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Issue 85: REAC Reality and Appeals & 2017 COLA

A New Reality

REAC Inspections Should Be Done Based on Rules, Not Rumors

Over the last several months, we have been getting variations of the same question “What is going on with REAC?” As in, why are inspections so much different than they used to be? New clients call and tell us stories about their new REAC Inspectors who are doing things like:

  • Using a flashlight to look at everything
  • Getting down on their hands and knees during an inspection
  • Entering rooms in a building that haven't been inspected before
  • Testing every single door and window

Our examples are countless, and most people who are reaching out to us are hoping that we'll tell them that the REAC inspector did something wrong. On the contrary, what people are seeing are the standards as they have been intended for many years, and the surprise that they're experiencing is that they expect their last REAC inspection to be the same as today’s, and vice-versa. New requirements such as the so-called “Industry Standard Repairs” are just an extension of what has always been true - REAC standards are easy to understand when you learn them, and dangerous when they are compiled from experiences that might be suspect.

For many years, we've heard clients tell us they assumed proper preparation and instruction on REAC, was simply having attended an inspection or two. What we teach our new clients is that REAC Inspections are supposed to be done based on a set of relatively easy to understand rules, and the first step in understanding the process is truly concentrating on the rules, regulations, and requirements - not rumors, or discussions of what happened on your last REAC Inspection. Factors like the property’s age, or that it was recently rehabilitated may have little or no bearing on its performance during a REAC Inspection. 

As a company, it is important to adopt a preparation method that is based on a clearer understanding of the REAC standards, and you'll discover that the process is less stressful and the results are more reliable. Before your next REAC Inspection, get a Pre-REAC Inspection from US Housing Consultants and find out how the country’s top property management companies prepare for REAC Inspections. We have now doubled the size of our REAC Services team, and we have inspectors in all corners of the country to help. Discover the difference of professional REAC Preparation; remove the stress and fear, and get great predictable results every time.

Don’t Violate Local Code to Pass Your REAC Inspection

How you can create a Database Adjustment to handle Local Code Issues

Understanding how to utilize the REAC inspection appeal process is the only way to ensure that you are getting the full benefits of the protocol applied to your property. An appeal can be viewed as the final step of the inspection process and is the only way that certain conditions can be considered or applied. Just like filing your taxes where you can easily overlook certain deductions that may be applicable without the help of an expert, you can also find many instances where exceptions may apply to your REAC inspection. There may be various points that can be returned for issues resulting from inspector error, conditions beyond your control, or a local area code variance.

For example, did you know that the local area code requirements supersede the Federal code? You may be in compliance with the local area, but not conforming to the Uniform Physical Conditions Standards (UPCS) protocol used by REAC. The best way to appropriately deal with that scenario is to consult a licensed trade professional for advice; if they determine you are in compliance with local area code requirements, then filing a Database Adjustment appeal of the REAC inspection, either before or following the REAC inspection, is the best approach to take. 

In some cases, properties have violated the local area code requirements to conform to the UPCS/REAC inspection protocol. The desire to meet REAC’s standards without any rebuttal or appeal can result in conditions that are substandard or in violation of local code. The most common occurrence of this is electrical panels that were modified to meet the UPCS/REAC inspection protocol. These panels may have been modified by property staff at the direct advice of REAC inspectors (advice or guidance that should not be offered, but often is), when it is then discovered that the panels were never in violation of the local area electrical code to begin with.

Here is the best approach: Rather than attempting to make the electrical panels conform to the UPCS/REAC inspection protocol, get a recommendation from a licensed electrician. If they confirm that the panels are not creating a hazard and were installed by the local area requirements, then an appeal would be possible no matter what. If a REAC inspector still deems the electrical panel to be deficient after following the advice of your electrician, you could always appeal using a statement from the electrician confirming that the panels meet the local area code requirements.

Making any modifications on your own has become riskier than ever. REAC inspectors will be looking for any modifications made to the panel and will assume an exposed wires hazard if they see any significant DIY modifications made to the panel, such as caulking applied between breakers or around a panel to fill gaps, or sheet metal pieces attached to the panel cover to cover holes or gaps.

In short, a bad repair may result in a bigger or an automatic deduction. Make sure to take any advice regarding repairs provided by REAC inspectors with a grain of salt; instead follow the advice of licensed trade professionals who can ensure you stay in compliance with your local area code requirements. Remember that you can always file an appeal if necessary, and of course, U.S. Housing Consultants can assist with simplifying the appeal process and ensure the best possible outcome - never hesitate to call us.

2017 COLA Increase Announced

Social Security Announces .3 Percent Benefit Increase for 2017

The Social Security Administration (SSA) announced that the monthly Social Security and Supplemental Security Income (SSI) benefits will increase .3 percent in 2017. Increased payments will begin on December 31, 2016. 

For the Part B premium, most SS recipients will continue to pay $104.90 per month.  

For HUD Move Ins:

For a move in scheduled prior to January 1st, the Social Security income can be calculated by using either:

  • The current SS award letter – current monthly benefit x 12 months; or
  • Using the current SS award letter, apply the .3% COLA and calculate the anticipated SS income using the actual # of months using the old monthly benefit and then calculating the new monthly benefit for the remaining # of months.

Whatever method is used, an Owner/Agent must be consistent with this calculation for all move ins.  We recommend that Owners/Agents include the COLA increase for move in transactions effective on or after January 1, 2017.  We also recommend that you check with your local HUD office or Contract Administrator for their guidance. 

For HUD Annual Recertifications:

Please refer to HH 4350.3 Revision 1, Change 4 Paragraph 9-6 B for information about how to handle the COLA increase for residents with certifications effective between January 2017 and April 1, 2017. Benefits that include the cost of living adjustments (COLAs) are not available from SSA for uploading into EIV until the end of the calendar year.

When processing recertifications with an effective date of January 1, February 1, March 1 and April 1, to complete the Recertification Steps outlined in Chapter 7, Figure 7-3, and provide the tenant with the required 30-day notice of any increase in rent, the owner must use one of the methods below for determining the tenant's income.

  • Use the benefit information reported in EIV that does not include the COLA as third party verification if the tenant confirms that the income data in EIV is what he/she is receiving;
  • Use the SSA benefit, award letter or Proof of Income Letter provided by the tenant that includes the COLA adjustment if the date of the letter is within 120 days from the date of receipt by the owner; or
  • Determine the tenant's income by applying the COLA increase percentage to the current verified benefit amount and document the tenant file with how the tenant's income was determined; or
  • Request third party verification directly from SSA when the income in EIV does not agree with the income the tenant reports he/she is receiving. (See Paragraph 9-15)

All recertifications effective after April 1 must reflect the SSA benefit that includes the COLA. The method selected should be applied consistently for all residents.

LIHTC and other programs:

When processing Move Ins or Annual Recertifications, apply the increased SS benefit for the number of months that it will apply.  For example, if you have a Move In scheduled for 11/1/16, we recommend that you calculate the anticipated SS income using the 2016 Gross SS amount for 2 months and use the 2017 Gross SS amount for 10 months.

Example:

Monthly Gross Social Security Amount in 2016 = $900.90 -OR- $900.90 X 1.003 = $903.60  

The 2017 Gross monthly SS benefit to use, for example, an 11/1/2016 Move In the Annual Income should be:

$900.90

X 2 months (Nov & Dec)

$1,801.80

$903.60

X 10 months (Jan - Oct)

$9,036.00

Total SS income

$10,837.80

Contact Us

  • US Housing Consultants
  • 160 Dover Road# 6, Chichester, NH, 03258
  • Phone: (603) 223-0003
  • Fax: (603) 736-4777
  • Email: info@us-hc.com
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U.S. Housing Consultants, Real Estate Consultants, Epsom, NH