For a Continuum of Care leasing project, in which a rented unit for which the contract rent amount does not include utilities, is it acceptable to exceed the Fair Market Rent (FMR) on the total of the rent and utilities if the utilities are paid from operations funds?
Contract rent = $400 (drawn from leasing)
Utilities = $100 (drawn from operations)
Fair Market Rent = $400
Rent reasonableness is not exceeded with the $500 gross rent.
Under the CoC Program, the restriction on using grant funds to pay above FMR is for the leasing budget line item. There is nothing in the CoC Program interim rule that prohibits the recipient or subrecipient from using operating funds to pay for utilities (gas, water, and electricity) that are not included in the lease that are above FMR so long as the total amount, contract rent plus utilities, is reasonable. This means that you can use operating funds to pay for utilities that take the total rent (contract rent plus utilities) above FMR, so long as the total rent is still reasonable when compared to other comparable units or structures.
Please note, occupancy charges collected from program participants are considered program income and could be used to pay utility costs not included in the lease above FMR as long as the total rent is still reasonable when compared to other comparable units or structures.