News

A. J. Johnson Partners with Mid-Atlantic AHMA for April 2022 Training on Affordable Housing

During the month of April 2022, A. J. Johnson will be partnering with the MidAtlantic Affordable Housing Management Association for four live webinars intended for real estate professionals, particularly those in the affordable multifamily housing field. The following live webinars will be presented: April 12: Compliance with Federal and State Fair Housing Requirements - the course "Compliance with Federal and State Fair Housing Requirements" will equip attendees with the knowledge and understanding needed to avoid fair housing violations.The course curriculum is centered around the regulations in the two major fair housing laws, The Fair Housing Act (Title VIII of the Civil Rights Act of 1968) and Section 504 of the Rehabilitation Act of 1973. The course also includes a discussion of the additional state and local protected characteristics. In addition, relevant portions of the Americans with Disabilities Act (ADA) are covered.The purpose of the Fair Housing Act is to eliminate housing discrimination, promote economic opportunity, and achieve diverse, inclusive communities. Professional fair housing training assists in this mission by ensuring that housing professionals understand both the rights of the public relative to fair housing and the duties and responsibilities of real estate professionals. April 14: 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. April 19: Violence Against Women Act - Guidance for Properties Subject to the Law The Violence Against Women (VAWA) Reauthorization Act of 2013 expanded VAWA protections to many different affordable housing programs - including the Low-Income Housing Tax Credit (LIHTC) Program. While HUD has provided detailed requirements on VAWA implementation at HUD properties, there has been no uniform guidance for LIHTC owners and managers. A proposal before Congress would legislate that LIHTC Extended Use Agreements contain VAWA requirements. The IRS has not provided guidance and while many state agencies are requiring VAWA plans, they are not providing information on what the plans should look like. This 2.5-hour training - when combined with the course materials- will review VAWA requirements and recommend best practices for developing VAWA plans at LIHTC and other non-HUD properties. The session will be presented by A. J. Johnson, a recognized expert in the affordable housing field and the author of "A Property Manager s Guide to the Violence Against Women Act." April 20: Reasonable Modification and Accommodation Requirements Under Section 504 and the Fair Housing Act. The training will focus on the specific duties and responsibilities of multifamily rental managers with regard to accommodating the needs of disabled applicants and residents. The difference between a "modification" and an "accommodation" will be covered, as well as who is responsible for paying for these modifications and accommodations. Multiple court cases will be used to illustrate the requirements of the law. 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.

HUD Confirms That Child Tax Credit and Earned Income Tax Credit Are Not Income

New resources and information about the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC) on now available on the HUD Exchange (www.hudexchange.info). The 2021 American Rescue Plan (ARP) temporarily increased the CTC from $2,000 per child to $3,000 per child for children over the age of six and from $2,000 to $3,600 for children under the age of six. It also raised the age limit for CTC eligibility from 16 to 17. The 2021 ARP also expanded the EITC to include more workers without children as well as older workers (age 65+), temporarily raised the maximum credit for individuals without dependents from approximately $540 to $1,500, and increased the income cap to qualify for individuals without dependents from approximately $16,000 to $21,000. These income levels constitute a large percentage of residents in affordable housing properties. The CTC and EITC are not considered income for federal affordable housing programs. Receiving these tax credits will not impact anyone s eligibility for federal benefits - including federal housing benefits. The federal government along with hundreds of non-profit organizations, state and local governments, and members of Congress are engaged in an all-out push to make sure every eligible American receives the EITC and CTC. Managers of federal affordable housing projects, such as public housing, Section 8, Section 515, HOME, and LIHTC should not be counting the CTC or EITC as income for project eligibility purposes.

HUD Updates FAQ on Multifamily Housing Utility Allowance Requirements

The Department of Housing & Urban Development (HUD) has recently updated the Frequently Asked Questions Methodology for Completing a Multifamily Housing Utility Analysis. The original Notice on the UA requirement was Notice H 2015-04, which was published on June 22, 2015. HUD added three updates to the FAQ: In the years in which Owner/Agents (OAs) perform a factor-based analysis, the new UA should be calculated by considering the previous UA both before rounding and after rounding. The new UA will be whichever method provides the higher UA, which will be a benefit to the tenants.In the past few years, some O/As have been issuing utility reimbursements on debit cards. In some cases, tenants have never activated the cards even though they have been notified several times to do so. They may have several hundred dollars on the cards. The question has arisen as to whether the O/As should pull the money back off the cards and return it to HUD after giving tenants proper notice. HUD responds in the FAQ that "The balance must be left to accumulate on the debit card. For utility allowance reimbursements, once a check is made payable to the tenant, or funds are deposited to a tenant s debit card, ownership of the funds passes to the tenant. HUD does not receive the funds back, nor does the owner." This position does create some potential problems for O/As, especially in the case of uncashed checks. If you write a check and the money never leaves your account, you may develop the false belief that you can spend those funds, but the money still belongs to the payee. If the payee finally deposits the check after months of delay, you risk overdrawing the account and bouncing the check.          Businesses must track outstanding items to avoid breaking unclaimed property laws. If payments remain uncashed, the assets may eventually have to be turned over to the state as unclaimed assets. This usually occurs after a few years but depends on the state. In any case, careful tracking of these payments is required, and make sure you use an accounting system that deducts uncashed checks from your available funds. For RAD conversions that have both Project-Based Rental Assistance (PBRA) and Project-Based Voucher (PBV) units, which units should be selected for the RAD PBRA baseline UA? HUD requires that the sample selected should include only units covered under the RAD PBRA HAP Contract. These are two distinct programs, and the unit samples should not overlap. While these three issues represent to update to the FAQ, O/As should review the original notice and the complete FAQ, which may be found on HUDCLIPS.

HUD to Enforce Carbon Monoxide Protections in HUD Projects

On January 31, 2022, HUD issued Notice H-2022-01, clarifying federal requirements for carbon monoxide (CO) alarms and detectors. CO is a byproduct of fuel-fired combustion appliances such as furnaces and water heaters. If these appliances are not properly vented, the undetectable gas can be deadly. There have been at least 11 deaths in HUD-assisted housing from CO poisoning since 2003 and HUD has been under increasing pressure to require CO alarms and detectors in HUD-supported properties. In 2019, HUD issued a notice reminding owners of their legal obligation to install working CO detectors in those jurisdictions where such devices are required. However, in areas where CO detectors are not required, HUD only "encouraged" the installation of the devices - it was not a requirement. This new HUD notice implements the requirements included in the Consolidated Appropriations Act of 2021, which requires sites to meet certain requirements within two years of the law s enactment, which was December 27, 2020. As a result of the law, public housing agencies (PHAs), and site owners that received federal rental assistance must comply with the International Fire Code (IFC) 2018 standards on the installation of CO alarms or detectors by December 27, 2022. The new requirement applies to all Housing Choice Voucher units and all Public Housing, Project-Based Voucher, Project-Based Rental Assistance, Section 202, and Section 811 properties with fire-fueled or fire-burning appliance or an attached garage. HUD is requiring that all affected sites have CO detectors installed in all dwelling units. The detectors must meet or exceed the standards of the IFC. The standards are outlined in Chapter 9, Fire Protection and Life Safety Systems, and Chapter 11, Construction Requirements for Existing Buildings of the IFC. It should be noted that if local codes are more stringent than the IFC, the local code must be followed. The IFC defines CO alarms and detectors as follows: Carbon Monoxide Alarm: A single or multiple station alarm intended to detect CO gas and alert occupants by a distinct audible signal. It incorporates a sensor, control components, and an alarm notification appliance in a single unit.Carbon Monoxide Detector: A device with an integral sensor to detect CO gas and transmit an alarm signal to a connected alarm control unit. Hard-Wire Requirements IFC-approved CO alarms must receive their primary power from the building s permanent wiring without a disconnecting switch other than that required for overcurrent protection, and when the primary power service is interrupted, serviced by a battery. UL Rating Requirements CO alarms must meet Underwriters Laboratories UL 2034 standard for sensitivity. Combination CO/smoke alarms are an acceptable alternative to CO alarms but must meet UL 2034 and UL 217 standards for sensitivity. Installation Locations CO detection must be installed in dwelling units that contain a fuel-burning appliance or fuel-burning fireplace.CO detection must be included in any dwelling units with attached private garages - even if the units do not have fuel-burning appliances or fireplaces.When required to be installed, the detectors must be installed outside each sleeping area and in the immediate vicinity of the bedroom. If a fuel-burning appliance is installed in the bedroom, a CO detector must be installed in the bedroom. The types of fuel-burning appliances likely to be present include gas/fuel-fired ranges, stoves, fireplaces, clothes dryers, furnaces, air handlers, boilers, and water heaters. Detectors are not required in dwelling units that do not have openings between the fuel-burning appliance or underground garage and the dwelling unit. This means that if you have a central heating or hot water system that does not distribute heat via forced air, CO detection is not specifically required in the units. Paying for the Required Installation According to the Notice, PHAs operating public housing units may use either operating funds or capital funds for the purchase, installation, and maintenance of CO alarms or detectors. For the HCV and project-based voucher programs, the property owner or landlord is responsible for the cost of the CO alarms or detectors. Owners of properties receiving assistance through the project-based rental assistance, Section 202 or 811 programs may use the property s reserve account, residual receipts, general operating reserves, owner contributions, or secondary financing to fund the purchase, installation, and maintenance of CO alarms and detectors. Such purchases are eligible project expenses. The price for approved detectors (not including the cost of installation) generally runs from $15 to $60 per detector, depending on the make and model. Owners who are required by this notice to install the alarms or detectors must do so by December 27, 2022. HUD MOR and REAC/INSPIRE inspections after this date will note the absence of required detectors. Now is the time for affected properties to begin pricing and planning for the required installation.

A. J. Johnson to Host Webinar of LIHTC Acquisition/Rehab Issues

A. J. Johnson will be conducting a 1.5-hour webinar on March 2, 2022, on Critical Issues Relating to the Acquisition & Rehabilitation of LIHTC properties. The Webinar will be held at 1:00 PM Eastern Time. This 1.5-hour session focuses on the issues that are critical to the success of any LIHTC acquisition/rehab project. The training focuses on tenant qualification, unit qualification, and first-year credit delivery. There will be a full discussion of determining the first-year applicable fraction, differentiating between the acquisition credit and rehab credit, transferring households between units during rehab, temporary relocation, the timing of resident qualifications, the meaning of the "safe-harbor" rule, resyndication and previously qualified households, and 8609 issues. Those interested in participating in the Webinar may register on the A. J. Johnson Consulting Services website (www.ajjcs.net) under "Training."

Recent Court Decision Confirms that ADA Does Not Apply to Private Apartment Complexes

In Saint Pierre v. NFG Housing Partners, LP  (November 2021), the U.S. District Court for the District of Maine ruled that the Americans with Disabilities Act (ADA) is not applicable to privately owned apartment communities. This is due to the fact that such communities are neither providing a governmental service nor do they meet the definition of a public accommodation. Lorraine Saint Pierre is a tenant as a subsidized housing complex for seniors ("Northfield Green") owned by a private partnership and managed by a private management company. Saint Pierre has a severe hearing disability and received several noise complaints from a neighbor with whom she shared a wall. Saint Pierre s response to the complaints was to request that the owner blow insulation into that wall, which was denied. She also claimed that her apartment also has mold caused by standing water on the adjacent grounds, which seeps into the foundation of the building, aggravating her disability. Saint Pierre informed management of the issue in writing, with supporting documentation from her doctor, but the mold problem was not addressed. Saint Pierre filed an administrative complaint against the owners and management with the Maine Human Rights Commission ("MHRC"). In September 2021, MHRC dismissed the administrative complaint, saying that it had "not found reasonable grounds to believe that unlawful discrimination had occurred." In October 2021, Saint Pierre filed the federal action. The Magistrate ruled that the complaint alleged sufficient facts to support the resident s claim under the federal Fair Housing Act and Maine s fair housing laws. However, her claims under the ADA failed. As to the ADA claims, the Magistrate noted that under the ADA: "Title I prohibits discrimination against disabled persons in employment; Title II prohibits discrimination against disabled persons in public services furnished by governmental entities; Title III prohibits discrimination against disabled persons in public accommodations provided by private entities; Title IV prohibits retaliation and coercion against disabled persons who exercise their rights under the ADA." In this case, the defendants are private corporations, and the apartment complex does not fall within the definition of a public accommodation. Court cases have consistently held that residential facilities such as apartments and condominiums are not considered public accommodations under the ADA. Examples of public accommodations are restaurants, hotels, theatres, doctor s offices, pharmacies, retail stores, museums, libraries, parks, private schools, and daycare centers. Such facilities - even if privately owned - are subject to the ADA. This case once again makes clear that for private apartment communities, there is no such thing as an "ADA unit." While units in private apartment communities that were built for first occupancy after March 13, 1991, are generally required to comply with the design and construction requirements of the Fair Housing Amendments Act of 1988, the ADA simply does not apply. Keep in mind, however, that under Title II of the ADA, public housing is subject to the requirements of the ADA. Also, housing communities with federal assistance, such as Section 8 and HOME funds are subject to the requirements of Section 504 of the Rehabilitation Act of 1973. The Low-income Housing Tax Credit (LIHTC) properties do not receive direct federal assistance and are therefore not subject to Section 504. Property owners are responsible for understanding the disability-related laws that apply to their property, but in general, for most privately owned housing, this does not include either the ADA or Section 504.

Zillow Home Sales Draw Congressional Scrutiny

Zillow s plans to sell a large portfolio of single-family homes to institutional investors is drawing attention from Congress. Senators Tina Smith (D-MN) and Sherrod Brown (D-OH) are raising concerns that these investors will turn the homes into rental properties - a move that could potentially leave local homebuyers without affordable options, and renters with poorly managed properties. Zillow plans to sell roughly 7,000 homes it already owns or has under contract through its home-flipping business, called Zillow Offers. The house-flipping business has, by any measure, been a failure. Zillow expects to lose about 5% to 7% on the failed venture. The institutional investors who are looking to purchase the properties are accumulating huge portfolios of single-family rental homes. Despite the allure of "house-flipping" that is shown on HGTV, buying a run-down home on the cheap, renovating it quickly, and selling it for a profit is not a sustainable business model. Supply chain issues and labor shortages during the pandemic mean it s more expensive and takes longer to turn run-down homes into desirable purchases. Zillow itself estimates that it will lose over half a billion dollars in value on the houses it owns. A fair percentage of the Zillow homes (almost 30%) are being sold to Pretium Partners, according to the Wall Street Journal. Other investment groups include American Homes 4 Rent and Invitation Homes. Depending on how many of the Zillow homes are sold in individual markets, there could be some impact on operators of well-run affordable apartments, such as owners of Low-Income Housing Tax Credit properties. However, since the homes owned by Zillow are fairly spread out around the country, significant local impacts are unlikely.

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

During the month of March 2022, A. J. Johnson will be partnering with the MidAtlantic Affordable Housing Management Association for three live webinars intended for real estate professionals, particularly those in the affordable multifamily housing field. The following live webinars will be presented: March 15: 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. March 16: Preparing Affordable Housing Properties for Agency Required Physical Inspections - Agency inspections of affordable housing properties are required for all affordable housing programs, and failure to meet the required inspection standards can result in significant financial and administrative penalties for property owners. This three-hour training focuses on how owners and managers may prepare for such inspections, with a concentration on State Housing Finance Agency inspections for the LIHTC program. Specific training areas include (1) a complete discussion of the most serious violations, including health & safety; (2) how vacant units are addressed during inspections; (3) when violations will be reported to the IRS; (4) the 20 most common deficiencies; (5) how to prepare a property for an inspection; (6) strategies for successful inspections; and (7) a review of the most important Uniform Physical Conditions Standards as they relate to the five inspectable areas [site/doors & windows/electrical/building exterior & systems/Units & Common Area]. In addition, an update on the current status of REAC will be presented as will a discussion of the new "NSPIRE" protocol, that will ultimately replace the current REAC procedures. At the end of the training, attendees will have a blueprint they can use to prepare their properties for agency-required physical inspections - regardless of the program under which they operate. March 29: Understanding Taxable and Tax-Exempt Bonds - There is often confusion regarding the difference between the Tax-Exempt Bond Program and the Taxable Bond programs administered by some State Agencies. This half-day training will describe in detail the management requirements of the State of Virginia Taxable Bond Program and the federal Tax-Exempt Bond Program. Areas to be covered for both programs include (1) income limits; (2) definition of annual income; (3) adjustments to income that are applicable to the taxable bond program; (4) income verification requirements; (5) calculation of income; (6) asset issues; (7) tenant certification requirements. Since either of these programs may be combined with the Low-Income Housing Tax Credit (LIHTC) Program, a review of the differences between the bond programs and the LIHTC program will be included. 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.