The Challenges of Managing Combined Funding Properties

Transcription

1 Gwen Volk CPM, NAHP-e, FHC,SHCM, HCCP, FHC, RAM GWEN VOLK INFOCUS, INC. The information on the handout, on the slides, and presented verbally in this course is intended as a guide. Agency compliance manuals, regulatory agreements and other pertinent documents provide further guidance and should always be consulted. Laws and regulations are subject to change and it is imperative that housing providers stay current with these changes. When managing a combined funding property, be sure to address conflicts in rules and procedures up front with all parties to ensure you are in compliance with their expectations. Financing affordable housing and community development projects is rarely simple or straightforward, often involving numerous funding sources and multi tiered ownership, investment and financing structures. 1

2 Project-Based Section 8 Tax Exempt Bonds Bond Issuer HOME Participating Jurisdiction P J A Perfect Fit? HUD Multifamily HUD Community Planning and Development HUD Public and Indian Housing Department of Agriculture Rural Development Department of Treasury IRS 2

3 Program Enacting Legislation Regulations Handbooks/Guides Project Based Housing & Community Development Act of 1974 CFR 24 Part HUD Occupancy HB Section 8 amending United States Housing Act of Rev 1 Ch. 4 Section 236 Housing & Urban Development Act of 1968 CFR 24 Part HUD Occupancy HB amending United States Housing Act of Rev 1 Ch. 4 Rental Assistance Housing & Community Development Act of 1974 CFR 24 Part HUD Occupancy HB Program (RAP) amending United States Housing Act of D Rev 1 Ch. 4 Rent Supplement Housing & Urban Development Act of 1965 CFR 24 Part HUD Occupancy HB amending United States Housing Act of Rev 1 Ch. 4 Section 221(d)3 National Housing Act of 1961, amending United CFR 24 Part HUD Occupancy HB BMIR States Housing Act of Rev 1 Ch. 4 Section 202 Housing Act of 1959, amending U. S. Housing CFR 24 Part HUD Occupancy HB (PAC or PRAC) Act of Rev 1 Ch. 4 Section 202/8 Housing & Community Development Act of 1974 CFR 24 Part HUD Occupancy HB and Housing Act of 1959, amending U. S. Housing Act of E Rev 1 Ch. 4 Section 811 PRAC Cranston-Gonzales National Affordable Housing Act of 1990, amending United States Housing Act of 1937 CFR 24 Part 891 C HUD Occupancy HB Rev 1 Ch. 4 Program Enacting Legislation Regulations Handbooks/Guides HOME Title II of the National Affordable 24 CFR Part Housing Act of 1990, amending 92 US Housing Act of 1937 Compliance in HOME Rental Projects: A Guide for Property Owners (2009) HOME Final Rule 07/ o/home/home-laws-andregulations/ CDBG Housing & Community Development Act of 1974 amending US Housing Act of 1937 CFR 24 Part o/resources/documents/basic ally-cdbg-chapter-4- Housing.pdf HUD Office of Public and Indian Housing Program Enacting Legislation Regulations Handbooks/Guides Public Housing The United States Housing Act of 1937 Housing Choice Vouchers RAD Rental Assistance Demo Housing & Community Development Act of 1974 amending 1937 Housing Act Public Law /18/11 (established RAD) Public Law /17/14 (extended RAD s second component) 24CFR Chapter 9 Public& Indian Housing 24 CFR Part 982 Section 8 Tenant Based Assistance PIH HB REV 2, 3 August 1987 / Public Housing Occupancy Guidebook, June 2003 PIH HB G April 2001: Housing Choice Voucher Program Guidebook PIH , REV 2 Quick Reference Guides to issued June 15, 2015 Multifamily Housing (PBRA) and revised RAD Notice Projects Converting to Project (235 pages) Based Voucher (PBV) Assistance 3

4 Program Enacting Legislation Regulations Handbooks/Guides Section 515 Direct Loans Section 515 of the Housing Act of CFR, Parts RD Occupancy Handbook , 2/24/05.[Chapter 6] Section 521 Rental Assistance Section 521 of the Housing Act of CFR, Parts RD Occupancy Handbook , 2/24/05. [Chapter 7] US Department of Treasury - IRS Program Enacting Legislation Regulations Handbooks/Guides Low Income Housing Credits 4% & 9% Tax Exempt Bonds Pre HERA Post HERA The Tax Reform Act of 1986 (temporary). Made a permanent part of the IRS Code (Section 42) by the Omnibus Budget Reconciliation Act of Mortgage Subsidy Bond Tax Act of 1980 set asides for low income units 2008 Housing & Economic Recovery Act IRS Code Section 42 IRS Code Section 142(d) 142(d) amended Guide for Completing Form 8823 Low Income Housing Agencies Report of Noncompliance. State Agency Manual or FAQ s Property specific Land Use Restriction Agreement and Issuer Handbook (if any) State Link to Compliance Guidance Link to Forms Indiana _Compliance_Manual.pdf Illinois managers/ Same link Ohio es.aspx ms.aspx Michigan _8002_26576_ ,00.html _8002_26576_ ,00.html Minnesota Same link cid= &pagename=external%2 FPage%2FEXTStandardLayout Wisconsin dasset.aspx?id=1015 4

5 Established July 2010 To better align the operation of Federal rental policy for properties with multiple Federal funding sources Participating Agencies White House Domestic Policy Council National Economic Council Office of Management and Budget U. S. Department of HUD [Multi- Family, PIH, CPD & OGC] U. S. Department of Agriculture RHS/RD U. S. Department of the Treasury IRS Alignment Initiatives Physical Inspections Income Reporting and Definitions Financial Reporting Common Energy Efficiency Requirements Appraisal Primer Market Study Standards Subsidy Layering Review Capital Needs Assessment Improve Data Sharing on Owner Defaults Fair Housing Compliance Enforcement 5

6 Physical Inspections Issue: A property that has multiple federal funding sources may be subject to multiple physical inspections using multiple standards. Lead Agency: USDA-RD Programs Involved: USDA-RD, HUD MF, HOME, HUD PIH Proposed Alignment: Federally-assisted multifamily housing owners are subject to multiple physical inspections as a result of utilizing more than one federal funding stream for property acquisition, repair or rehabilitation, or rental income subsidy, when programs are combined on a property. State-level teams are testing solutions to eliminate duplicative physical inspections at each multifamily property financed with multiple federal funding sources. State, local and federal housing agencies will come to agreement on the use of common inspection criteria, a statistically valid sample size, and an established inspection frequency. Participating States: MI, MN, OH, OR, WA, WI As of 2015, thirty-one (31) states were participating in the pilot program for: 1. Alignment of inspection standards: a. Use of the Uniform Physical Condition Standards (UPCS) for the LIHTC, HOME, Rural Development, Public Housing, project based Section 8, Section 202 and Section 811 and FHA insured Multifamily programs; or b. Use of the UPCS or local code, whichever is more stringent for all properties that have units supported by HOME funds. The Housing Choice Voucher Program (HCV) uses Housing Quality Standards which differ from UPCS and local code; 2. Use of statistically valid sample size from all assisted units in building; 3. Established inspection frequency of not less than every three years. 6

7 The Thirty-One States California, Colorado, Delaware, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia, Vermont, Washington, Wisconsin, and West Virginia. As listed on the HUD website Established in 2011, seven (7) states including MI, OH, WI, NV, PA, NC, SC participated in the pilot program where State-level teams tested different strategies for standardizing, and aligning Subsidy Layering Review requirements across agencies. On September 26, 2014, HUD issued Notice entitled Administrative Guidelines; Subsidy Layering Reviews for Section 8 Project-Based Voucher Housing Assistance Payments Contracts and Mixed-Finance Development. HUD intends to publish a guidebook that will allow all agencies that wish to enter into such an agreement to do so. HUD has exempted all HUD properties that have RD financing from HUD audit requirements. Notice H allows owners of HUD assisted projects that receive less than $500,000 in federal financial assistance to submit unaudited, owner-certified, financial statements February 14, 2014 new version of FASS-MF so these owners can submit owner-certified financials electronically. RD has been working on a handbook update to eliminate the AUP* requirement and use the $500,000 threshold for audits. *AUP means agreed upon procedures which is the light audit required of RD projects with between 16 and 24 units. 7

8 IRS publishes Amendments to Low Income Housing Credit Compliance Monitoring Regulations - FR Vol. 81 No. 37 February 25, 2016 IRS issues Revenue Procedure reduces minimum number of units for which the state agency must perform physical inspections and low-income certification reviews permits state agency to perform inspections on different units than those for which file reviews are performed Both initiatives may make it easier for LIHC owners to work with HUD on properties subject to HUD REAC Inspections (if state agency adopts the IRS modifications these are permissions, not requirements) Variations in Program-Specific Requirements: Eligibility requirements Documentation Requirements Unit Requirements Variations in Monitoring: Physical Inspections Management Reviews Reporting Non-Compliance Variations in Other Requirements AFHMP VAWA Variations in Procedures Verification Calculation Certification Leases Utility Allowances Terminations Record retention Terminations Record retention Eligibility requirements Definition of Income Income Limits Income eligibility initially and at recertification Income Targeting Student eligibility Documentation Requirements Social Security Numbers Birth Certificates Citizenship Criminal Background Screening Unit Requirements Unit as sole/primary residence Under-Utilization Manager s unit Transfers 8

9 Verification Income Assets Calculation Income Rents Security Deposits Certifications Notice Requirements Types and Timing Effective Dates Adding Household Members Acquisition Rehab Issues (More) Variations in Procedures Leases Forms Modifications Addenda/Attachments Beginning Term Utility Allowances Termination Tenancy Assistance Record Retention Variations in Monitoring Management reviews Physical Inspections Reporting non-compliance 9

10 Variations in Other Requirements AFHMP vs AFFH FHEO requires AFHMP of most HUD projects FHEO requires AFFH of PHA s and of states and localities using HOME/CDBG funds VAWA 2013 reauthorization applies to LIHC, HUD, RD but... Each agency devises its own rules and forms HUD Fair Housing rules applicable only to deep subsidy projects: Section 504 access for persons with disabilities Meaningful access for persons with limited English proficiency Equal access for LGBT Equal access to restrooms re: gender identity HUD announced on 1/12/15 that an LIHC property cannot terminate a Section 8 tenant for becoming over-income for LIHC or for not meeting another LIHC requirement (full-time student household, for example) because the HUD lease does not include this as a grounds for termination. Owners may offer full-time student households incentives to move out so as long as the incentives are not paid from Section 8 or FHA project funds. Owners should inform tenants in writing that they have the option of remaining as HUD-assisted tenants and that the choice of moving with incentives is truly voluntary. HUD s Tips for Combining LIHTC with... Section 8 Excerpts: Tenants who qualify for Section 8 80% income limits on pre-universe properties, cannot be denied housing due to an LIHC restriction of 50% or 60%. Owners cannot exclude students who would otherwise qualify for Section 8 without having a HUD-approved waiver. Owners may want to choose other than 100% LIHC deals in order to avoid conflicts. 10

11 Every program s rules rule for their program. Conflicts among eligibility rules can result in a household who qualifies for one program but not another not being able to move-in or being limited as to which units are available to them. Conflicts among procedures can result in different incomes for the same household one for each program. Some conflicts will mean that an owner may have to sacrifice financial benefits or even risk noncompliance if a solution cannot be found. Name the programs funding the property and/or its residents Review the regulations, regulatory documents, agency handbooks and manuals for each program. Identify potential conflicts especially those that can be resolved within the existing regulations Talk about these issues with compliance staff of the agencies involved and seek common ground where not in violation of program rules. Establish property procedures that take into account every program Hire staff with multiple program experience and train them in your procedures 11

12 Include all the Players on the Team from Day One Developer Owner Syndicator Management Agent Compliance Manager Property Manager/Assistant Manager Leasing Staff Regional Manager Director of Operations And last but not least... Assume nothing Question everything Listen well Take Action Repeat... Multiple Program Knowledge and Experience 12

13 Gwen Volk, CPM, NAHP-e, FHC,SHCM, HCCP, FHC, RAM GWEN VOLK INFOCUS, INC. (903)