As I work on my last big projects for 2015, I have higher-level LIHTC issues on my mind.
I believe that managing LIHTC – or any housing program for that matter – in a blended capacity is one of the more challenging tasks that management can encounter and one that more and more managers are having to master. That’s why I dedicated a big chunk of my year to updating and revising our Blended Occupancy Specialist (BOS) course, and delivering it nationwide. Our hats go off to property owners and managers who value job training and apply the lessons provided through our services to strengthen the compliance standards and the management results of their housing portfolios.
Taking LIHTC to a higher level involves basic program knowledge layered with blending issues like student eligibility and over-income tenants at recertification, topics we have covered in a couple of webinars this year.
Another issue raised by blended management is how to properly set the rents for these units in order to maintain compliance with all program requirements. Some mandate that the rent paid by the tenants be tied directly to their household income, while others operate within rent limits which give the owner discretion as to the amount of actual rent that is set and charged to tenants. They all take into consideration tenant-paid utility allowances, as well, but the methods by which those are determined differ between programs and obviously require understanding by management in order to be factored correctly. In fact, new guidance has been issued by HUD this year about how utility allowances should be established for their project-based programs and new provision for utility allowances was included in the 2013 HOME Final Rule that owners and managers should know. Both of these certainly affect rent calculations for these programs, blended with LIHTC or otherwise.
Another advanced LIHTC concept involves planning ahead for what will happen after the initial compliance period for Section 42 requirements. If you intend to continue in the management of affordable housing, chances are you will be faced with post Year 15 issues for a housing credit property (or more) at some point in your career – if you haven’t already. The options include staying the compliance course with your state housing agency through the extended use period, re-syndicating with a new LIHTC allocation, or undergoing the Qualified Contract Process for opting out of the program after year 15. Of course there are specific requirements involved in taking any of these courses of action that owners and managers should be aware of in their planning, which is truly the key to success in the post Year 15 period of time.
And what of correcting non-compliance issues in the manner that the IRS directs? This often depends on management’s familiarity with the IRS’s Guide to Completing Form 8823 including its guidance for keeping LIHT units in compliance, what it considers out of compliance and the steps necessary to bring them back into compliance. Following these directives successfully usually requires more than just basic LIHTC program knowledge. Fortunately the Guide contains numerous examples that review scenarios based on line items 11a-q on IRS Form 8823, which is used for state housing agencies to report non-compliance to the IRS, that illustrate the proper ways to restore compliance when it slips.
So, all of this leads me to believe that we have more that we can teach you to help elevate your LIHTC expertise before the end of 2015. In fact, I’m working hard to do that by presenting the next in our series of webinars on “Blended Challenges” that will focus on setting rents at properties blended with LIHTC, HUD P/B and/or HOME funding. The webinar is this Thursday, Nov. 19. Better yet, our grand LIHTC finale for 2015 will be the rollout of Tax Credit Specialist Advanced running Dec. 8-11. I encourage you to end the year on its best note by joining me for both of these exciting training opportunities.