2014 NEVADA LIHTC TRAINING Presented by Beth Hodges – Salter Ltd Cleveland Rd. Wooster, OH Presented by Beth L. Hodges; Salter Ltd.

Disclaimer Materials are distributed and the seminar program is presented with the understanding that Salter Ltd. and its associates are not rendering any legal, accounting or other professional advice. Participants should be aware that rules relating to government subsidized housing, and housing compliance regulations are continually changing. The interpretation and application of regulations can vary widely, based upon specific fact, circumstances and locales. Participants are encouraged to consult with their own advisors. Salter Ltd. does not assume any liability or other consequences that result from reliance on the information conveyed during this program.

2014 NEVADA LIHTC TRAINING Format = Triple “S” Silver State Show: LINE-UP: 1. State 2. Social Serve 3. Salter Covering modules of topics that are relevant to LIH / Affordable Housing Management Not a general overall beginning training program Opportunity to discuss specific issues at end

NEVADA COMPLIANCE INFORMATION

SOCIALSERVE.ORG -APARTMENT LISTINGS Socialserve.org Affordable housing listing service

Salter Show Beth Info EXPERIENCE IN PROGRAMS CURRENTLY REVIEWING FILES IN 30 STATES TRAININGS in 40 Plan for Rest of Today:

AGENDA – 3 rd “S” LIHTC Program Background: Applicable fractions, Minimum set-asides Initial Eligibility, on-going Compliance 3 “H” - Hera, Hold Harmless, HOME 140% rule; “NAU” Changes in first year household

HOT TOPICS to be COVERED VAWA Military Sexual Preference LGBT Other Fair Housing items Medical Marijuana – state vs. federal Good Cause / No Cause Evictions LEPP Plans – not LIH monitored

TRENDING TOPICS - ELIGIBILITY Social Security Verification changes Direct Express Tip Compliance RMD’s - Pensions IRMAA significance Negative Assets Assets of all types

OLD “FAVORITE” TOPICS Income and Asset Calculations Children in household - - custody vs. familial status Anticipating income Student Issue REASONABLE PERSON STANDARD BEST PRACTICES - DUE DILIGENCE STATE SPECIFICS

APPLICABLE FRACTION / SET-ASIDE SET- ASIDE: 20/50 OR 40/60 Applicable Fraction – What percentage of your units need to be rented to a LIH qualified resident? Deeper Skewing criteria / Other funding requirements

APPLICABLE FRACTION / SET-ASIDE NEW TYPICAL PROPERTIES HAVE 100% LIH units: example 48 units at 60% 24 units at 50% 12 units at 30% ALL SET-ASIDES MUST BE SATISFIED AT LEASE UP AND FULFILL “NAU” WHAT WOULD BE THE SET-ASIDE FOR THIS PROPERTY?

APPLICABLE FRACTION / SET-ASIDE WHAT WOULD BE THE SET-ASIDE FOR THIS PROPERTY? Reason:

“NAU” - Next Available Unit 2013 Income Limits 50% : 2 person $29,100 60% : 2 person $34,920 SCENARIO: You have leased- up your entire property. Mr./Mrs. Smith income qualified a 50% unit at $28,500 for a 2 BR unit. Y2 Mrs. Smith says she has finished school and got a job at the local casino as an accountant. The family income is now at $$54,000.

“NAU” - Next Available Unit 1. How much income can the Smith’s earn before it triggers “NAU” ? $________________

“NAU” - Next Available Unit 2014 Income Limits 50% : 2 person $29,100 60% : 2 person $34,920 A 60% unit 2 BR unit is vacant at your property. What is the maximum income you can qualify a 2 person family at? ________________  A 2 BR unit is vacant at your property. If you have no other vacancies, what is the maximum income you can qualify a 2 person family at in light of the Smith’s income ? ______________________ Mrs. Smith is pregnant. Does this make a difference? _____________

3 “H” – HERA, HOLD HARMLESS, HOME IF I ONLY KNEW THEN WHAT I KNOW NOW - Housing & Economic Recovery Act aka H.R. 322 General rationale: Requirements:

3 “H” – HERA, HOLD HARMLESS, HOME BIGGEST QUESTIONS: 1. What am I as a property designation. 2. Which income numbers do I use…. 3. what is the meaning of life.

3 “H” – HERA, HOLD HARMLESS, HOME EVERY PROPERY NUMBERS ARE BASED UPON P.I.S. PLACED IN SERVICE DATE OR CERTIFICATE OF OCCUPANCY <1/1/ USE HERA (11 Counties in NV) or HIGHEST Income Limits since placed in service date 1/1/2009 or LATER - USE THE PUBLISHED INCOME LIMIT FOR THE COUNTY OR THE HIGHEST ONE SINCE PLACED IN SERVICE (AKA MTSP) EXCEPT:

3 “H” – HERA, HOLD HARMLESS, HOME EXCEPT : If property has HOME FUNDS THEN: use the lower of the current 50% (low HOME) or 60% MTSP for current MTSP Year for these units OR: if only “X%” are HOME, then …………….

3 “H” – HERA, HOLD HARMLESS, HOME EXCEPT: If property is RD (RHS) or HUD- use their limits EXCEPT: If County qualifies as Rural area and are less than the National Non-metro limit. NOTE NONE applicable in Nevada—all county limits are higher in the State.

3 “H” – HERA, HOLD HARMLESS, HOME Where can you find Placed in Service date? Multiple building issues

HOLD-HARMLESS aka MTSP RECAP Hold Harmless for the Multi-family Tax Subsidy Program are for those properties place-in-service as of January 1, 2009 National Non Metropolitan NOT a factor in Nevada Limits never go DOWN for those EXCLUSIVE MTSP or HOME units WHAT YEAR TO USE BECOMES CRITICAL FACTOR

HERA (Special) Property Placed in Service (PIS) prior to January 1, 2009 Impacts only CERTAIN COUNTIES/ MSA one step further----- Time Frame TO IMPLEMENT Income Changes? ______________ Time Frame for Utility Rate Changes? ______________

UTILITY ALLOWANCE Why is the utility allowance update so important?

HOT TOPICS to be COVERED VAWA Military Sexual Preference LGBT Other Fair Housing items Medical Marijuana – state vs. federal Children in household - - custody vs. familial status Good Cause / No Cause Evictions LEPP Plans

VAWA A woman applies for an apartment in your complex for herself, one year old and her newborn child. During the screening process, you learn that she’s currently staying with family members after moving out of her previous rental unit because of domestic abuse by her boyfriend and baby daddy. She says that she’s has a CPO against him. You know of the boyfriend. You have concerns that he may show up and cause problems at your community. You believe his former girlfriend lives at your complex. Plus, you only have studio and 1 BR units available.

VAWA 1. Could your community face liability under state or federal law if you reject her application based on concerns for the safety and welfare of your current residents? ____________ YES____________ NO 2. Could you reject her based upon your occupancy standards of 2 per bedroom? __________ YES__________ NO 3. What do you need to document your file? ______________________

VAWA VAWA or Violence against Women Act was reauthorized 3/7/13. It is not limited to women. Includes domestic violence, dating violence, dating sexual assault, stalking, campus and tribal. Race, color, religion, national origin, sex, (meaning gender neutral) gender identification, (LGBT) sexual orientation, disability ACTUAL OR PERCEIVED

VAWA Does not apply to private housing** APPLIES TO LIH but not specifically Section 42: (a) and 42(g)(9) and 8823 Audit Guide Chap 13 AND All other federal housing FFHO ** Could be basis for other fair housing legal issue

VAWA Regulation differs from HUD “One-Strike” VAWA Prohibits such evictions Not “Good Cause” Does not count as serious or repeated violations of lease ALLOWS CERTIFICATION FROM TENANT by Landlord (42 USC 14337d(u)(1)(A) PHA or 42 USC 1437(ee)(1) voucher program

MILITARY A “good renter” prospect makes application at your complex. He is verified just under the AMGI income limit for your County. During the interview process, he mentions that he has enlisted in the armed forces but doesn’t know when he will be sent to basic training.

MILITARY 1. Your standard lease is 1 year. Can you deny him occupancy since you know he will be breaking the lease prior to the end of the lease term? ______ YES_____ NO 2. He says that he will only be in the unit for 3 to 4 months—not the 6 month LIH requirement. Can you deny his occupancy? _______ YES_____ NO

Sexual Orientation / Gender Identity Applies to LGBT NEVADA also covers transvestites NV Admin. Code Properties must be gender neutral Same other standards of “TSC” Attitude of other residents cannot become your issue

OTHER FAIR HOUSING ISSUES TOP AREAS OF ISSUES: Familial Status Religious / National Origins in a age of profiling Disability – Health / Handicap “Class Membership”

NOVEMBER 2013 published in Property Newsletter All children must be supervised by an adult at all times while playing outside. No sports activities, skateboarding, roller-blading, or general extracurricular activities are to take place in our community. If we see anyone violating any of the above activities or see any unsupervised children they will be sent home immediately.“ Is there a consequence for this policy? FAMILIAL STATUS

Marijuana

NO CAUSE / GOOD CAUSE EVICTIONS Good Cause: Non Payment of Rent ALWAYS #1 Documented negligence, abuse of premises by tenant, household member or person who has consent of tenant to be on premises (NRS 118A.110) NOTE THAT THIS HAS VAWA CONSEQUENCES

NO CAUSE / GOOD CAUSE EVICTIONS NRS 118A.310 Basic obligations. A tenant shall, as basic obligations under this chapter: 1. Comply with the terms of the rental agreement; 2. Keep that part of the premises which is occupied and used as clean and safe as the condition of the premises permit; 3. Dispose of all ashes, garbage, rubbish and other waste from the dwelling unit in a clean and safe manner; 4. Keep all plumbing fixtures in the dwelling unit as clean as their condition permits; 5. Use in a reasonable manner all electrical, plumbing, sanitary, heating, ventilating, air-conditioning and other facilities and appliances, including elevators, in the premises; 6. Not deliberately or negligently render the premises uninhabitable or destroy, deface, damage, impair or remove any part of the premises or knowingly permit any person to do so; and 7. Conduct himself or herself and require other persons on the premises with his or her consent to conduct themselves in a manner that will not disturb a neighbor’s peaceful enjoyment of the premises. (Added to NRS by 1977, 1336) HOW HAVE YOU DOCUMENTED A VIOLATION WHICH IS SERIOUS, REPEATED AND REMEDIATION ATTEMPTS HAVE BEEN MADE WITHOUT SUCCESS?

NO CAUSE / GOOD CAUSE EVICTIONS NO CAUSE EVICTIONS: Does not meet Section 42 Test Cannot non renew lease in assisted housing because you “don’t like” person; a pain to deal with etc. Cannot non renew because person causes resident upheaval e.g. troublemaker, you don’t think that tenant should live alone, housekeeping not at your standards, have “better” applicant

LEPP Plan BY SHOW OF HANDS: How many people have a LEPP at their property? How many people know what this is?

TRENDING TOPICS - ELIGIBILITY ISSUES Social Security Verification changes Direct Express Tip Compliance RMD’s - Pensions IRMAA significance Real Estate Negative Assets Assets of all types

SOCIAL SECURITY VERIFICATIONS SEE LETTER

DIRECT EXPRESS CARD

 Effective March 1, 2013 those persons receiving Social Security Benefits have 2 options for payment:  Electronic funds to bank account  Direct Express Card Balance on card considered an asset … Can be obtained through an ATM, online, or paper statement (.75 cent charge) all are acceptable verifications! TREAT AS ANY OTHER ASSET

TIP COMPLIANCE TIP AFFIDAVIT = LAST RESORT 1. Verification on VOE or YTD 2. Pay stubs – breakout of tips on stubs 3. IF not accounting for tips on Pay Stubs What have YOU done to document this scenario and clarify

RMD What does it stand for? What does it mean?

IRMAA What is this? What does it mean?

Review of Pension / 401K funds If person is working, only the amount that can be withdrawn without terminating employment is counted. Interest is counted as asset or as above Once a person stops working: Monthly, arbitrary distribution of fund or annual distributions counted as income. (Once paying on a regular basis, no longer income)

Review of Pension / 401K funds EXCEPTIONS IRS QDROS issue Fed / State retirees

Review of Pension / 401K funds CALCULATIONS:

VETERANS LUMP SUM PYMTS – income When deposited in account, should it is also be an asset ?

REAL ESTATE Harry and Ida Nowes, age 79 applied for occupancy at your senior complex. In addition to social security- joint gross amount of $2,000/month, they own their home for which they took out a reverse mortgage. The house is valued by the County at $105,000. They have received $1,000/month for the past 8 years on this payout. Selling costs for homes are 10%. They also have a checking account with a 6 month average balance of $700 at.001%. Their current account balance is $2,600. What do you certify their income at? $_____________________________

REAL ESTATE The Pitts are neighbors of the Nowes. Angie is a former property manager who is renting out their house while they have been traveling the country in their RV. They get $1000/ month rent per the lease. Taxes on the home are $620/half; Insurance is $750/year; maintenance is running $400/year. House value is $105,000 and they have no mortgage on property. The land the house sits on is valued at $15,000. This is the start of the second year that they have had home rented but have not yet filed taxes. What dollar value do you list on TIC to determine eligibility and where? …any other issues?

SELF-EMPLOYED - BUSINESS Gross sales less expense and depreciation –anticipated sales for the following year. Business plan SCH. C tax return (what is reality) Other documentation e.g. deposits in bank etc.

ASSET VERIFICATIONS What do you do when applicant has payee for their benefit payment and says you cannot verify bank account because amount is being deposited in payee’s account and payee refuses to give you her account information? ______________________________________________

INCOME or ASSET? A 65 year old has a mutual fund account with a balance of $167,280 paying 2.4%. He takes a $1,000/month withdrawal and has it transferred into his checking account. All are verified and accurately reflect this situation. Is this money an asset or $12,000 annual income? ______________ Income_______________Asset

LIVE-IN AIDE CAN YOU EXCLUDE THE INCOME OF A SEPARATED SPOUSE WHO IS THE “LIVE-IN AIDE” WHEN DETERMINING HOUSEHOLD’S ELIGIBILITY? _____ Yes_____ No

OLD FAVORITES Income and Asset Calculations Children in household - - custody vs. familial status Anticipating income Student Issue REASONABLE PERSON STANDARD BEST PRACTICES - DUE DILIGENCE STATE SPECIFICS

CHILDREN IN HOUSEHOLD – CUSTODY OR FAMILIAL STATUS? IRS VIEW HUD DETERMINATION: STATE INTERPRETATION – case by case basis Familial Status – NOT A FAIR HOUSING ISSUE – eligibility question

ANTICIPATING INCOME $$$$ STATE OF NEVADA – in light of the economic downturn…state specific Count if a job offer has been received Case by Case basis We like “Show me the Money”…Example:

STUDENT ISSUE – (REALLY) ISSUES TO LOOK FOR: Has been a student during the year Housing due to school location DEFINING STUDENT: individual 5 calendar months is full time per the institution whether consecutive or not Has faculty, curriculum, educational activities IRC 42(i)(3)(D)

REASONABLE PERSON STANDARD Best information available at the time of certification—represents the income the household anticipates it will receive following the effective date of the certification ( )

DUE DILIGENCE Definition What this really means