Shelter Plus Care Policy Guide: Determining the S+C Subsidy

The grant amount that is awarded is based on the calculation described above. The actual subsidy that S+C will provide for a specific unit is based on the difference between the contract rent and the rent paid by the tenant(s) of that unit.

Contract Rent

The contract rent (actual rental cost of the unit) will usually differ from the fair market rent (amount reserved) for each unit.

For the SRO component, the contract rents 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 75% of the Section 8 Existing Housing FMR for a 0-bedroom (the SRO FMR) unit minus the allowance for tenant paid utilities. Once the base rent is established, debt service for eligible rehab costs is added to determine the Contract Rent.

For all other components, the contract rent is the actual rent for the dwelling units. If the applicant will pay utilities, the rent can include the utilities. The applicant must determine that the contract rent is reasonable in relation to rents being charged for comparable unassisted units, as well as not in excess of rents currently being charged by the same owner for comparable unassisted units. The applicant may subsidize this amount with other resources provided the rent is still reasonable.

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 gross income; or
  • 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.

Although some 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. However, if there is a substantial change in income during the year, an adjustment must be made. PHAs are very familiar with this process. They are a good source of technical assistance. S+C Subsidy per Unit

The following example illustrates the relationship among the contract rent, the tenant rent and the S+C rental assistance subsidy:

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

S+C makes up the difference between the contract rent and the tenant's contribution.

In a shared living situation, such as a shared apartment or a group home, each participant pays tenant rent. The following example illustrates how the rental subsidy would be calculated:

Contract rent for 6BR grp home   $1150 month
Tenant rent payment, part. 1 $ 85 month  
Tenant rent payment, part. 2 125 month  
Tenant rent payment, part. 3 35 month  
Tenant rent payment, part. 4 75 month  
Tenant rent payment, part. 5 50 month  
Tenant rent payment, part. 6 80 month  
Total of tenant payments 450 month - 450 month
S+C rental payment   $ 700 month