Maintenance at LIHTC properties is key to compliance
Many of you have received compliance certification training through the National Center for Housing Management. In fact, I would wager that most of you reading this article have had COS, TCS, BOS or some combination thereof. You know we spend a lot of time reviewing income and assets in those classes and goodness knows we love our HUD Handbook citations at NCHM. But one area of utmost importance that receives only passing mention in our compliance courses is the physical condition of our properties.
Having been invited to participate on a physical inspections panel at the National Council of State Housing Agency’s Housing Credit Conference in Atlanta next month has got me thinking quite a bit about how well we maintain our affordable housing stock in addition to how well it is managed.
The standard of measurement for physical compliance at Low-Income Housing Tax Credit (LIHTC) properties is determined by the State Housing Agency from either HUD’s Uniform Physical Condition Standards (UPCS) or local health, safety and building codes. When conducting physical inspections as part of their compliance monitoring responsibilities under Section 42 of the Internal Revenue Code, the state agencies are required to review a minimum of 20% of the LIHTC units. The vast majority of state agencies have chosen to use UPCS as their standard, but managers are cautioned to double-check with their state agency to confirm which is implemented in their jurisdiction. You need to be well-versed in what the state’s expectations are in order to successfully meet them.
We recommend that unit inspections be conducted at your properties at least every six months, and if you’re managing a troubled property that has had physical issues then quarterly inspections should be done until the problems have been remediated. For LIHTC purposes, managers should pay close attention to physical condition of their vacant units as many state agencies have been intentionally selecting them for inspection while doing their reviews. If a unit is found not to be rent-ready within thirty days of vacancy, then most state agencies are going to consider it out of compliance and will report this to the IRS on Form 8823. The Unit Vacancy Rule states that reasonable attempts must be made to re-rent vacant tax credit units in order to continue claiming credits on them. There is no point in making those reasonable attempts unless the unit is truly ready to be occupied.
If you will be in attendance for this session at the Housing Credit Conference you can look forward to also learning about accessibility and fair housing violations that relate to the physical condition of properties and a topic that continues to be popular in affordable housing circles — bedbugs! For those not attending in June, stay tuned for a Spotlight On Physical Conditions for LIHTC webinar in August brought to you by yours truly. And for good, comprehensive maintenance training, register for NCHM’s Certified Manager of Maintenance (CMM) course which will get you one step closer to attaining your Registered Housing Manager (RHM) certification.