News

Age Verification Requirements for Senior Properties

On February 13, 2013, HUD announced that a homeowners association and managers in Edina, MN will pay more than $40,000 under a Consent Order for refusing to allow children under the age of 18 to live at the property. HUD charged 7000 Sandell Condominium Association, Inc., its property management company, and the property s off site manager, Paul Bonzonie, with violation of the Fair Housing Act for having a policy that prohibited children from living in the building. The owner of the building claimed that they were a senior housing property, which may lawfully exclude children. However, HUD determined that the Association failed to formally and routinely verify the ages of the complex s residents - a requirement in order to claim the status of senior housing. The plaintiff and his wife stated that they were told by the Condo Association that they were violating the rules of the complex by allowing their minor children to live with them for more than 30 days in a calendar year. The Association fined the residents and filed suit in State court in an attempt to prevent the children from living at the complex. HUD found that due to the failure to properly verify the age of residents, the property does not meet the requirements as Housing for Older Persons, and is therefore a family property. Under the terms of the consent order, the Association, property management company, and off-site manager will pay the plaintiff $30,000, pay his attorney $12,200, and allow the couple and their children to live at the property without fear of retaliation or harassment. There are two lessons to take away from this case: (1)Individual managers may be sued and fined under fair housing law; and (2) if you operate senior properties, be sure you have a formal system for verifying the age of all your residents.

Violence Against Women Act Ready for President's Signature

On February 28, 2013, the Violence Against Women Act (VAWA) passed the House of Representatives after already having been approved by the Senate. The bill now goes to President Obama for his signature, which is certain. Title VI, Section 601 of the Act outlines the Housing Protections provided by the legislation, and I will highlight those protections here. The following programs will now be covered by VAWA (the list of programs has been significantly expanded: Section 202 Section 811 Housing provided under the Cranston-Gonzalez Affordable Housing Act McKinney-Vento Homeless Program Section 221(d) Insurance Programs Section 236 Section 6 and Section 8 Rural Housing Programs Low-Income Housing Tax Credit An applicant or resident participating in any of these programs may not be denied assistance, terminated from, or evicted from housing because they have been or are a victim of domestic violence, dating violence, sexual assault, or stalking. This applies even if the person committing the violence of doing the stalking is a member of the household. Leases under covered programs may be bifurcated in order to evict, remove, or terminate assistance to any individual who engages in criminal activity relating to domestic violence, without evicting the victim of the domestic violence. If the evicted tenant is the sole tenant eligible to receive assistance, the victim shall be given the opportunity to qualify. If they do not qualify, they will be given a reasonable time, as determined by the appropriate agency, to find new housing or establish eligibility. Victims of domestic violence may be evicted for lease violations not associated with of domestic violence, dating violence, sexual assault, or stalking. In other words, such victims have no special protections or privileges except those relating to domestic violence, dating violence, sexual assault, or stalking. Request for Documentation If a person represents that they are entitled to protection under this section of the law, the property owner may request, in writing, that the applicant or tenant submit documentation within 14 days after receiving the written request for documentation, a certification that - States that the applicant or tenant is a victim of domestic violence, dating violence, sexual assault, or stalking; States that the incident of domestic violence, dating violence, sexual assault, or stalking meets the definition of domestic violence under this law; and Includes the name of the person who committed the domestic violence if the name is know and safe to provide. This document must be signed by an employee, agent, or volunteer of a victim service provider, an attorney, a medical professional, or a mental health professional from whom the victim has sought assistance relating to domestic violence, dating violence, sexual assault, or stalking. The document must state under penalty of perjury that the professional signing the statement believes that the incident meets the requirements of the VAWA. The document must also be signed by the applicant or tenant. The document may also be a record of a Federal, state, tribal or local law enforcement agency, court, or administrative agency, or at the discretion of the agency or owner, a statement or other evidence provided by the applicant or tenant. Confidentiality All information provided by a potential victim must be kept in confidence and may not be entered into any shared database or disclosed to any entity or individual unless the disclosure is Requested or consented to by the individual in writing; Required as part of an eviction proceeding; or Otherwise required by law. Conflicting Information If an owner receives conflicting information, they may require third party documentation. Also, the VAWA is preempted by any Federal, state or local law that is more stringent. Notification The Secretary of HUD will develop a Notice of the rights of individuals under this law, including the right to confidentiality. Once this notice is available, owners will be required to provide such notice to applicants for covered housing, when an applicant is Denied housing; Admitted to housing; Notified of eviction or assistance termination; and The notice must be in multiple languages, consistent with the requirements of the Limited English Proficiency (LEP) Regulations (these regulations do not apply to the LIHTC program at this time). Emergency Transfers Agencies will develop emergency transfer plans for use by owners that Allow tenants who are victims to transfer to another available and safe dwelling unit if - The tenant requests the transfer; and The tenant believes that they are threatened with imminent harm if they remain in the same dwelling unit; or If the tenant was a victim of sexual assault, the assault occurred on the premises within 90-days of the transfer request; and Incorporates confidentiality measures ensuring that the location of the new unit is not disclosed to the person who committed the act of violence. While this law will be in place when signed by the President, additional guidance is needed from the applicable agencies in order to fully implement the requirements of the statute. HUD already has guidance in place for Section 8 properties, and those properties should continue to follow the requirements of VAWA as they have in the past, pending new guidance from HUD. As for LIHTC properties, this is a brand new requirement. Guidance will be required in a number of areas, including: When tenants are evicted due to the commission of a crime covered by this law, and they were the sole qualifying tenant, what steps will be taken to qualify the victim (the remaining resident)? This could occur in a tax credit property if the abuser was the original tenant, got married, and the wife joined the unit. She would be added as a new member, but would have to qualify on her own in the event the husband was removed from the unit. If she did not qualify (due to income, student status, etc.), what would be an appropriate time to allow her to find additional housing? Agencies must develop an Emergency Transfer Plan; will this be done by the IRS or State HFAs? These, and a number of other issues will have to be worked out before the law can be fully implemented at LIHTC properties.

HUD Changes Income Verification Rules for PHAs

HUD has issued Notice PIH 2013-3, establishing temporary guidelines for public housing agencies (PHAs) in fulfilling certain public housing and Housing Choice Voucher program requirements during this period of decreased resources available to PHAs. It offers PHAs four options that they may adopt in order to ease the burdens associated with administration of the public housing and voucher programs. Keep in mind that these changes only apply to PHAs and are only for public housing and vouchers: Annual Income Determinations - PHAs now have the option of projecting income for the upcoming year or using income from the prior 12-months to determine the annual income of a household (note: this may impact the ability of tax credit properties to use PHA verification of income for a voucher resident); Assets Verification - When households have assets of $5,000 or less, PHAs have the option of verifying all assets or allowing households to self-certify (this matches the requirement for LIHTC properties); Fixed Incomes - For elderly and disabled households with fixed incomes (pension, Disability, Social Security and SSI), instead of verifying income and calculating rent every year, PHAs may use published COLAs to determine income; and Rent Payment Standard - when a disabled resident needs a reasonable accommodation, a PHA may provide a rent payment standard of up to 120-percent of the fair market rent (as opposed to the 110% current permitted). These changes are set to expire March 31, 2014, but HUD is pursuing permanent changes to provide more flexibility to PHAs.   This guidance is important for PHAs, but also for LIHTC properties that use PHA verification of income for voucher residents. Prior to accepting a PHA verification of income for a voucher resident, owners and managers of LIHTC properties should determine the method of income determination to be used by the PHA. Since HUD project-based Section 8 requirements are that income be projected for the 12-month period following the effective date of the certification, PHA verification of income for the prior 12-months will not meet the requirements of the LIHTC program and may not be acceptable for tax credit purposes.   Please feel free to contact me with any questions.   AJ

Increased Focus on Sex Offender Issues Could Impact MOR Scores

Increased Focus on Sex Offender Issues Could Affect MOR Scores   The U. S. Department of Housing & Urban Development (HUD) has updated HUD-9834, Management Reviews of Multifamily Projects. This new version of the form will be in effect for all MOR reviews conducted after March 4, 2013 (and has already been used for some reviews). There are a number of new review areas, including the collection of certain statistics for applicants and tenants who are subject to a lifetime registration as a sex offender. During these reviews, managers must have the following information on hand relating to registered lifetime sex offenders:   Number of households containing a household member subject to a state lifetime sex offender registration requirement that was identified at re-certification, and the following information relative to these households: How many were admitted prior to June 25, 2001 (the effective date of the Screening and Eviction for Drug Abuse and Other Criminal Activity final rule); How many were erroneously admitted; and How many include a member who became subject to the registration requirement after admission? Number of evictions due to the erroneous admission of a household with a member subject to the lifetime registration requirement, and how many of those evictions were upheld in court; Number of evictions due to a household member becoming subject to the registration requirement after admission, and the number of such evictions upheld in court. Owners and agents should ensure that documentation regarding registered sex offender status is available and up-to-date. Owners and managers should also carefully review the revised HUD - 9834 for new requirements relative to EIV plans and policies as well as TRACS compliance.

HUD Publishes Final Rule on Fair Housing Disparate Impact

On February 15, 2013, HUD published a final rule in the Federal Register (78 Fed. Reg. 11460) regarding disparate impact liability under federal fair housing law. Disparate impact is the theory of fair housing law that asserts that certain policies of housing providers, while seemingly neutral, in fact have a harsher impact on members of a protected class. A finding of disparate impact could result in liability under fair housing law even when there was no "intent" to discriminate. In this final rule, HUD is attempting to formalize in code the approach that has been used for courts and agencies for a number of years. This has been a three-tiered approach to disparate impact cases: 1. Plaintiffs have the initial burden to show that a challenged practice has a disproportionately adverse impact on persons in a protected class. If they are able to do that; 2. Burden shifts to the defendant to show a legitimate reason for the challenged practice ("legally sufficient justification"). The defendant must show that there is no less discriminatory way to meet a nondiscriminatory goal. If the defendant is successful; 3. The burden shifts back to the plaintiff to show that there is a less discriminatory alternative. Disparate impact is a very controversial aspect of fair housing law. It has long been a subject of contention - unsettled in the courts - as to whether well-intentioned acts that have a disparate impact on a certain group should be considered a violation of fair housing law. There is now a case pending before the Supreme Court challenging whether the fair housing act allows for disparate impact liability. With the publication of this rule, HUD is clearly hoping that the courts will defer to the Agency s interpretation of the theory of disparate impact, and if the Supreme Court takes the case, it will be interesting to see how much deference the court gives to HUD s interpretation. This new rule will have far-ranging impact in the housing industry, not just with developers and managers of multifamily housing, but with lenders, insurance companies and other participants in the nation s housing. For example, lenders who have adopted more stringent requirements since the 2008 real estate crisis may be liable if those new policies inhibit the ability of certain groups to qualify for mortgages. In the final rule, HUD expresses the belief that this will not be an issue, stating that courts and agencies will be able to distinguish legitimate business rules from actual discriminatory conduct. All persons involved in housing that is subject to fair housing law should become familiar with the new HUD rule. I will be including a discussion of the new rules and their consequences in all fair housing training that I conduct going forward.  

New Ohio Law Should Lower Real Estate Taxes for LIHTC Projects

Owners of low-income housing tax credit properties in Ohio may soon be paying less in property taxes for their properties due to a law signed by the Governor of Ohio, John Kasich, on December 20, 2012. The law, H.B. 510, requires that tax assessors consider encumbrances to a property when determining its valuation for tax purposes. This means that assessments for LIHTC properties in Ohio should take into consideration the rent restrictions required by the Section 42 program, thus lowering the value of the property. This should result in lower taxes for LIHTC properties in Ohio.

Violence Against Women Act

As you may know, Congress did not extend the Violence Against Women Act (VAWA) at the end of 2012. However, the Congressional failure to act only terminated appropriations under the program; the Statute creating the program is still in place and an active law. For this reason, the provisions of VAWA remain in effect. If you participate in the Project-Based Section 8 Program, be sure you continue to use the HUD Form 91066, Certification of Domestic Violence, and HUD Form 91067, VAWA Lease Addendum.

IRS Priorities for 2013 Relating to LIHTC

During 2013, the IRS will review various issues under Section 42 of the IRC, including the following:   Guidance relating to the application of the design and construction accessibility requirements under the Fair Housing Amendments Act of 1988. Issues relating to compliance monitoring, including issues identified in Notice 2012-18. Here, the IRS will examine the efficacy of the Physical Inspections Pilot Program, under which HFAs were able to use HUD REAC inspections in lieu of the standard HFA physical inspections. In particular, the IRS will examine whether the fact that the units inspected will not be the same as the units for which files are reviewed will diminish the value of the HFA review process. Review of Revenue Procedure 2007-54, which provides disaster relief under Section 42 for Presidentially Declared Disaster Areas. Guidance concerning the exception under 42(d)(6) for any federally or state assisted building. This section has to do with the ability of acquired buildings to claim credits when the current owner purchases the building less than ten years after prior acquisition or substantial rehabilitation and the building is federally assisted. Regulations concerning utility allowances under 42(g)(2))B) (ii) for sub-metered buildings. Interim guidance on this issue was published in Notice 2009-44 and was published in the Federal Register of August 7, 2012. We will monitor the IRS progress on these issues and let you know as soon as the Agency takes any action in these areas.