With the passage of the Consolidated Appropriations Act of 2018, the Low Income Housing Tax Credit (LIHTC) Program gained an additional option for the minimum set-aside test in the form of Average Income. As such, owners of tax credit properties that receive their credit awards following the Act’s effective date of March 23, 2018 may now opt to have income targeting for designated LIHTC units that ranges from 20% of Area Median Income (AMI) up to 80% AMI as long as 40% of the units in a project are qualified by households whose income averages at or below 60% AMI. Prior to this change, income targeting for housing credit units could be no higher than 60% AMI. One of the stated goals of income averaging is to open up the applicant pool to a larger portion of qualifying families in order to increase income diversity in the LIHTC program. It also offers a way to make it easier for existing tenants in aging portfolios to income qualify under acquisition/rehab for LIHTC.
In recognition of this change, HUD published a second set of income limits for Multifamily Tax Subsidy Projects (MTSP) on February 18, 2020. For each county, parish or Metropolitan Statistical Area (MSA) in the country there are now dual sets of MTSP Income Limits published in accordance with the three minimum set-aside options that may be elected at the end of the first year of the Credit Period for LIHTC projects. Since 2009, HUD has published MTSP limits reflecting 50% AMI and 60% AMI, which correspond with the traditional 20-50 and 40-60 minimum set-aside options. (These are aside from the 25-60 option which is only applicable in New York City.) Both of these data sets can be found at https://www.huduser.gov/portal/datasets/mtsp.html.
It should be noted that the newly published Income Averaging income limits are for FY 2019, using the same data as the standard MTSP limits previously published on April 24, 2019. In other words, they do not represent updated limits but are simply a new manner of publication in order to facilitate income qualification for properties utilizing the Average Income test. The current MTSP data sets will remain effective until the FY 2020 income limits are published later this year.