MTSP income limits published for LIHTC
On May 14, HUD published the latest Multifamily Tax Subsidy Projects (MTSP) income limits for Low-Income Housing Tax Credit (LIHTC) and tax-exempt bond properties.
Initially published in 2009, MTSP was established by HUD in response to the Housing and Economic Recovery Act (HERA) of 2008, which made special provision for LIHTC properties to help protect rents tied directly to Area Median Gross Income (AMGI). HUD had previously granted “Hold-Harmless” status to those LIHTC properties impacted by the change in income-limit calculation, which froze their income limits at the previous year’s level where there would have been a decrease.
In addition, HUD has discontinued its hold-harmless policy as published in a May 17, 2010 Notice. It states that HUD will now allow Section 8 income limits to decrease as of this Fiscal Year up to 5% lower than the previous year and capping the increases to 5% or twice the change in the national Median Family Income (MFI), whichever is greater. Since MTSP rents are now protected under the HERA provision, HUD no longer saw the need for the hold harmless policy to be effective. “HERA eliminates the need for HUD to continue its hold-harmless policy for the benefit of MTSPs”. It goes on to explain that the statutory hold-harmless policy applies to all MTSP properties, not just those benefiting from HUD’s hold-harmless policy. This translates into the fact that AMGI for MTSPs may not be less than for the previous year.
The formula for making this determination involves comparing the Very Low Income level, representing 50% of AMGI, from 2010 to the “impacted” VLI from 2009, and to the 2008 VLI and using the maximum amount for the MTSP VLI for impacted areas in 2010. For the 60% limits, these limits are simply multiplied by 1.2. For non-impacted MTSP properties, the formula is simply the greatest of 2010 and 2009 VLI at 50% AMGI and that amount multiplied by 1.2 for the 60% limits.
This year’s MTSP publication reflects an average 1.3% increase to the MTSP limits in 74% of the country. Also important to the LIHTC program is the latest National Non-Metro median income which increased from $51,300 to $51, 600. Another HERA provision allows LIHTC properties in rural areas to use the greater of their actual income limits or this national figure when qualifying applicants and setting their rents.