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HUD Adds Income Exclusion for Veterans Disability for HUD-VASH Participants - IRS Adopts for LIHTC

The Department of Housing and Urban Development (HUD) published a Notice in the August 13, 2024, Federal Register announcing policy changes to the Veterans Affairs Supportive Housing (VASH) program to improve access for veterans experiencing homelessness. Homeless veterans often receive disability benefits as a result of disabilities that were acquired or made worse during military service. Before this change, such benefits were considered income for HUD programs, causing some veterans to exceed the income limits for specific assisted housing programs. HUD is expanding access to these programs by adding five new policies to the HUD-VASH program: Initial income eligibility will now be set at 80% of the area median income rather than 50% as in the past. While this higher limit has been optional for agencies participating in the HUD-VASH program, it is now mandatory. Service-connected disability benefits are now excluded from income. Presently, this income is excluded only from the HUD-VASH program but is likely to be adopted by other housing subsidy programs (as discussed below, the IRS has adopted it for the LIHTC program). Local agencies will no longer have to compete for HUD-VASH project-based awards if all units in a project serve HUD-VASH families at a VA facility. Up to 140 percent of the Fair Market Rent may be allowed as a reasonable accommodation for a person with a disability, but only with HUD approval. PHAs may establish a zero minimum rent policy for HUD-VASH units. IRS Revenue Procedure Adopts Income Exclusion for the LIHTC Program On September 24, 2024, the IRS issued Revenue Procedure 2024-38, providing the same income exclusion for LIHTC and Tax-Exempt Bond properties. It should be noted that the exclusion only applies to tenants receiving assistance under the HUD-VASH program. It does not apply to LIHTC or tax-exempt bond residents who do not receive assistance under the HUD-VASH program. Operators of LIHTC or Tax-Exempt Bond properties should also note that the programs' income limits have not changed, so a HUD-VASH recipient may not income qualify for the LIHTC or Tax-Exempt Bond Program if they qualify at the new 80% HUD limit. Effective immediately, all projects with tenants assisted by the HUD-VASH program will exclude the total amount of any VA disability benefits received by those applicants or residents. Managers of LIHTC or Tax-Exempt Bond properties serving tenants with vouchers should request information from local PHAs regarding whether the vouchers are being provided under the HUD-VASH program. If so, any VA disability income should be excluded.

HUD Extends HOTMA Implementation Date

On September 24, 2024, the HUD Office of Multifamily Housing (MFH) published Housing Notice H 2024-09, extending the date that Owners must fully comply with the HOTMA final regulations to July 1, 2025. MFH will soon release a series of FAQs to address questions relating to HOTMA implementation thoroughly. HUD is developing and publishing a series of forms, including the 50059 and Model Leases, to reflect HOTMA requirements. These forms will be available for public comment before they are finalized for use.

Determining the Cutoff Date for HUD Required Annual Reexaminations

In dealing with clients on HUD-assisted properties that require annual reexaminations, we still find some confusion among managers relative to the cutoff date by which residents must report for the yearly reexamination interview. Managers of HUD-assisted properties understand that the annual recertification process must begin at most 120 days before the annual reexamination anniversary date. Once managers have distributed the three required recertification reminder notices for the annual reexamination notice, HUD expects Section 8 residents to promptly report for the recertification interview, sign the required paperwork, and provide necessary documentation relating to income and assets. Assuming the resident reports for the annual interview before the cutoff date, the manager must complete the recertification with enough time to provide 30 days' notice of any resulting rent increase. It's crucial to note that if the resident misses the cutoff date, they lose the privilege of a 30-day notice of a rent increase. This underscores the significance of adhering to the timeline and the potential impact on Section 8 residents. The Cutoff Date HUD defines the cutoff date as the tenth day of the 11th month before the annual reexamination date. This cutoff date must be included in the initial 120-day notice to the resident and in the 90 and 60-day reminder notices. Here are two simple methods for remembering the cutoff date. The first method involves starting with the month of the last annual reexamination and adding 11. The result is the 10th day of the 11th month. The second method is to count two months back from the annual recertification month, and the result is again the 10th day of that month. Using the first method, if the last annual reexamination was November 1, 2023, count forward 11 months, including November. The 11th month is September 2024, so the cutoff date for the November 1, 2024 reexamination is September 11, 2024. If using the second method, count two months back from November (not including November), and the cutoff date remains September 21, 2024. To avoid the counting requirement, I recommend that managers keep a chart showing the cutoff date for each recertification month. Here is an example of such a chart: Recertification Month            Cutoff Date January 1                                      November 10 February 1                                    December 10 March 1                                        January 10 April 1                                          February 10 May 1                                            March 10 June 1                                           April 10 July 1                                            May 10 August 1                                       June 10 September 1                                 July 10 October 1                                     August 10 November 1                                  September 10 December 1                                  October 10

A. J. Johnson Partners with Mid-Atlantic AHMA for Affordable Housing Training in October 2024

In October 2024, A. J. Johnson will partner with the MidAtlantic Affordable Housing Management Association for a live webinar training session for real estate professionals, especially those in the affordable multifamily housing field. The following session will be presented: October 16: Ensuring Section 42 Compliance on December 31, Including Average Income Issues. Experienced LIHTC managers and compliance professionals know the importance of the last day of the tax year (typically December 31). This session will focus on all the issues to be aware of as the year draws to a close, with recommendations on ensuring compliance at year-end and the ramifications of noncompliance. The discussion will center on the three primary compliance areas impacting the ability to claim credits - eligibility, affordability, and habitability. The training will stress the importance of year-round compliance relative to rent since excess rent can result in a credit loss at any point in the year. Special attention will be given to year-end issues relating to the Average Income Minimum set aside. The session will close with a review of casualty loss issues and how these events may (or may not) impact the credits. This session is part of a year-long collaboration between A. J. Johnson and MidAtlantic AHMA designed to provide affordable housing professionals with the knowledge needed to effectively manage the complex requirements of the various agencies overseeing these programs. Persons interested in this session may register by visiting either www.ajjcs.net or https://www.mid-atlanticahma.org.