Year-end Review and Some Recent Questions
Thinking back over the past couple of years in terms of regulatory revisions and updates to the Low-Income Housing Tax Credit Program is enough to make your head spin if you’re not careful. The main catalyst that started the avalanche forward was the passage of H.R. 3221, the Housing and Economic Recovery Act (HERA) in the summer of 2008. From there, we got the American Recovery and Reinvestment Act (ARRA) in February 2009, followed shortly by the publication of new Multifamily Tax Subsidy Project (MTSP) income limits by HUD in March 2009. The summer of 2009 saw the publication of Change 3 to HUD Handbook 4350.3, with several new implications for LIHTC and then the IRS released their revised version of the 8823 Guidebook in October 2009.
Phew! Who would dare say that we housing professionals operate in a dull, stagnant working environment? Many could claim that following federal regulations for a living is rather dry, but over the past couple of years, at least, it has been incredibly dynamic.
The National Center for Housing Management has, of course, kept our clients up to speed along the way with all of these breaking stories of regulatory change. Many of the revisions have been topics of discussion in our written materials and all of our classes have been updated to reflect and interpret the latest provisions to appropriately educate our students. We know that the coming year will most likely hold even more change for our industry, but it is hard to imagine as much as what we have recently been handed and had to digest. Again, phew! Maybe a couple years of stagnation should be in order to help everyone catch up.
So, to take a slight breather from rapid regulatory change and explanation that you may have become accustomed to reading here, we have decided simply to review a few recent LIHTC hotline questions this month to help ground our readers in the realities of everyday management dilemmas and decision making. Hopefully these will give you better perspective on situations you may have encountered and pondered upon yourself.
Q: Does everyone have to sign the Annual Student Certification even if the household contains no students?
A: Yes. The IRS has clarified in the revised 8823 Guidebook that annual student recertification is required, even at 100% LIHTC properties which no longer have to conduct annual income recertification for tenants. Keep in mind that full-time student status is an ongoing eligibility concerns that should be monitored at all times. The IRS has even included a sample student certification form in the Guidebook revision that you may reference as well as following our recommendation to contact your state agency to see if they have developed a form for use at tax credit properties in your state.
Q: We have a blended site that has both LIHTC and HUD programs in place. When moving tenants from HUD units to LIHTC units (or vice-versa) do we need to execute new leases?
A: Yes. Assuming that there are different leases for different programs and that the property is blended but the units themselves are not, then you should be using the HUD model lease for your HUD units and a separate LIHTC lease for your tax credit units. When you have blended units, then you should still use the HUD model lease which is usually paired with an LIHTC lease addendum to cover the additional provisions of the tax credit program. And as always, we recommend that you consult with legal counsel for lease review to ensure local and state landlord/tenant law is properly followed and for purposes of fair housing compliance.
Q: We were recently informed that some of the units at our LIHTC property are set aside for 80% of AMI due to other sources of funding. Our state agency only provides us with the 50% and 60% income limit tables, so where can we find those for 80%?
A: First of all, remember that the units set aside at 80% cannot be included in your count of qualified units for purposes of the housing credit program. The only set-asides recognized by the IRS for tax credit qualification are those targeting 50% and 60% AMI that you receive as income limit tables from your state agency.
HUD does publish limits for 80% AMI with their regular, Section 8 limits referring to this level of income targeting as “Low Income”. Some older HUD properties still have 80% set-asides as do some units funded under the HOME program.
Please remember that our eHotline is available to all currently certified NCHM clients. We wish you all the happiest of holidays and look forward to navigating the waters of affordable housing compliance with you in 2010!