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Determining the SRO Rental Payment

The amount that is awarded is based on the calculation described in "Eligible Rehab Costs". The actual subsidy that the SRO program will provide for a specific unit is based on the difference between the contract rent (actual rental cost of the unit) and the rent paid by the tenant of that unit.

Contract Rent

The contract rent must be no more than the Moderate Rehabilitation SRO FMR minus the allowance for tenant-paid utilities. To establish the actual Contract Rent, the applicant must first establish the Base Rent, which must be reasonable in relation to comparable unassisted units and may not exceed rents currently being charged by the same owner for comparable unassisted units. The Base Rent maximum is is 75% of the Section 8 Existing Housing FMR for a 0-bedroom (the SRO FMR) unit minus the allowance for tenant paid facilities. Once the base rent is established, debt service for eligible rehab costs is added to derive the Contract Rent." Tenant Rent

Some of the contract rent will be paid by participants. Participants must pay rent in accordance with section 3(a) of the Housing Act of 1937. Under section 3(a), each participant must pay as rent the highest of:

• 30 percent of monthly adjusted income;
• 10 percent of monthly income;
• If receiving payments for welfare assistance from a public agency and a part of such payments, adjusted in accordance with actual housing costs, is specifically designated by such agency to meet housing costs, the portion of such payments which is so designated; or
• $25.00 to $50.00 a month as specified by the PHA.

Although many participants will not have an income when they enter the program, it is not unreasonable to expect that, through supportive services, many would at some point become employed or would be receiving income support payments.

The participant's income must be examined initially to determine the amount of rent payable and must be reexamined at least annually.

SRO Subsidy per Unit

The following example illustrates the relationship among the SRO rental assistance, the contract rent, and the tenant rent:

Contract rent for SRO unit	$ 325 month
Tenant rent payment	-75 month
SRO rental payment	$ 250 month

SRO assistance makes up the difference between the tenant's contribution and the contract rent.