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

Managing Eligibility in Blended Occupancy Projects

Sheryl Putnam and Samantha Pratter

Experience – Leadership - Collaboration

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

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

Overview of Programs

Program regulations sometimes conflict

A general rule is that the most restrictive program wins!

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


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


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


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

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”


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


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)

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


Rent limits Contract rent is established by PHA on HAP

Contract


Income limits Same as for Housing Choice Voucher (HCV)

Program Generally 50% of AMI

PHA establishes that participants are income-eligible

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


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


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

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 r rental housing eligible activity


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


Income limits Tenants in HOME-assisted units must meet

specified income limits:Low-income – 80% of AMIVery low-income – 50% of AMI


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


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

Regulatory Agencies

Internal Revenue Service (IRS) Bureau of the US Department of the

Treasury Allocates funds to each state on a per-

capita basis

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

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 sectorOwners in the private sector

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 sectorOwners in the private sector

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

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

Regulatory Agencies

Public housing authorities (PHAs) Created through state enabling legislation Contractual relationship with HUD through

the annual contributions contract (ACC)

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

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


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


Key regulatory documents – LIHTC HUD Handbook 4350.3 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


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


Key regulatory documents – PBRA The Housing Assistance Payments (HAP) Contract HUD Handbook 4350.3 Occupancy Requirements of

Multifamily Subsidized Housing Programs HUD Handbook 4350.1, Multifamily Asset Management

and Project Servicing HUD Handbook 4381.5, The Management Agent

Handbook HUD Handbook 8025.1, Implementing Affirmative Fair

Housing Marketing Requirements for Multifamily Housing


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


Key regulatory documents – PBV The Annual Contributions Contract (ACC) Administrative plan, agency/annual plan HUD 52578-B

Similar to family obligations in voucher Project-Based Voucher Housing Assistance

Payment Contract (PBV-HAP contract)


Key regulatory documents – PH24 CFR Parts 5, 8, 100, 902, 903, 945, 960,

965, 966The Annual Contributions Contract (ACC) The Admissions and Continued

Occupancy Policy (ACOP) Five-Year Plan / Annual PlanThe public housing lease


Key regulatory documents – HOME Authorized under Title II of the Cranston-

Gonzalez National Affordable Housing Act (42 U.S.C. 12701 et seq.)

24 CFR Part 92


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 http://

www.hud.gov/offices/cpd/affordablehousing/library/modelguides/2009/2009homerentalpo.cfm

http://www.hud.gov/offices/cpd/affordablehousing/library/modelguides/2009/2009homerentalpo.cfm





Managing Eligibility – LIHTC

Tenants must be income-eligibleHousehold’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 4350.3


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


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


SSN requirementsNo 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


Student status Units comprised entirely of full-time students

do not qualify as LIHTC units


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.

Managing Eligibility

Student statusPart-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


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


Income limitsPublished by HUD each year Income limit table to be used is determined by

the Placed In Service dateThe 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


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)


Staff/Manager unitsIf 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

Managing Eligibility – PBRA

Tenants must be income-eligible Household’s anticipated annual gross income

must be at or below applicable income limitEither 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

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


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


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


Citizenship status – PBRA, PBV, and PHEach member will be:

Citizen or nationalEligible immigrant Ineligible noncitizen


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


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

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


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

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


63


UNLESS… The student is eligible and the student’s

parents (individually or jointly) are income eligible for the program

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

Managing Eligibility – PBRA, PBV and PH

Required denial of admission See TSP (PBRA), ACOP (PH), or admin plan

(PBV)

Managing Eligibility – PBV and PH

Unique to PBV and PH: PIH 2012-10 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

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

Managing Eligibility – PH

Student status Student rules in other HUD programs do

NOT apply to PHPIH Notice 2005-16 encourages policy for

determining and verifying the eligibility of full-time college students of non-parental/guardian households

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


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 AMIThese are called the Low HOME income

limits


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


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

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

Owner must perform due diligence verifying income

Due diligence = to go beyond the minimumAll sources of income and assets must be

verified to establish initial LIHTC eligibility following the HUD Handbook 4350.3 Preferred verification method is third-party

verification



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


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

Consent & Verification FormsPBRA, 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

Consent & Verification FormsPBRA, 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

Verification – PBRA

SSN verificationSocial Security cardOriginal document from SSAOriginal document issued by a federal or

state agencyAnd more…

8080

VerificationPBV and PH

SSN verification PHA must accept any of the following:

SS cardSSA-issued documentOriginal document issued by federal, state,

or local government agencyContaining name & SSN

Verification Timeframes– PBRA

Verifications for eligibility are valid for 120 days from the date of receipt by the owner

Verification Timeframes – PBV

PHAs must obtain verification of eligibility no more than 60 days before initial issuance of a voucher

Verification Timeframes – PH

Verifications for eligibility are generally valid for no more than 90 days Public Housing Occupancy Guidebook

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

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-50059 or HUD-50058

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

Determining Rents

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 4350.3 And annually in certain LIHTC projects

Income is about eligibility, not about rent

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

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

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

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

Rents - PBRA

Rents are based on a percentage of income HUD Handbook 4350.3 Chapter 5 TTP – UA = household rent HAP is amount owner bills HUD for each

month, difference between TTP and gross rent Reported on 50059

Rents – PBRA

Unit rent determination Project rent is established and approved by

HUD or contract administrator

Rents – PBRA

Utility allowancesEstimate of average monthly utility billsNo uniform guidelines as to how UA should be calculated

Check with HUD or CAVaries between HUD offices and CA

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

Rents – PBV

Unit rent determination Established at beginning of HAPC term Owner may request increases

Rents – PBV

Utility allowances Established and maintained by PHA For tenant-paid utilities

Rents – PH

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

Rents – PH

Unit rent determinationFlat rent and income-based rent

Rents – PH

Utility allowancesPHA establishedAny unit for which family pays utilitiesFlat rent families will not have a UA applied to

their rent

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

Rents – HOME

Unit rent determinationUnit rents established by ownerUnit rents must be approved by the PJ

Unit rent + utility allowance cannot exceed HUD published rent limits:Low HOMEHigh HOME

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

Rents – HOME

Unit rent determinationUnits 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

Rents – HOME

Unit rent determinationUnits 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); AND2. 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

Rents – HOME

Unit rent determinationProperties 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

Rents – HOME

Utility allowances Provided by PJ May be different than

LIHTC utility allowance


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

Thank you for participating in today’s Housing Help Session!

Hope to see you again!