In a recent edition of HOMEfires, HUD made it clear that a Participating Jurisdiction (PJ) may not grant or provide HOME funds to an entity that then lends the HOME funds to the owner of an affordable rental project. This is because HOME statutory and regulatory requirements require the PJ to ensure compliance with HOME requirements through binding contractual agreements with the project owner. A PJ may only provide HOME funds to an entity to lend to the owner of an affordable housing development if the entity is a sub-recipient to the PJ.
Section 226 of Title II of the Cranston-Gonzalez National Affordable Housing Act, as amended (NAHA) requires a PJ to have a contractual relationship with the owner of a HOME rental project to ensure compliance with the HOME requirements (42 U.S.C. 12756).
Section 226 requires that the PJ ensure long-term compliance with the HOME statute and provide remedies for a breach through both agreements with project owners and other such measures of enforcement of HOME requirements by the PJ or beneficiaries (e.g., deed restrictions, liens or real estate, or covenants running with the land). PJs must enter into written agreements with project owners to provide the HOME funds for the development or rehabilitation of affordable rental housing and to impose HOME requirements on the project.
If a PJ provides HOME funds to an entity that then lends the HOME funds to the project owner, the PJ is not providing HOME funds to the project owner but rather to an intermediary. Even if the intermediary entity imposes HOME requirements on the owner, the PJ is still in violation of the HOME statutory requirements to "ensure long-term compliance" through "binding contractual agreements with owners."
If a PJ provides HOME funds under a written agreement with an entity that is not the owner, it is not a valid commitment of HOME funds under the HOME regulations.
The HOME statute and regulations do not permit HOME funds to be disbursed to any entity for the purpose of then loaning the HOME funds to an owner of rental housing unless the entity loaning the HOME funds to the owner is a public entity or nonprofit acting as a subrecipient or State recipient of the PJ. Only then do the HOME regulations permit an entity other than the PJ to provide HOME funds under written agreements with owners to carry out HOME eligible activities (See 24 CFR 92.2(2); 24 CFR 92.205; and 24 CFR 92.504). Subrecipients may not loan HOME funds to an owner it owns or controls in whole or in part.
Noncompliance or violations of HOME requirements may result in repayment of the HOME funds, remedies under 2 CFR 200.338, or other legally available actions against the PJ and subrecipient (but not against the owner of the project).
HUD has the discretion to pursue enforcement actions for any violations. For violations that occurred prior to this guidance, HUD may require invalid agreements to be restated or non-compliant written agreements and associated documents to be assigned to the HOME PJ. HUD has indicated that they are going to pursue compliance actions for all agreements executed after the date of this guidance (September 30, 2021) that do not comply with the noted requirements.
A. J. Johnson to Offer Live Webinar on The Most Common LIHTC Non-compliance - Avoiding 8823s
A. J. Johnson will be conducting a webinar on October 26, 2021, on Avoiding the Most Common LIHTC Noncompliance - Remaining 8823 Free. The Webinar will be held from 1:00 PM to 2:30 PM Eastern time. Credit loss on tax credit properties generally is the result of mistakes in six specific areas - habitability (physical condition), inaccurate determination of income at move-in, changes in eligible basis, the charging of excess rent or fees, utility allowance errors (resulting in excess rent), and non-qualified student households. This 90-minute session will provide an overview of each of these areas, with recommendations on how to avoid non-compliance that may result in credit reduction or recapture. Those interested in participating in the Webinar may register on the A. J. Johnson Consulting Services website (www.ajjcs.net) under "Training Schedule.
Social Security COLA - 2022
The federal government announced on October 13, 2021, that the Social Security Cost of Live Adjustment (COLA) for 2022 will be 5.9%, which is the largest increase since 1982 when the increase was 8.7%. This increase will provide an additional $92 per month for the average retiree. This is a huge increase over the 2021 increase of 1.3%. Social Security recipients will receive a notice in the mail in early December showing their new benefit amount. Recipients will see an increase in their January 2022 payment. Those receiving SSI will see the increase on December 31, 2021. Owners and managers of properties that are required to determine the income of residents should use the new COLA SS rate when projecting the income of applicants and residents. This also affects persons receiving SSI, VA pensions, Civil Service Pensions, and Railroad Retirement.
A. J. Johnson to Offer Live Webinar on Tenant-on-Tenant Harassment; Limiting Fair Housing Liability.
A. J. Johnson will be conducting a webinar on November 3, 2021, on Tenant-on-Tenant Harassment; Limiting Fair Housing Liability. The Webinar will be held from 1:00 PM to 2:00 PM Eastern time. Dealing with tenant-on-tenant harassment is an evolving area of fair housing law. Landlords are generally familiar with how their actions can be construed as discriminatory. But how should landlords react when one resident is violating the fair housing rights of another resident?This one-hour training is designed to help landlords understand the current legal state of this issue and to establish policies to limit potential landlord liability. The session will include a discussion of the two most relevant court cases relating to tenant-on-tenant harassment and will provide recommended policies to limit potential liability. Those interested in participating in the Webinar may register on the A. J. Johnson Consulting Services website (www.ajjcs.net) under "Training Schedule.
A. J. Johnson to Host Live Webinar on Section 8 Management & Best Practices
A. J. Johnson will be conducting a webinar on October 19, 2021, on Section 8 Management and Best Practices. The Webinar will be held from 9 AM to 3:30 PM Eastern time. While most Section 8 training focuses on the HUD regulations relative to the management of the properties, this session will focus on recommended and workable management practices. Covered areas will include (1) management of waiting lists and development of Tenant Selection Plans; (2) handling reasonable accommodation requests, including those relating to assistance animals and reserved parking; and (3) establishment of community policies, including pet policies, unit transfer policies, criminal screening, VAWA implementation, and fraud prevention and detection. The course will also include a full discussion of applicant qualification procedures, including how to properly verify household deductions, such as childcare expenses and medical deductions. Those interested in participating in the Webinar may register on the A. J. Johnson Consulting Services website (www.ajjcs.net) under "Training Schedule.