In January I joined my industry colleagues in our nation’s capital for NCSHA’s Housing Finance Agency Institute. The sessions – ranging from “Compliance Hot Topics” to “Year 15 Strategies” – and the Housing Credit Compliance Forum generated fresh insights (and some lively debate) regarding current issues facing the LIHTC Program. Here are some of event’s most significant takeaways:
1. News on income limits is that February is the expected publication date this year and will become the new standard going forward. The short explanation is that HUD, by changing the definition of Extremely Low Income last year, must now wait for HHS to publish the Federal Poverty Guidelines – which are generally released the third week of January – before it can publish its income limits.
In addition, HUD has changed its methodology for calculating the income limits from taking a backwards five-year average from the American Communities Survey to looking forward using economic data from the Congressional Budget Office and the Consumer Price Index to better anticipate current trends. As a result, they expect income limits to increase from the stagnation of the last few years.
2. The federal alignment project for physical inspections at sites with multiple subsidies is in the fourth year of its pilot. This involves properties with any combination of HUD P/B, LIHTC, HOME, and RD programs. There are currently 31 states participating, with plans for eventually having all 50 involved.
3. With regard to the new HUD Passbook Savings Rate, the question was raised whether LIHTC should prorate to the changes which are now expected to be issued at least annually. It was decided that the states should establish policy on this going forward since LIHTC is a program that doesn’t include interims.
Our advice is to check with your state agency about this so that you’ll know how to handle it going forward.
4. On the HOME front (pardon the pun), the long-awaited HOME Applicability Charts from the 2013 Final Rule have been released! I know this isn’t a LIHTC matter per se, but since so many LIHTC properties have HOME funding I think we should all at least have this on our radars. In my opinion, the main thing to draw from this in terms of compliance is that it confirms that the student eligibility restrictions apply to ALL HOME-funded units, even those with commitments before the Final Rule came out in 2013. The applicability charts can be found here.
5. The question over whether Required Minimum Distributions (RMDs) from retirement accounts should be counted as income even if only received in one periodic payment per year has been debated at these events since Change 4 was published in the summer of 2013. The definitive answer that came out of this event is that HUD says they are considered income and that the remaining amounts in the account are no longer counted as an asset when the RMDs start.
6. A HUD memo was released during the workshops and was discussed as it relates to HUD tenants who don’t requalify for LIHTC when layering. It’s not really new guidance, but is a good reminder of HUD’s take on this issue. It can be found here.
7. And finally, questions over income verification e.g. paystubs v. traditional third- party verifications of income were also raised and debated. The bottom line is that it’s up to the state agencies to determine what they consider sufficient verification, so we advise to consult with yours when it comes to this as they have a wide range of differing opinions when it comes to their verification requirements.