News

HUD Lodges Fair Housing Complaint Against Facebook

On August 17, 2018, the U.S. Department of Housing & Urban Development (HUD) announced a formal complaint against Facebook for violating the Fair Housing Act by allowing landlords and sellers to use its advertising platform to engage in housing discrimination.   HUD claims Facebook enables advertisers to control which users receive housing-related ads based on the recipients race, color, religion, sex, familial status, national origin, disability, and/or zip code. Facebook then invites advertisers to express unlawful preferences by offering discriminatory options, effectively limiting housing options for these protected classes under the guise of targeted advertising.   The complaint provides the following examples of how Facebook is permitting the discriminatory actions:   Facebook enables advertisers to discriminate based on sex by showing ads only to men or only to women; Facebook enables advertisers to discriminate based on disability by not showing ads to users whom Facebook categorizes as interested in "assistance dog," "mobility scooter," "accessibility," or "deaf culture;" Facebook enables advertisers to discriminate based on familial status by not showing ads to users whom Facebook categorizes as interested in "child care" or "parenting," or by showing ads only to users with children above a certain age; Facebook enables advertisers to discriminate based on religion by showing ads only to users whom Facebook categorizes as interested in the "Christian Church," "Jesus," "Christ," or the "Bible;" Facebook enables advertisers to discriminate based on national origin by not showing ads to users whom Facebook categorizes as interested in "Latin America," "Southeast Asia," "China," "Honduras," "Somalia," the "Hispanic National Bar Association" or "Mundo Hispanico;" and Facebook enables advertisers to discriminate based on race and color drawing a red line around majority-minority zip codes and now showing ads to users who live in those zip codes.   Facebook markets its ad targeting platform as a useful tool for providers of housing-related services. For example, Facebook promotes its ad targeting platform with "success stories" for finding "the perfect homeowners," "reaching home buyers," "attracting renters," and "personalizing property ads."   Industry professionals have expected this action for some time since there have been numerous complaints about Facebooks ads by fair housing proponents. To say the least, it will be interesting to see how Facebook responds. It is likely that their defense will be that they are a "platform" and not a publisher, which is the defense they have used recently relative to the Russian election activities. How that argument stands up we ll just have to wait and see.

Update on State Positions Regarding Income Averaging

State Housing Finance Agencies (HFAs) continue to release information regarding how they will approach the new minimum set-aside election - the "Average Income" election. As of August 1, 2018, 20 HFAs have provided some guidance on how the new election will be dealt with in individual states and one (Virginia) has provided proposed QAP changes relating to the Average Income (AI) set-aside. Following is the guidance that I currently have with regard to the approach individual HFAs will be taking relative to AI (as a disclaimer - it is possible that more states have provided guidance that I am unaware of). Alaska: will not permit the AI set-aside to be used. California May be used only on 9% projects; Projects using AI to house 60 to 80% AMI tenants in rent-restricted units must maintain the AI at or below the 50% level; Previously awarded projects may use AI if 8609s have not been issued and it would not have changed awarded points; and All BINs must be part of a multiple building election. Connecticut Previously awarded projects may use AI if 8609s have not been issued and it would not have changed awarded points; and Lenders and equity providers must provide a statement that they are aware of the AI election. Florida May be used only on 9% projects; Previously awarded projects electing the AI set-aside must provide an updated market study; All BINs must be part of a multiple building election; Extended Use Agreement will not be changed if AI is selected for second allocation of credits; and Lenders and equity providers must provide a statement that they are aware of the AI election. Georgia Will not be permitted for 2018 allocations; May be used only on 9% projects; Previously awarded projects may use AI if 8609s have not been issued and it would not have changed awarded points; All units in the project must be rent-restricted (i.e., no mixed-income projects); No more than four threshold income limits may be used; The designation of each unit must be identified; Must be a reasonable distribution of set-asides across all unit sizes; All BINs must be part of a multiple building election; Extended Use Agreement will not be changed if AI is selected for second allocation of credits; Lenders and equity providers must provide a statement that they are aware of the AI election; and Property Management company must acknowledge the use of AI. Indiana May be used only on 9% projects; and Projects awarded 2018 credits may make the election if 8609s have not be sent to the IRS. Maryland May be used only on 9% projects; and Previously awarded projects may use AI if 8609s have not been issued and it would not have changed awarded points. Michigan Previously awarded projects electing the AI set-aside must provide an updated market study; and Lenders and equity providers must provide a statement that they are aware of the AI election. Minnesota Will not be permitted for 2018 allocations. New Jersey Will not be permitted for 2018 allocations. North Dakota May be used only on 9% projects; Previously awarded projects may use AI if 8609s have not been issued and it would not have changed awarded points; Projects awarded 2018 credits may make the election if 8609s have not be sent to the IRS; All units in the project must be rent-restricted (i.e., no mixed-income projects); All BINs must be part of a multiple building election; Extended Use Agreement will not be changed if AI is selected for second allocation of credits; and Lenders and equity providers must provide a statement that they are aware of the AI election. Ohio May be used only on 9% projects; If units are designated for 60 to 80% tenants in LIHTC units, at least 50% of rent-restricted units must be affordable to tenants with incomes under the 60% level; All units in the project must be rent-restricted (i.e., no mixed-income projects); All BINs must be part of a multiple building election; and Extended Use Agreement will not be changed if AI is selected for second allocation of credits. Oklahoma May be used only on 9% projects; Previously awarded projects may use AI if 8609s have not been issued and it would not have changed awarded points; All units in the project must be rent-restricted (i.e., no mixed-income projects); The designation of each unit must be identified; Must be a reasonable distribution of set-asides across all unit sizes; All BINs must be part of a multiple building election; Extended Use Agreement will not be changed if AI is selected for second allocation of credits; and Property Management company must acknowledge the use of AI. Pennsylvania Will not be permitted for 2018 allocations; Only up to 10% of units may be designated for incomes above the 60% AMI; May be used only on 9% projects; Previously awarded projects electing the AI set-aside must provide an updated market study; All units in the project must be rent-restricted (i.e., no mixed-income projects); No more than four threshold income limits may be used; Must be a reasonable distribution of set-asides across all unit sizes; and Lenders and equity providers must provide a statement that they are aware of the AI election. South Carolina Will not be permitted for 2018 allocations. South Dakota May be used only on 9% projects; and While units receiving Housing Trust Funds (HTF) can be included for purposes of AI, they will not receive points as Deep-Income Target Scoring on an application. Texas May be used only on 9% projects; Previously awarded projects may use AI if 8609s have not been issued and it would not have changed awarded points; Previously awarded projects electing the AI set-aside must provide an updated market study; The designation of each unit must be identified; and Lenders and equity providers must provide a statement that they are aware of the AI election. Utah May be used only on 9% projects; and Must be a reasonable distribution of set-asides across all unit sizes. Virginia (QAP Proposals Only) Previously awarded projects may use AI if 8609s have not been issued and it would not have changed awarded points; All units in the project must be rent-restricted (i.e., no mixed-income projects); All BINs must be part of a multiple building election; The designation of each unit must be identified; Owners electing the AI set-aside will have to waive the Qualified Contract option; Extended Use Agreement will not be changed if AI is selected for second allocation of credits; Units will be required to float; Must be a reasonable distribution of set-asides across all unit sizes; and Use of project-based rental assistance will be limited for the deeper set-aside units. Washington May be used only on 9% projects; Previously awarded projects may use AI if 8609s have not been issued and it would not have changed awarded points; Previously awarded projects electing the AI set-aside must provide an updated market study; Extended Use Agreement will not be changed if AI is selected for second allocation of credits; and Lenders and equity providers must provide a statement that they are aware of the AI election. Wisconsin AI may only be used on 4% credit deals; All units in the project must be rent-restricted (i.e., no mixed-income projects); and Extended Use Agreement will not be changed if AI is selected for second allocation of credits. Owners and managers should keep in mind that these policies are fluid and certainly subject to change. Anyone considering electing the Average Income Minimum Set-Aside should carefully review their HFAs QAP and associated regulations prior to making the election.  

HUD Publishes Notice on Implementation of Public Housing Income Limit

The Department of Housing & Urban Development (HUD) published a notice in the July 26, 2018 Federal Register implementing a statutory requirement from the Housing Opportunity Through Modernization Act of 2016 (HOTMA) that places a limit on the income of public housing residents. The Notice goes into effect on September 24, 2018.   Background   HOTMA amended the Housing Act of 1937 to place an income limitation on a public housing tenancy for families. The law requires that after a family s income has exceeded 120 percent of the area median income (AMI) for two consecutive years, a public housing agency (PHA) must terminate the family s tenancy within six months of the second income determination or charge the family a monthly rent equal to the greater of (1) the applicable Fair Market Rent (FMR); or (2) the amount of monthly subsidy for the unit including amounts from the operating and capital fund. The income limit established by HOTMA is referred to as the "over-income limit." A PHA must notify a family of the potential changes to monthly rent after one year of the family s income exceeding the over-income limit. The over-income limit does not apply to PHAs operating fewer than 250 public housing units that are renting to families with income exceeding the over-income limit, if the PHAs are renting to those families because there are no income-eligible families on the PHA waiting list. Each PHA must submit a report annually to HUD regarding the number of families residing in public housing with incomes exceeding the over-income limit and the number of families on the waiting lists for admission to public housing projects. These reports must be publicly available.   This notice finalizes how the over-income limit is determined and informs PHAs how to begin implementing the statutory income limit for public housing. However, the notice does not address how a PHA is to determine the monthly subsidy to use in setting rents for over-income families that the PHA has allowed to remain in public housing. HUD will follow this notice with a proposed rule on this issue. This notice does not make effective the requirement to submit the annual report on the number of over-income families. HUD intends to make this reporting requirement effective through another forthcoming notice.   What This Notice Does   This notice essentially implements the requirement to begin tracking over-income public housing residents through the recertification process. As of September 24, 2018, HUD will be following the provisions of HOTMA, using the method of determining the over-income limit as described in the November 29, 2016 notice. PHAs must update their Admissions and Continued Occupancy Policies (ACOP) to implement these changes. Such policies must include the imposition of an over-income limit in the program, all instances of when the two-year timeframe begins, and notification requirements. PHAs must complete all relevant policy and PHA plan changes no later than March 24, 2019, which is six months after the effective date of this notice.   Once a PHA has completed updates to its ACOP and Plan, when the PHA becomes aware that a family s income exceeds the applicable income limit, the PHA must document that the family exceeds the threshold to compare with the family s income one year later.   If, one year after the initial determination by the PHA that a family s income exceeds the over-income limit, the family s income continues to exceed the over-income limit, the PHA must provide written notification to the family that their income has exceeded the over-income limit for one-year, and that if the family s income continues to exceed the over-income limit for the next 12 consecutive months, the family will be subject to either a higher rent or termination based on the PHAs policies. If a family requests an interim reexamination, which then demonstrates that a family s income has dropped below the over-income limit, the family is no longer considered over-income. If a PHA becomes aware, through a subsequent annual reexamination or an interim reexamination that the family s income has increased to an amount that exceeds the over-income limit, the family will begin a new two-year clock.   HUD will provide additional information on where to locate applicable income limits (which are not yet available), guidelines for PHAs to set alternative rents for over-income families, and any other guidance regarding this provision in a forthcoming notice. The task for PHAs at this point is to begin the process of updating relevant policies and plans, and to do so by March 24, 2019.

ADA Service Animal Guidance May be Instructive for Housing Providers

The Americans with Disabilities Act (ADA) requires that state and local government agencies and non-profits that provide goods or services to the public make "reasonable modifications" in policies, practices, or procedures when needed to accommodate persons with disabilities. This requirement should be familiar to housing providers since it virtually mirrors the fair housing requirement regarding reasonable accommodations for disabled persons. ADA recognized service animals fall under this requirement, just as assistance animals for housing fall under the fair housing requirement relative to accommodations.   Under the ADA, a service animal is defined as a dog (and in some cases a miniature horse) that has been individually trained to do work or perform tasks for an individual with a disability. The task(s) performed by the animal must be directly related to the person s disability. This ADA definition has been broadened significantly for fair housing purposes and includes many types of animals other than dogs and miniature horses.   Fair housing law requires that owners and managers accept "emotional support" animals as a reasonable accommodation to a disabled person. The ADA has no such requirement, and emotional support, therapy, comfort, companion animals, etc. are not considered service animals. The reason is that such animals have not been trained to perform a specific task or job. However, the ADA does distinguish between psychiatric service animals and emotional support animals. For example, a dog trained to sense anxiety attacks and acting to reduce the severity of those attacks is considered a service animal.   The Department of Justice has provided guidance with regard to service animals under the ADA, and while much of it is not applicable to assistance animals for fair housing purposes, some of the guidance may be instructive for housing providers. Following is an outline of some ADA guidance that may be relevant to how owners handle assistance animals for fair housing purposes.   What questions does the ADA permit if it is not obvious that an animal is a service animal? Is the dog a service animal required due to a disability; and What work or task has the dog been trained to perform? No documentation relative to the training of the animal or proof of the dog s abilities may be requested, nor may any inquiry be made regarding the nature of the disability.   For housing purposes, this may be a good policy to follow when guests bring assistance animals - including emotional support animals - to a property.   The ADA does not require that a service animal wear a vest, ID tag, or specific harness - and neither should a housing provider. Handlers are responsible for the care and supervision of a service animal. This includes Toileting; Feeding; Grooming; and Vet care. Housing providers are also not responsible for the care and supervision of assistance animals, and these issues should clearly be addressed in an "Assistance Animal Lease Addendum."   What about service animals in food service areas? The ADA states that service animals must be permitted to accompany handlers in self-service food lines and communal food preparation areas. The same is true for assistance animals in a housing environment. If a housing community has a central dining facility or community kitchen where residents can prepare food, assistance animals must be permitted in those areas. Can landlords designate certain units for assistance animals? This one is a bold and emphatic NO! The ADA prohibits hotels from restricting service animals to certain rooms and landlords may not restrict assistance animals to certain units or buildings. Can a cleaning fee be charged? Again - no. Hotels cannot charge a cleaning fee for a service animal and a landlord cannot charge a cleaning fee for assistance animals. However, in both cases, fees for damages are permitted. How many animals can a person have? The ADA permits a person to have as many service animals as the need (key word). For example, a person with a vision impairment and a seizure disorder may need two animals. The same applies in the context of housing. The need for each animal must be specifically related to a person s disability. Do animals have to be certified? No - and no documentation of certification may be required. In fact, the ADA does not recognize online certification and registration documents as being an indicator that a person needs a service animal - and neither should a housing provider. A landlord, when verifying the need for an assistance animal, has the right to determine that the verifier is at least familiar with the applicant or resident s disability and the effect of interaction with a specific animal. Landlords must allow assistance animals but have the right to require that local animal control and public health requirements be met. This includes documentation of vaccinations, spaying/neutering (if required in the area), and local licensing and registration. The ADA does not restrict breeds of dogs and neither may landlords. However, if a specific animal can be shown to be dangerous, it may be refused as an assistance animal at a property. What if a local ordinance bans certain breeds? The ADA requires that municipalities that prohibit specific dog breeds make an exception for service animals. This is likely the case for fair housing purposes also. Prior to refusing an assistance animal due to a local restriction, landlords should contact the locality to determine the procedure for requesting an accommodation due to the person s disability. What does "under control" mean? For both ADA and fair housing, service and assistance animals must be under the handler s control at all times. Does this mean that the animals must be leashed? What about barking? The ADA requires that service animals be harnessed, leashed, or tethered while in public places unless these devices interfere with the service animal s work or the person s disability prevents use of these devices. In that case, the person must use voice, signal, or other effective means to maintain control of the animal. For example, a person who uses a wheelchair may use a long, retractable leash to allow a service animal to pick up or retrieve items. They may not allow the dog to wander away and must maintain control of the dog, even when it is retrieving an item at a distance. Or, a returning veteran who has PTSD and has great difficulty entering spaces may have a dog that is trained to enter the space, check to see that no threats are there, and come back and signal that it is safe to enter. While the dog must be off leash to do its job, it may be leashed at other times. Under control also means that a service animal should not be allowed to bark repeatedly in an area where others may be disturbed. However, if a dog barks just once, or barks because someone has provoked it, this does not mean that the dog is out of control. This same guidance may be applied in a general way for housing purposes. For example, unless it interferes with an assistance animal s work or the disabled person cannot use controlling devices, requiring that a service animal be leashed or otherwise contained in common and public areas would not be unreasonable. For housing purposes, the type of animal will also have to be considered with regard to what constitutes "control." Clearly, a dog or cat may be leashed while in common areas, but what about a boa constrictor, which is sometimes used as an emotional support animal? In such cases, the animal being in contact with the disabled person at all times could constitute "total control." What can staff do when a service or assistance animal is out of control? If a service (or assistance) animal is out of control and the handler does not take effective action to control it, staff may request that the animal be removed from the premises. Are service/assistance animals allowed in swimming pools? No - neither the ADA nor fair housing override public health rules that prohibit animals in swimming pools. However, these animals must be allowed on the pool deck and in other areas where the public is allowed to go, keeping in mind the "total control" requirement.   Owners and managers of apartment communities should keep in mind that while the ADA applies to housing programs administered by state and local governments, such as public housing authorities, and to places of public accommodation, such as public and private universities, it does not generally apply to privately owned apartments. But, the Fair Housing Act applies to virtually all types of housing, both public and privately-owned, including housing covered by the ADA. Under the Fair Housing Act, housing providers are obligated to permit, as a reasonable accommodation, the use of animals that work, provide assistance, or perform tasks that benefit persons with disabilities, or provide emotional support to alleviate a symptom or effect of a disability. While guidance relating to the ADA may be useful for housing operators in terms of establishing policies, fair housing requirements relative to assistance animals are much broader and far-reaching than ADA requirements regarding assistance animals.    

Opportunity Zones Present New Development Opportunities

The Tax Cuts & Jobs Act of 2017 created something called "Opportunity Zones." This is a brand new section of the federal tax code. An Opportunity Zone or "OZ" is an economically-distressed community where new investments may be eligible for preferential tax treatment. Communities must be nominated by their state for the designation and then certified by the Secretary of Treasury as an OZ.   The first OZs were designated in 18 states on April 9, 2018, and as of the beginning of June, 46 states and six territories/districts had submitted almost 8,000 census tracts to be designated OZs.   It is hoped that these zones will spur economic development and job creation in distressed communities. This is essentially a federal tax "carrot" designed to encourage development in these areas by providing tax benefits to investors. Included in the potential benefits will be (1) deferral of tax on any prior gains until the earlier of the date on which an investment is sold or exchanged, or December 31, 2026, so long as the gain is reinvested in a Qualified Opportunity Fund; and (2) if the investor holds the investment in the Opportunity Fund for at least ten years, the investor would be eligible for an increase in basis equal to the fair market value of the investment on the date that the investment is sold or exchanged.   Qualified Opportunity Funds   A Qualified Opportunity Fund (QOF) is an investment vehicle that is set up as either a partnership or corporation for investing in eligible property that is located in an OZ and that uses the investor s gains from a prior investment for funding the QOF.   To become a QOF, an eligible taxpayer simply self-certifies; no approval or action by the IRS is required. The taxpayer will complete a form (to be released by the IRS) and attach it to the federal tax return for the taxable year.   Impact on Affordable Housing   OZs are not specifically intended for housing production, but mixed-use (residential/commercial) and workforce housing have significant potential as OZ efforts. Affordable housing is in fact one of the activities specifically targeted in the new legislation.   Funds are now being formed and the first investments are expected by early 2019. The biggest current impediment to fund formation is timing; gain must be invested within 180-days of selling property and that may not work with the timing requirements of specific deals. Some potential participants are examining the possibility of bridge financing to deal with this issue.   Once these funds get off the ground, it is expected that real estate will be a prime area for investment. This is due to the fact that investors are going to want deals that appreciate in value and not those that are highly risky; real estate is a sound investment and many of the likely investors are already familiar with these deals.   While in its infancy, the OZ program offers potential for affordable housing developers, and may well provide another source of investors - including individual investors vs. corporate investors. In addition, since banks often have little if any gain to invest, new types of investors will be participating in the OZs, further creating the potential for new affordable housing opportunities.    

Website Accessibility

In recent years, there has been a spate of litigation relating to website accessibility under the Americans with Disabilities Act (ADA). The ADA provides that no person shall be discriminated against in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of public accommodation. These requirements clearly apply to public accommodations such as stores, hotels/motels, movie theaters, etc; all such places must be accessible to people with disabilities.   The lawsuits relating to website accessibility allege that when businesses fail to make their websites accessible to individuals with visual impairments, it is a violation of the ADA. People with visual impairments rely on screen-reading technology to access information on the Internet. Such technology reads aloud the information on a website. However, in order to use this technology, websites must be coded in a way that allows the information to be translated into meaningful text. If a website does not utilize this code, it will be inaccessible to persons with visual impairments.   This is an evolving area of law, and there has been no clear consensus by the courts as to how this will go. In fact, it is not yet clear that the ADA even applies to commercial websites. The business community takes the position that the ADA applies only to physical locations of business - not their websites. However, in several recent cases, the courts have ruled against retailers, refusing to dismiss ADA claims regarding website accessibility.   Recent Cases   An Ohio court refused to dismiss an ADA website accessibility lawsuit against Jo-Ann Fabrics, a company that sells fabric and other merchandise at its stores and through its website. In the suit, a blind customer alleged that she was unable to access information through the company s website because it was not compatible with screen-reading technology. The court refused the Company s request to dismiss the case, rejecting the claim that the ADA applied only to physical locations and not the Internet (Castillo v. Jo-Ann Stores, LLC, Ohio, February 2018). Andrews v. Blick Art Materials, LLC, New York, December 2017 - in this case, the court approved a settlement against a retailer that sold art supplies online and in its stores. The complaining shopper, who is legally blind, alleged that the retailer discriminated against him based on his disability because he was unable to use the company s website to buy art supplies, when non-disabled customers were able to do so. The court had previously refused to dismiss the case, leading to the settlement.   So far, no complaints have been files against the multifamily housing industry, but the cases that have been filed are a warning shot across our bow. In 2017 and so far in 2018, hundreds of lawsuits have been filed over the lack of website accessibility and more are coming down the road.   It is not inconceivable that communities could face ADA claims based on website accessibility. The ADA applies to public spaces, which include apartment leasing offices and parking lots, since we invite the public to these spaces. In the 21st Century, much of the information the public obtains about rental properties is from the web, and community websites are a go-to resource for many people looking for housing. These sites include pricing information, floor plans, location maps, photos and videos. If a website does not meet accessibility standard, it is not accessible to individuals with vision impairments, which could lead to an ADA claim.   It is worth noting that as far back as 2010, the Justice Department pledged to issue ADA guidelines on website accessibility, but so far has not done so. The only guidelines that have been issued apply to government entities. There is nothing to indicate that the current Justice Department intends to issue guidance, so as an industry, we are pretty much on our own.   Based on this new area of litigation, it is recommended that owners and management companies begin researching the issue and make a determination of what it will take to make websites accessible. The industry standard at this point is the Web Content Accessibility Guidelines 2.0 (WCAG 2.0). These standards, published by a working group of experts, have been widely accepted as providing full and equal access to people with disabilities by a long list of countries, state and local governments, and companies.   So - just one more issue to be concerned about. Being proactive, and looking into this now rather than later, may be worthwhile for owners and managers in the multifamily housing industry.

States Begin Issuing Average Income Set-Aside Guidance

A number of states have now begun to issue guidance regarding the implementation of the "Average-Income" minimum set-aside test, which was signed into law as part of the Consolidated Appropriations Act of 2018. Eight states have provided formal guidance. Alaska - will not permit owners to elect income-averaging for LIHTC sites. Only the 20/50 or 40/60 minimum set-aside will be permitted; California - will allow applicants to use the average income set-aside for new projects. When doing so, the property wide average income based on unit designations must be no higher than 50%, as opposed to the 60% average permitted under Federal law. In addition, owners must make all buildings in the project part of a multiple building project as reflected on the Line 8b election on Form 8609; Georgia - will permit income averaging beginning in 2018, but LIHTC resyndications and properties with a commitment of HOME funds from the State Agency (DCA) will not be allowed. Also, the 8609, Line 8b election must be made and the number of income averaging designations will be limited to no more than four - 30, 50, 60, and 80 percent; Indiana - owners with an allocation of 2018 credits may request use of the average income option unless doing so would reduce either the number of LIHTC units or the application point score. Documentation requirements include an updated market study; Iowa - income averaging will not be permitted for 2018 credit allocations, but may be for 2019; Texas - agency staff may approve income averaging as long as no representations made in the application for credits change. If there is any change from what was offered in the application for credits, approval may only be granted by a vote of the agency board. Owners will also need an updated market study and approval from funding sources. Texas will also permit units to "float," as long as the overall low-income percentage remains the same as the original commitment; Ohio - a draft 2019 QAP permits income averaging as long as (1) all units are low-income [i.e., no market rate units]; (2) at least 50% of all units must be occupied by persons earning 60% of AMI or less; (3) applicants may need a legal opinion regarding compliance with other subsidies; (4) in the case of a resyndication, there can be no increase in rents or occupancy limits for any LIHTC unit; and (5) owners will need to make the 8b election on the Form 8609s; and Wisconsin - will permit income averaging in 2018 for 100% affordable 4% deals (i.e., bond financing will be required). Guidance from additional states will be forthcoming, but no owner of a LIHTC property should consider making the Average Income election without first discussing doing so with the applicable state agency.

Owner-Adopted Preferences in the RAD Program

On June 29, 2018, HUD published a list of allowable owner-adopted preferences for RAD properties, including direction for owners wanting to establish an owner-adopted elderly preference. The guidance highlights current HUD policy located in the RAD Notice (PIH 2012-32[HA] H-2017-03, REV-3), HUD Handbook 4350.3, REV-1, the Section 8 Statute, the regulation at 24 CFR 5.655, and Housing Notice 2013-21. The guidance clarifies that owners of RAD properties are not permitted to establish an elderly "designation" (i.e., a set-aside of units for the elderly) because the Section 8 statute, unlike the statute governing public housing, does not authorize designations. However, owners of RAD properties may adopt a selection "preference" for elderly individuals and/or elderly families, which permits those applicants to be selected from the waiting list and housed before other eligible families. Any preference adopted as part of the conversion that will alter the occupancy of the property is subject to an upfront civil rights review during the RAD conversion process. Certain preferences also require approval from HUD s Multifamily Field Office, as described below. Owner-Adopted Preferences That Do Not Require HUD Multifamily Field Office Approval Project owners may adopt a preference for any or all of the populations in 24 CFR 5.655(c)(5) without prior HUD approval. These four preferences are for: Single persons who are 62 or older over other single persons; Single persons who are displaced over other single persons; Single persons who are homeless over other single persons; and/or Single persons with disabilities over other single persons. Preferences That Require HUD Multifamily Field Office Approval As stated in V.b of Housing Notice 2013-21 (issued July 25, 2013), Section 8 project owners may establish an owner-adopted preference for populations other than those noted above but must obtain local HUD office approval to do so. Examples include but are not limited to: Elderly families; Near-elderly single persons; and/or Near-elderly families RAD Conversions Prior to June 15, 2015 RAD conversions prior to Revision-2 of the RAD Notice (PIH 2012-32) may have established the statutory elderly preference following 24 CFR 880.612a. In addition, properties may have incorrectly identified and implemented an elderly "preference" as an elderly "designation." This is because 24 CFR 880.612a was not included in Appendix I of the RAD Notice prior to June 15, 2015. Owners who have done either are required to review their policies and, if necessary, modify them to comply with RAD Notice-Revision 3, 24 CFR 5.655(c), and Housing Notice 2013-21. Fair Housing Requirements for Preferences An owner may not adopt a preference that would have the purpose or effect of substantially delaying or denying the participation of other eligible families in the program on the basis of race, color, national origin, religion, sex, disability, or familial status, or would create or perpetuate segregation. Identifying Preferences in the Tenant Selection Plan Owners must also include a description of any preference in use at the property. This includes the regulatory approved preferences found at 24 CFR 5.655(c)(5) and any preferences that have been approved by HUD (e.g., elderly families, near-elderly single persons, near-elderly families). Owners must inform all applicants about available preferences and give all applicants an opportunity to show that they qualify for available preferences. This notification to applicants must be made when a new preference is implemented.

Want news delivered to your inbox?

Subscribe to our news articles to stay up to date.

We care about the protection of your data. Read our Privacy Policy.