federalUnited StatesLow-Income Housing Tax Creditutility_allowance

Where no branch of the hierarchy applies the default is the PHA schedule, and any estimate obtained displaces it for every similar unit in the building

lihtc.ua.default_pha_schedule_and_building_wide_propagation_of_an_estimate · v1.0.0

For a rent-restricted unit that falls through 1.42-10(b)(1), (2), (3) and (4)(i), the appropriate utility allowance is the applicable PHA utility allowance. That default is displaced the moment an estimate is obtained under any of the four alternative methods -- a local utility company estimate, a State or local housing credit agency estimate, a cost estimate calculated with the HUD Utility Schedule Model, or a cost estimate calculated by an energy consumption model. Displacement is not optional and is not confined to the unit studied: the estimate becomes the applicable allowance for ALL rent-restricted units of similar size and construction in the building. Because any interested party, including a tenant, may obtain a utility company estimate, an owner can be moved off the PHA schedule by someone else's action.

'Similar size and construction' is the propagation boundary and the regulation does not define it. Where a building mixes structure types the boundary is a judgement the corpus does not make; agencies vary, and MSHDA's published schedules for example split on Apartment / Attached / Detached.

Confidence: high
Effective from: 2008-07-29
Last reviewed: 2026-08-31

Citations

All sources verified within 1 day

Utility allowances
26 CFR 1.42-10(b)(4)(ii)(A), first two sentences
regulationSource ↗verified 1d ago
Utility allowances
26 CFR 1.42-10(b)(4)(ii)(A), third sentence
regulationSource ↗verified 1d ago
Guide for Completing Form 8823, Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition
Pub. 5913 (1-2024), Category 11m, A. Definition, (1)
persuasive_agency_guidanceSource ↗verified 1d ago