• Is it time to update your project sign? Is the information on the sign up to date?
• Does it read USDA Rural Development (correct) and not FmHA (incorrect)?
• Is the International Symbol of Accessibility (ISA) on the sign? (This is not required but strongly encouraged.)
• Does it display the project name, contact information, location, telephone number, and TDD number?
• Is the Equal Housing Opportunity Statement/Logo on the sign? It should take up five percent of the total sign area
• Remember, the sign must be not less than 16 square feet in size for housing projects with either 8 or more rental units (smaller housing projects may have smaller signs but they should be visible).

1. Receipt from the insurance company that identifies the annual premium amount and shows that the full amount was paid
   
   
2. A copy of the canceled check for the annual premium amount, along with a copy of the invoice identifying the annual premium.  The mortgagee's name should be listed as "USDA Rural Housing Service," with the appropriate area office address included.
   

1. How often should utility allowance reviews be conducted? 
   
2. When should utility allowance changes be submitted to Rural Development, i.e., what is the threshold for determining whether a utility allowance change is required? 
   
3. Can Rural Development staff settle on one methodology for calculating projected utility costs?

Answers:

1. RD Instruction 3560.202 (d) states: "Borrowers must review utility allowances annually, adjust for accuracy, and submit any utility allowance changes to the Agency for approval. If no changes are needed, the borrower must notify the Agency that no changes were made."  
   
   
2. There is no maximum or minimum threshold for when a utility allowance change must be considered.  Handbook 2, Section 7.13 B states, "The borrower should review utility allowances on an annual basis to determine whether any changes have to be made. 
   The borrower should indicate no changes to the utility rates in the comment section of the budget narrative." 
   
   There is often confusion regarding the difference between the utility rate and the utility cost.  The utility rate is the kilowatt rate charged by the utility company, whereas the utility cost is the rate times the kilowatt consumption level.  So, if the utility rate being charged by the utility company changes, an impact analysis must be conducted to determine whether a change to the utility allowance should occur.  Note that if the utility rate stays the same, but the utility cost increases due to increased kilowatt consumption, this would not trigger a utility allowance adjustment due to the increased kilowatt consumption levels. Also, some confusion arises because in the past Rural Development had a $5 threshold; unless the utility cost increased more than $5, no change was considered necessary. No such threshold exists under the RD 3560 Instruction.  A change in utility rates results in an analysis on the overall impact on utility costs, and the discretion of owners and managers must then be used to determine whether a change to the utility allowance is warranted.
   
   
3. Yes, Rural Development can and will settle on a methodology for calculation projected utility costs.  There are two primary methods used; 1) Take historical kilowatt consumption levels and apply the new/proposed utility rates to the past kilowatt consumption levels to project anticipated utility costs, and 2) Take the actual cost a tenant has historically paid and apply the percent increase in the rate to the historical actual cost and project out.  Both methods are considered acceptable, and there is only a small difference when you run the two calculations. However, we understand management's concern and thus the request for Rural Development offices to settle on one methodology for consistency purposes.  The most accurate calculation is to take historical consumption levels and apply the proposed utility rate increase to the historical kilowatt consumption levels; therefore, methodology #1 will be used in calculating projected utility costs when a change to the utility allowance is proposed.  We have attached a calculation tool that is available to help simplify the calculation.  Please contact your servicing office for specific guidance on how to properly use it.