-R-106. Record background information pertaining to the determination of a utility service cost in the parcel file.

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Subsidized Housing

Subsidized housing includes public housing, government subsidized housing, and housing program subsidies.

When a public housing unit or a privately owned dwelling with a government subsidy tied to the unit will be used as comparable replacement housing, compute the rental assistance payment according to preceding Rental Assistance Calculation for normal rental payments.

When a person displaced from a privately owned government subsidized dwelling or from a public housing unit receives a housing program subsidy not tied to the displacement dwelling, such as a HUD Section 8 Existing Housing Certificate or a Housing Voucher, and the displacee is to be relocated in a comparable unsubsidized dwelling, subtract the amount of the housing subsidy from the probable rental cost of the replacement dwelling before computing the rental assistance payment. In such cases, explain the rent adjustment in the remarks section of Form ROW-R-107.

Nothing in this section prohibits a Federal, State or local agency from offering, or precludes a person from accepting, assistance under a government housing program, even if the person did not receive similar assistance before displacement. TxDOT must, however, inform the person of his options under this Section, and inform the person that receiving a government housing subsidy requires computing the relocation rental assistance payment based on the person’s actual out-of-pocket costs for the replacement housing.

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Housing Allowance

Obtain form ROW-R-IA, Income Affidavit, attesting to no duplication of payments, from each tenant displacee before computing the displacee’s rental assistance payment. If a displacee does not provide TxDOT a sworn affidavit regarding his receipt, or non-receipt, of a government housing allowance, he cannot be granted a relocation rental assistance payment because TxDOT will not possess information needed for payment calculation. If it is discovered that a displacee is in receipt of a government housing allowance not reported on his affidavit, the person’s rental assistance payment will be withdrawn for recalculation of the proposed payment.

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Disbursement

If a computed rent supplement exceeds $7,200, handle it according to Last Resort Housing.

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Manner of Disbursement

Payment under this Section is made in a lump sum amount. A displacee who receives a relocation payment for the rent of a DSS replacement dwelling that costs less to rent than the comparable dwelling on which his approved rent supplement was based is entitled to a payment for the unused balance of the approved rent supplement if he applies for the payment and meets criteria for this payment.

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