News

Social Security COLA - 2023

The federal government announced on October 13, 2022, that the Social Security Cost of Live Adjustment (COLA) for 2023 will be 8.7%, which is the largest increase since 1981. This increase will provide an additional $146 per month for the average retiree. This is a significant increase over the 2022 increase of 5.9%. Social Security recipients will receive a notice in the mail in early December showing their new benefit amount. Recipients will see an increase in their January 2023 payment. Those receiving SSI will see the increase on December 31, 2022. Owners and managers of properties that are required to determine the income of residents should use the new COLA SS rate when projecting the income of applicants and residents. This also affects persons receiving SSI, VA pensions, Civil Service Pensions, and Railroad Retirement.

Social Security COLA is Expected to be Announced on October 12 or 13.

The annual Cost of Living Adjustment (COLA) for Social Security should be announced no later than October 13 and based on the inflation rate to date, may be as high as 8.7%. It's likely to be the biggest since 1981, which is when the U.S. was experiencing another bout of high inflation.  That year, seniors got a benefit boost of 11.2%. There are only two other years when seniors received COLAs bigger than what is forecast for 2023: 1980, when benefits got a 14.3% hike; and 1979 when benefits rose by 9.9%. There have also been several years when beneficiaries received no bump at all, such as in 2009 and 2010, when the COLA was 0% due to flatlining inflation during the post-financial crisis years. Managers and operators of affordable housing should stay alert for the announcement since any increase should be reflected in the annual income of persons receiving Social Security. Keep in mind that the COLA will also apply to SSI, Veterans pensions, railroad retirement, and Civil Service pensions.

A. J. Johnson Joins Mid-Atlantic AHMA for Fall Conference on Affordable Housing

A. J. Johnson will be participating in the Mid-Atlantic Affordable Housing Management Association Fall Conference on Affordable Housing in November 2022. The Conference will be held from November 15-17, 2022 at the Doubletree Hotel/Midlothian-Richmond in Richmond, VA. The conference will feature a broad spectrum of affordable housing information. AJ will present the following sessions : November 15: (1) Preparation for Audit/Inspection - Setting Up Resident Files; (2) Correction of LIHTC Non-compliance; and (3) LIHTC Case Studies - Including Gig Employment and Assets November 16: (1) VAWA - Overview of Requirements on LIHTC Projects; (2) LIHTC Updates and Anticipated Changes {this session will include a full discussion of the Average Income Final Regulation}; (3) Streamlining Files & Processes - Best Practices  & Tips for Lease-Up and the Extended Use Period; and (4) Special Rules of the LIHTC Program - with a Focus on the Student Rules. Persons interested in attending the conference should register online at www.mid-atlanticahma.org.

IRS Issues Final Average Income Regulation

On October 7, 2022, the IRS published final and temporary regulations on the average income set aside for the LIHTC program. A quick review of the regulation indicates that the "cliff test" has been eliminated and owners will have more flexibility in swapping unit designations. I will be reviewing the new regulation in detail and once done, I will post an analysis on the A. J. Johnson Consulting Services website. For additional information about A. J. Johnson Consulting Services please visit our website at ajjcs.net. You can automatically receive notifications of our articles by just clicking News," entering your email, and clicking on "subscribe." You will then receive automatic notifications of all posted articles.

A. J. Johnson Partners with CHFA on Live Webinar - What Happens After an 8823 is Issued?

A.J. Johnson will be presenting 8823s - What Happens After They Are Sent to the IRS on October 20, 2022, at 11:00 AM (EST). This class will be offered through Colorado Housing and Finance Authority s chfareach educational programming for affordable housing property owners and managers. An updated link for course registration is included below. All tax credit professionals work hard to avoid the dreaded 8823 - Report of Noncompliance. However, properties still receive 8823s and those reports of noncompliance are sent to the IRS. But what happens then? What is the role of the HFA after it issues the 8823 to the IRS? What should a property owner do after being reported to the IRS for noncompliance? This 1.5-hour live webinar explores these issues and will outline the responsibilities of both the HFA and property owners after the issuance of an 8823. Unlike most LIHTC training, this session is presented from the point of view of the IRS and will provide owners and managers of LIHTC properties with a unique perspective regarding how to protect the credits for these important properties. The link to register for the session is  https://www.chfainfo.com/rental-housing/chfareach/all-events#id=11338&cid=986&wid=501&type=Cal

A. J. Johnson Partners with Enterprise to Provide LIHTC Training and HCCP Exam

On November 1, 2, and 3, A. J. Johnson will be partnering with Enterprise Community Partners for in-person training intended for real estate professionals, particularly those in the affordable multifamily housing field. Following the in-person training sessions, AJ will be providing a review of testable areas and in-person administration of the Housing Credit Certified Professional (HCCP ) exam. The following sessions will be presented: November 1, 2022: Intermediate LIHTC Compliance  - Designed for more experienced managers, supervisory personnel, investment asset managers, and compliance specialists, this program expands on the information covered in the Basics of Tax Credit Site Management. A more in-depth discussion of income verification issues is included as well as a discussion of minimum set-aside issues (including the Average Income Minimum Set-Aside), optional fees and use of common areas. The Available Unit Rule is covered in great detail, as are the requirements for units occupied by students. Attendees will also learn the requirements relating to setting rents at a tax credit property. This course contains some practice problems but is more discussion oriented than the Basic course. A calculator is required for this course. November 2, 2022: Advanced LIHTC Compliance - This full-day training is intended for senior management staff, developers, corporate finance officers, and others involved in decision-making with regard to how LIHTC deals are structured. This training covers complex issues such as eligible and qualified basis, applicable fraction, credit calculation (including first-year calculation), placed in service issues, rehab projects, tax-exempt bonds, projects with HOME funds, Next Available Unit Rule, employee units, mixed-income properties, the Average Income Minimum Set-Aside, vacant unit rule, and dealing effectively with State Agencies. Individuals who take both two days of training will be provided with study materials and a practice exam to assist in preparation for the HCCP exam, to be administered on November 3. November 3, 2022: Review of testable areas and administration of the Housing Credit Certified Professional (HCCP ) exam. Following the two days of intensive and comprehensive LIHTC training, AJ will provide a review of program requirements and will administer the HCCP exam in person. The training and exam will take place at the Doubletree by Hilton, 5485 Twin Knolls Road, Columbia, MD. Persons interested in any (or all) of these training sessions should contact Lisa Ciano at Enterprise Partners. Lisa s email is lciano@enterprisecommunity.com.

Meta (formerly Facebook) Settles Fair Housing Complaint with DOJ

The Department of Justice (DOJ) has entered into a Settlement Agreement resolving allegations that Meta Platforms, Inc., formerly known as Facebook, Inc., has engaged in discriminatory advertising in violation of the Fair Housing Act (FHA). The proposed agreement resolves a federal lawsuit alleging that Meta s housing advertising system discriminates against Facebook users based on their race, color, religion, sex, disability, familial status, and national origin. Meta uses algorithms in determining which Facebook users receive housing ads, and these algorithms rely, in part, on characteristics protected under the FHA. Under the settlement, which still must be approved by the federal court, Meta will stop using an advertising tool for housing ads (known as the "Special Ad Audience" tool) that relies on a discriminatory algorithm. Meta will also develop a new system to address racial and other disparities caused by its use of personalization algorithms in its housing ad delivery system. The settlement marks the first time that Meta will be subject to court oversight for its ad targeting and delivery system. The DOJ lawsuit alleged both disparate treatment and disparate impact discrimination. Disparate treatment because it intentionally classifies users on the basis of FHA-protected characteristics and disparate impact because the algorithms affect Facebook users differently on the basis of their membership in protected classes.

HUD Finalizes New MOR Scheduling Protocol

Section 8 properties are subject to audits and inspections known as Management & Occupancy Reviews (MORs). HUD has recently introduced a new risk-based management and occupancy review schedule. The new schedule is designed to streamline and reduce the number of MOR reviews. The final rule implementing this new schedule comes seven years after the proposed rule and goes into effect on September 26. Based on HUD data, most sites have historically received "satisfactory," "above average," or "superior" MOR scores. Therefore, there is no need to review properties as frequently as in the past. The new MOR schedule establishes a frequency for completion of MORs based on a site s previous MOR score and the site s rating or classification under a risk-based model. The frequency of MORs described here will begin with the first MOR scheduled on or after September 26. The final rule changes MOR scheduling for the following Section 8 Programs: New Construction;Substantial Rehabilitation;State Housing Agencies;New Construction financed under Section 515 of the Housing Act of 1949;Loan Management Set-Aside;HAP Program for the Disposition of HUD-Owned Projects; andSection 202/8 Program The schedule does not apply to restructured Mark-Market properties. Classifications The new MOR schedule establishes a frequency for the completion of MORs based on a site s previous MOR score and its risk classification. The risk classifications are: Not Troubled;Potentially Troubled; orTroubled The risk rating considers the site s financial characteristics such as low debt service coverage ratio, recent defaults, excessive vacancies, low REAC scores, tenant input provided directly to HUD, and pending foreclosure or partial claim payments. The New Schedule Section 8 sites that are "Potentially Troubled" or "Troubled" will automatically be reviewed annually. The new scheduling changes apply only to sites with a risk classification of "Not Troubled." If a site s risk classification is "Not Troubled" and the MOR review conducted on September 26 or later is "Unsatisfactory" or "Below Average," the next MOR will be conducted within 12 months.If a site s risk classification is "Not Troubled" and the MOR review conducted on September 26 or later is "Satisfactory," the next MOR will be conducted within 24 months.If a site s risk classification is "Not Troubled" and the MOR review conducted on September 26 or later is "Above Average" or "Superior," the next MOR will be conducted within 36 months. Implementation Owners and managers will know the timeframe for the site s next review at the first MOR following September 26. In addition to the noted schedule change, the final rule states that a MOR must be conducted within six months of a management or ownership change regardless of the results of the previous MOR. It should be noted that MORs are not the same as REAC physical inspections, which are not affected by the new rule.