Managing eligibility of blended occupancy projects
June 11, 2012 Leave a comment
Projects with multiple sources of funding/subsidy are more common than ever before. These projects are referred to as blended occupancy or combined funding projects.
Managing eligibility of these projects is complicated and can cause confusion. It’s not uncommon to have a project with two, three, or four different types of funding. That means varying and often conflicting compliance requirements from multiple agencies.
Tip #1: Understand your project’s funding/subsidy sources.
It sounds fairly straightforward, but a thorough understanding of each funding and subsidy source is the first step to successfully managing your blended occupancy project.
Read the project’s governing documents. Key information such as affordability periods, number of units that must be rent restricted, income limits of eligible households, and other critical information will be outlined in the project’s governing documents. These documents will also tell you if the project owner has elected to rent a certain number of units to tenants at lower income levels than required by the IRS or HUD.
If you don’t have the project’s governing documents, get them from the project owner. You can’t be expected to successfully manage the project without them.
Tip #2: The most restrictive program wins.
A general rule is that the most restrictive program wins! If you manage eligibility to the most restrictive program, you will generally be in compliance with other programs.
A blended occupancy/combined funding unit with Low-Income Housing Tax Credits (LIHTC) and Project-Based Section 8 Assistance (PBRA) must use the Multifamily Tax Subsidy Projects (MTSP) income limits to determine initial tenant income eligibility for the LIHTC program and the HUD Program Income Limits to determine initial tenant income eligibility for the PBRA program.
If your project has LIHTCs, you must also know the building’s Placed-In-Service (PIS) date. The income limit for your building is determined by the date it was placed in service. This date is located on an important governing document, the IRS Form 8609.
Remember, the most restrictive income limit must be used to determine initial tenant income eligibility.
Tip #3: Get training.
With multiple financing/subsidy sources in your project, you must be able to quickly interpret and apply complex federal regulations issued by multiple regulatory agencies. The consequences for noncompliance, particularly for LIHTC, can be devastating. Initial and ongoing training is not a luxury for blended occupancy projects, it’s a must.
Professional Development Manager Cara Gillette oversees NMA’s regulatory and program management seminars, ensuring excellence across the board. She recently co-developed a new class, Blended Occupancy Management, which provides the practical tools needed to navigate a complex regulatory environment.
To learn more about blended occupancy and combined funding, sign up for the upcoming Housing Help Session. This audio conference is a convenient and affordable training option, just $99 for PIH Alert subscribers and $129 for non-subscribers.