2023 Income Limits Will Be Delayed
The U.S. Department of Housing & Urban Development (HUD) normally publishes annual income limits in early April of each year. However, complications with calculating the limits due to COVID-19 will cause a delay in the release of the limits in 2023. According to HUD, the limits will be released on or about May 15, 2023. HUD normally uses American Community Survey (ACS) Data from three years prior to the income limit release to determine family median incomes and income limits. However, the Census Bureau did not release the 2020 one-year ACS data due to data collection difficulties because of the COVID-19 pandemic. For this reason, HUD will use 2021 ACS data to determine the 2023 median income and income limits for low-income housing tax credit (LIHTC) properties. Why is this important? Owners of LIHTC properties will have to wait a little longer than usual to determine the income and rent levels available to them for 2023. While increases in income limits nationally are expected to be less than in prior years, most areas should still see some increase in limits, which will allow for a modest increase in rents in 2023.
Virginia Housing Looking for Compliance Staff
Virginia Housing (formerly Virginia Housing & Development Authority) has three positions open in Compliance & Asset Management. If interested, you may access the position descriptions at https://us63.dayforcehcm.com/CandidatePortal/en-US/VHDA. Virginia Housing (VH) is one of the premier Housing Finance Agencies in the nation and I have had the privilege of working with them for more than 40 years. The Agency provides an excellent work environment and has a comprehensive benefits program, including medical, dental, vision, and prescription drug coverage. VH also has both long- and short-term disability plans and various options for retirement plans. If you (or someone you know) are looking for an excellent opportunity on the public side of the affordable housing field, I encourage you to check out the open positions at VH and consider applying.
Rural Development Suspends Interim Recertification Requirements for COLA Recipients
On November 10, 2022, the Rural Development Service released an Unnumbered Letter granting a temporary exception to tenant recertification requirements. On October 13, 2022, the Social Security Administration announced there will be an 8.7% increase in Social Security and Supplemental Security Income (SSI) benefits in 2023. This will increase the average SS payment by more than $140 per month starting in January. The RD Section 515 program requires that tenant households be recertified at least annually or when household income changes by $100 or more per month. Since the increase would require recertifications for most Social Security recipients, the Agency is temporarily waiving the recertification requirement for tenants whose household income, regardless of income type, has increased by more than $100 but less than $200. Accordingly, during the Exception period, tenants will not be required to recertify unless their household income changes by $200 or more per month. This temporary waiver will be in place for all of 2023 and will expire on December 31, 2023. During the period of the waiver, tenant households must be recertified at least annually or whenever a change in household income of $200 or more per month occurs. The requirement that borrowers must recertify for changes of $50 per month if the tenant requests that such change be made, is still in effect. Keep in mind, the exception does not waive the requirement for the annual renewal certifications. Owners will receive a copy of this notice from RD. Once received, the notice must be posted in a conspicuous location at the property and a copy of the notice must be provided to all tenants.
Service Coordinators - A Plus for Affordable Senior Housing
Multi-family properties with federal assistance can benefit greatly from the presence of an on-site service coordinator. These coordinators provide supportive services and act as advocates for vulnerable residents. These coordinators are members of the management team and play a significant role in keeping at-risk residents housed and healthy. According to a report by the Joint Center for Housing Studies at Harvard, during the recent pandemic, 40% of the residents at properties served by Service Coordinators " did not have the food, medicine or household supplies they would need to isolate for a week." It was the service coordinators who handled the procurement and distribution of food, medicine, and household goods for these residents. If you operate a federally assisted site for older adults or the disabled, your property could benefit greatly from a service coordinator - if you do not already have one. In this article, I will provide an overview of HUD s Senior Coordinator in Multifamily Housing Services Program. I will explain the benefits of having a service coordinator on staff, what a service coordinator does, and funding sources for such a position. HUD s Service Coordinator Program HUD established its Service Coordinators in Multifamily Housing Program (SCMF) in 1990. HUD has the authority to use Section 8 funds to employ service coordinators in most HUD-assisted and conventional public housing developments designated for the elderly and disabled. Primary guidance for the program may be found in the SCMF Resource Guide. This guide supplements the HUD Management Agent Handbook 4381.5, REV-2, CHG-2. The resource guide may be found at https://files. hudexchange.info/resources/documents/ Service-Coordinators-in-Multifamily-Housing-Program-Resource-Guide.pdf. Service coordinators provide seven key functions: Proactively engage with residents. The coordinators make it a priority to build relationships with residents through frequent interactions that are formal and informal. Conduct assessments and develop service plans. They conduct annual assessments with residents and use this assessment information to develop plans for making referrals and helping residents obtain services and resources. Develop a property-wide profile. The coordinator will create a picture of resident needs across the housing community and develop responsive, community-wide programming. Establish partnerships with community-based service organizations. Make referrals for support services. Coordinators will also monitor whether residents have followed up on those referrals. Educate and advocate for residents. The coordinator will organize onsite educational events provided by community-based organizations. Coordinate closely with other project staff. The coordinators are active members of the site management team and will meet regularly with other staff to share information and discuss issues that affect the residents. Benefits of Service Coordinators A primary benefit of a service coordinator is linking residents to needed social services. This is an important part of keeping the elderly in their homes and aging in place. These service coordinators are full-time staff members with specialized training in linking residents with the services they need. Services that can be arranged include: home-delivered meals; transportation; public assistance such as Medicaid, food stamps/SNAP, and Medicare Part D prescription drug plan; home healthcare; house cleaning services; and assistance with medical bills or insurance claims. According to the American Association of Service Coordinators (AASC), in 2021, 93 percent of residents with service coordinators continued living independently instead of moving to facilities with higher care levels. This not only provides a significant benefit to residents but also helps prevent costly evictions. Who is Eligible for a Service Coordinator? HUD-assisted housing sites that are designated for older adults and people with disabilities are eligible to participate in the Service Coordinators in Multifamily Housing Program. There are two main funding sources for the Service Coordinators in Multifamily Housing Program: Operating Budget: residual receipts, budget-based rent increases, and debt service savings may be used to fund the coordinator position. The service coordinator becomes a permanent part of the management team, and the cost of the service coordinator program becomes a standard budget expense.Owners must obtain HUD approval to add a service coordinator program to any site s budget, regardless of whether or not an increase in rental rates is proposed.Owners of Section 202 PRAC projects can include a service coordinator program in their operating budget at any time after the project is fully occupied.HUD may approve the use of residual receipts to fund some or all of a site s service coordinator program. Owners with funds in their residual receipt accounts must use all available residual receipts prior to receiving any service coordinator grant funds. HUD Grants: Owners may apply for grants awarded through a HUD-issued Notice of Funding Availability (NOFA). Service coordinator grants are made for an initial three-year term and provide funding for the salary, fringe benefits, and related administrative costs associated with employing a service coordinator. Grants are renewed annually thereafter if no other funding source is available to cover costs. Program Monitoring All service coordinator programs in multifamily housing are expected to adhere to the same requirements as outlined in the SCMF Program Resource Guide. HUD conducts monitoring reviews of service coordinator programs to ensure they serve their intended purpose. The frequency of reviews will depend on the nature of a site s day-to-day operations and service coordinator program activities. Staffing the Positions A site owner will hire a service coordinator through job listings like any other staff. The hiring of qualified professionals is critical to the success of the SCMF program. In general, there should be one full-time service coordinator for every 50 to 100 residents. However, at sites with large numbers of residents with mental health conditions or other high needs, a smaller ratio may be appropriate. What do Service Coordinators Not Do? Provide direct services; Act as recreation or activity directors; Duplicate existing community services; Provide nursing care; Handle resident funds; Manage leasing agents; Provide transportation to residents; Organize or lead resident organizations; or Act of Power of Attorney for residents. Service Coordinator Qualifications Minimum requirements for Service Coordinators include - A bachelor s degree in social work or a degree in psychology or counseling, preferably; however, individuals without a degree but with appropriate work experience may be hired; Two to three years experience in providing social services to families; Demonstrated working knowledge of social services and resources in your area; and Demonstrated ability to advocate, organize, problem-solve, and "provide results" for families. Training in cultural competency and bilingual skills are also assets for many service coordination positions, and in larger properties, service coordinator aides are often hired to assist the coordinator. Aides should have appropriate education or experience working with elderly people and/or persons with disabilities. College students working towards a degree in social work, or a health-related field may look to gain hands-on experience and may be able to receive academic credit for an internship or work-study program. Service Coordinator Training Requirements All new-hire service coordinators must have met a minimum of 36 training hours of classroom/seminar time before hiring or must complete these minimum training requirements within 12 months of initial hiring, on age-related and disability issues. Recently completed college courses on aging, mental health, or other relevant topics relating to the needs of the residents may be counted toward the 36-hour training requirement. HUD requires service coordinators to remain current on changing statutes at all levels of government and current practices in aging and/or disability issues. Service coordinators should receive 12 hours of continuing education each year, and fair housing training is a must. Bottom Line Every HUD property that serves the elderly or disabled can benefit from the services of a service coordinator. If your property does not currently have a service coordinator, serious thought should be given to creating the position either through the current project budget or by applying in the next round of HUD funding.
Medical Expense Deduction - Still Confusing for Affordable Housing Managers
There are five possible deductions that owners of federally subsidized properties (e.g., Section 8 and Rural Development (RD) Rental Assistance) may subtract from annual income based on allowable family expenses and family characteristics. The remaining income, after these deductions are subtracted, is called adjusted income. Adjusted income is generally the amount upon which rent is based (it also determines eligibility for the RD Section 515 Program). Of the five possible deductions, three are available to any family living in a subsidized unit and two are permitted only for elderly and disabled families. The three types of deductions available to any family in a subsidized unit are: A deduction for dependents; A childcare deduction; and A disability assistance deduction. The two types of deductions permitted only for families in which the head or spouse is elderly, or disabled are: A deduction for unreimbursed medical expenses; and An elderly/disabled family deduction. It is the deduction for medical expenses that creates the most confusion for managers of affordable housing. If the household is eligible for a medical expense deduction, owners must include the unreimbursed medical expenses of all household members, including the expenses of nonelderly adults or children living in the family. For example, if a 15-year-old grandchild lives with a 70-year-old head of household, the medical expenses of both household members are deducted. Medical expenses include all expenses the family anticipates during the 12 months following certification or recertification if the expenses are not reimbursed by an outside source, such as insurance. Knowing what to allow as a medical expense is often difficult, and while there is no absolute list of allowable medical expenses, the following are the most common types of expenses that may be deducted: Services of recognized health care professionals. This includes services of physicians, nurses, dentists, opticians, mental health practitioners, osteopaths, chiropractors, Christian Science practitioners, and acupuncture practitioners; Services of health care facilities, laboratory fees, x-rays, diagnostic tests, blood, and oxygen. These may include hospitals, health maintenance organizations (HMOs), laser eye surgery, outpatient medical facilities, and clinic fees; Alcoholism and drug addiction treatment; Medical insurance premiums, including expenses paid to an HMO, Medicaid insurance payments that haven t been reimbursed, and long-term care premiums (not prorated); Prescription and non-prescription medicines. Non-prescription medicines may be deducted only if prescribed by a physician for a specific medical condition; Transportation to and from treatment and lodging based on actual cost (e.g., bus fare) or, if driving a car, a mileage rate based on IRS rules (currently 62.5 cents per mile); Medical care cost of permanently institutionalized family members if their income is included in annual income; Service animals are allowable medical expenses in IRS Publication 502, which HUD recommends using as a standard for determining allowable medical expenses.The expense would have to meet the definition of either a disability assistance expense or a medical expense to be deducted. For HUD purposes, this also includes expenses relating to a support animal, if the need for such an animal is verified by a licensed health professional. Dental treatments such as fees paid to a dentist, x-rays, fillings, braces, extractions, and dentures; Eyeglasses, contact lenses; Hearing aid and batteries, wheelchair, walker, artificial limbs, Braille books and magazines, and oxygen and oxygen equipment. This includes the purchase and upkeep of the equipment such as additional utility costs to the tenant because of an oxygen machine (for sites with tenant-paid utilities only); Attendant care or periodic medical care such as nursing services; assistance animal and its upkeep; and Payments on accumulated medical bills (scheduled/feasible payments only). It is also important that managers recognize nondeductible medical expenses, keeping in mind that applicants/residents will often seek to include every conceivable medical cost as an expense. Typical nondeductible medical expenses include: Unnecessary cosmetic surgery.This applies to any procedure that s directed at improving the patient s appearance and doesn t meaningfully promote the proper function of the body or prevent or treat illness or disease.Procedures such as face-lifts, hair transplants, hair removal (electrolysis), and liposuction generally aren t deductible.However, if medical complications, such as infections, occur as a result of the procedure and require medical treatment, the medical treatment expenses would be treated as a medical expense deduction. Amounts paid for cosmetic surgery may be deducted if necessary to improve a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease; Health club dues, such as membership in any club organized for business, pleasure, recreation, or another social purpose, such as YMCA dues, or amounts paid for steam baths for general health or to relieve physical or mental discomfort not related to a particular medical condition; Household help expenses, even if such help is recommended by a doctor. However, persons providing nursing-type services may be deducted. Also, certain maintenance or personal care services provided for long-term care may be deducted; Medical savings account (MSA), such as an Archer MSA; Nutritional supplements, vitamins, herbal supplements, and natural medicines.However, these may be deducted if they are recommended in writing by a medical practitioner licensed in the locality where practicing.These items must be recommended as a treatment for a specific medical condition diagnosed by a physician or other health care provider licensed to make a diagnosis in the locality where practicing. Otherwise, these items are taken to maintain ordinary good health and are not for medical care; Personal use items. Items ordinarily used for personal, living, or family purposes may not be deducted unless the item is used primarily to prevent or alleviate a physical or mental defect or illness. For example, the cost of a wig purchased upon the advice of a physician for the mental health of a patient who has lost all of his or her hair from disease, or incontinence supplies can be included with medical expenses; and Non-prescription medicines. These are not included in medical expenses unless they re recommended in writing by a licensed medical professional in the locality where practicing. The items must be recommended as a treatment for a specific medical condition diagnosed by a physician or other health care provider licensed to make a diagnosis. Bottom Line: Managers of federally - assisted housing properties need to be fully versed in allowable medical expenses. The guidance provided here and in HUD Handbook 4350.3, Change 4 will serve as a comprehensive resource for determining those expenses.
A. J. Johnson to Offer Last Fair Housing Training of 2022
A. J. Johnson will be conducting a webinar on December 28, 2022, on Compliance with Federal & State Fair Housing Requirements. This is A.J. s last Fair Housing training of 2022 and is a must for individuals required to take fair housing training this year. The Webinar will be held from 1:00 PM to 4:00 PM Eastern time. The course "Compliance with Federal and State Fair Housing Requirements" will equip attendees with the knowledge and understanding needed to avoid fair housing violations. The course curriculum is centered around the regulations in the two major fair housing laws, The Fair Housing Act (Title VIII of the Civil Rights Act of 1968) and Section 504 of the Rehabilitation Act of 1973. The course also includes a discussion of the additional state and local protected characteristics. In addition, relevant portions of the Americans with Disabilities Act (ADA) are covered as is an in-depth discussion of reasonable accommodation requirements - including rules relating to assistance animals. The purpose of the Fair Housing Act is to eliminate housing discrimination, promote economic opportunity, and achieve diverse, inclusive communities. Professional fair housing training assists in this mission by ensuring that housing professionals understand both the rights of the public relative to fair housing and the duties and responsibilities of real estate professionals. Those interested in participating in the Webinar may register on the A. J. Johnson Consulting Services website (www.ajjcs.net) under "Training Schedule."
Average Income Final Regulation - Unit Designation Requirements
This is the third in my series of articles on the new Average Income Regulation. In this article, I will review the requirements relating to the designation of units. Designation of Imputed Income Limitations and Identification of Units The final regulations require the initial designation of a unit to be made no later than when a unit is first occupied as a low-income unit. The regulations also revise the timing of the designation so that it is no longer required by the end of the first year of the credit period, and instead is based on when a unit is first occupied as a low-income unit. (Owners and managers should note that this may be before or after the beginning of the first year of the credit period). The designation must also be communicated annually to the HFA, and the HFA may establish the time and manner in which information is provided to it. This change will allow a taxpayer to make designations after having a chance to evaluate the market for a particular unit. Importantly, the temporary regulations also provide Agencies with the discretion, on a case-by-case basis, to waive in writing any failure to comply with the temporary regulations recordkeeping and reporting requirements. The waiver may be done up to 180 days after discovery of the failure, whether by taxpayer or Agency. At the discretion of the applicable Agency, this waiver may treat the relevant requirements as having been satisfied. Timing of Designations of Income Limitations The final regulations permit the changing of a unit s imputed income limitation in certain circumstances. For an unoccupied unit that is subject to a change in imputed income limitation, the final regulations provide that the taxpayer must designate the unit s changed imputed income limitation prior to occupancy of that unit. For an occupied unit that is subject to a change in imputed income limitation, the taxpayer must designate the unit s changed imputed income limitation prior to the end of the taxable year in which the change occurs. Changing a Unit s Imputed Income Designation The proposed regulations did not allow income limitations to be changed after they had been designated. Under the final regulations, a taxpayer may change the imputed income limitation designation of a previously designated low-income unit in any of the following circumstances: (1) In accordance with future written instructions from the IRS. (2) In accordance with an HFAs publicly available written procedures, if those procedures are available to all of the Agency s projects that have elected the average income test. (3) To comply with the requirements of the Americans With Disabilities Act of 1990; the Fair Housing Amendments Act of 1988; the Violence Against Women Act; the Rehabilitation Act of 1973; or any other State, Federal, or local law or program that protects tenants and that is identified by the IRS or an Agency in a manner described in (1) or (2) above. The tenant protections that apply to an average-income project and that redesignation may enhance do not necessarily have any specific connection to section 42. For example, the protections may be ones that apply to all multifamily rental housing, or they may apply to the project at issue because some congressionally authorized spending supported the project with Federal financial assistance. Even if tenant protection does not legally apply to a particular average-income project but does apply to analogous multifamily rental housing, the owner of the project may redesignate income limitations to implement the protection for the project s residents. (4) To enable a current income-qualified tenant to move to a different unit within a project keeping the same income limitation (and thus the same maximum gross rent), with the newly occupied unit and the vacated unit exchanging income limitations. (5) To restore the required average income limitation for purposes of identifying a qualified group of units either for purposes of satisfying the average income set aside or for purposes of identifying the units to be used in computing applicable fraction(s). This rule is limited to newly designated, or redesignated, units that are vacant or are occupied by a tenant that would satisfy the new, lower imputed income limitation. Any new designation of units must be reported to the HFA in a manner required by the HFA. For example, an HFA may allow the project owner to describe a current year s information by reporting differences from the prior year s information or by reporting that there is no difference from the prior year. As noted above, on a case-by-case basis, the Agency has the discretion to waive in writing any failure to comply with the reporting requirements up to 180 days after discovery of the failure, whether by the owner or Agency. If an Agency exercises this discretion, the reporting requirements will be considered to have been met.
A. J. Johnson Partners with Mid-Atlantic AHMA for December Training on Affordable Housing
During the month of December 2022, A. J. Johnson will be partnering with the MidAtlantic Affordable Housing Management Association for two in-person training sessions intended for real estate professionals, particularly those in the affordable multifamily housing field. Following the in-person training sessions, AJ will be providing a review of testable areas and in-person administration of the Housing Credit Certified Professional (HCCP ) exam. The following sessions will be presented: December 13: Intermediate LIHTC Compliance (In-person training in Richmond, VA) - Designed for more experienced managers, supervisory personnel, investment asset managers, and compliance specialists, this program expands on the information covered in the Basics of Tax Credit Site Management. A more in-depth discussion of income verification issues is included as well as a discussion of minimum set-aside issues (including the Average Income Minimum Set-Aside), optional fees and use of common areas. The Available Unit Rule is covered in great detail, as are the requirements for units occupied by students. Attendees will also learn the requirements relating to setting rents at a tax-credit property. This course contains some practice problems but is more discussion oriented than the Basic course. A calculator is required for this course. December 14: Advanced LIHTC Compliance (In-person training in Richmond, VA) - This full-day training is intended for senior management staff, developers, corporate finance officers, and others involved in decision-making with regard to how LIHTC deals are structured. This training covers complex issues such as eligible and qualified basis, applicable fraction, credit calculation (including first-year calculation), placed-in-service issues, rehab projects, tax-exempt bonds, projects with HOME funds, Next Available Unit Rule, employee units, mixed-income properties, the Average Income Minimum Set-Aside, vacant unit rule, and dealing effectively with State Agencies. Individuals who take both two days of training will be provided with study materials and a practice exam to assist in preparation for the HCCP exam, to be administered on December 15. December 15: Review of testable areas and administration of the Housing Credit Certified Professional (HCCP ) exam (In-person exam in Richmond, VA). Following the two days of intensive and comprehensive LIHTC training, AJ will provide a review of program requirements and will administer the HCCP exam in person. These sessions are part of the year-long collaboration between A. J. Johnson and MidAtlantic AHMA and is designed to provide affordable housing professionals with the knowledge needed to effectively manage the complex requirements of the various agencies overseeing these programs. Persons interested in any (or all) of these training sessions may register by visiting either www.ajjcs.net or https://www.mid-atlanticahma.org.