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A. J. Johnson Partners with Mid-Atlantic AHMA for July Training on Affordable Housing

During the month of July 2022, A. J. Johnson will be partnering with the MidAtlantic Affordable Housing Management Association for three live webinar training sessions intended for real estate professionals, particularly those in the affordable multifamily housing field.  The following sessions will be presented: July 12: Dealing with Affordable Housing Expenses & Deductions - Owners and managers must determine the amount of a family s income before the family is allowed to move into assisted housing and at least annually thereafter. The amount of assistance paid on behalf of the family is calculated using the family s annual income less allowable deductions. HUD program regulations specify the types and amounts of income and deductions to be included in the calculation of annual and adjusted income. There are five possible deductions that may be subtracted from annual income based on allowable family expenses and family characteristics. The remainder, after these deductions are subtracted, is called adjusted income. Adjusted income is generally the amount upon which rent is based. This training focuses on the calculation of annual adjusted income and will cover in detail the adjustments relating to (1) dependent deduction; (2) childcare deduction; (3) disability-related expenses; (4) the elderly deduction; and (5) deductions for medical expenses. The training also includes problems to ensure that the attendees can apply what they learn to actual situations. July 14: Operating Policies for Affordable Housing Properties - Written Operating Policies are a critical component of good management of affordable housing properties. This training will introduce attendees to the basic requirements of four essential policies - the Management Plan, general property policies (aka - "house rules"), tenant transfer policies, and waiting list management. At the conclusion of the training, property managers will be much more aware of the importance of these policies and the elements that should be part of each of the policies. July 26: 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. These sessions are part of the year-long collaboration between A. J. Johnson and MidAtlantic AHMA that is 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 any (or all) of these training sessions may register by visiting either www.ajjcs.net or https://www.mid-atlanticahma.org.

Eviction Due to Unauthorized Occupants Possible with Solid Documentation

In Montgomery Street Housing Urban Renewal, LLC v. Sheriff (June 2021), a property owner sued to evict a resident for lease violations relating to an unauthorized occupant. The New Jersey property, Montgomery Heights Apartments, is a Low-Income Housing Tax Credit (LIHTC) property with project-based Vouchers. The rules of both programs require that income be established based on the income of all household members. The property s occupancy standards require a minimum of three and a maximum of six household members for three-bedroom units. The property also had a procedure in place for adding new household members after the initial household moved in. This procedure required management approval and established eligibility of the new applicant. On December 15, 2016, the defendant applied for a three-bedroom apartment at the property, stating that she was the head of a five-person household, which included herself and four children. She stated that she was separated from her husband and that she expected no additions to the household in the next 12 months. She also stated that there were no "temporarily absent" household members. The application was approved, and the defendant signed a lease with an expiration of April 30, 2018. The lease specified that no more than one adult and four children could live in the unit and named the authorized occupants. The lease also permitted the landlord to terminate the lease with a 30-day written notice if any unauthorized occupant lived in the apartment. In April 2018, the lease was renewed, and the defendant certified that the same people were in the unit as were there at move-in. On January 2, 2019, a LIHTC self-certification was completed, certifying the same household members. On April 11, 2019, management notified the tenant that an unauthorized male had been found to be living in the unit, and it was believed to be the resident s husband. The resident was given until April 26, 2019, to remove the unauthorized occupant. Instead of removing her husband, on June 6, 2019, the resident delivered a letter to management asking that her husband and son be permitted to apply to be added to the lease.  On June 3, 2019, her husband had submitted a change-of-address form to the United States Postal Service, indicating that his mail should be sent to a post office box instead of the defendant s apartment, where it had been sent. On June 10, 2019, management sent the tenant a "LOW INCOME HOUSING TAX CREDIT NOTICE TO QUIT AND DEMAND FOR POSSESSION." The tenant was advised that the lease would terminate on July 31, 2019. The reason for the termination was the unauthorized occupant. The defendant did not vacate and on September 18, 2019, the landlord filed a complaint for possession. The defendant asserted that her apartment was large enough for herself and her five children, as well as her husband. She admitted that her 13-year-old son had moved in in August 2019 and that her husband had been "in and out" of the apartment since January 2019. On January 9, 2020, the trial court ruled in favor of the landlord, finding "there has been substantial non-compliance by unauthorized occupants." The defendant appealed, citing in part that "family reunification" does not constitute good cause to evict, that a seven-person occupancy did not violate LIHTC or HUD regulations, and that the eviction was contrary to law. The appeals court determined that "a continuing substantial violation of a reasonable lease term after the tenant has received a written notice to cease, is one of the statutory good causes for eviction." The court ruled that the language in the lease was "clear and unambiguous," and that the provisions of the lease were reasonable and consistent with public policy. Based on this reasoning, the appeals court upheld the eviction due to unauthorized occupancy. The Takeaway Owners of affordable housing properties should carefully review the language in their property leases relating to unauthorized occupancy. Make sure it is clear and precise. Also, when unauthorized occupancy is suspected, evidence and documentation of the lease violation will go a long way to ensuring the successful pursuit of the eviction.

Security Deposit Replacement Products - The Traditional Security Deposit May Soon Sharing Space with New Alternative

The standard practice of paying a month s rent (or more) is being challenged in the multifamily marketplace with new alternatives to the cash security deposit. These new products represent a gamechanger for the way landlords protect themselves from potential damages and non-payment of rent. An estimated $45 billion currently sits in security deposit accounts. These new products have the potential to free up much of this money for more immediate uses. However, there are pros and cons to these new products. Products being sold include surety bonds, insurance policies, and rent guarantees. Tenants are charged nonrefundable monthly fees - usually $10 to $30 - instead of a refundable upfront lump sum.Critics of these new products claim that tenants can wind up paying a lot more than they would with a refundable security deposit and that the products do not always offer the same protections.While the products are sold to renters, the companies are working for the landlords, and it s not always clear who takes the lead in resolving disputes. There is a growing movement in many cities called "Renters Choice," which is pressing cities and states to relax security deposit laws allowing greater potential for the new products, which are known collectively as "security deposit replacements," or SDRs. The first two laws of this type have been passed in Cincinnati and Atlanta. How It Works Companies like SureDeposit, TheGuarantors, Rhino, LeaseLock, and Obligo sign up property owners. Each product has a different system, so owners have a variety of choices. The target tenant market is not generally people who cannot afford a deposit, but people who prefer to use their money elsewhere or do not trust the landlord to return it. Some companies - such as Rhino - offer security deposit insurance. The renter purchases the insurance for the landlord s benefit in case there is unpaid rent or damages. For example, a tenant with a $2,000 monthly rent would pay a monthly fee of $20 or so for a policy that would pay the landlord as much as $2,000 if there were issues when the tenant moved out. If the damages total more than $2,000, the tenant is billed by Rhino. One of the main weaknesses relative to regular security deposits is the complexity and cost of maintaining the accounts. Also, landlords often have trouble tracking down tenants to return the security deposit after they move out. And of course, in affordable housing complexes, new applicants often have a tough time coming up with the money for a deposit. In the affordable housing realm, one of the primary benefits of these products is to help people get into the housing that they can otherwise afford - were it not for the upfront costs. However, tenant advocacy groups are not fully onboard with the alternatives. They point out that security deposits - while imperfect - offer legal protections that are lacking in these new products. The deposits are refundable while the cost of the new products is an actual cost - that will not be recouped. While these products do offer viable alternatives to traditional security deposits in many cases, landlords considering offering these options to applicants should be aware of potential pitfalls. Tenants who can afford lump sum deposits will usually be better off providing a refundable deposit than paying a nonrefundable monthly fee. Also, most affordable housing programs (e.g., LIHTC) will have to offer this service as an option and not require that applicants use the product. Otherwise, the fees associated with the insurance will be considered rent. All-in-all, it seems worthwhile for landlords of affordable rental properties to at least look into the possibility of offering an SDA to applicants. While pricing varies geographically, the cost of one of these products can range from $96 to $262 for a $1,400 per month rent. This is clearly more affordable to many applicants than a $1,400 security deposit, but it is nonrefundable. As noted already, the key to offering products of this type is to ensure that applicants fully understand that they have an option to provide a traditional security deposit or use of the alternate products. With this option available, affordable housing operators may well be able to expand the market of eligible renters who can afford the upfront costs of project entry.

HUD Publishes Various Income and Rent Limits

HUD has published the Fiscal Year 2022 income limits for Emergency Solutions Grants (ESG), Community Development Block Grant (CDBG), Housing Opportunities for People with Aids (HOPWA), the HOME Program, and the Housing Trust Fund (HTF). These limits will be effective on June 15, 2022, and can be found on HUD User at www.huduser.gov/portal/datasets/il.html. It should be noted that the CDBG-DR Income Limits for Puerto Rico and the U.S. Virgin Islands were effective on April 18, 2022. Income limits for the Neighborhood Stabilization Program have not yet been published but will also be effective on June 15, 2022. The FY 2022 rent limits for HOME and HTF have also been published and are effective on June 15, 2022. The HOME rent limits are available at www.hudexchange.info/programs/home/home-rent-limits/ and the HTF rents are available at www.hudexchange.info/programs/htf/htf-rent-limits/.

The Affordable Connectivity Program Can Increase Internet Access for Low-Income Households

There is a new federal subsidy program that can help low-income families pay for Internet service. The Affordable Connectivity Program (ACP), offered through many Internet service providers, gives households $30 per month to cover the cost of internet service and a one-time payment of $100 for computer devices for eligible households. Families on qualifying Tribal lands are eligible for up to $75 per month. ACP is a $14.2 billion program made possible by the Infrastructure Investment and Jobs Act that was signed into law in 2021. A household is eligible to receive ACP support if a member of the household meets at least one of the following criteria: Has an income that is at or below 200% of the federal poverty guidelines (for a family of four this is $55,500);Participates in certain assistance programs, such as SNAP, Medicaid, Federal Public Housing Assistance, SSI, WIC, or Lifeline (the FCC program to make communication services more affordable for low-income consumers);Participates in Tribal specific programs, such as Bureau of Indian Affairs General Assistance, Tribal TANF, or Food Distribution Program on Indian Reservations;Is approved to receive benefits under the free and reduced-price school lunch program or the school breakfast program in the current or immediately preceding school year;Received a federal Pell grant during the current award year; orMeets the eligibility criteria for a participating provider s existing low-income program. Public housing and Section 8 residents are eligible for ACP funding based on their receiving housing assistance, and based on the qualifying income limits, many residents of LIHTC housing without rental assistance will also qualify. HUD has determined that this assistance does not count as income for housing program purposes. Owners of affordable housing properties are encouraged to make residents aware of this subsidy since it can increase their internet connectivity without added expense. ACP enrollment opened on December 31, 2021. Eligible households may enroll through a participating broadband provider or by (1) going to ACPBenefit.org to submit an online application or print a mail-in application, and (2) contacting their preferred broadband provider and selecting a plan. Additional information about the ACP is available at www.fcc.gov/ACP or by calling 877-384-2575 between 9 AM and 9 PM.

A. J. Johnson Partners with Mid-Atlantic AHMA for June Training on Affordable Housing - Including an In-Person HCCP Exam

During the month of June 2022, A. J. Johnson will be partnering with the MidAtlantic Affordable Housing Management Association for one live webinar and two in-person training sessions 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: June 14: Intermediate LIHTC Compliance (In-person training in Richmond, VA) - 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. June 15: Advanced LIHTC Compliance (In-person training in Richmond, VA) - 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 June 16. June 16: Review of testable areas and administration of the Housing Credit Certified Professional (HCCP ) exam (In-person exam in Richmond, VA). 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. June 28: The Verification and Calculation of Income and Assets on Affordable Housing Properties (live webinar)- This five-hour live webinar (there will be a 1.5-hour lunch break) provides concentrated instruction on the required methodology for calculating and verifying income, and for determining the value of assets and income generated by those assets. The first section of the course involves a comprehensive discussion of employment income, along with military pay, pensions/social security, self-employment income, and child support. It concludes with workshop problems designed to test what the student has learned during the discussion phase of the training and serve to reinforce HUD required techniques for the determination of income. The second component of the training focuses on a detailed discussion of requirements related to the determination of asset value and income and is applicable to all federal housing programs, including the low-income housing tax credit, tax-exempt bonds, Section 8, Section 515, HOME, and HOPE VI. Multiple types of assets are covered, both in terms of what constitutes an asset and how must they be verified. This section also concludes with a series of problems, designed to test the student s understanding of the basic requirements relative to assets. These sessions are part of the year-long collaboration between A. J. Johnson and MidAtlantic AHMA that is 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 any (or all) of these training sessions may register by visiting either www.ajjcs.net or https://www.mid-atlanticahma.org.

Maine Human Rights Commission Files Case Against Assisted Living Facility for Transgender Discrimination

In what may be the first case of its kind in the United States, on March 14, 2022, the Maine Human Rights Commission issued a finding of reasonable grounds that Sunrise Assisted Living violated state nondiscrimination protections when it denied a 79-year-old woman a room because she is transgender. The Commission s action followed an investigation of the complaint that was filed by GLBTQ Legal Advocates & Defenders (GLAD) on behalf of Marie King. It is the first known discrimination complaint filed in the country by a transgender older adult against a long-term care facility. In the spring of 2021, a social worker at Pen Bay Medical Center contacted Sunrise on behalf of Ms. King, who was a patient at the hospital. The facility initially said there was an available room, but when they learned that Ms. King is transgender, Sunrise informed the hospital they would not admit her because they were concerned she wanted to reside in a room with a female roommate. The Commission made a finding of reasonable grounds that Sunrise discriminated against her on the basis of her gender identity, transgender status, and her sex, all protected under the Maine Human Rights Act. The Commission will now bring the parties together to attempt to resolve the matter. This process must happen within 90 days and there is no appeals process. Failing that, the case may be brought to court. It is worth noting that other recent cases have indicated that discrimination based on sexual orientation and gender identity may be considered discrimination based on sex, which would also violate the federal Fair Housing Act.

A. J. Johnson to Host Webinar on Development of Affirmative Fair Housing Marketing Plans - AFHMP

A. J. Johnson will be conducting a one-hour webinar on May 4, 2022, on Requirements Regarding the Development of Affirmative Fair Housing Marketing Plans (AFHMP). The Webinar will be held at 1:00 PM Eastern Time. The Fair Housing Act requires federal agencies to administer all programs and activities relating to housing and urban development in a manner that "affirmatively" furthers fair housing. This means that it is not enough to prevent segregation - the government must encourage "integration." Each owner who participates in HUD or Rural Development multifamily housing programs must develop and provide a description of the Affirmative Fair Housing Marketing Plan (AFHMP) for the property to comply with the requirements of the Law. A cornerstone of an AFHMP is the requirement to market a property to those "least likely to apply." This course outlines the basic requirements of an AFHMP, including marketing strategies, the meaning of "least likely to apply," and updating the Plan. Completion of the course will assist managers in a full understanding of how to comply with HUD rules regarding these important plans. Those interested in participating in the Webinar may register on the A. J. Johnson Consulting Services website (www.ajjcs.net) under "Training."