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federalUnited StatesLow-Income Housing Tax Creditutility_allowance

An RHS-assisted building must use the Rural Housing Service method for every rent-restricted unit in it

lihtc.ua.rhs_assisted_building_uses_the_rhs_method · v1.0.0

If a building receives assistance from the Rural Housing Service, the applicable utility allowance for ALL rent-restricted units in that building is the allowance determined under the method prescribed by RHS for the building. This holds whether or not the building or its tenants also receive other state or federal assistance, so an RHS-assisted building layered with LIHTC has no election to make: the utility company estimate, agency estimate, HUD Utility Schedule Model and energy consumption model in 1.42-10(b)(4)(ii) are all unavailable to it. Under 7 CFR 3560.202(d) the RHS method is the borrower establishing an allowance for each size and type of unit from estimated utility costs, reviewed annually and submitted to the Agency for approval.

This is the top of a mandatory hierarchy, not a menu. TDHCA's own utility allowance FAQ states the same reading for its portfolio: 'If the Development has RHS building(s) or building(s) with RHS assisted tenants, the UA is determined under the method prescribed by the RHS. No other utility method can be used'.
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)(1)
    regulationSource ↗verified 1d ago
  • Direct Multi-Family Housing Loans and Grants
    7 CFR 3560.202(d)
    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), first bullet
    persuasive_agency_guidanceSource ↗verified 1d ago