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Navigating the maze of regulatory differences in blended occupancy projects: Part III

Posted by NMA on Nov 13, 2012 2:50:56 PM

blended occupancy projectsWith aging housing stock and dwindling resources, it's not uncommon to manage projects with two, three, or more separate sources of funding and/or subsidy, each with different oversight agencies and compliance requirements.

These blended occupancy projects, also referred to as mixed-finance projects, have multiple funding and/or subsidy sources, creating a maze of complicated and often conflicting regulations. In addition to being proficient in the HCV and public housing programs, PHA managers and staff must now be knowledgeable in a variety of other programs such as project-based vouchers (PBV), Low-Income Housing Tax Credit (LIHTC) and HOME.

Failure to maintain continuous program compliance in these programs can result in serious consequences. Follow our three-part series to learn more about some of the major regulatory differences in blended occupancy projects.

Part I: Inspection Standards/Frequency

Part II: Annual Recertification Requirements

Part III: Student Rules

Student Rules

Part-time students. Full-time students. Under the age of 24. No dependent children. Huh? If you're confused about the eligibility of students in your project, you're not alone. Depending on the funding and/or subsidy sources in your project, certain students are not eligible to live in blended occupancy projects. We've highlighted a few of the areas of student eligibility for certain programs below.

Low-Income Housing Tax Credit (LIHTC) Student Eligibility Requirements:

The Internal Revenue Service (IRS) defines a student a bit differently than HUD does. At IRC §152 (f)(2), the IRS defines a student as:

An individual, who during each of 5 calendar months during the calendar year in which the taxable year of the taxpayer begins, is a full-time student at an educational organization described in IRC § 170(b)(1)(A)(ii) or is pursuing a full-time course of institutional on-farm training under the supervision of an accredited agent of an educational organization described in IRC §170(b)(1)(A)(ii) or of a state or political subdivision of a state. Treasury Regulation §1.151-3(b) further provides that the five calendar months need not be consecutive.

What does this mean to you? It means that units receiving LIHTCs, comprised entirely of full-time students (none of which meet one of the exceptions outlined in the Internal Revenue Code), do not qualify as low-income units and are out of compliance.

You must have verification and documentation policies in place to verify student status when households initially move into LIHTC units. You must also have verification and documentation policies in place to verify a household's student status within 120 days before the anniversary of the effective date of the initial student verification.

Section 8 Project-Based Rental Assistance (PBRA) Student Eligibility Requirements:

HUD regulations prohibit PBRA assistance to any individual who is enrolled (either full or part time) as a student at an institution of higher education for the purpose of obtaining a degree, certificate, or other program leading to a recognized educational credential who is:

  • Under the age of 24
  • Not a U.S. veteran
  • Unmarried
  • Does not have a dependent child
  • Is not a person with disabilities, as such term is defined in 3(b)(3)(E) of the United State Housing Act of 1937 (42 U.S.C. 1437a(b)(3)(E)), and was not receiving Section 8 assistance as of November 30, 2005
  • Is not living with his or her parents who are receiving Section 8 assistance
  • Is not individually eligible to receive section 8 assistance and has parents (the parents individually or jointly) who are not income eligible to receive Section 8 assistance

This means that unless the student qualifies as an "independent student" as provided in HUD Handbook 4350.3, Chapter 3, Section 3-13, Paragraph (A)(3), assistance must be denied and/or terminated for students meeting all of the criteria listed above.

You must have verification and documentation policies in place to verify student status at the time households initially qualify for PBRA. You must also have verification and documentation policies in place to verify households’ student status at annual recertification, initial certification (when an in-place tenant begins receiving Section 8), and at the time of an interim recertification if one of the family composition changes reported is that a household member is enrolled as a student.

Section 8 Housing Choice Voucher Project-Based (PBV) Student Eligibility Requirements:

HUD regulations for the PBV program are exactly the same as the PBRA program above. Unless the student qualifies as a "independent student" as provided in your PHA's administrative plan, assistance must be denied and/or terminated for students meeting all of the criteria listed above in the PBRA section.

You must have verification and documentation policies in place to verify student status at the time households initially qualify for PBV. You must also have verification and documentation policies in place to verify household’s student status at annual recertification, and at the time of an interim recertification if one of the family composition changes reported is that a household member is enrolled as a student.

Public Housing Student Eligibility Requirements:

The prohibition on providing HUD rental assistance to students in the PBRA and PBV programs does not apply to the public housing program, meaning that both part-time and full-time students can live in public housing.

HUD did issue Notice PIH 2005-26, based on a concern that PHAs might be admitting ineligible college students to HUD's public and assisted housing programs. The notice provides guidance for determining and verifying the eligibility of full-time college students of non-parental/guardian households.

PHAs are encouraged (but not required) to adopt policies stating that the following must also be verified:

  • That the student does or does not anticipate receiving income from an outside source, such as a parent
  • That the student has established a household separate from his or her parents or guardian for at least one year prior to applying for admission
  • That the student is not claimed as a dependent by anyone, such as a parent, on that individual’s tax return

What does this mean to you? Both part-time and full-time students can reside in public housing. A blended occupancy unit with LIHTC will have to comply with the more restrictive LIHTC student eligibility requirements.

HOME Student Eligibility Requirements:

The prohibition on providing HUD rental assistance to students in the PBRA and PBV programs does not apply to the HOME program. Both part-time and full-time students can reside in HOME-assisted units. A blended occupancy unit with LIHTC, PBRA or PBV will have to comply with the most restrictive program requirements regarding student eligibility.

This concludes our three-part series on regulatory differences in blended occupancy projects. As an NMA trainer and consultant, Sheryl Putnam spearheaded the development of NMA's Blended Occupancy Management course. Contact sales@nanmckay.com to bring this training to your agency.

Topics: blended occupancy, combined funding, LIHTC, mixed financing, PBRA, PBV

Navigating the maze of regulatory differences in blended occupancy projects: Part II

Posted by NMA on Nov 1, 2012 3:14:16 PM

blended occupancy projectsWith aging housing stock and dwindling resources, it's not uncommon to manage projects with two, three, or more separate sources of funding and/or subsidy, each with different oversight agencies and compliance requirements.

These blended occupancy projects, also referred to as mixed-finance projects, have multiple funding and/or subsidy sources, creating a maze of complicated and often conflicting regulations. In addition to being proficient in the HCV and public housing programs, PHA managers and staff must now be knowledgeable in a variety of other programs such as project-based vouchers (PBV), Low-Income Housing Tax Credit (LIHTC) and HOME.

Failure to maintain continuous program compliance in these programs can result in serious consequences. Follow our three-part series to learn more about some of the major regulatory differences in blended occupancy projects.

Part I: Inspection Standards/Frequency

Part II: Annual Recertification Requirements

Part III: Student Rules

Annual Recertification Requirements

Annual recertification requirements can vary significantly in projects with multiple funding/subsidy sources. We recommend adherence to the most restrictive annual recertification requirement to ensure that your projects and units remain in continuous program compliance. Some of the major differences are outlined below:

Low-Income Housing Tax Credit (LIHTC) Annual Reexamination Requirements:

Annual recertifications of household income and composition must be conducted for all LIHTC units located in certain LIHTC projects.

In projects maintained as 100% LIHTC, HERA (The Housing and Economic Recovery Act of 2008) eliminated the requirement for annual recertifications. Many state agencies, owners, and syndicators, however, still require full annual recertifications, or a combination of full/partial annual recertification for 100% LIHTC projects. Check with your owner, syndicator and state monitoring agency on annual recertification requirements.

Projects with a mix of LIHTC and non-LIHTC projects must conduct annual recertifications according to owner, syndicator, and state agency requirements.  For both types of LIHTC projects, many owners, syndicators, and state agencies may require that you use specific forms to capture household composition and income/asset information.

Section 8 Project-Based Rental Assistance (PBRA) Annual Recertification Requirements:

Annual recertifications of household income and composition must be conducted by the household’s anniversary date. Annual recertification requirements are outlined in HUD Handbook 4350.3, Chapter 7.

Section 8 Housing Choice Voucher Project-Based (PBV) Annual Recertification Requirements:

Annual recertifications of household income and composition must be conducted by the PHA in accordance with the PHA’s administrative plan within 30 days prior to the anniversary date.

Public Housing Annual Recertification Requirements:

Annual recertification of household income and composition must be conducted for families paying income-based rent at least annually. Families paying flat rent require income recertification at least once every three years.

HOME Annual Recertification Requirements:

Annual recertifications of household income and composition must be conducted in accordance with the participating jurisdictions' policies for the HOME program. HUD regulations require that every 6th year of the project’s affordability period, not the tenancy period, source documentation must be used by the owner to verify household income. Self-certification can be used in the intervening years, if allowed by the participating jurisdictions' policies.

As an NMA trainer and consultant, Sheryl Putnam spearheaded the development of NMA's Blended Occupancy Management course.

Topics: blended occupancy, combined funding, flat rent, HERA, LIHTC, mixed financing, PBRA, PBV, recertification

Navigating the maze of regulatory differences in blended occupancy projects: Part I

Posted by NMA on Oct 24, 2012 1:58:46 PM

blended occupancy projectsWith aging housing stock and dwindling resources, it's not uncommon to manage projects with two, three, or more separate sources of funding and/or subsidy, each with different oversight agencies and compliance requirements.

These blended occupancy projects, also referred to as mixed-finance projects, have multiple funding and/or subsidy sources, creating a maze of complicated and often conflicting regulations. In addition to being proficient in the HCV and public housing programs, PHA managers and staff must now be knowledgeable in a variety of other programs such as project-based vouchers (PBV), Low-Income Housing Tax Credit (LIHTC) and HOME.

Failure to maintain continuous program compliance in these programs can result in serious consequences. Follow our three-part series to learn more about some of the major regulatory differences in blended occupancy projects.

Part I: Inspection Standards/Frequency

Part II: Annual Recertification Requirements

Part III: Student Rules

Inspection Standards/Frequency

In blended occupancy projects, the inspection standard that must be used varies depending on the type of funding in the project. In projects with multiple funding sources, we recommend adherence to the most restrictive inspection standard protocol to ensure that your projects and units remain in continuous program compliance.

Low-Income Housing Tax Credit (LIHTC) Inspection Standards:

The LIHTC program requires that projects must be in safe, decent, sanitary condition and in good repair, according to either the Uniform Physical Conditions Standards (UPCS) established by HUD, or local inspection standards. The standards to be used must be identified in the state's Qualified Allocation Plan (QAP).

Low-Income Housing Tax Credit (LIHTC) Inspection Frequency:

IRS code requires that owners certify to the state monitoring agency, typically the state housing finance agency, in writing, on an annual basis, that all LIHTC units and buildings were suitable for occupancy, for the preceding 12-month period, in the form and format outlined in the state's QAP. State monitoring agencies must perform onsite inspections of LIHTC properties once every three years to ensure that LIHTC buildings and units are suitable for occupancy. Based on this requirement, it's recommended that LIHTC owners perform move-in, annual, and move-out inspections.

Section 8 Project-Based Rental Assistance (PBRA) Inspection Standards:

HUD requires that projects receiving PBRA assistance must be in safe, decent, sanitary condition and in good repair, according to HUD's UPCS standards.

Section 8 Project-Based Rental Assistance (PBRA) Inspection Frequency:

HUD handbook 4350.3 requires that PBRA owners/agents perform move-in, annual, and move-out inspections.

Section 8 Housing Choice Voucher Project-Based (PBV) Inspection Standards:

HUD requires that units under a PBV HAP contract be in safe, decent, sanitary condition and in good repair according to HUD's Housing Quality Standards (HQS).

Section 8 Housing Choice Voucher Project-Based (PBV) Inspection Frequency:

HUD regulations require pre-HAP contract, turnover, and annual inspections by the PHA.

Public Housing Inspection Standards:

HUD requires that all public housing units be in safe, decent, sanitary condition and in good repair according to HUD's UPCS.

Public Housing Inspection Frequency:

HUD regulations require that the PHA perform move-in, annual, and move-out inspections.

HOME Inspection Standards:

While all HOME-assisted properties must meet minimum property standards including the control and abatement of lead-based paint, the specific property inspection protocol varies depending on the type of HOME-assisted project. Housing constructed or rehabilitated with HOME funds must meet all applicable local codes, rehabilitation standards, ordinances, and zoning ordinances at project completion and throughout the project's affordability period.

Additionally, the participating jurisdiction must have written standards for rehabilitation that ensure the HOME-assisted housing is decent, safe, and sanitary.

Acquisition of existing rental housing with HOME funds must meet all applicable state and local housing quality standards and code requirements if applicable, or HUD's HQS in the absence of such standards or code requirements.

HOME Inspection Frequency:

Although HUD regulations do not specifically dictate when owners of HOME-assisted properties must perform inspections, all HOME-assisted properties must meet minimum property standards throughout the project's affordability period. Depending on the total number of units in the property (not the number of HOME-assisted units in the property), participating jurisdictions must perform onsite inspections of HOME-assisted properties to ensure compliance with HOME property standards. We recommend performing move-in, annual, and move-out inspections.

As an NMA trainer and consultant, Sheryl Putnam spearheaded the development of NMA's Blended Occupancy Management course.

Topics: blended occupancy, combined funding, HQS, inspections, LIHTC, mixed financing, PBRA, PBV, UPCS

Friday news roundup 6/22/12

Posted by NMA on Jun 22, 2012 10:34:43 AM

GoSection8: 100 localized listings portals we’ve created for housing authorities around the country

The HUDdle: Celebrating equal access to housing during LGBT pride month

PIH: New notices on passbook savings rate, calculation of operating subsidy eligibility

Urban Land Magazine (via Affordable Housing Report): Making mixed-income housing work

U.S. Interagency Council on Homelessness (via CLPHA): PHAs are critical in efforts to prevent and end homelessness

Leave your links and recommendations in the comments.

Topics: blended occupancy, combined funding, fair housing, mixed financing, PIH notices

Managing eligibility of blended occupancy projects

Posted by NMA on Jun 11, 2012 10:12:19 AM

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.

Topics: blended occupancy, combined funding, eligibility, Housing Help Sessions, income limits, LIHTC, mixed financing, occupancy, PBRA

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