Affordable Housing Connections
February 2022 Newsletter
2022 Suballocator Manuals
Suballocator Manuals have been updated for 2022 and are posted to our website. The manuals include clarifications on Request for Action submissions, reporting requirements for owners with projects serving LTH, rent increases in assisted living projects, the requirement of Tenant Selection Plan, effect of noncompliance for management companies. Please be sure to review the updated manuals and reach out to us with any questions you may have.
Updated CHART Guide
The CHART User Guide was updated and can be found in Egnyte within your secure management folder. There were no substantial changes to CHART for PY2021. Please utilize the User Guide when questions arise regarding CHART and reach out to your portfolio manager should you have any additional questions.
ACTION REQUIRED: Annual Owner Certification Due February 15, 2022
Properties who receive an allocation of Low Income Housing Tax Credits (LIHTC) and/or federal HOME funds are required to submit a certification of compliance and occupancy report annually. January 1, 2021, through December 31, 2021, LIHTC & HOME completed submission package must be uploaded to your secure folder within Egnyte by Tuesday February 15th, 2022, by 5:00 p.m. Documents for submission are located within your secure folder.
*Instructional email sent to Owner's and Management Agent Contact on 12-16-2021*
Required documents located within Egnyte secured folders
If you have already completed your PY2021 Annual Owner Certification and reporting forms, please disregard this message.
Submission Package Requirements:
- Owner 2021 CHART Authorization for each project
- Signed HTC12, HTC12(Y15) and HOME program Owner's Certification including any applicable supporting documentation.
- PY2021 completed HTC and/or HOME CHART Report
- All completed UA schedules effective during the reporting period
- For project with allocated credits, but not yet Placed in Service, use the owner certification form found in the HTC 12 only CHART on tab HTC 12. Complete the top portion of the HTC12 form, check the box indicating “No buildings have been Placed in Service”. Skip all other items and have the owner representative sign and date the form.
CHART PY2021 is to be used for the following two types of projects:
- Projects with tax credits issued by a Suballocator for which AHC conducts compliance monitoring.
- Projects with tax credits and HOME issued by a Suballocator for which AHC conducts compliance monitoring.
HOME CHART PY2021 is to be used for the following type of project:
- All HOME projects that do not have tax credits issued by a Suballocator but that contracts with AHC for monitoring.
HTC12 Only CHART PY2021 is to be used by the following types of projects:
- Projects with either a 42m letter or Carryover letter issued prior to 12/31/21 must report with both an HTC12 and an HTC12 Only CHART, whether or not placed in service.
- Projects with tax credits issued by a Suballocator for which AHC conducts compliance monitoring and have no buildings placed in service in 2021.
- Projects with tax credits with at least one building placed in service in 2021 but owner elected to not claim credits in 2021.
IRS Further Extends Relief from LIHTC and PAB Deadlines, Compliance Requirements Due to COVID-19
The notice also provides an extension to satisfy occupancy obligations. Concerning compliance, Notice 2022-05 provides an extension of the requirement for a 30-day notice for state agency reviews of tenant files through the end of 2022 and allows state agencies to defer physical inspections through June 30, 2022, with the option to extend that through the end of 2022 in consultation with local public health experts. The closure of amenities or common areas in LIHTC properties due to COVID-19 will not result in a reduction of eligible basis and essential workers may be provided emergency housing in LIHTC properties.
Carbon Monoxide Alarms or Detectors in U.S. Housing and Urban Development (HUD)-Assisted Housing
HUD’s Offices of Public and Indian Housing, Multifamily Housing Programs, and Lead Hazard Control and Healthy Homes posted a joint Notice on January 31, 2022, requiring carbon monoxide alarms or detectors in their HUD-assisted housing programs starting December 27, 2022.
The notice reminds owners and operators of Public Housing, Project Based Rental Assistance (PBRA), Housing Choice Vouchers (HCV), Project Based Vouchers (PBV), Supportive Housing for the Elderly (Section 202) and Supportive Housing for Persons with Disabilities (Section 811) properties of carbon monoxide poisoning risks in housing, identifies resources for preventing and detecting exposure, and provides notice of the requirement for alarms or detectors to be installed in certain HUD-assisted housing by December 27, 2022. Read the Notice here.
Tax Credit & HOME Program Requirement Conflicts
Earlier in 2021, the Biden administration submitted to Congress the President’s priorities for fiscal year 2022 discretionary funding (Office of Management and Budget). The request reveals the administration’s priorities regarding affordable housing. Along with pursuing a significant expansion of rental assistance, the request seeks to address the shortages of affordable housing with a $500 million increase to the HOME Investment Partnerships Program, for a total of $1.9 billion, to construct and rehabilitate affordable rental housing and to support other housing-related needs. If accepted, this would be the largest funding level for HOME since 2009.
HOME is an ideal source of gap financing for LIHTC projects because of its flexibility (funds can be used for grants, direct loans, loan guarantees or other forms of credit enhancements, or rental assistance or security deposits). To establish affordable rents (household is paying no more than 30% of its income for housing costs) in many markets, other housing funds such as the HOME Investment Partnerships Program are leveraged to finance projects where the equity raised from tax credits may not be sufficient to provide the additional capital required to operate the site.
With more LIHTC sites partially financed with HOME funds to increase the supply of affordable housing, its vital for property managers to be mindful of the need to comply with both the tax credit and the HOME program. Because the two programs’ requirements can conflict, understanding each set of requirements separately is only half the battle. You must know how to solve those conflicts between the two programs to make certain you have overall project compliance. If not, you risk losing both the owner’s tax credits and the HOME funding.
When your LIHTC project also has HOME funding, you must meet each program’s income requirements. As you know, HUD updates both the HOME and LIHTC income limits at least annually.
- Uses a Minimum Set-aside requirement
- Rent certain percentage of units at project to households earning no more than certain percentages of area median gross income (AMGI)
- Income limits only apply to HOME-assisted units at the project
- All HOME-assisted units must be occupied by low-income households whose annual gross incomes do not exceed 80% AMGI
- For projects with 5 or more HOME-assisted units, at least 20% of HOME-assisted must be occupied by very low-income households (whose annual gross incomes do not exceed 50% AMGI
How to Resolve Differences:
Find the lowest common denominator to resolve conflicts between the LIHTC and HOME programs’ income requirements.
You must also know how to resolve the differences between the LIHTC and HOME rent requirements. Each program has its own definition of GROSS RENT.
Under the LIHTC program, gross rent is defined as the tenant’s portion of rent plus the UA for the unit. For a 40/60 project, the rents are based on 60% AMGI and are adjusted for household and unit size. So, to determine the maximum unit rent, you must take the rent limit for the bedroom size and deduct the UA for that unit. If the tenant of that unit has a rental subsidy, then the gross rent for the unit for LIHTC purposes is the tenant paid portion of rent plus the UA.
Gross rent under the HOME program is defined as the unit rent plus the UA for the unit. If the tenant has rent assistance, then the gross rent is the tenant’s portion, plus the rent assistance, plus the UA. Remember, for projects with 5 or more HOME units you must meet the Low HOME requirement, so you will have two rent levels with which to comply: “Low HOME” and “High HOME” rents. HUD determines the HOME rents and are based on:
o Low HOME Rent = 30% of the gross income of a household earning 50% of AMGI, adjusted for bedroom size or the FMR for the unit size, whichever is lower.
o High HOME Rent = 30% of the adjusted income whose gross income is 65%of AMGI, adjusted for bedroom size or the FMR for the unit size, whichever is lower.
How to Resolve Differences:
Calculate the gross rent for the unit using the gross rent definition of each program. If the gross rent under the LIHTC program is above the HOME rent limits, you may need to lower the unit rent until it fits into the appropriate HOME rent level. All non-HOME-assisted units can remain at a rent amount that doesn’t exceed the LIHTC rent limit. Remember that maximum unit rent is determined by subtracting the current UA for the unit from the rent limit for that bedroom size.
HUD updates and publishes the HOME income and rent limits annually by Metropolitan Statistical Area (MSA). LIHTC income and rents limits are computed using the HUD-issued income limits and are published by the state agencies.
Both the LIHTC and HOME program have periods of time in which the above requirements apply.
The Affordability Period for LIHTC projects is generally 30 years, broken down into two 15-year time frames.
- The first 15-year interval is called the Compliance Period. During this time the project must comply with all IRS Section 42 requirements. Within this 15-year timeframe, there is also the 10 year credit period. It is during this time that the IRS can recapture credits for noncompliance.
- The subsequent 15-year interval is called the Extended Use Period (EUP). During this time the project must comply with all requirements imposed by the credit allocator. These requirements are memorialized in a recorded document called a Land Use Restriction Agreement (LURA).
- The Period of Affordability (POA) is the length of time that a HOME-assisted project must meet the requirements of the HOME program. POAs range from 5 to 20 years.
- The minimum duration of the POA for the HOME program is based on the per unit amount of the HOME investment and the nature of the activity funded.
How to Resolve Differences:
It is quite possible that your HOME assisted LIHTC project will have different affordability periods for each program. It is also possible that your HOME assisted LIHTC project may have different first years of affordability.
Overlapping Time Periods
Notice in the example below, first year credits were claimed in 2020, marking year 1 for LIHTC affordability, but the HOME affordability period didn’t begin until 2021.
In this example the affordability time periods overlap but they do not start or end at the same time. The project must comply with the requirements of each program for the duration of that program’s affordability/compliance period. Remember, to satisfy both sets of requirements you must adhere to the most restrictive requirement in any given circumstance.
Question: We have a new property that will be housing tenants that are aging out of foster care. The households may be eligible for Extended Foster Care Stipends. Can I please ask if the Extended Foster Care Stipend is included in the household’s income for eligibility?
Answer: Great question! First, let us start by explaining what the Extended Foster Care program is and where funding comes from. The federal government provides funding that enables states to address the unique needs and experiences of older youth who are transitioning out of foster care (18 years of age, “aging out”). Extended foster care services vary state by state. The Minnesota law allows youth that are in foster care immediately prior to their 18th birthday to receive extended foster care services and payments. Minnesota benefits may include financial support.
All youth in extended foster care are eligible for foster care maintenance payments which include basic rate and an assessed supplemental rate. For youth living in a supervised independent living setting, the county or tribe may pay all or part of the foster care maintenance payment directly to the youth.
To answer the second part of your question, “is the extended foster care stipend included as income for eligibility” we will look at the HUD Occupancy handbook. Exhibit 5-1: Income inclusions and Exclusions, Page 2; Income Exclusions, Paragraph (2) “Payments received for the care of foster children or foster adults (usually persons with disabilities unrelated to the tenant family, who are unable to live alone)” illustrates the income from the Extended Foster Care program is EXCLUDED as household income.
Here is a link to a bulletin regarding payment amounts, specifically payment tables (towards the end of the document), put out by Minnesota’s Department of Human Services. https://www.dhs.state.mn.us/main/groups/publications/documents/pub/dhs-319847.pdf. Clarification on the program can also be located on Minnesota’s Department of Human Services website here https://mn.gov/dhs/people-we-serve/children-and-families/services/adolescent-services/programs-services/extended-foster-care.jsp.
1. Your mixed income LIHTC project is now in Extended Use Period. You recently moved in an eligible household that includes two adults. One of the two adults just informed you they were married over the weekend and therefore need to add their spouse to the lease. This adult addition to the household is three (3) months after their initial move in date. What should management to do?
(A.) Go ahead and add the 3rd member to the current household’s lease. Because you are in EUP, there is no need to meet initial eligibility requirements nor create a new TIC.
(B.) No need to do anything, you no longer have LIHTC requirements.
(C.) Initiate a new TIC and meet initial eligibility requirements. Because this change in composition occurred within the first six (6) months of occupancy, you are required to certify income and tenant eligibility of all 3 adults.
(D.) Mixed income LIHTC projects only require recertification of income annually. You can add this 3rd adult to the TIC when you complete the Household Questionnaire or similar form during their household anniversary.
1. True or False? During the Extended Use Period (EUP), 100% LIHTC projects have no income/assets recertification requirements. Owner’s/Agents must report certification dates, unit numbers, and household names at year end, but does not need to report current income and student status.
A project consists of two buildings. The owner elected the Average Income set aside on the 8609 and both buildings are part of a multiple building project. Both buildings have 5 units each, 10 units total. The owner has chosen to have three units at 80%, four units at 60%, two units at 40% and one unit at 20%. Remember, all Average Income projects must at least meet the 40/60 set aside. At a minimum, how many units must be affordable?
What are the seven protected groups* under the Federal Fair Housing Act?
*Do not include local protections. (check all that apply)
(F.) National Origin
(H.) Marital Status
(I.) Sexual Orientation
(J.) Familial Status
(L.) National Origin/Nationality
FIRST LEADERSHIP IN AFFORDABLE HOUSING CERTIFICATE COHORT GRADUATES!
The 2022 Leadership in Affordable Housing Certificate (LAHC) Course 1 began on January 11 by Zoom. Instructors are Barbara Dacy, Executive Director, Ottertail County HRA and Lyn Burton, Executive Director, AHC and ELC.
Affordable Housing Connections
We deliver monitoring and consulting services to governmental organizations, property owners and managers; and education to individuals who aspire to leadership in the affordable housing industry. Our aim is to protect the investment of private equity and tax dollars and to ensure continued quality affordable rental housing.