[Code of Federal Regulations]

[Title 24, Volume 4]

[Revised as of April 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 24CFR904.109]



[Page 312-313]

 

                 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;

    (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



[[Page 313]]



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.