News

HUD Extends Effective Period for 2019 and 2020 QCTs, DDAs that Were Not on Subsequent Lists

On July 2, 2021, HUD published a notice in the Federal Register extending the period by 180 days for which certain 2019 and 2020 qualified census tracts (QCTs) and difficult development areas (DDAs) are effective for purposes of the low-income housing tax credit (LIHTC). The notice, in response to the COVID-19 pandemic and presidentially declared emergency, extends the eligibility period from 730 days to 910 days for properties in QCTs and DDAs that are not on subsequent lists of QCTs and DDAs and that submitted applications while the area was a 2019 or 2020 QCT or DDA. HUD published lists of DDAs and QCTs for 2019 on October 22, 2018; for 2020 on September 25, 2019; and for 2021 on September 24, 2020. HUD is revising the effective date of the 2019 and 2020 QCTs and DDAs to aid the ability of areas affected by COVID-19 to place LIHTC properties into service. Effective Dates The 2019 lists of QCTs and DDAs are effective: For allocations of credit after December 31, 2018; orFor purposes of IRC 42(h)(4) if the bonds are issued and the building is placed in service after December 31, 2018. If an area is not on a subsequent list of DDAs, the 2019 lists are effective for the area if: The allocation of credit to an applicant is made no later than the end of the 910-day period after the applicant submits a complete application to the LIHTC-allocating agency, and the submission is made before the effective date of subsequent lists; orFor purposes of IRC 42(h)(4), if:The bonds are issued, or the building is placed in service no later than the end of the 910-day period after the applicant submits a complete application to the bond-issuing agency, andThe submission is made before the effective date of the subsequent lists, provided that both the issuance of the bonds and the placement in service date of the building occur after the application is submitted. An application is deemed to be submitted on the date it is filed in the application is determined to be complete by the credit-allocating or bond-allocating agency. A "complete application" means that no more than de minimis clarification of the application is required for the agency to make a decision about the allocation of credits or the issuance of bonds requested in the application. In the case of a "multiphase project." The DDA or QCT status of the project that applies for all phases of the project is that which applied when the project first received its first allocation of LIHTC.  For purposes of 42(h)(4), the DDA or QCT status of the site of the project that applies for all phases of the project is that which applied when the first of the following occurred: (a) the building(s) in the first phase were placed in service, or (b) the bonds were issued. Multiphase projects must be fully identified in the first application of credit for any building in the project. Example of Effective Date Project A is located in a 2019 DDA that is NOT a designated DDA in 2020, 2021, or 2022. A complete application for tax credits for Project A was filed with the allocating agency on November 15, 2019. Credits are allocated to the project on January 30, 2022. Project A is eligible for the increase in basis accorded a project in the 2019 DDA because the application was filed BEFORE January 1, 2020 (the effective date for the 2020 DDA lists), and because tax credits were allocated no later than the end of the 910-day period after the filing of the complete application for an allocation of tax credits (May 13, 2022). The 2020 lists of QCTs and DDAs are effective: For allocations of credit after December 31, 2019; orFor purposes of IRC 42(h)(4) if the bonds are issued and the building is placed in service after December 31, 2019. If an area is not on a subsequent list of DDAs, the 2020 lists are effective for the area if: The allocation of credit to an applicant is made no later than the end of the 910-day period after the applicant submits a complete application to the LIHTC-allocating agency, and the submission is made before the effective date of subsequent lists; orFor purposes of IRC 42(h)(4), if:The bonds are issued, or the building is placed in service no later than the end of the 910-day period after the applicant submits a complete application to the bond-issuing agency, andThe submission is made before the effective date of the subsequent lists, provided that both the issuance of the bonds and the placement in service date of the building occur after the application is submitted. An application is deemed to be submitted on the date it is filed in the application is determined to be complete by the credit-allocating or bond-allocating agency. A "complete application" means that no more than de minimis clarification of the application is required for the agency to make a decision about the allocation of credits or the issuance of bonds requested in the application. In the case of a "multiphase project." The DDA or QCT status of the project that applies for all phases of the project is that which applied when the project first received its first allocation of LIHTC.  For purposes of 42(h)(4), the DDA or QCT status of the site of the project that applies for all phases of the project is that which applied when the first of the following occurred: (a) the building(s) in the first phase were placed in service, or (b) the bonds were issued. Multiphase projects must be fully identified in the first application of credit for any building in the project. Example of Effective Date Project A is located in a 2020 DDA that is NOT a designated DDA in 2021, 2022, or 2023. A complete application for tax credits for Project A was filed with the allocating agency on November 15, 2020. Credits are allocated to the project on January 30, 2023. Project A is eligible for the increase in basis accorded a project in the 2020 DDA because the application was filed BEFORE January 1, 2021 (the effective date for the 2021 DDA lists), and because tax credits were allocated no later than the end of the 910-day period after the filing of the complete application for an allocation of tax credits (May 14, 2023). Owners with projects that received a basis boost due to being in a QCT or DDA in 2019 or 2020, and these areas were not designated as a QCT or DDA in subsequent years, should carefully review the HUD Notice for applicability to their project.

A. J. Johnson Partners with Mid-Atlantic AHMA for July Training on Affordable Housing Training

During the month of July 2021, A. J. Johnson will be partnering with the MidAtlantic Affordable Housing Management Association for three live webinars intended for real estate professionals, particularly those in the affordable multifamily housing field. The following live webinars will be presented: July 14: File Management & Documentation for Affordable Housing Properties.This 2.5-hour course covers the important, but often overlooked, role that file management and documentation play in the success of affordable housing properties. A detailed discussion of how to organize a file, the documents required for each file, setting up the "property notebook," and acceptable forms of verification for all issues relating to eligibility are covered. The course also includes a basic review of resident eligibility issues, with particular emphasis on the documentation of income. July 20: Critical Policies for Every Affordable Housing Property As important as it is to understand the technical requirements of compliance for affordable housing programs, it is equally as important to have sound operational policies in place. This full-day training reviews the critical operating and protection policies that every affordable housing property should have. A full discussion of the following policies is included: Management Plans, Property Policies, Resident Transfer Policies, Waiting List Management, Sexual Harassment Policy, Criminal Screening, Reasonable Accommodations, VAWA, and Fraud Prevention & Detection. The training concludes with a discussion of the special issues relating to "layered" projects. The training is intended for site staff as well as supervisory and compliance personnel. July 22: Onsite Management Requirements of HOME Projects. This six-hour course outlines the basic requirements of the HOME Investment Partnership Program, with particular emphasis on combining HOME funds with the federal Low-Income Housing Tax Credit. The training provides an overview of HOME Program regulations, including rent rules, unit designations, income restrictions, and recertification requirements. The course concludes with a detailed discussion of combining HOME and tax credits, focusing on occupancy requirements and rents, tenant eligibility differences, handling over-income residents, and monitoring requirements. These sessions are part of the year-long collaboration between A. J. Johnson and MidAtlantic AHMA that 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.

Supreme Court Leaves CDC Eviction Moratorium in Place

In a 5-4 vote, the Supreme Court is leaving a CDC nationwide ban on evictions due to COVID-19 in place. The Court rejected the request by a Landlord group, led by the Alabama Association of Realtors, to end the CDC moratorium on evicting millions of tenants who are not paying rent during the pandemic. Last week, the Biden Administration extended the moratorium until July 31. It is unlikely to be extended past that date. A federal judge in Washington, DC had struck down the moratorium as exceeding the CDC s authority, but put her ruling on hold. The vote by the high court will keep the ban in place until the end of July. In a brief opinion, Justice Brett Kavanaugh said that while he agrees with the ruling of the DC judge, he voted to leave the ban on evictions in place because it is due to end in a month and that time will allow for "more orderly distribution of the congressionally appropriated rental assistance funds." Also last week, the Treasury Department issued updated guidance for the Emergency Rental Assistance Program (ERAP) encouraging states and local governments to streamline the distribution of the $46.5 billion in ERA funding. Chief Justice John Roberts and the court s three liberal members also voted to keep the moratorium in place. The eviction ban was initially put in place last year to provide protection for renters out of concern that having families lose their homes and move into shelters or share crowded spaces with friends or relatives during the pandemic would increase the spread of the disease. According to HUD, at the end of March 2021, 6.4 million American households were behind on their rent. As of June 7, according to the U.S. Census Bureau s Household Pulse Survey, about 3.2 million people in the U.S. said they face eviction in the next two months.

A. J. Johnson to Offer Live Webinar on Reasonable Modifications and Accommodations Under Section 504 and the Fair Housing Act

A. J. Johnson will be conducting a webinar on July 1, 2021 on Reasonable Modification and Accommodation Requirements Under Section 504 and the Fair Housing Act.  The Webinar will be held from 1:00 PM to 2:30 PM Eastern time. The training will focus on the specific duties and responsibilities of multifamily rental managers with regard to accommodating the needs of disabled applicants and residents. The difference between a "modification" and an "accommodation" will be covered, as well as who is responsible for paying for these modifications and accommodations. Multiple court cases will be used to illustrate the requirements of the law. There will be adequate time for questions and answers relating to specific 504 or Fair Housing Accommodation/Modification issues. Those interested in participating in the Webinar may register on the A. J. Johnson Consulting Services website (www.ajjcs.net) under "Training Schedule."

HUD Restores Affirmatively Furthering Fair Housing Requirement

The U.S. Department of Housing and Urban Development (HUD) published an interim final rule on June 10 to restore the implementation of the Fair Housing Act s Affirmatively Furthering Fair Housing (AFFH) requirement. The publication provides a robust definition of the duty to affirmatively further fair housing, to which many HUD grantees must certify compliance. Additionally, HUD will provide communities that receive HUD funding with the technical support they need to meet their long-standing fair housing obligations. In addition to barring housing discrimination, the Fair Housing Act requires HUD and its funding recipients, such as local communities, to also take affirmative steps to remedy fair housing issues such as racially segregated neighborhoods, lack of housing choice, and unequal access to housing-related opportunities. To fulfill this requirement, in 2015, HUD promulgated a rule that compelled each covered funding recipient to undertake a defined fair housing planning process. Funding recipients were required to complete an assessment of fair housing issues, identify fair housing priorities and goals, and then commit to meaningful actions to meet those goals and remedy identified issues, with HUD reviewing each assessment. The last administration suspended the implementation of this rule and eliminated the 2015 rule s procedural requirements, redefining the regulatory AFFH requirement for communities. Under the restored AFFH regulatory definition announced on June 10, municipalities and other HUD funding recipients that must regularly certify compliance with the Fair Housing Act s AFFH requirement will, in doing so, commit to taking steps to remedy their unique fair housing issues. To support compliance with AFFH, HUD will provide a voluntary process that funding recipients can choose to use to identify the fair housing concerns that exist locally and commit to specific steps to remedy them. HUD will provide technical assistance and support to funding recipients that carry out this voluntary fair housing planning process. This rule is one of the ways in which HUD fulfills its legal mandate under the Fair Housing Act to "affirmatively further" the purposes of the Act. Additionally, it is consistent with President Biden s January 26 Memorandum, Redressing Our Nation s and the Federal Government s History of Discriminatory Housing Practices and Policies, which directed HUD to examine the prior Administration s fair housing rules and take all steps necessary to implement the Fair Housing Act s requirement that HUD administer its programs in a manner that affirmatively furthers fair housing. With this action, HUD is rescinding the previous Administration s rule (entitled "Preserving Neighborhood and Community Choice," or PCNC) and restoring certain definitions and other selected parts from the 2015 AFFH rule. The interim final rule will go into effect on July 31, 2021. HUD will take comments for 30 days after publication and may act on them prior to the effective date of the rule. HUD intends to undertake a separate rulemaking to build upon and further improve the 2015 AFFH rule by instituting a new fair housing planning process and framework that increases efficiency and improves outcomes for communities across the country. It should be noted that this rule affects cities, counties, and states, and is not a requirement of individual developers or housing operators.

A. J. Johnson Partners with Mid-Atlantic AHMA for June Training on Income, Assets & Tax-Exempt Bonds

During the month of June 2021, A. J. Johnson will be partnering with the MidAtlantic Affordable Housing Management Association for two live webinars intended for real estate professionals, particularly those in the affordable multifamily housing field. The following live webinars will be presented: June 23: Dealing with Income & Assets on Affordable Housing Properties -This five-hour course (there will be a one-hour lunch break) provides concentrated instruction on the required methodology for calculating and verifying income, and for determining the value of assets and income generated by those assets. The first section of the course involves a comprehensive discussion of employment income, along with military pay, pensions/social security, self-employment income, and child support. It concludes with workshop problems designed to test what the student has learned during the discussion phase of the training and serve to reinforce HUD required techniques for the determination of income. The second component of the training focuses on a detailed discussion of requirements related to the determination of asset value and income and is applicable to all federal housing programs, including the low-income housing tax credit, tax-exempt bonds, Section 8, Section 515, HOME, and HOPE VI. Multiple types of assets are covered, both in terms of what constitutes an asset and how must they be verified. This section also concludes with a series of problems, designed to test the student s understanding of the basic requirements relative to assets. June 24: Understanding the Basic Management Requirements of the Tax-Exempt Bond Program - This 2.5-hour course covers the basic requirements of the Tax-Exempt Bond Program, especially those requirements relating to on-site compliance. It is recommended for managers of tax-exempt bond properties, senior management, and compliance staff, as well as developers. The course covers the compliance differences between the Tax-Exempt Bond and Low-Income Housing Tax Credit (LIHTC) programs and provides guidance when combining bonds and credits. These sessions are part of the year-long collaboration between A. J. Johnson and MidAtlantic AHMA that 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.

Biden Housing Plan Stresses Housing as Infrastructure

On May 26, the Biden Administration released its full plans for a surge in new housing spending as part of the American Jobs Plan. The proposal would invest $318 billion, including $105 billion in newly proposed tax credits. The goal is to expand the supply of safe, affordable housing in all 50 states and territories, in turn creating thousands of jobs. According to the White House, the Jobs Plan will create more than 2 million affordable housing units, making it the most aggressive affordable housing plan in the nation s history. While the overall plan will be hard-fought in Congress, there is broad bipartisan support for the elements that comprise the housing portion of the legislation, creating the possibility that even if the entire plan is not passed into law, some of the affordable housing components could be passed as stand-alone legislation. There are currently 11 million households in the United States that pay more than 50% of their income toward rent and millions of children live with exposure to lead paint in substandard housing. The main element of the housing portion of the Plan is $213 billion in spending for a variety of HUD programs, including (1) $45 billion for the Housing Trust Fund, which represents a huge expansion of a program that serves persons whose incomes do not exceed 30% of the area median income; (2) $35 billion for the HOME program, which is often used in conjunction with Low-Income Housing Tax Credits (LIHTC); and (3) $2 billion each into the Section 202 program for the elderly and project-based rental assistance. If approved, the new project-based rental assistance agreements will be the first in more than 20 years. In addition to the increased funding for HUD programs, the plan provides $105 billion in new and expanded tax credits, including $55 billion for the LIHTC program. Between the LIHTC and similar programs, the Jobs Plan aims to spur the construction of 500,000 to 600,000 affordable apartments over a five-year period. Included in this $105 billion tranche is a brand new tax credit based on the Neighborhoods Home Investment Act. This $20 billion program is modeled after the LIHTC program and would cover the cost of purchasing and rehabilitating homes in areas where the cost of building new housing is higher than the actual value of the homes. About 22% of metro areas nationwide and 25% of non-metro areas would qualify for these investments. The housing component of the Jobs Plan provides funds for rural housing also, with plans that would complement current Department of Agriculture housing programs. One of the most intriguing (and sure to be controversial) parts of the plan is a $5 billion zoning reform program that would be used for local housing policy grants for cities and counties that agree to ease restrictive or exclusionary zoning. Exclusionary zoning is one of the key contributors to the lack of affordable housing in many areas and leads to segregation and concentrated poverty. We will be following the progress of the American Jobs Plan as it works its way through Congress and will provide regular updates on its progress.

Court Affirms Right of Spouse to be a Live-in Aide at HUD-Assisted Property

In Johnson v. Guardian Management, April 2021, a court ruled that a current spouse may be a live-in aide for a resident at a HUD Section 8 project. Facts of the Case A Section 8 resident requested an accommodation for a live-in aide because of increased health problems associated with falls, memory issues, seizures, and other issues resulting from his disabilities.The resident submitted the required verification form from a healthcare provider verifying that he was disabled and his need for a live-in aide was related to his disability and necessary for him to have equal enjoyment of his apartment.Management denied his request because he asked that his wife be considered as the live-in aide.The resident filed a complaint with HUD s Office of Fair Housing & Equal Opportunity (FHEO) and filed suit in federal court.The FHEO determined that the wife did not qualify as a live-in aide, explaining that "while a relative may be considered a live-in caregiver," HUD s "applicable rules and regulations" don t allow a spouse to be a live-in aide.The FHEO s Letter of Findings quoted HUD Handbook 4350.3 s three requirements to be a live-in aide: (1) the aide must be essential to the care and well-being of the resident; (2) the aide may not be obligated for the support of the disabled person; and (3) the aide would not be living in the unit except to provide the necessary supportive services. Court Ruling The court ruled that spouses are not automatically excluded from serving as live-in aides and that HUD s interpretation of its own regulations was wrong. The judge pointed out that the HUD Handbook specifically states that a relative may be a live-in aide if they meet all the requirements.In fact, the judge noted that when the HUD regulation defining live-in aides was established, the agency intentionally deleted proposed text that would have prevented spouses and family members from serving as live-in aides specifically to encourage such persons to serve as live-in aides.The circumstances of this case showed sufficient evidence to support the resident s claim that the spouse would not be living with the resident except to provide supportive services.At the time of their marriage, the resident lived in Oregon and his wife lived in the Philippines.The resident and his wife continued to live apart for the next two years.During those two years, the wife continued to live and maintain her own home in the Philippines, where she worked as a teacher and showed no intention of moving to the United States.After two years of marriage, she offered to move to the United States to care for the resident because of his disability.The wife took a leave of absence from her job in the Philippines and was certified as the resident s live-in aide under the Medicaid Independent Choice Program.According to the court, the fact that the wife did not move to the United States for two years after marrying the resident until his health deteriorated further, is adequate evidence to support the resident s claim that his wife lives with him solely for the purpose of providing supportive services. Why This Case Matters A separated spouse - even if not legally separated - can be a live-in aide. The facts and circumstances will dictate whether the HUD requirements as outlined in 4350.3 are met. In this case - and all cases where a spouse is proposed as a live-in aide - the key is to show that were it not for the needs of the disabled resident, the spouse would not be living in the unit. As a best practice, you should be able to verify that the spouse has established their own residence, apart from your resident, for a long enough period of time to show that their intention is to live apart. And finally, remember that since the Low-Income Housing Tax Credit Program follows HUD rules in the determination of household membership, this same requirement applies to LIHTC properties.