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Managing Eligibility in Blended Occupancy Projects Sheryl Putnam and Samantha Pratter Experience – Leadership - Collaboration.

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Presentation on theme: "Managing Eligibility in Blended Occupancy Projects Sheryl Putnam and Samantha Pratter Experience – Leadership - Collaboration."— Presentation transcript:

1 Managing Eligibility in Blended Occupancy Projects Sheryl Putnam and Samantha Pratter Experience – Leadership - Collaboration

2 Learning Objectives  Key program elements and requirements for the following programs:  Low Income Housing Tax Credit (LIHTC)  Project Based Rental Assistance (PBRA)  Project Based Voucher (PBV)  Public Housing (PH)  HOME

3 Learning Objectives  Similarities and differences of determining eligibility in combined funding projects:  Citizenship requirements  Social Security Number requirements  Student rules  Income limits  Verification requirements  Staff units in LIHTC units

4 Overview of Programs  Program regulations sometimes conflict  A general rule is that the most restrictive program wins!

5 Overview of Programs - LIHTC  Provides the private market incentives for construction, rehab or acquisition of low-income rental housing  Federal tax credits awarded to owners/developers by State Housing Finance Agencies (HFA)  State HFAs perform ongoing compliance on behalf of IRS  Noncompliance may result in recapture of credits by the IRS

6 Overview of Programs - LIHTC  The federal minimum set-asides are minimums  Federal minimum set-asides are 20/50 or 40/60  Owners may also choose to rent to lower- income households  Known as deep rent skewing  Indicated in regulatory documents

7 Overview of Programs - LIHTC  Income limits  Tenants in LIHTC units must meet specified income limits  Generally either 50% or 60% LIHTC income limit, but may be lower depending on project

8 Overview of Programs - LIHTC  Rent limits  LIHTC units must be rent restricted throughout the project’s compliance period  Rent includes the utility allowance and cannot exceed HUD’s published rent limits

9 Overview of Programs - PBRA  Provided to either PHAs or private owners  20 to 40 year HAP Contract with HUD after completion of construction or rehab  After the initial term of the HAP contract, owners can continue or “opt out”

10 Overview of Programs - PBRA  Rent limits  Contract rent is approved by HUD as listed on the HAP contract or amendment to HAP contract  Must be comparable to unsubsidized rents

11 Overview of Programs - PBRA  Income limits  Either the low-income (80% of AMI) or very low- income (50% of AMI)  Projects with HAP contracts on or after 10/1/81 must admit only very low-income (50% of AMI)

12 Overview of Programs - PBV  Section 8 HCV project-based voucher  Allows PHAs that administer tenant-based vouchers to attach up to 25% of voucher budget authority to specific units or projects  PHA and owner enter into a HAP contract  Minimum of one year, maximum of 15 years

13 Overview of Programs - PBV  Rent limits  Contract rent is established by PHA on HAP Contract

14 Overview of Programs - PBV  Income limits  Same as for Housing Choice Voucher (HCV) Program  Generally 50% of AMI  PHA establishes that participants are income- eligible

15 Overview of Programs - PH  Created in 1937, public housing is owned by local housing authorities (PHA)  PH receives operating subsidy (and capital grant) from HUD

16 Overview of Programs - PH  Rents  Tenant rent is the amount payable by family  Families choose annually whether to pay income-based or flat rent  If income-based, TTP minus utility allowance (if any)  Flat rent is based on market value

17 Overview of Programs - PH  Income limits  For admission, family must have income at or below 80% of AMI  Once a family is admitted, they’re no longer subject to the income limits

18 Overview of Programs - HOME  HUD provides formula grants to states and participating jurisdictions (PJs) for eligible HOME activities  Many different types of eligible HOME activities  This session is focusing on HOME-assisted rrental housing eligible activity

19 Overview of Programs - HOME  HOME projects must remain affordable for 5 – 20 years (affordability period)  Depending on the type of HOME project

20 Overview of Programs - HOME  Income limits  Tenants in HOME-assisted units must meet specified income limits:  Low-income – 80% of AMI  Very low-income – 50% of AMI

21 Overview of Programs - HOME  Rent limits  Two HOME rent limits for the HOME program:  High HOME rent and low HOME rent – the maximum rents that owners can charge  Published annually by HUD

22 Overview of Programs - HOME  HOME projects with five or more HOME units must have 20% of HOME units designated Low HOME Rent units  Remaining units can be High HOME  Owner must continuously maintain this mix during the affordability period

23 Regulatory Agencies  Internal Revenue Service (IRS)  Bureau of the US Department of the Treasury  Allocates funds to each state on a per- capita basis

24 Regulatory Agencies  Housing finance agencies (HFA)  State-chartered authorities established to help meet the affordable housing needs of the residents of their states  Administrator of LIHTC program for IRS  “Eyes and ears” of the IRS  Perform desk audits; inspect housing; inspect tenant files  Issue reports of noncompliance to IRS utilizing IRS Form 8823

25 Regulatory Agencies  Housing and Urban Development (HUD)  Contracts with entities that actually build, manage, and maintain the buildings and administer rent subsidy programs  Public housing agencies (PHAs) in the public sector  Owners in the private sector

26 Regulatory Agencies  Housing and Urban Development (HUD)  Contracts with entities that actually build, manage, and maintain the buildings and administer rent subsidy programs  Public housing agencies (PHAs) in the public sector  Owners in the private sector

27 Regulatory Agencies  Contract administrators (CAs) – PBRA  Program compliance function  Ensures HUD-subsidized properties serving eligible families at the correct level of assistance,  Asset management function  Ensures the physical and financial health of HUD properties

28 Regulatory Agencies  Contract administrators (CAs)  Generally housing agencies  State housing finance agencies  Local housing authorities  Some partner with companies specializing in this type of work

29 Regulatory Agencies  Public housing authorities (PHAs)  Created through state enabling legislation  Contractual relationship with HUD through the annual contributions contract (ACC)

30 Regulatory Agencies  Participating jurisdictions (PJs)  Any state or local government that HUD has designated to administer a HOME program  Allocates the HOME funds  Conducts compliance activities throughout the project’s affordability period

31 Regulatory Documents  Successful management comes from a thorough understanding of all governing regulatory documents  Key information outlined in documents such as  Affordability/compliance periods  Income limits  Number of units rent restricted

32 Regulatory Documents  Key regulatory documents – LIHTC  Section 42 of the Internal Revenue Code (IRC) and related regulations  The Qualified Allocation Plan (QAP)  The Tax Credit Application  Regulatory Agreement  IRS Form(s) 8609 – one for each building  The state-specific LIHTC compliance manual

33 Regulatory Documents  Key regulatory documents – LIHTC  HUD Handbook  Guide for Completing Form 8823: Low Income Housing Credit Agencies Report of Noncompliance or Building Disposition  General Explanation of the Tax Reform Act of 1986

34 Regulatory Documents  Key regulatory documents – PBRA  24 CFR Part 880 (for new construction)  24 CFR Part 881 (for substantial rehabilitation)  State housing finance agencies  24 CFR Part 883

35 Regulatory Documents  Key regulatory documents – PBRA  The Housing Assistance Payments (HAP) Contract  HUD Handbook Occupancy Requirements of Multifamily Subsidized Housing Programs  HUD Handbook , Multifamily Asset Management and Project Servicing  HUD Handbook , The Management Agent Handbook  HUD Handbook , Implementing Affirmative Fair Housing Marketing Requirements for Multifamily Housing

36 Regulatory Documents  Key regulatory documents – PBV  24 CFR Part 983 (PBV)  24 CFR Part 982 and 5 (HCV)  With the exception of the sections that are not applicable as described in 24 CFR Part 983

37 Regulatory Documents  Key regulatory documents – PBV  The Annual Contributions Contract (ACC)  Administrative plan, agency/annual plan  HUD B  Similar to family obligations in voucher  Project-Based Voucher Housing Assistance Payment Contract (PBV-HAP contract)

38 Regulatory Documents  Key regulatory documents – PH  24 CFR Parts 5, 8, 100, 902, 903, 945, 960, 965, 966  The Annual Contributions Contract (ACC)  The Admissions and Continued Occupancy Policy (ACOP)  Five-Year Plan / Annual Plan  The public housing lease

39 Regulatory Documents  Key regulatory documents – HOME  Authorized under Title II of the Cranston- Gonzalez National Affordable Housing Act (42 U.S.C et seq.)  24 CFR Part 92

40 Regulatory Documents  Key regulatory documents – HOME  Written agreement  Deed restrictions  HOME Loan Agreement  PJ-specific HOME compliance manual  Compliance in HOME Rental Projects: A Guide for Property Owners  ousing/library/modelguides/2009/2009homer entalpo.cfm ousing/library/modelguides/2009/2009homer entalpo.cfm

41 Managing Eligibility in Blended Occupancy Projects

42 Managing Eligibility – LIHTC  Tenants must be income-eligible  Household’s anticipated annual gross income must be at or below the applicable income limit  50% or 60%—as elected by the owner on IRS Form 8609  Household income calculated according to Section 8 using the HUD Handbook

43 Managing Eligibility – LIHTC  Tenants must be income-eligible  Project may have lower income targeting requirements  Usually 30% of AMI  Pay special attention to the set-asides in the project’s regulatory agreement

44 Managing Eligibility – LIHTC  Citizenship status  No requirement to verify citizenship status  Nor does the program prohibit admission to a LIHTC unit based on a household member’s citizenship status  A combined funding unit with PBRA, PBV, or PH must comply with citizenship requirements for its respective program

45 Managing Eligibility – LIHTC  SSN requirements  No requirement to verify social security numbers for the household  A combined funding unit with PBRA, PBV, or PH must comply with SSN requirements for its respective program

46 Managing Eligibility – LIHTC  Student status  Units comprised entirely of full-time students do not qualify as LIHTC units

47 Managing Eligibility – LIHTC  IRS definition of student  An individual, who during each of 5 calendar months during a calendar year in which the taxable year of the taxpayer begins, is a full- time student at an educational organization described in IRC §170. The five calendar months do not need to be consecutive.

48 Managing Eligibility  Student status  Part-time students are okay!  If, however, the entire household consists of full-time students, the unit is not considered an LIHTC unit, unless the student falls in an exemption category

49 Managing Eligibility – LIHTC  Exemption categories:  A student is receiving assistance under Title IV of the Social Security Act (TANF)  A student was previously under the care of a state foster care program  A student is enrolled in a job training program receiving assistance under JTPA or similar program  Household consists of a single parent and his/her dependents, where neither the single parent nor their children are dependents of another individual  Household consists of persons who are married and eligible to file a joint tax return

50 Managing Eligibility – LIHTC  Income limits  Published by HUD each year  Income limit table to be used is determined by the Placed In Service date  The Placed in Service date is the date all compliance activities begin for a LIHTC building  Revised income limits must be implemented within 45 days of HUD publishing the limits

51 Managing Eligibility – LIHTC  Income limits  Beginning in 2009, HUD published separate income limits for LIHTC projects  These income limit tables are referred to as multifamily tax subsidy projects (MTSP)

52 Managing Eligibility – LIHTC  Staff/Manager units If one or more units in a LIHTC project are used for on- site staff, one of the following will apply: The unit is considered a rental unit  staff must be a qualified LIHTC household OR The unit is considered common area  Staff does not have to be a qualified LIHTC household  Must be full-time

53 Managing Eligibility – PBRA Tenants must be income-eligible  Household’s anticipated annual gross income must be at or below applicable income limit  Either 80% or 50% of AMI  Program and project eligibility must be determined  Applicants must be eligible to reside in the specific project to which they have applied

54 Managing Eligibility – PBRA  Three things may affect an applicant’s eligibility for a particular project: 1.Extent to which all or some units are designated for specific family types; 2.Project-specific occupancy standards, family size, and the unit sizes available; and 3.A family’s intention to lease using a housing choice voucher subsidy

55 Managing Eligibility  Citizenship status – PBRA, PBV and PH  No family may receive PBRA, PBV or PH assistance prior to the affirmative establishment and verification of eligibility of at least one family member

56 Managing Eligibility  Citizenship status – PBRA, PBV and PH  All applicants must be given notice of the requirement to submit evidence of citizenship or eligible immigration status at the time of application  All family members, regardless of age, must declare

57 Managing Eligibility  Citizenship status – PBRA, PBV, and PH  Each member will be:  Citizen or national  Eligible immigrant  Ineligible noncitizen

58 Managing Eligibility  Citizenship – PBRA, PBV and PH  Households will fall into one of the following categories:  All members citizens or eligible immigrants  Some members eligible and some ineligible (mixed family)  Receive prorated assistance  All members are ineligible noncitizens  Not eligible for assistance

59 Managing Eligibility  SSN requirements – PBRA, PBV and PH  All applicants (except for noncontending members) must disclose and document a complete and accurate SSN for each household member, including foster children, foster adults and live-in aides

60 Managing Eligibility – PBRA and PBV  Sole residence requirement  Tenants receiving PBRA or PBV assistance must have only one residence and receive assistance only in that unit and under no circumstances benefit from multiple subsidies

61 Managing Eligibility  Student status – PBRA and PBV  Assistance cannot be provided to any individual who is…  Enrolled as either a part-time or full-time student at an institution of higher education for the purpose of obtaining a degree, certificate, or other program leading to a recognized educational credential

62  And is…  Is under the age of 24;  Is not married;  Is not a veteran of the U.S. military;  Does not have a dependent child;  Is not living with his or her parents who are receiving Section 8 assistance Managing Eligibility – PBRA and PBV

63 63 Managing Eligibility – PBRA and PBV  UNLESS…  The student is eligible and the student’s parents (individually or jointly) are income eligible for the program

64 Managing Eligibility – PBRA, PBV and PH  Equal Access Final Rule:  HUD-assisted housing must be made available without regard to actual or perceived sexual orientation, gender identity, or marital status  Administrators and participating owners may not inquire about the sexual orientation or gender identity of an applicant or occupant for the purposes of making eligibility determinations

65 Managing Eligibility – PBRA, PBV and PH  Required denial of admission  See TSP (PBRA), ACOP (PH), or admin plan (PBV)

66 Managing Eligibility – PBV and PH  Unique to PBV and PH: PIH  If family otherwise eligible, they may maintain position on waiting list for a period of time per PHA policy  If all household members have not disclosed their SSN when unit becomes available, the PHA must offer the unit to the next eligible family on the waiting list

67 Managing Eligibility – PH  Tenants must be income-eligible  A PH household’s anticipated annual gross income must be at or below 80% of AMI  Income limits are only applied at admission

68 Managing Eligibility – PH  Student status  Student rules in other HUD programs do NOT apply to PH  PIH Notice encourages policy for determining and verifying the eligibility of full-time college students of non- parental/guardian households

69 Managing Eligibility – HOME  Tenants must be income-eligible  Two income limits:  High HOME Income Limits (80% AMI)  Low HOME Income Limits (50% AMI)  All HOME-assisted units must be occupied by low-income households at or below 80% (AMI)  PJ determines the definition of annual income to be used

70 Managing Eligibility – HOME  Tenants must be income-eligible  Projects with 5+ HOME-assisted units:  At least 20% of the units must be rented to households at or below 50% percent AMI  These are called the Low HOME income limits

71 Managing Eligibility – HOME  Citizenship status  No requirement to verify citizenship status  No prohibition of admission based citizenship status  Unit with PBRA, PBV, or PH must comply with citizenship requirements for its respective program

72 Managing Eligibility – HOME  SSN requirements  No requirement to verify social security numbers for the household  A combined funding unit with PBRA, PBV, or PH must comply with citizenship requirements for its respective program

73 Consent & Verification – LIHTC  Tenant Income Certification (TIC) is required for LIHTC households  Must be signed by all adult household members before move-in and at annual recertification  Information on TIC similar to 50059/50058 form  State-specific TIC

74  Owner must perform due diligence verifying income  Due diligence = to go beyond the minimum  All sources of income and assets must be verified to establish initial LIHTC eligibility following the HUD Handbook  Preferred verification method is third-party verification Consent & Verification – LIHTC

75  Verifications can be no older than 120 days before the effective date of the tenant income certification (TIC)  IRS does not require specific verification forms  Check with state agency on required verification forms

76 Consent & Verification – LIHTC  Pay special attention to verifying full- time student status  The IRS has stated that acceptable methods of verification include third-party verifications, oral statements, or a review of documents submitted by the student  Check with state agency

77 Consent & Verification Forms PBRA, PBV, PH  HUD-9887 and form HUD-9887-A (PBRA) and HUD-9886 (PBV & PH)  Each household member age 18 and older must sign form (head, spouse, cohead regardless of age)  Regardless of whether they report income

78 Consent & Verification Forms PBRA, PBV, PH  Form HUD-92006, Supplement to Application for Federally Assisted Housing, must be provided to households at the time of application  The household is not required to provide the information

79 Verification – PBRA  SSN verification  Social Security card  Original document from SSA  Original document issued by a federal or state agency  And more…

80 8080 Verification PBV and PH  SSN verification  PHA must accept any of the following:  SS card  SSA-issued document  Original document issued by federal, state, or local government agency  Containing name & SSN

81 Verification Timeframes– PBRA  Verifications for eligibility are valid for 120 days from the date of receipt by the owner

82 Verification Timeframes – PBV  PHAs must obtain verification of eligibility no more than 60 days before initial issuance of a voucher

83 Verification Timeframes – PH  Verifications for eligibility are generally valid for no more than 90 days  Public Housing Occupancy Guidebook

84 Consent & Verification – HOME  The HOME program requires verification of household income to determine program eligibility  Applicant/tenant self-certification is not allowed as a verification method to determine program eligibility, neither is a certification from another program Check with PJ on required verification forms

85 Consent & Verification – HOME  Owners must obtain verification of eligibility no more than 6 months before executing a HOME lease agreement  Verifications used for move-in must be from source documents  Can’t use form HUD or HUD-50058

86 Consent & Verification – Comparison  LIHTC  Verifications can be no older than 120 days before the effective date of the tenant income certification (TIC)  PBRA  Verifications for eligibility are valid for 120 days from the date of receipt by the owner Most restrictive program wins!  PBV  PHAs must obtain verification of eligibility no more than 60 days before initial issuance of a voucher  PH  Verifications for eligibility are generally valid for no more than 90 days  Public Housing Occupancy Guidebook  HOME  Owners must obtain verification of eligibility no more than 6 months before executing a HOME lease agreement

87 Determining Rents

88 Rents – LIHTC  Rents aren’t based on a percentage of income, but owners must determine the household’s gross annual income before move-in following HUD Handbook  And annually in certain LIHTC projects  Income is about eligibility, not about rent

89 Rents – LIHTC  Unit rent determination  Unit rents are set by project owner  Unit rent is the rent paid by the LIHTC household  Unit rent + utility allowance cannot exceed HUD published LIHTC rent limits

90 Rents – LIHTC  Unit rent determination  Rents over LIHTC limit cannot be charged except for:  Section 8 participants – PBRA, PBV or HCV – as long as the income is based on HUD requirements and there is a HAP contract and the owner receives subsidy on behalf of a participant

91 Rents – LIHTC  Utility allowances  Unit rent + utility allowance cannot exceed HUD published LIHTC rent limits  Included if tenant pays for any utilities  Owner can choose from (check with state agency for fee, if any):  PHA utility allowance  Local utility allowance estimate  HUD utility schedule model  Engineering consumption model

92 Rents – LIHTC  Once a unit is out of compliance with rent limits, it’s out of compliance for the rest of the owner’s tax year!  Example: A unit out of compliance on April 2, 2012 will remain out of compliance until January 1, 2013

93 Rents - PBRA  Rents are based on a percentage of income  HUD Handbook Chapter 5  TTP – UA = household rent  HAP is amount owner bills HUD for each month, difference between TTP and gross rent  Reported on 50059

94 Rents – PBRA  Unit rent determination  Project rent is established and approved by HUD or contract administrator

95 Rents – PBRA  Utility allowances  Estimate of average monthly utility bills  No uniform guidelines as to how UA should be calculated  Check with HUD or CA  Varies between HUD offices and CA

96 Rents – PBV  Rents are based on a percentage of income  Family income determination  Follows HCV program rules  TTP – UA = tenant rent  HAP is amount PHA pays owner each month- differs by family  Reported on 50058

97 Rents – PBV  Unit rent determination  Established at beginning of HAPC term  Owner may request increases

98 Rents – PBV  Utility allowances  Established and maintained by PHA  For tenant-paid utilities

99 Rents – PH  Family income determination  Rent is income-based or flat  TTP – UA (if any)= tenant rent  Reported on 50058

100 Rents – PH  Unit rent determination  Flat rent and income-based rent

101 Rents – PH  Utility allowances  PHA established  Any unit for which family pays utilities  Flat rent families will not have a UA applied to their rent

102 Rents – HOME  Rents aren’t based on a percentage of income, but owners must determine the household’s gross annual income before move-in using source documentation  PJ determines the definition of annual income

103 Rents – HOME  Unit rent determination  Unit rents established by owner  Unit rents must be approved by the PJ Unit rent + utility allowance cannot exceed HUD published rent limits:  Low HOME  High HOME

104 Rents – HOME Low HOME Rent – Maximum amount of rent that can be charged to very-low income (50%) households High HOME Rent – Maximum amount of rent that can be charged to low-income (80%) households

105 Rents – HOME  Unit rent determination Units with HOME + LIHTC Use the LOWER of the HOME or the LIHTC maximum rent amounts Remember to compare the utility allowance schedules if using two separate utility allowances

106 Rents – HOME  Unit rent determination Units with HOME + PBRA that are identified as Low HOME may exceed HUD published Low HOME rent limits if: 1.The household is VLI (50% AMI); AND 2.The household’s tenant paid rent does not exceed 30% of the household’s adjusted income If the above is true, maximum Low HOME rent = Tenant paid rent + Project based subsidy

107 Rents – HOME  Unit rent determination Properties with HOME + HCV and/or PBV  Maximum unit rent cannot exceed HUD published rent limits for Low and High HOME  Tenant paid rent + HAP cannot exceed HUD published rent limits

108 Rents – HOME  Utility allowances  Provided by PJ  May be different than LIHTC utility allowance

109 Managing Eligibility in Blended Occupancy Projects Bottom line  Income eligibility varies by program. Just because a family is eligible under one program, does not mean they are automatically eligible under another  Rent limits vary by program  Student rules in LIHTC and HUD programs are not identical  Only PBRA, PBV and PH have SSN and citizenship requirements  Utility allowances vary by program Eligibility should be determined according to the most restrictive program

110 Thank you for participating in today’s Housing Help Session!  Hope to see you again!


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