RECOMMENDATIONS OF SECTION 8 TASK FORCE TO TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS JULY 18, 2000

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1 RECOMMENDATIONS OF SECTION 8 TASK FORCE TO TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS INTRODUCTION JULY 18, 2000 In June, 2000, the Texas Department of Housing and Community Affairs (TDHCA) appointed a Section 8 Task Force and charged it to develop a policy for expanding housing opportunities for Section 8 voucher and certificate holders in TDHCA assisted properties. During the work of the Task Force that directive was narrowed to concentrate on properties that receive assistance through the Low Income Housing Tax Credit (LIHTC) program. The Section 8 Task Force was comprised of diverse representatives covering all of the different aspects of the affordable housing community and met on June 2, 2000, July 8, 2000 and July 18, 2000 to consider and discuss the options and prepare its report. Two specific actions are proposed for TDHCA by the Task Force. First, it is recommended that TDCHA immediately approve a statement of policy relative to this issue. Secondly, it is recommended that TDHCA develop and propose a rule that incorporates specific restrictions and monitoring actions designed to ensure compliance with that policy. STATEMENT OF POLICY TDHCA s policy on Section 8 and LIHTC projects is as follows: Managers and owners of LIHTC properties are prohibited from having policies, practices, procedures and/or screening criteria which have the effect of excluding applicants because they have a Section 8 voucher or certificate. The verification of such an exclusionary practice on the part of the owner or the manager by TDHCA will be considered a violation and will result in the issuance of a Notice of Violation and, if appropriate, issuance of a Form 8823 to the Internal Revenue Service. Any violation of program requirements relative to this policy will also impact the Owner s ability to participate in future TDHCA programs. LIHTC properties with Land Use Restrictive Agreement s (LURA s) executed after August 10, 1993, are governed by Section 42 of the Internal Revenue Code which clearly prohibits... refusal to lease to a holder of a voucher or certificate of eligibility under Section 8 of the United States Housing Act of 1937 because of the status of the prospective tenant as such a holder. For these properties, this policy is mandatory and compliance is expected.

2 Page 2 For properties whose LURA s are dated prior to August 10, 1993, the requirements are not as strong but all owners and managers of LIHTC properties of this age are encouraged to obtain their own legal advice relative to compliance. Whatever the case, TDHCA intends to strongly encourage compliance with this policy by all LIHTC properties. SPECIFIC MANAGEMENT REQUIREMENTS AND RESTRICTIONS Management Plan The management plan for the property must clearly state that Section 8 certificate or voucher holders are welcome and that they will be provided the same consideration for occupancy as any other applicant. Use of Minimum Income Requirements Any minimum monthly or annual income requirements that are applied to all applicants for occupancy may also be applied to Section 8 certificate or voucher holders with the following exceptions: The minimum income requirement for Section 8 certificate or voucher holders can only be applied to the portion of the rent the prospective tenant would pay. For instance, if the rent is $400 and the prospective tenant will pay $100, then the minimum income requirement can only be factored against the $100 the prospective tenant is responsible for paying. The minimum income required for Section 8 certificate or voucher holders cannot exceed 2.5 (two and one-half) times the portion of the rent the tenant will pay. Using the example from above the minimum income requirement could not exceed 2.5 times the $100 tenant paid portion of the rent. The annual minimum income requirement would then be $3,000 per year for this family ($100 per month times 2.5 factor times 12 months). Employment Requirements An LIHTC owner or manager who requires that applicants, other than elderly applicants or applicants with disabilities, be employed in order to qualify to lease a dwelling unit must apply that requirement in a manner that is consistent with the Fair Housing Act and with the TDHCA and LIHTC program requirements. Such a policy/procedure must not have the effect of excluding applicants with Section 8 vouchers or certificates.

3 Page 3 Other Tenant Screening Criteria As with employment requirements, any other screening criteria (credit history, prior landlord history, criminal history, etc.) must be applied in a manner that is consistent with the Fair Housing Act and with the TDHCA and LIHTC program requirements. Such a policy/procedure must not have the effect of excluding applicants with Section 8 vouchers or certificates. MARKETING AND INFORMATION REQUIREMENTS Cooperation and Communication with Administering Agencies Annually, during the first quarter of each year, each LIHTC property in Texas will be required to communicate in writing with the local administering agencies for the Section 8 program. A current copy of this correspondence (sample letter attached) will required to be available during on-site reviews by TDHCA. This communication will include information on the unit characteristics and rents and will advise the administering agency that the property accepts Section 8 vouchers and certificates and will treat referrals in a fair and equal manner in accordance with this policy. Advertising The Fair Housing logo and Fair Housing posters are required to be posted in the office of every LIHTC property. TDHCA Website TDHCA will develop a new section on its web site that provides information on these requirements for LIHTC properties as well as a list of LIHTC projects. On-Site Staff Information Owners and managers are required to distribute instructions on these policies and procedures to their on-site staff within 60 days. It is strongly recommended that those polices and procedures be in writing so they can be available for review during site visits by the Compliance staff at TDCHA. TDHCA COMPLIANCE MONITORING Qualified Allocation Plan In future Qualified Allocation Plans, the points that are allowed for notifying public housing authorities that the property will accept applications from those on the public housing waiting list will be eliminated. In support of this policy, a threshold requirement

4 Page 4 will be added that requires that all applicants notify the local administering agencies for Section 8 that the property will be available to Section 8 certificate or voucher holders. Annual Owner s Certification It is also recommended that language incorporated into the Annual Owner s Certification of Program Compliance form that annually requires the owner to verify their compliance with this policy and the Section 42 and LURA requirements relative to accepting Section 8 voucher or certificate holders. Notice of Violation and Issuance of Form 8823 It is anticipated that the Compliance Division of TDHCA will monitor compliance with these requirements in their normal activities and through investigation of complaints. Identification of a policy or practice that unfairly excludes Section 8 voucher or certificate holders will be a finding and, if appropriate, will result in the issuance of a Form Prohibition Against Further TDHCA Participation Issuance of Form 8823 s for violations of this policy and procedure can have significant bearing on consideration of future applications for participation in the various TDHCA programs. Overall Compliance Monitoring Vigorous and complete monitoring and enforcement of these polices and procedures are expected from the Compliance Division of TDHCA. In support of that effort, all types of efforts are to be undertaken (for example, following up on specific complaints, using testers to verify non-compliant behavior, etc.) SUMMARY In closing, these are several comments which are intended to provide guidance to future efforts in this area: 1. While the scope of the Section 8 Task Force was restricted to LIHTC properties, guidelines of this nature would be useful for all of the TDHCA housing programs with Section 8 occupancy provisions. Consideration should be given to implementation of similar requirements and restrictions as expeditiously as possible. 2. Significant discussion took place in the Section 8 Task Force meetings regarding the need for an revision to the LURA, that allows prospective residents who feel their rights may have been violated to recover legal fees. It was agreed that this issue is

5 one for comment on the next version of the Qualified Allocation Plan. However, such a revision would allow for one more course of action in forcing hesitant owners into fulfilling their obligations to the LIHTC program. While it is the belief of the Task Force that a majority of the operators and managers of LIHTC properties in Texas are already considering Section 8 voucher and certificate holders just as they do any other applicant, there was agreement that it was critical that any operators not providing fair treatment to Section 8 voucher or certificate holders must be redirected into a state of compliance relative to these issues.