[Code of Federal Regulations]
[Title 24, Volume 4]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR904.109]

[Page 305-306]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
CHAPTER IX--OFFICE OF ASSISTANT SECRETARY FOR PUBLIC AND INDIAN HOUSING, 
               DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 904--LOW RENT HOUSING HOMEOWNERSHIP OPPORTUNITIES--Table of Contents
 
               Subpart B--Turnkey III Program Description
 
Sec. 904.109  Monthly operating expense.

    (a) Definition and categories of monthly operating expense. The term 
``monthly operating expense'' means the monthly amount needed for the 
following purposes:
    (1) Administration. Administrative salaries, travel, legal expenses, 
office supplies, postage, telephone and telegraph, etc.;
    (2) Homebuyer services. LHA expenses in the achievement of social 
goals, including costs such as salaries, publications, payments to the 
HBA to assist its operation, contract and other costs;

[[Page 306]]

    (3) Utilities. Those utilities (such as water), if any, to be 
furnished by the LHA as part of operating expense;
    (4) Routine maintenance--common property. For community building, 
grounds, and other common areas, if any. The amount required for routine 
maintenance of common property depends upon the type of common property 
included in the development and the extent of the LHA's responsibility 
for maintenance (see also Sec. 904.109(c));
    (5) Protective services. The cost of supplemental protective 
services paid by the LHA for the protection of persons and property;
    (6) General expense. Premiums for fire and other insurance, payments 
in lieu of taxes to the local taxing body, collection losses, payroll 
taxes, etc.;
    (7) Nonroutine maintenance--common property (Contribution to 
operating reserve). Extraordinary maintenance of equipment applicable to 
the community building and grounds, and unanticipated items for non-
dwelling structures (see Sec. 904.112).
    (b) Monthly operating expense rate. The monthly operating expense 
rate for each fiscal year shall be established on the basis of the LHA's 
HUD-approved operating budget for that fiscal year. The operating budget 
may be revised during the course of the fiscal year in accordance with 
HUD requirements. If it is subsequently determined that the actual 
operating expense for a fiscal year was more or less than the amount 
provided by the monthly operating expense established for that fiscal 
year, the rate of monthly operating expenses to be established for the 
next fiscal year may be adjusted to account for the difference (see 
Sec. 904.112(b)). Such adjustment may result in a change in the required 
monthly payment, see Sec. 904.107(j)(3).
    (c) Provision for common property maintenance. During the period the 
LHA is responsible for the maintenance of common property, the annual 
operating budget and the monthly operating expense rate shall include 
the amount required for routine maintenance of all common property in 
the development, even though a number of the homes may have been 
acquired by homebuyers. During such period, this amount shall be 
computed on the basis of the total number of homes in the development 
(i. e., the annual amount budgeted for routine maintenance of common 
property shall be divided by the number of homes in the development, 
resulting in the annual amount for each home; this figure shall in turn 
be divided by 12 to determine the monthly amount to be included in the 
monthly operating expense (and in the break-even amount) for routine 
maintenance of common property). After the home owners association 
assumes responsibility for maintenance of common property, the monthly 
operating expense (and break-even amount) shall include an amount equal 
to the monthly assessment by the homeowners association for the 
remaining homes owned by the LHA (see Sec. 904.112(b) for nonroutine 
maintenance of common property).
    (d) Posting of monthly operating expense statement. A statement 
showing the budgeted monthly amount allocated in the current operating 
budget to each operating expense category shall be provided to the HBA 
and copies shall be provided to homebuyers upon request.